10-Q 1 ekso20240331_10q.htm FORM 10-Q ekso20240331_10q.htm
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Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q 

 


 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______ to ______ 

 

Commission File Number: 001-37854 

 


 

Ekso Bionics Holdings, Inc.

 

(Exact name of registrant as specified in its charter) 

 


 

Nevada

99-0367049

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

101 Glacier Point, Suite A

San Rafael, CA

94901

(Address of principal executive offices)

(Zip Code)

 

(510) 984-1761

(Registrant’s telephone number, including area code)

 


(Former name, former address, and former fiscal year, if changed since last report)

 


 

Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Name of each exchange on which registered:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share

 

EKSO

 

Nasdaq Capital Market

 

 

Indicate by 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. Yes ☒    No ☐

 

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an 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.

 

Large accelerated filer 

 

Accelerated filer 

     

Non-accelerated filer 

 

Smaller reporting company 

     
   

Emerging growth company 

 

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No ☒

 

The number of shares of registrant’s common stock outstanding as of April 26, 2024 was 18,174,426.



 

 

Ekso Bionics Holdings, Inc.

 

Quarterly Report on Form 10-Q 

 

Table of Contents

 

   

Page No.

 

PART I. FINANCIAL INFORMATION

 
     

Item 1.

Financial Statements

4

     
 

Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023

4

     
 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months ended March 31, 2024and 2023 (unaudited)

5

     
 

Condensed Consolidated Statements of Stockholders' Equity for the Three Months ended March 31, 2024 and 2023(unaudited)

6

     
 

Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2024 and 2023 (unaudited)

8

     
 

Notes to Condensed Consolidated Financial Statements (unaudited)

9

     

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

31

     

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

39

     

Item 4.

Controls and Procedures

39

     
 

PART II. OTHER INFORMATION

 
     

Item 1.

Legal Proceedings

40

     

Item 1A.

Risk Factors

40

     
Item 5. Other Information 40
     

Item 6.

Exhibits

41

     
 

Signatures

42

 

 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

 

Ekso Bionics Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par value)

 

  

March 31, 2024

  

December 31, 2023

 
  

(unaudited)

  

(Note 2)

 

Assets

        

Current assets:

        

Cash and restricted cash

 $8,799  $8,638 

Accounts receivable, net of allowances of $16 and $79, respectively

  5,773   5,645 

Inventories

  5,106   5,050 

Prepaid expenses and other current assets

  838   875 

Total current assets

  20,516   20,208 

Property and equipment, net

  1,862   2,018 

Right-of-use assets

  893   977 

Intangible assets, net

  4,815   4,892 

Goodwill

  431   431 

Other assets

  440   392 

Total assets

 $28,957  $28,918 
         

Liabilities and Stockholders’ Equity

        

Current liabilities:

        

Accounts payable

 $1,876  $1,847 

Accrued liabilities

  1,786   2,664 

Deferred revenues, current

  2,028   1,993 

Note payable, current

  1,250   1,250 

Lease liabilities, current

  372   363 

Total current liabilities

  7,312   8,117 

Deferred revenues

  2,119   2,169 

Notes payable, net

  4,594   4,832 

Lease liabilities

  626   723 

Warrant liabilities

  133   366 

Other non-current liabilities

  122   105 

Total liabilities

  14,906   16,312 

Commitments and contingencies (Note 14)

          

Stockholders’ equity:

        

Convertible preferred stock, $0.001 par value; 10,000 shares authorized; none issued and outstanding at March 31, 2024 and December 31, 2023

      

Common stock, $0.001 par value; 141,429 shares authorized; 18,096 and 14,848 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

  18   15 

Additional paid-in capital

  256,160   251,580 

Accumulated other comprehensive income

  447   156 

Accumulated deficit

  (242,574)  (239,145)

Total stockholders’ equity

  14,051   12,606 

Total liabilities and stockholders’ equity

 $28,957  $28,918 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

 

 

Ekso Bionics Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2024

   

2023

 

Revenue

  $ 3,756     $ 4,122  

Cost of revenue

    1,805       2,122  

Gross profit

    1,951       2,000  
                 

Operating expenses:

               

Sales and marketing

    1,818       2,088  

Research and development

    1,136       1,154  

General and administrative

    2,253       3,206  

Total operating expenses

    5,207       6,448  
                 

Loss from operations

    (3,256 )     (4,448 )
                 

Other (expense) income, net:

               

Interest expense, net

    (57 )     (112 )

Loss on modification of warrant

    (109 )      

Gain (loss) on revaluation of warrant liabilities

    342       (26 )

Unrealized (loss) gain on foreign exchange

    (349 )     217  

Other income (expense), net

          (20 )

Total other (expense) income, net

    (173 )     59  
                 

Net loss

  $ (3,429 )   $ (4,389 )

Other comprehensive income (loss)

    291       (194 )

Comprehensive loss

  $ (3,138 )   $ (4,583 )
                 

Net loss per share applicable to common shareholders, basic and diluted

  $ (0.20 )   $ (0.33 )
                 

Weighted average number of shares outstanding, basic and diluted

    17,419       13,296  

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

 

Ekso Bionics Holdings, Inc.

Condensed Consolidated Statements of Stockholders Equity

(In thousands)

(Unaudited)

 

 

                                           

Accumulated

                 
                                           

Other

           

Total

 
   

Convertible Preferred Stock

   

Common Stock

   

Additional

   

Comprehensive

   

Accumulated

   

Stockholders’

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Paid-in Capital

   

(Loss) Income

   

Deficit

   

Equity

 

Balance as of December 31, 2023

        $       14,848     $ 15     $ 251,580     $ 156     $ (239,145 )   $ 12,606  

Net loss

                                        (3,429 )     (3,429 )

Issuance of common stock under:

                                                               

Equity financing, net

                2,997       3       3,967                   3,970  

Matching contribution to 401(k) plan

                163             237                   237  

Equity incentive plan

                88                                

Stock-based compensation expense

                            376                   376  

Foreign currency translation adjustments

                                  291             291  

Balance as of March 31, 2024

        $       18,096     $ 18     $ 256,160     $ 447     $ (242,574 )   $ 14,051  

 

 

Ekso Bionics Holdings, Inc.

Condensed Consolidated Statements of Stockholders Equity

(In thousands)

(Unaudited)

 

                                           

Accumulated

                 
                                           

Other

           

Total

 
   

Convertible Preferred Stock

   

Common Stock

   

Additional

   

Comprehensive

   

Accumulated

   

Stockholders’

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Paid-in Capital

   

(Loss) Income

   

Deficit

   

Equity

 

Balance as of December 31, 2022

        $       13,203     $ 13     $ 248,813     $ 563     $ (223,947 )   $ 25,442  

Net loss

                                        (4,389 )     (4,389 )

Issuance of common stock under:

                                                               

Equity incentive plan

                139                                

Stock-based compensation expense

                            424                   424  

Foreign currency translation adjustments

                                  (194 )           (194 )

Balance as of March 31, 2023

        $       13,342     $ 13     $ 249,237     $ 369     $ (228,336 )   $ 21,283  

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

 

Ekso Bionics Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

   

Three Months Ended March 31,

 
   

2024

   

2023

 

Operating activities:

               

Net loss

  $ (3,429 )   $ (4,389 )

Adjustments to reconcile net loss to net cash used in operating activities

               

Depreciation and amortization

    406       414  

Changes in provision for credit losses on accounts receivable

    (12 )     1  

(Gain) loss on revaluation of warrant liabilities

    (342 )     26  

Stock-based compensation expense

    376       424  

Loss on modification of warrant

    109        

Common stock contribution to 401(k) plan

    29       93  

Unrealized loss (gain) on foreign currency transactions

    349       (217 )

Changes in operating assets and liabilities:

               

Accounts receivable

    (214 )     (202 )

Inventories

    (80 )     (375 )

Prepaid expenses and other assets, current and noncurrent

    36       (134 )

Accounts payable

    32       (110 )

Accrued, lease and other liabilities, current and noncurrent

    (723 )     (248 )

Deferred revenues

    (3 )     503  

Net cash used in operating activities

    (3,466 )     (4,214 )

Investing activities:

               

Acquisition of property and equipment

    (8 )     (42 )

Net cash used in investing activities

    (8 )     (42 )

Financing activities:

               

Principal payments under note payable

    (313 )      

Proceeds from issuance of common stock, net

    3,970        

Net cash provided by financing activities

    3,657        

Effect of exchange rate changes on cash

    (22 )     8  

Net increase (decrease) in cash

    161       (4,248 )

Cash and restricted cash at beginning of period

    8,638       20,525  

Cash and restricted cash at end of period

  $ 8,799     $ 16,277  
                 

Supplemental disclosure of cash flow activities

               

Cash paid for interest

  $ 48     $ 47  

Supplemental disclosure of non-cash activities

               

Transfer of inventory to (from) property and equipment

  $ 16     $ (96 )

Share issuance for common stock contribution to 401(k) plan

  $ 237     $  

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 
8

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)

 

 

1.         Organization

 

Description of Business

 

Ekso Bionics Holdings, Inc. (the “Company”) designs, develops, and markets wearable powered and non-powered exoskeleton products to augment human strength, endurance and mobility. The Company’s exoskeleton technology is primarily focused on aiding in the recovery and improved quality of life of individuals who have suffered from a variety of neurological conditions and allows for neurorehabilitation ranging from hospital to home, and also has technology that can be utilized by able-bodied users in the workplace. The Company has marketed devices that (i) enable individuals with neurological conditions affecting gait, including acquired brain injury ("ABI") and multiple sclerosis ("MS"), and spinal cord injury ("SCI") to rehabilitate and to stand and walk in neurorehabilitation settings and, for patients with a SCI, for home and community use, (ii) assist individuals with a broad range of upper extremity impairments, and (iii) allow industrial workers to perform difficult repetitive work for extended periods. Founded in 2005, the Company is headquartered in the San Francisco Bay area and listed on the Nasdaq Capital Market under the symbol “EKSO”.

 

Liquidity and Going Concern

 

As of March 31, 2024, the Company had an accumulated deficit of $242,574.  Largely as a result of significant research and development activities related to the development of the Company’s advanced technology and commercialization of such technology into its medical device business, the Company has incurred significant operating losses and negative cash flows from operations since inception. In the three months ended March 31, 2024, the Company used $3,466 of cash in its operations. Cash on hand as of March 31, 2024 was $8,799.

 

As described in Note 9. Notes Payable, net, borrowings under the Company’s secured term loan agreement with Pacific Western Bank have a liquidity covenant requiring minimum cash on hand equivalent to the current outstanding principal balance. As of March 31, 2024, $2,000 of cash must remain as restricted. After considering cash restrictions, effective unrestricted cash as of March 31, 2024 was approximately $6,799.

 

Our expectation to generate operating losses and negative operating cash flows in the future and the need for additional funding to support our planned operations raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that the condensed consolidated financial statements are issued. Management intends to raise funds through one or more financings. However, due to several factors, including those outside management’s control, there can be no assurance that the Company will be able to complete such financings on acceptable terms or in amounts sufficient to continue operating the business under the operating plan. If we are unable to complete sufficient additional financings, management’s plans include delaying or abandoning certain product development projects, cost reduction efforts for our products, and refocused sales efforts to accelerate revenue growth above historical results. We have concluded the likelihood that our plan to successfully reduce expenses to align with our available cash, while reasonably possible, is less than probable. Accordingly, we have concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least 12 months from the date of issuance of these condensed consolidated financial statements. 

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

 

9

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

 

 

 

2.         Basis of Presentation and Summary of Significant Accounting Policies and Estimates

 

Basis of Presentation and Consolidation

 

The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 4, 2024.

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on a consistent basis with the audited consolidated financial statements for the fiscal year ended December 31, 2023, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein.

 

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending  December 31, 2024 or any future periods.

 

The condensed consolidated financial statements include the financial statements of Ekso Bionics Holdings, Inc. and its subsidiaries. All significant transactions and balances between Ekso Bionics Holdings, Inc. and its subsidiaries have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet, and the reported amounts of revenues and expenses during the reporting period. For the Company, these estimates include, but are not limited to, assets acquired and liabilities assumed in business combinations, revenue recognition, deferred revenue, the valuation of warrants and employee equity awards, future warranty costs, accounting for leases, useful lives assigned to long-lived assets, valuation of inventory, realizability of deferred tax assets, and contingencies. Actual results could differ from those estimates.

 

Foreign Currency

 

The assets and liabilities of foreign subsidiaries and equity investments, where the local currency is the functional currency, are translated from their respective functional currencies into U.S. dollars at the rates in effect at the balance sheet date, and revenue and expense amounts are translated at average rates during the period, with resulting foreign currency translation adjustments recorded in accumulated other comprehensive income as a component of stockholders’ equity. Gains and losses from the re-measurement of balances denominated in currencies other than the entities' functional currencies, are recorded in other expense, net in the accompanying condensed consolidated statements of operations and comprehensive loss.

 

10

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

Inventory

 

Inventories are recorded at the lower of cost or net realizable value. Cost is computed using the standard cost method, which approximates actual cost on a first-in, first-out basis. Materials from vendors are received and recorded as raw materials. Once the raw materials are incorporated in the fabrication of the product, the related value of the component is recorded as work in progress ("WIP"). Direct and indirect labor and applicable overhead costs are also allocated and recorded to WIP inventory. Finished goods are comprised of completed products that are ready for customer shipment. The Company periodically evaluates the carrying value of inventory on hand for potential excess amounts over sales and forecasted demand. Excess and obsolete inventories identified, if any, are recorded as an inventory impairment charge within the condensed consolidated statements of operations and comprehensive loss. The Company's estimate of write-downs for excess and obsolete inventory is based on a detailed analysis which includes on-hand inventory and purchase commitments in excess of forecasted demand. Subsequent disposals of inventories are recorded as a reduction of inventory.

 

Leases

 

The Company records its leases in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 842, Leases. 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 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.

 

Lease expense is recognized over the expected lease term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, lease liabilities current and lease liabilities non-current.

 

Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes the lease expense for such leases on a straight-line basis over the lease term.

 

Revenue Recognition

 

The Company records its revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which when capable of being distinct, are accounted for as separate performance obligations. Revenue recognition is evaluated based on the following five steps: (i) identification of the contract with the customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

 

For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are determined based on observable prices at which the Company separately sells its products or services. If a standalone selling price is not directly observable, judgment is made to estimate the selling price based on market conditions and entity-specific factors including cost plus analyses, features and functionality of the product and/or services, the geography of the Company’s customers, and type of customer. Any discounts or other reductions to the transaction price are allocated proportionately to all performance obligations within the multiple-element arrangement. The Company periodically validates the stand-alone selling price for performance obligations by evaluating whether changes in the key assumptions used to determine the stand-alone selling prices will have a significant effect on the allocation of transaction price between multiple performance obligations.

 

The Company exercised judgement to determine that a product return reserve was not required as historical returns activity have not been material.

 

11

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

Concentration of Credit Risk and Other Risks and Uncertainties

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows. The Company extends credit to customers in the normal course of business. Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the condensed consolidated financial statements. The Company does not require collateral from its customers to secure accounts receivable.

 

Accounts receivable are derived from the sale of products shipped and services performed for customers primarily located in the U.S., Europe, Asia, and Australia. Invoices are aged based on contractual terms with the customer. The Company reviews accounts receivable for collectability and provides an allowance for potential credit losses. The allowance for potential credit losses on trade receivables reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance based on known troubled accounts, historical experience, and other currently available evidence. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 90 days. The Company has not experienced material losses related to accounts receivable as of  March 31, 2024 and December 31, 2023.

 

Many of the sales contracts with customers outside of the U.S. are settled in a foreign currency other than the U.S. dollar. The Company does not enter into any foreign currency hedging agreements and is susceptible to gains and losses from foreign currency fluctuations. To date, the Company has not experienced significant gains or losses upon collecting receivables denominated in a foreign currency.

 

The Company had two customers with an accounts receivable balance totaling 10% or more of the Company’s total accounts receivable as of  March 31, 2024 (11% and 11%), as compared with no customers as of  December 31, 2023.

 

During the three months ended March 31, 2024, the Company had one customer with sales of 10% or more of the Company’s total revenue (11%), as compared with two customers in the three months ended  March 31, 2023 (26% and 14%).

 

Recent Accounting Pronouncements

 

In November 2023, the FASB issued Accounting Standards Update, or ASU, No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU looks to provide improvements to the segment disclosure by providing users with more decision-useful information about reportable segments in a public entity. The main provisions require a company to disclose, on an annual and interim basis, significant expenses included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition. The ASU is to be applied retrospectively to all prior periods presented in the financial statements with an effective date for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU.

 

Accounting Pronouncements Adopted in 2024

 

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplified the accounting for convertible instruments. ASU 2020-06 eliminated certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminated certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance became effective for the Company in the first quarter of 2024 and was applied using a full retrospective approach. The adoption did not have a material impact on the Company's financial statements.

 

12

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 
 

3.         Accumulated Other Comprehensive Income (Loss)

 

The Company's accumulated other comprehensive income (loss) consists of the accumulated net unrealized gains or losses on foreign currency translation adjustments. The change in accumulated other comprehensive income (loss) presented on the condensed consolidated balance sheets for the three months ended March 31, 2024 and 2023, is reflected in the table below net of tax:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 

Balance at beginning of period

 $156  $563 

Net unrealized gain (loss) on foreign currency translation

  291   (194)

Balance at end of period

 $447  $369 

 

 

13

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 
 

4.         Fair Value Measurement

 

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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Three levels of inputs, of which the first two are considered observable and the last unobservable, may be used to measure fair value which are the following:

 

Level 1—Quoted prices in active markets for identical assets or liabilities. The Company considers a market to be active when transactions for the asset occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The valuation of Level 3 investments requires the use of significant management judgments or estimation.

 

14

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

The Company’s fair value hierarchies for its financial assets and liabilities, which require fair value measurement on a recurring basis are as follows:

 

  

Total

  

Level 1

  

Level 2

  

Level 3

 

March 31, 2024

                

Liabilities

                

Warrant liabilities

 $133  $  $  $133 

December 31, 2023

                

Liabilities

                

Warrant liabilities

 $366  $  $  $366 

 

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities for the three months ended March 31, 2024, which were measured at fair value on a recurring basis:

 

  

Warrant Liabilities

 

Balance as of December 31, 2023

 $366 

Loss on modification of warrant

  109 

Net gain on revaluation of warrants issued

  (342)

Balance as of March 31, 2024

 $133 

 

Refer to Note 11. Capitalization and Equity Structure – Warrants for additional information regarding the valuation of warrants.

 

 

5.         Inventories

 

Inventories consisted of the following:

 

   

March 31, 2024

   

December 31, 2023

 

Raw materials

  $ 3,986     $ 4,298  

Work in progress

    361       290  

Finished goods

    759       462  

Inventories

  $ 5,106     $ 5,050  

 

 

6.         Revenue

 

The Company’s medical device segment (EksoHealth) revenue is primarily generated through the sale and subscription of the EksoNR, Ekso Indego Therapy, and Ekso Indego Personal devices, along with the sale of support and maintenance contracts. Revenue from medical device product sales is recognized at the point in time when control of the product transfers to the customer. Transfer of control generally occurs upon shipment from the Company’s facility for sales of the EksoNR, Ekso Indego Therapy, and Ekso Indego Personal devices. Support and maintenance contracts extend coverage beyond the Company’s standard warranty agreements ranging from 12 to 48 months. Revenue is recognized evenly over the term of the contracts. Revenue from medical device subscriptions is recognized evenly over the contract term, typically over 24 months.

 

The Company’s industrial device segment (EksoWorks) revenue is primarily generated through the sale of the upper body exoskeleton EVO and associated accessories. Revenue from industrial device sales is recognized at the point in time when control of the product transfers to the customer. Transfer of control generally occurs upon shipment from the Company’s facility. 

 

15

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

Deferred Revenue

 

Deferred revenue is comprised mainly of unearned revenue related to extended support and maintenance contracts, but also includes other offerings for which the Company has been paid in advance and earns revenue when the Company transfers control of the product or service.

 

Deferred revenue consisted of the following:

 

  

March 31, 2024

  

December 31, 2023

 

Deferred extended maintenance and support

 $3,915   3,993 

Deferred device and advances

  232   169 

Total deferred revenues

  4,147   4,162 

Less current portion

  (2,028)  (1,993)

Deferred revenues, non-current

 $2,119  $2,169 

 

On September 25, 2023, the Company entered into a warranty claim lump-sum agreement with Parker Hannifin Corporation ("Parker"), pursuant to which, among other things, Parker paid the Company $700 for the release of Parker's obligation to reimburse the Company for its costs and expenses associated with servicing certain product warranty obligations.  The Company recorded the lump sum payment as deferred revenue and recognizes revenue as services are performed.

 

Deferred revenue activity consisted of the following for the three months ended March 31, 2024:

 

Beginning balance

 $4,162 

Deferral of revenue

  684 

Recognition of deferred revenue

  (699)

Ending balance

 $4,147 

 

The Company expects to recognize approximately $1,662 of the deferred revenue during the remainder of 2024, $1,241 in 2025, and $1,244 thereafter.

 

In addition to deferred revenue, the Company has a non-cancellable backlog of $1,946, expected to be recognized between 2024 and 2026, primarily related to its contracts for subscription units with its customers and customer orders received but not fulfilled. These subscription contracts typically have 24-month terms and subscription income is recognized on a straight-line basis over the term of the contract.

 

Disaggregation of Revenue

 

The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2024:

 

  

EksoHealth

  

EksoWorks

  

Total

 

Device revenue

 $2,585  $168  $2,753 

Service and support

  765      765 

Subscriptions

  144      144 

Parts and other

  65   29   94 
  $3,559  $197  $3,756 

 

The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2023:

 

  

EksoHealth

  

EksoWorks

  

Total

 

Device revenue

 $3,048  $111  $3,159 

Service and support

  644      644 

Subscriptions

  275   7   282 

Parts and other

  30   7   37 
  $3,997  $125  $4,122 

 

16

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 
 

7.         Accrued Liabilities

 

Accrued liabilities consisted of the following:

 

   

March 31, 2024

   

December 31, 2023

 

Salaries, benefits and related expenses

  $ 1,275     $ 2,058  

Device warranty

    404       461  

Other

    107       145  

Total

  $ 1,786     $ 2,664  

 

Warranty

 

The current portion of the device warranty liability is classified as a component of Accrued liabilities, while the long-term portion of the device warranty liability is classified as a component of Other non-current liabilities in the condensed consolidated balance sheets. A reconciliation of the changes in the device warranty liability for the three months ended March 31, 2024 is as follows:

 

   

Three Months Ended

 
   

March 31, 2024

 

Balance at beginning of the period

  $ 566  

Additions for estimated future expense

    121  

Incurred costs

    (161 )

Balance at end of the period

  $ 526  

 

   

Balance as of March 31, 2024

 

Current portion

  $ 404  

Long-term portion

    122  

Total

  $ 526  

 

 

8.         Goodwill and Intangible Assets

 

On December 5, 2022, the Company acquired the Human Motion Control ("HMC") business unit from Parker (the "HMC Acquisition"). The assets acquired from the business unit included intellectual property rights associated with the Ekso Indego Personal, Ekso Indego Therapy, and future products in the orthotics and prosthetics space.

 

Goodwill

 

The Company accounted for the acquisition as a business combination in accordance with ASC 805, Business Combinations, by applying the acquisition method, and accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date The excess of the purchase price over the net assets acquired of $431 was recorded as goodwill. The goodwill recognized is attributed primarily to expected synergies of HMC with the Company.

 

The Company determined no impairment existed for goodwill for the three months ended March 31, 2024.

 

Intangible Assets

 

The following table summarizes the components of gross assets, accumulated amortization, and net carrying values for definite and indefinite lived intangible asset balances as of March 31, 2024:

 

  

March 31, 2024

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

 

Developed technology

 $2,310  $(382) $1,928 

Trade name

  2,310   N/A   2,310 

Intellectual property

  460      460 

Customer relationships

  140   (23)  117 

Below market lease

  20   (20)   

Total intangible assets

 $5,240  $(425) $4,815 

 

  

December 31, 2023

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

 

Developed technology

 $2,310  $(310) $2,000 

Trade name

  2,310   N/A   2,310 

Intellectual property

  460      460 

Customer relationships

  140   (18)  122 

Below market lease

  20   (20)   

Total intangible assets

 $5,240  $(348) $4,892 

 

17

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

Definite lived intangible assets are amortized over their estimated lives using the straight line method, which is estimated as eight years for developed technology, 12 years for intellectual property, eight years for customer relationships and one year for below market lease. The acquired trade name was estimated to have an indefinite life, and consequently, no amortization expense was recorded. The Company determined no impairment existed for intangible assets for the three months ended March 31, 2024.

 

The estimated future amortization expenses related to definite lived intangible assets as of March 31, 2024 were as follows:

 

Fiscal Year

 

Amount

 

2024 - remainder

 $230 

2025

  345 

2026

  345 

2027

  345 

2028

  345 

2029 and thereafter

  895 

Total

 $2,505 

 

Amortization expense related to the acquired definite lived intangible assets was $77 and $82 for the three months ended March 31, 2024 and 2023, respectively, and was included as a component of operating expenses and cost of revenue in the condensed consolidated statement of operations and comprehensive loss.

 

9.         Notes Payable, net

 

PWB Term Loan

 

In August 2020, the Company entered into a loan agreement (the "PWB Loan Agreement") with a lender, Pacific Western Bank, and received a loan in the principal amount of $2,000 (the "PWB Term Loan") that bore interest on the outstanding daily balance at a rate equal to the greater of: (a) 0.50% above the variable rate of interest announced by the lender as its “prime rate” then in effect; or (b) 4.50%. The PWB Loan Agreement created a first priority security interest with respect to substantially all assets of the Company, including proceeds of intellectual property, but expressly excluding intellectual property itself.

 

The Company was required to pay accrued interest on the current loan on the 13th day of each month through and including August 13, 2023, at which time the unpaid principal and accrued and unpaid interest was due and payable in full. On August 17, 2023, the Company entered into an amendment to the PWB Loan Agreement extending the maturity date to August 13, 2026 with interest only payments until such date, having daily borrowings bearing interest at a variable annual rate equal to the greater of the Lender's "prime rate" then in effect and 4.50%, and cause the Company to maintain all of its depository, operating, and investment accounts with Pacific Western Bank. The Company determined this amendment constituted a loan modification under ASC 470, and used the updated imputed interest rate to recalculate debt discounts, debt issuance costs and final payment to be amortized over the new term.

 

The PWB Loan Agreement contains a liquidity covenant, which requires that the Company maintain cash in accounts of the lender or subject to control agreements in favor of the lender in an amount equal to at least the outstanding balance of the PWB Term Loan, which was $2,000 as of March 31, 2024. It also contains a primary depository covenant, which restricts the Company from having more than $1,000 held in subsidiary accounts outside of the United States. As of March 31, 2024 the Company was compliant with all covenants.

 

The interest rate of the PWB Term Loan is subject to increase in the event of late payment and after occurrence of and during the continuation of an event of default. The Company may elect to prepay the PWB Term Loan at any time, in whole or in part, without penalty or premium.

 

The debt issuance costs and debt discounts combined with the stated interest resulted in an effective interest rate of 8.74% for the three months ended March 31, 2024. The debt issuance costs are amortized to interest expense using the effective interest method over the life of the loan. Interest expense for the PWB Term Loan totaled $44 and $43 for the three months ended March 31, 2024 and 2023, respectively.

 

18

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

The following table presents scheduled principal payments of the Company’s PWB term loan as of March 31, 2024:

 

Period

 

Amount

 

2024-2025

 $ 

2026

  2,000 

Total principal payments

  2,000 

Less debt discount and issuance cost

  (6)

Note payable, net

 $1,994 
     

Current portion

 $ 

Long-term portion

  1,994 

Note payable, net

 $1,994 

 

Parker Hannifin Promissory Note

 

In connection with the HMC Acquisition, on December 5, 2022, the Company delivered a $5,000 unsecured, subordinated promissory note (the "Promissory Note") to Parker. The Promissory Note, subordinate to the PWB Term Loan, bears no interest with principal payable in sixteen equal installments due on the last day of each quarter, which commenced on December 31, 2023 and matures on September 30, 2027. 

 

The Promissory Note, upon the occurrence of an event of default, allows for the levying of interest equal to the lesser of (a) 5% per annum and (b) the maximum interest rate permitted under applicable law on the then entire outstanding principal balance, and also for the acceleration of all outstanding liabilities and obligations, making them immediately payable. Under the terms of the Promissory Note, the following occurrences constitute a default, and could, upon written notice or declaration by Parker, allow for the levying of interest and or the acceleration of principal outstanding: (i) failure to pay any amount of the principal when due and payable, (ii) the dissolution of the Company (including the declaration of bankruptcy), and (iii) the acquisition of the Company by another entity or the sale of substantially all of its assets to another entity.

 

The Company recorded the Promissory Note of $4,055 in its condensed consolidated balance sheets under the captions Notes Payable, Current and Notes Payable, Net, estimating an implicit discount rate of 7.5% via reference to the interest charged on the Company's PWB Term Loan and other relevant economic factors present at the execution date of the Promissory Note. The amortization of debt discounts resulted in an effective interest rate of 7.11% for the three months ended March 31, 2024. The debt discount is amortized to interest expense using the effective interest method over the life of the loan. Interest expense on the Promissory Note was $75 and $79 for the three months ended March 31, 2024 and 2023, respectively.

 

The following table presents scheduled principal payments of the Company's Promissory Note as of March 31, 2024:

 

Period

 

Amount

 

2024 - remainder

 $938 

2025

  1,250 

2026

  1,250 

2027

  937 

Total principal payments

  4,375 

Less debt discount

  (525)

Note payable, net

 $3,850 
     

Current portion

  1,250 

Long-term portion

  2,600 

Note payable, net

 $3,850 

 

19

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 
 

10.         Lease Obligations

 

 

The Company's operating lease agreement for its headquarters and manufacturing facility in San Rafael, California (the "San Rafael Lease") commenced in  July 2022 and expires in October 2026  and it provides the Company with the option to renew for an additional three-year period at the prevailing market rate at the time of extension. 

 

The Company has determined that the new San Rafael Lease constitutes an operating lease under ASC 842 and estimates the lease term as July 2022 through October 2026. The option to extend for a three-year period lacks significant economic incentives and disincentives, which would make exercise reasonably certain. Fixed lease payments for identified lease components over the identified term have been discounted at the Company's estimated incremental borrowing rate as of the date of contract execution and are reflected in the condensed consolidated balance sheets under the captions Lease liabilities, current and Lease liabilities, and the corresponding right of use asset is reflected in the condensed consolidated balance sheets under the caption Right-of-use assets. Non-lease components, such as common area maintenance costs, are excluded from the lease liability calculation and expensed as incurred. The Company records a straight-line monthly rent expense for the San Rafael Lease equal to the sum of all fixed lease payments divided by the number of months in the lease term.

 

The Company's operating lease agreement for its office in Hamburg, Germany commenced in  May 2022 and expires in June 2025 and it provides the Company with an option to renew for one five-year period. 

 

The Company has determined that the new Hamburg lease agreement constitutes a lease under ASC 842 and estimates the lease term as May 2022 through June 2025. The option to extend for a five-year period lacks significant economic incentives and disincentives which would make exercise reasonably certain. Fixed lease payments for identified lease components over the identified term have been discounted at the Company's estimated incremental borrowing rate and are reflected in the condensed consolidated balance sheets under the captions Lease liabilities, current and Lease liabilities, and the corresponding right of use asset is reflected in the condensed consolidated balance sheets under the caption Right-of-use assets. Non-lease components, such as common area maintenance costs, are excluded from the lease liability calculation and expensed as incurred. The Company records a straight-line monthly rent expense for this lease equal to the sum of all fixed lease payments divided by the number of months in the lease term.

 

20

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

The Company’s future lease payments as of March 31, 2024, which are presented as Lease liabilities, current and Lease liabilities on the Company’s condensed consolidated balance sheets are as follows:

 

Periods

 

Operating Leases

 

2024 - remainder

 $328 

2025

  416 

2026

  362 

Total lease payments

  1,106 

Less: imputed interest

  (108)

Present value of lease liabilities

 $998 
     

Weighted-average remaining lease term (in years)

  2.48 

Weighted-average discount rate

  8.2%

 

Lease expense under the Company’s operating leases was $136 and $133 for the three months ended  March 31, 2024 and 2023, respectively.

 

 

11.         Capitalization and Equity Structure

 

Summary

 

The Company’s authorized capital stock at  March 31, 2024 and  December 31, 2023 consisted of 141,429 shares of common stock and 10,000 shares of preferred stock. As of March 31, 2024 and December 31, 2023, there were 18,096 and 14,848, respectively, shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.

 

January 2024 Offering

 

On  January 10, 2024, the Company entered into a securities purchase agreement with certain institutional investors to sell an aggregate of 2,968 shares of the Company’s common stock in a registered direct offering (the “January 2024 Offering”) at an offering price of $1.55 per share. The net proceeds of the January 2024 Offering were approximately $3,931 after deducting placement agent fees and estimated offering expenses paid by the Company. The Company used the net proceeds from the January 2024 Offering for general corporate purposes, which included research and development activities, selling, general and administrative costs, strategic initiatives and to meet working capital needs.

 

At the Market Offering

 

In October 2020, the Company entered into an At The Market Offering Agreement (the "ATM Agreement") with H.C. Wainwright & Co., LLC (the "Agent"), under which the Company may issue and sell shares of its common stock, from time to time, to or through the Agent. The Company may offer and sell shares having an aggregate offering price of up to $5,000 under the registration statement and prospectus supplement filed with the SEC related to such offering. In June 2023, the Company entered into an amendment to the ATM Agreement that removed the requirement that shares of the Company's common stock may not be sold for a price lower than $6.75 per share. During the three months ended March 31, 2024, the Company sold 30 shares of common stock under the ATM Agreement at an average price of $1.45 per share, for aggregate proceeds of $39, net of commission and issuance costs. The Company did not sell any shares under the ATM Agreement during the three months ended March 31, 2023. As of March 31, 2024, the Company had $4,241 available for future offerings under the prospectus filed with respect to the ATM Agreement.

 

Warrants

 

Warrants outstanding as of March 31, 2024 and  December 31, 2023 were as follows:  

 

  

Exercise

  

Remaining term

                 

Source

 

Price

  

(Years)

  

December 31, 2023

  

Issued

  

Exercised

  

March 31, 2024

 

2021 Warrants

 $12.81   1.9   273         273 

June 2020 Investor Warrants

 $5.18   1.7   127         127 

June 2020 Placement Agent Warrants

 $5.64   1.2   39         39 

December 2019 Warrants

 $8.10   1.2   556         556 

December 2019 Placement Agent Warrants

 $8.44   0.7   52         52 

May 2019 Warrants

 $1.55   0.1   193         193 
           1,240         1,240 

 

No warrants were exercised during the three and three months ended March 31, 2024 and 2023.

 

21

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

2021 Warrants

 

In February 2021, the Company issued warrants (the "2021 Warrants"), exercisable for up to 273 shares of the Company’s common stock at an exercise price of $12.81 per share. The 2021 Warrants were exercisable immediately and will expire five years from the date of issuance, or on February 11, 2026.

 

In addition, the 2021 Warrants contain a cashless exercise provision, whereby, if, at the time a holder exercises its 2021 Warrants, a registration statement registering the issuance or the resale of the shares of common stock underlying the 2021 Warrants under the Securities Act is not then effective or available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate exercise price, the holder may elect to instead receive, upon such exercise (either in whole or in part), the net number of shares of the Company’s common stock determined according to a formula set forth in the 2021 Warrants. The 2021 Warrants will be automatically exercised on a cashless basis on their expiration date. The 2021 Warrants could also require payment of liquidated damages by the Company in the form of cash payments in the event of a failure by the Company to timely deliver shares of common stock upon exercise of such warrants.

 

The 2021 Warrants also contain a put option, under which, if the Company enters into a Fundamental Transaction, as defined in the 2021 Warrants, the Company or any successor entity will, at the option of a holder of a 2021 Warrant, exercisable concurrently with or at any time within 30 days after the consummation of such Fundamental Transaction, purchase such holder’s 2021 Warrant by paying to such holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such holder’s 2021 Warrant within five trading days after the notice of exercise by the holder of the put option. Because of this put-option provision, the 2021 Warrants are classified as a liability and are marked to market at each reporting date.

 

The warrant liability related to the 2021 Warrants is measured at fair value upon issuance and at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the 2021 Warrants:

 

  

March 31, 2024

  

December 31, 2023

 

Current share price

 $1.36  $2.50 

Conversion price

 $12.81  $12.81 

Risk-free interest rate

  4.65%  4.20%

Expected term (years)

  1.86   2.11 

Volatility of stock

  94.2%  76.5%

 

June 2020 Investor Warrants

 

In June 2020, the Company issued warrants (the "June 2020 Investor Warrants"), exercisable for up to 874 shares of the Company’s common stock at an exercise price of $5.18 per share. The June 2020 Investor Warrants were immediately exercisable and will expire five and one-half years from the date of issuance, or on December 10, 2025.

 

In addition, the June 2020 Investor Warrants contain a cashless exercise provision, whereby, if, at the time a holder exercises its June 2020 Investor Warrants, a registration statement registering the issuance or the resale of the shares of common stock underlying the June 2020 Investor Warrants under the Securities Act is not then effective or available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate exercise price, the holder may elect to instead receive, upon such exercise (either in whole or in part), the net number of shares of the Company’s common stock determined according to a formula set forth in the June 2020 Investor Warrant. The June 2020 Investor Warrants will be automatically exercised on a cashless basis on their expiration date.

 

The June 2020 Investor Warrants could also require payment of liquidated damages by the Company in the form of cash payments in the event of a failure by the Company to timely deliver shares of common stock upon exercise of such warrants.

 

22

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

The June 2020 Investor Warrants also contain a put option, under which, if the Company enters into a Fundamental Transaction, as defined in the June 2020 Investor Warrants, the holders of the June 2020 Investor Warrants will be entitled to receive upon exercise of the June 2020 Investor Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the June 2020 Investor Warrants immediately prior to such Fundamental Transaction. Alternatively, the Company or any successor entity will, at the option of a holder of a June 2020 Investor Warrant, exercisable concurrently with or at any time within 30 days after the consummation of such Fundamental Transaction, purchase such holder’s June 2020 Investor Warrant by paying to such holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such holder’s June 2020 Investor Warrant. Because of this put-option provision, the June 2020 Investor Warrants are classified as a liability and are marked to market at each reporting date.

 

The warrant liability related to the June 2020 Investor Warrants is measured at fair value at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the June 2020 Investor Warrants:

 

  

March 31, 2024

  

December 31, 2023

 

Current share price

 $1.36  $2.50 

Conversion price

 $5.18  $5.18 

Risk-free interest rate

  4.73%  4.26%

Expected term (years)

  1.69   1.94 

Volatility of stock

  95.4%  78.2%

 

June 2020 Placement Agent Warrants

 

In June 2020, the Company issued warrants (the "June 2020 Placement Agent Warrants"), exercisable for up to 122 shares of the Company’s common stock, to the placement agent for such offering. The June 2020 Placement Agent Warrants have substantially the same form as the June 2020 Investor Warrants, including the put option described above, except that they have an exercise price per share equal to $5.64, subject to adjustment in certain circumstances, and will expire on June 7, 2025.

 

Because of the put-option provision in the June 2020 Placement Agent Warrants, these warrants are classified as a liability and are marked to market at each reporting date.

 

The warrant liability related to the June 2020 Placement Agent Warrants is measured at fair value at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the June 2020 Placement Agent Warrants:

 

  

March 31, 2024

  

December 31, 2023

 

Current share price

 $1.36  $2.50 

Conversion price

 $5.64  $5.64 

Risk-free interest rate

  4.95%  4.54%

Expected term (years)

  1.19   1.44 

Volatility of stock

  102.1%  83.0%

 

December 2019 Warrants

 

In December 2019, pursuant to a securities purchase agreement (the "December 2019 Offering"), the Company issued warrants (the "December 2019 Warrants") to purchase 556 shares of common stock. The December 2019 Warrants are currently exercisable, have an exercise price of $8.10 per share, and will expire five years from the date they initially became exercisable, or on June 21, 2025.

 

The December 2019 Warrants also contain a cashless exercise provision and could require cash payments in the event of a failure to timely deliver securities or in the event of insufficient authorized shares. The December 2019 Warrants will be automatically exercised on a cashless basis on their expiration date. The December 2019 Warrants also contain a put option, under which, if the Company enters into a Fundamental Transaction, as defined in the December 2019 Warrants, the Company or any successor entity will, at the option of a holder of a December 2019 Warrant, exercisable concurrently with or at any time within 30 days after the consummation of such Fundamental Transaction, purchase such holder’s December 2019 Warrant by paying to such holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such holder’s December 2019 Warrant within five trading days after the notice of exercise by the holder of the put option. Because of this put-option provision, the December 2019 Warrants are classified as a liability and are marked to market at each reporting date.

 

23

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

The warrant liability related to the December 2019 Warrants is measured at fair value at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the December 2019 Warrants:

 

  

March 31, 2024

  

December 31, 2023

 

Current share price

 $1.36  $2.50 

Conversion price

 $8.10  $8.10 

Risk-free interest rate

  4.93%  4.53%

Expected term (years)

  1.22   1.47 

Volatility of stock

  101.3%  82.3%

 

December 2019 Placement Agent Warrants

 

In December 2019, in connection with the December 2019 Offering, the Company issued warrants to purchase 52 shares of the Company’s common stock to the placement agent for such offering (the "December 2019 Placement Agent Warrants"). The December 2019 Placement Agent Warrants have substantially the same form as the December 2019 Warrants, except that they have an exercise price per share equal to $8.44, subject to adjustment in certain circumstances, and will expire on December 18, 2025.

 

The warrant liability related to the December 2019 Placement Agent Warrants is measured at fair value at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the December 2019 Placement Agent Warrants:

 

  

March 31, 2024

  

December 31, 2023

 

Current share price

 $1.36  $2.50 

Conversion price

 $8.44  $8.44 

Risk-free interest rate

  5.23%  4.82%

Expected term (years)

  0.72   0.97 

Volatility of stock

  123.4%  85.2%

 

Management has assessed that the likelihood of a Change of Control (as defined in the December 2019 Placement Agent Warrants), occurring during the term of the December 2019 Placement Agent Warrants is low, and that if such an event were to occur, the difference between the cashless exercise value and the warrants fair value is nominal.

 

May 2019 Warrants

 

In May 2019, pursuant to an underwriting agreement, (the "May 2019 Offering"), the Company issued the warrants (the "May 2019 Warrants") to purchase 444 shares of common stock. The May 2019 Warrants are currently exercisable, have a current exercise price of $1.55 per share, and will expire five years from the date of their issuance, or on May 24, 2024. The May 2019 Warrants contain a price protection feature, pursuant to which, subject to certain exceptions, if shares of common stock are sold or issued in the future, or securities convertible or exercisable for shares of the Company’s common stock are sold or issued in the future, for consideration, or with an exercise price or conversion price, as applicable, per share less than the exercise price per share then in effect for the May 2019 Warrants, the exercise price of the May 2019 Warrants is reduced to the consideration paid for, or the exercise price or conversion price of, as the case may be, the securities issued in such offering. Pursuant to this provision, in connection with the January 2024 Offering, the exercise price of the May 2019 Warrants was reduced to $1.55 per share. 

 

24

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

In addition, if the Company effects or enters into any issuance of common stock or options or convertible securities exercisable for or convertible into common stock at a price which varies or may vary with the market price of the shares of the Company's common stock, subject to certain exceptions, a May 2019 Warrant holder may, at the time of exercise of the holder’s warrant, elect to exercise the warrant at such variable price.

 

The May 2019 Warrants include a put option, whereby while the May 2019 Warrants are outstanding, if the Company enters into a Change of Control, as defined in the May 2019 Warrants, the Company or any successor entity will, at the option of a 2019 Warrant holder exercise within 90 days after the public disclosure of the Change of Control transaction, purchase such holder’s May 2019 Warrants by paying to such holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such warrants on the later date of consummation of the Change of Control transaction or two trading days after the notice of such request. Because of this put option provision, the May 2019 Warrants are classified as a liability and are marked to market at each reporting date.

 

The warrant liability related to the May 2019 Warrants is measured at fair value at each reporting and exercise date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. Because of the price protection feature contained in the May 2019 Warrants, the Company uses a combination of the Black-Scholes Model and the Lattice Model to estimate the fair value of the warrants at each reporting period. The following assumptions were used in the Black-Scholes Model in combination with the Lattice Model to measure the fair value of the May 2019 Warrants:

 

  

March 31, 2024

  

December 31, 2023

 

Share price

 $1.36  $1.88(1)

Conversion price

 $1.55  $3.52 

Risk-free interest rate

  5.48%  5.3%

Expected term (years)

  0.1   0.4 

Volatility of stock

  92.2%  77.5%

(1) As of December 31, 2023, management determined that a financing event was likely in the first quarter of 2024, and reduced the share price used in the model by 25% in order to reflect the total amount that would be realized accordingly.

 

Management has assessed that the likelihood of a Change of Control occurring during the term of the warrants is low, and that if such an event were to occur, the difference between the cashless exercise value and the  May 2019 Warrants fair value is nominal.

 

 

12.         Stock-based Compensation

 

The Company's Amended and Restated 2014 Equity Incentive Plan (the "2014 Plan") expired on  January 31, 2024. Following such expiration, no grants  may be made under the 2014 Plan, but the grants in effect prior to such expiration were not impacted by the expiration. 

 

Stock Options

 

The following table summarizes information about the Company’s stock options outstanding as of March 31, 2024, and activity during the three months then ended:

 

                   

Weighted-

         
                   

Average

         
           

Weighted-

   

Remaining

   

Aggregate

 
   

Stock

   

Average

   

Contractual

   

Intrinsic

 
   

Awards

   

Exercise Price

   

Life (Years)

   

Value

 

Balance as of December 31, 2023

    252     $ 36.17                  

Options cancelled

    (55 )     37.54                  

Balance as of March 31, 2024

    197     $ 37.79       4.26     $  

Vested and expected to vest as of March 31, 2024

    197     $ 37.79       4.26     $  

Exercisable as of March 31, 2024

    196     $ 37.80       4.26     $  

 

25

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

There were no stock options awarded during the three months ended March 31, 2024 and 2023, and no unrecognized compensation cost related to unvested stock options as of March 31, 2024.

 

Restricted Stock Units

 

The Company issues time-based restricted stock units (“RSUs”) and performance-based restricted stock units ("PSUs") to employees and non-employee members of the Board. Each RSU and PSU represents the right to receive one share of the Company’s common stock upon vesting and subsequent settlement. PSUs vest upon achievement of performance targets based on the Company's annual operating plan. The fair values of RSUs and PSUs are determined based on the closing price of the Company’s common stock on the date of grant.

 

Combined RSU and PSU activity for the three months ended March 31, 2024 is summarized below:

 

           

Weighted-

 
   

Number of

   

Average Grant

 
   

Shares

   

Date Fair Value

 

Unvested as of December 31, 2023

    1,305     $ 1.67  

Vested

    (172 )     1.87  

Unvested as of March 31, 2024

    1,133     $ 1.64  

 

As of March 31, 2024, $1,007 of total unrecognized compensation expense related to unvested RSUs and PSUs was expected to be recognized over a weighted average period of 1.30 years.

 

Compensation Expense

 

Stock-based compensation expense is included in the condensed consolidated statements of operations and comprehensive loss in general and administrative, research and development, or sales and marketing expenses, depending on the nature of the services provided. Stock-based compensation expense related to options, RSUs and PSUs was recorded as follows:

 

   

Three Months Ended March 31,

 
   

2024

   

2023

 

Sales and marketing

  $ 52     $ 64  

Research and development

    91       82  

General and administrative

    233       278  
    $ 376     $ 424  

 

401(k) Plan Share Match

 

During the three months ended March 31, 2024, the Company issued 163 shares of common stock with a fair value of $237, to eligible employees’ deferral accounts for the 401(k) Plan matching contribution representing 50% of each eligible employee’s elected deferral (up to the statutory limit) for the years ended December 31, 2023. No shares related to the 401(k) Plan matching contribution were issued during the three months ended March 31, 2023. 

 

The expense for the 401(k) Plan share matching was $29 and $93 for the three months ended March 31, 2024 and 2023, respectively.

 

26

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 
 

13.         Income Taxes

 

There were no material changes to the unrecognized tax benefits in the three months ended March 31, 2024, and the Company does not expect significant changes to unrecognized tax benefits through the end of the fiscal year.

 

 

14.         Commitments and Contingencies

 

Material Contracts

 

The Company has two license agreements with the Regents of the University of California to maintain exclusive rights to certain patents. The Company is required to pay 1% of net sales of licensed medical devices sold to entities other than the U.S. government. In addition, the Company is required to pay 21% of consideration collected from any sub-licensee for the grant of the sub-license.

 

In connection with the HMC Acquisition, the Company assumed two license agreements with Vanderbilt University to maintain exclusive rights to patents on the Company's behalf.

 

The Vanderbilt Exoskeleton License Agreement was entered into as of October 15, 2012 and will continue until April 29, 2038, unless sooner terminated. Under this agreement, the Company is required to pay 6% of net sales of licensed patent products and 3% of net sales of licensed software products. The minimum annual royalty for licensed products is $250.

 

The Vanderbilt Knee License Agreement was entered into as of March 1, 2022 and will continue until February 15, 2041, unless sooner terminated. Under this agreement, the Company is required to pay 3.75% of net sales for licensed patent products and the minimum annual royalty is $75 due on or before July 31, 2028 and $100 per year thereafter.

 

The Company also entered into transitional use agreements with Parker granting the Company access to certain information technology systems and shared services relating to manufacturing facilities in Macedonia, Ohio for twelve months following the date of the acquisition. As consideration for access to these resources, the Company made monthly payments of $20 until December 2023. In addition to and in conjunction with the transitional services agreement, the Company entered into a transitional manufacturing agreement that provides the Company additional time to use Parker's certification in the European Union relating to the acquired assets while the Company continues the application process for its own certification. This agreement relatedly extended the Company's ability to use Parker's Ohio facility during the pendency of such application process, which is not anticipated to go beyond May 2024, which is 18 months from the date of the acquisition. As consideration for the use of the facility beyond the initial twelve months, the Company will be required to make monthly payments of $3 until May 2024.

 

Purchase Obligations

 

The Company purchases components from a variety of suppliers and uses contract manufacturers to provide manufacturing services for its products. Purchase obligations are defined as agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. 

 

The Company had purchase obligations primarily for purchases of inventory and manufacturing related service contracts totaling $2,387 as of March 31, 2024, which are expected to be paid within one year, and $2,783 as of December 31, 2023. Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.

 

The Company has operating lease commitments totaling $1,106 payable over 32 months related to the San Rafael, California and Hamburg, Germany leases disclosed in Note 10. Lease Obligations.

 

Loss Contingencies

 

In the normal course of business, the Company is subject to various legal matters. In the opinion of management, the resolution of such matters will not have a material adverse effect on the Company’s condensed consolidated financial statements.

 

27

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 
 

15.         Net Loss Per Share

 

The following table sets forth the computation of basic and diluted net loss per share:

 

   

Three Months Ended

 
   

March 31,

 
   

2024

   

2023

 

Numerator:

               

Net loss applicable to common stockholders, basic and diluted

  $ (3,429 )   $ (4,389 )
                 

Denominator:

               

Weighted-average number of shares, basic and diluted

    17,419       13,296  
                 

Net loss per share, basic and diluted

  $ (0.20 )   $ (0.33 )

 

The following table sets forth potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented:

 

   

Three Months Ended

 
   

March 31,

 
   

2024

   

2023

 

Options to purchase common stock

    197       268  

Restricted stock units

    1,133       1,029  

Warrants for common stock

    1,240       1,240  

Total common stock equivalents

    2,570       2,537  

 

 

16.         Segment Disclosures

 

The Company has two reportable segments: EksoHealth and EksoWorks. The EksoHealth segment designs, manufactures, and markets exoskeletons for applications in the medical markets. The EksoWorks segment designs, manufactures, and markets exoskeleton devices to allow able-bodied users to perform difficult repetitive work for extended periods. The reportable segments are each managed separately because they serve distinct markets.

 

The Company evaluates performance and allocates resources based on segment gross profit margin. The Company does not consider operating expenses or net assets as segment measures and, accordingly, are not allocated.

 

28

Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 

Segment reporting information is as follows:

 

  

EksoHealth

  

EksoWorks

  

Total

 

Three months ended March 31, 2024

            

Revenue

 $3,559  $