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EKSO BIONICS HOLDINGS, INC. - Quarter Report: 2022 June (Form 10-Q)

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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 June 30, 2022
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.)
 
1414 Harbour Way South, Suite 1201
Richmond, CA
 94804
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareEKSO
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 x    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 x     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 ☐
 

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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 x
 
The number of shares of registrant’s common stock outstanding as of July 26, 2022 was 13,026,620.


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 Ekso Bionics Holdings, Inc.
 
Quarterly Report on Form 10-Q 

Table of Contents
  
 Page No.
  
   
   
 
   
 
   
 
   
 
   
   
   
   
  
   
   
   
 


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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
 

Ekso Bionics Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value)
 
 June 30, 2022December 31, 2021
 (unaudited)(Note 2)
Assets  
Current assets:  
Cash$31,912 $40,406 
Accounts receivable, net of allowances of $21 and $28, respectively
3,341 4,662 
Inventories3,274 2,242 
Prepaid expenses and other current assets796 485 
Total current assets39,323 47,795 
Property and equipment, net905 991 
Right-of-use assets164 216 
Other assets128 164 
Total assets$40,520 $49,166 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$2,045 $3,107 
Accrued liabilities1,583 2,299 
Deferred revenues, current1,140 1,220 
Lease liabilities, current51 229 
Total current liabilities4,819 6,855 
Deferred revenues1,143 1,475 
Note payable, net1,995 1,993 
Lease liability114 — 
Warrant liabilities651 1,550 
Other non-current liabilities69 74 
Total liabilities8,791 11,947 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; 10,000 shares authorized; none issued and outstanding at June 30, 2022 and December 31, 2021
— — 
Common stock, $0.001 par value; 141,429 shares authorized; 13,010 and 12,693 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
13 13 
Additional paid-in capital247,347 246,090 
Accumulated other comprehensive gain (loss)834 (17)
Accumulated deficit(216,465)(208,867)
Total stockholders’ equity31,729 37,219 
Total liabilities and stockholders’ equity$40,520 $49,166 
 

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

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Ekso Bionics Holdings, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2022202120222021
Revenue$3,465 $2,211 $6,032 $4,121 
Cost of revenue1,824 919 3,182 1,594 
Gross profit1,641 1,292 2,850 2,527 
Operating expenses:
Sales and marketing1,841 1,787 3,470 3,580 
Research and development920 709 1,919 1,312 
General and administrative2,109 2,144 4,927 4,122 
Total operating expenses4,870 4,640 10,316 9,014 
Loss from operations(3,229)(3,348)(7,466)(6,487)
Other income (expense), net:
Interest expense(29)(27)(56)(53)
Gain on revaluation of warrant liabilities999 875 899 886 
Gain on forgiveness of note payable— 1,099 — 1,099 
Unrealized (loss) gain on foreign exchange(718)131 (972)(372)
Other expense, net(1)(3)(3)(16)
Total other income (expense), net251 2,075 (132)1,544 
Net loss$(2,978)$(1,273)$(7,598)$(4,943)
Other comprehensive income (loss)639 (125)851 340 
Comprehensive loss$(2,339)$(1,398)$(6,747)$(4,603)
Net loss per share applicable to common shareholders, basic$(0.23)$(0.10)$(0.59)$(0.42)
Net loss per share applicable to common shareholders, diluted$(0.23)$(0.11)$(0.59)$(0.44)
Weighted average number of shares outstanding, basic12,884 12,655 12,807 11,709 
Weighted average number of shares outstanding, diluted12,884 12,737 12,807 11,839 
 
The accompanying notes are an integral part of these condensed consolidated financial statements

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Ekso Bionics Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)
Convertible Preferred StockCommon StockAdditional Paid-in CapitalAccumulated Other Comprehensive
(Loss) Income		Accumulated DeficitTotal Stockholders’
 Equity
SharesAmountSharesAmount
Balance at December 31, 2021— $— 12,693 $13 $246,090 $(17)$(208,867)$37,219 
Net loss— — — — — — (4,620)(4,620)
Issuance of common stock under:
Matching contribution to 401(k) plan— — 68 — 176 — — 176 
Equity incentive plan— — 83 — — — — — 
Stock-based compensation expense— — — — 499 — — 499 
Foreign currency translation adjustments— — — — — 212 — 212 
Balance at March 31, 2022— $— 12,844 $13 $246,765 $195 $(213,487)$33,486 
Net loss— — — — — — (2,978)(2,978)
Issuance of common stock under:
Equity incentive plan— — 166 — — — — — 
Stock-based compensation expense— — — — 582 — — 582 
Foreign currency translation adjustments— — — — — 639 — 639 
Balance at June 30, 2022— $— 13,010 $13 $247,347 $834 $(216,465)$31,729 


















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Ekso Bionics Holdings, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)

Convertible Preferred StockCommon StockAdditional Paid-in CapitalAccumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance at December 31, 2020— $— 8,349 $8 $204,376 $(847)$(199,103)$4,434 
Net loss— — — — — — (3,670)(3,670)
Issuance of common stock under:
Equity financing, net— — 3,980 4 35,356 — — 35,360 
Exercise of warrants— — 300 1 3,877 — — 3,878 
Matching contribution to 401(k) plan— — 26 — 152 — — 152 
Stock-based compensation expense— — — — 356 — — 356 
Foreign currency translation adjustments— — — — — 465 — 465 
Balance at March 31, 2021— $— 12,655 $13 $244,117 $(382)$(202,773)$40,975 
Net loss— — — — — — (1,273)(1,273)
Stock-based compensation expense— — — — 519 — — 519 
Foreign currency translation adjustments— — — — — (125)— (125)
Balance at June 30, 2021— $— 12,655 $13 $244,636 $(507)$(204,046)$40,096 

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


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Ekso Bionics Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Six Months Ended June 30,
 20222021
Operating activities:  
Net loss$(7,598)$(4,943)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization462 502 
Changes in allowance for doubtful accounts(7)48 
Gain on forgiveness of note payable— (1,099)
Gain on revaluation of warrant liabilities(899)(886)
Stock-based compensation expense1,081 875 
Common stock contribution to 401(k) plan103 107 
Unrealized loss on foreign currency transactions972 372 
Changes in operating assets and liabilities:
Accounts receivable1,228 420 
Inventories(1,221)(136)
Prepaid expenses, and other assets, current and noncurrent(318)(135)
Accounts payable(1,048)(73)
Accrued, lease and other liabilities(836)(304)
Deferred revenues(373)(354)
Net cash used in operating activities(8,454)(5,606)
Financing activities:
Proceeds from issuance of common stock and warrants, net— 37,295 
Proceeds from exercise of warrants— 1,417 
Net cash provided by financing activities— 38,712 
Effect of exchange rate changes on cash(40)(30)
Net (decrease) increase in cash(8,494)33,076 
Cash at beginning of period40,406 12,862 
Cash at end of period$31,912 $45,938 
Supplemental disclosure of cash flow activities
Cash paid for interest$55 $46 
Cash paid for income taxes$4 $— 
Supplemental disclosure of non-cash activities
Fair value of warrants issued upon equity financing$— $1,936 
Reclassification of warrant liability to equity upon exercise of warrants$— $2,461 
Transfer of inventory to property and equipment$175 $162 
Initial recognition of operating lease liability and right of use asset$174 $— 
Share issuance for common stock contribution to 401(k) plan$176 $152 
 
The accompanying notes are an integral part of these condensed consolidated financial statements

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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 exoskeleton products to augment human strength, endurance and mobility. The Company’s exoskeleton technology serves multiple markets and can be utilized both by able-bodied users and by persons with physical disabilities. 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 walk again, (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 Capital Resources
 
As of June 30, 2022, the Company had an accumulated deficit of $216,465.  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 six months ended June 30, 2022, the Company used $8,454 of cash in its operations. Cash on hand as of June 30, 2022 was $31,912.

As described in Note 8, 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 June 30, 2022, $2,000 of cash must remain as restricted. After considering cash restrictions, effective unrestricted cash as of June 30, 2022 is approximately $29,912. With this unrestricted cash balance, the Company believes that it currently has sufficient cash to fund its operations beyond the look forward period of one year from the issuance of these condensed consolidated financial statements.
 
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, 2021, which was filed with the SEC on February 24, 2022.

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, 2021, 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 and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 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.

Reclassifications

During the second quarter ended June 30, 2022, the Company reclassified the amortization of operating lease right-of-use assets in its condensed consolidated statements of cash flows. Amounts amortized related to operating lease right-of-use assets have

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
been reclassified to "Depreciation and amortization" from "Prepaid expenses, and other assets, current and noncurrent" as applicable. Accordingly, prior period amounts have been reclassified to conform to the current period presentation, in all material respects. These reclassifications did not affect changes in cash flow used in operating activities or net increase in cash for the six months ended June 30, 2021.

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, revenue recognition, deferred revenue and the deferral of the associated costs, the valuation of warrants and employee stock options, 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.

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 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.


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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
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 the Company’s markets. 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 returns reserve was not required as historical returns activity have not been material.

Going Concern
 
The Company assesses its ability to continue as a going concern at every interim and annual period in accordance with ASC 205-40. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
 
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 maintains cash accounts in excess of federally insured limits. However, the Company believes it is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held. 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 Company has not experienced material losses related to accounts receivable as of June 30, 2022 and December 31, 2021. 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 settling contracts denominated in a foreign currency.
 
At June 30, 2022, the Company had two customers (14% and 13%) with an accounts receivable balance totaling 10% or more of the Company’s total accounts receivable, as compared with zero customers at December 31, 2021.
 
During the three months ended June 30, 2022, the Company had three customers with sales of 10% or more of the Company’s total revenue (34%, 13%, and 11%), as compared with one customer in the three months ended June 30, 2021 (13%).


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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
During the six months ended June 30, 2022, the Company had one customer with sales of 10% or more of the Company’s total revenue (22%), as compared with one customer in the six months ended June 30, 2021 (11%).
 
Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2022-02, which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Upon the initial recognition of such assets, which will be based on, among other things, historical information, current conditions, and reasonable supportable forecasts. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The update will be effective for the Company beginning in the first quarter of 2023. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its condensed consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for convertible instruments. ASU 2020-06 eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates 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 is effective for the Company beginning in the first quarter of 2024 and must be applied using either a modified or full retrospective approach. Early adoption is permitted. The Company does not expect the impact of adopting ASU 2020-06 to be material on its consolidated financial statements.



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 six months ended June 30, 2022 and 2021, is reflected in the table below net of tax:
 Six Months Ended June 30,
20222021
Balance at beginning of period$(17)$(847)
Net unrealized gain on foreign currency translation851 340 
Balance at end of period$834 $(507)
 
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.

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

The Company’s fair value hierarchies for its financial assets and liabilities, which require fair value measurement on a recurring basis are as follows:
 TotalLevel 1Level 2Level 3
June 30, 2022    
Liabilities    
Warrant liabilities$651 $— $— $651 
December 31, 2021
Liabilities
Warrant liabilities$1,550 $— $— $1,550 
 
The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities for the period ended June 30, 2022, which were measured at fair value on a recurring basis:
 Warrant Liability
Balance at December 31, 2021$1,550 
Gain on revaluation of warrants issued in connection with the February 2021, June 2020, December 2019 and May 2019 financings(899)
Balance at June 30, 2022$651 
 
Refer to Note 10. Capitalization and Equity Structure – Warrants for additional information regarding the valuation of warrants.
 
5.    Inventories
 
Inventories consisted of the following:
 June 30, 2022December 31, 2021
Raw materials$2,416 $2,061 
Work in progress585 145 
Finished goods273 36 
Inventories$3,274 $2,242 

6.    Revenue

The Company’s medical device segment (EksoHealth) revenue is primarily generated through the sale and subscription of the EksoNR, the sale of support and maintenance contracts (Ekso Care), and the sale of accessories for the EksoNR. In 2021, the Company moved to a customer subscription sales model and away from a rental sales model. Under the rental sales model, the Company offered customers a short-term rental arrangement of its products to help bridge to a capital purchase since customers typically have challenges in obtaining approvals for capital expenditures. Subscription sales arrangements, however, bypass the customer capital purchase process, are intended to renew annually, and provide a long-term revenue stream.
 

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
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, software and accessories. Ekso Care support and maintenance contracts extend coverage beyond the Company’s standard warranty agreements. The separately priced Ekso Care contracts range from 12 to 48 months. The Company receives payment at the inception of the contract and recognizes revenue evenly over the term of the contracts. Revenue from medical device subscriptions is recognized evenly over the initial contract term, typically over 12 to 24 months.

The Company’s industrial device segment (EksoWorks) revenue is generated through the sale of the upper body exoskeletons (EksoVest and the EVO) and the support arm (EksoZeroG). 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.

At the end of the second quarter of 2022, the Company ceased commercialization of the ZeroG support arm and related products and accessories. The Company may continue to sell parts and accessories to existing ZeroG customers to deplete its current stock of ZeroG inventories, however, the Company does not expect any future revenues derived from the sale of the ZeroG product line to have a material contribution to EksoWorks segment revenues. Refer to Note 13 Commitment and Contingencies for further information regarding commitments and obligations related to the ZeroG product line.
 
Deferred Revenue
 
For the sale of its products, the Company recognizes revenue upon the transfer of control of products to its customers, typically upon shipment from its facilities. For the subscription of its products, the Company generally recognizes revenue over the subscription term commencing upon the completion of customer training. For service agreements, the Company generally invoices customers at the beginning of the coverage period and records revenue related to the billed amounts over time, equivalent to the coverage period of the maintenance and support contract.

Deferred revenue is comprised mainly of unearned revenue related to service agreement contracts (Ekso Care), 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:
June 30, 2022December 31, 2021
Deferred extended maintenance and support$2,237 $2,349 
Deferred royalties— 280 
Deferred device and advances46 66 
Total deferred revenues2,283 2,695 
Less current portion(1,140)(1,220)
Deferred revenues, non-current$1,143 $1,475 
 
Deferred revenue activity consisted of the following for the six months ended June 30, 2022:
Beginning balance$2,695 
Deferral of revenue728 
Recognition of deferred revenue(1,140)
Ending balance$2,283 
 
As of June 30, 2022, the Company’s deferred revenue was $2,283. The Company expects to recognize approximately $665 of the deferred revenue during the remainder of 2022, $789 in 2023, and $829 thereafter.

In addition to deferred revenue, the Company has a non-cancellable backlog of $1,847 related to its contracts for subscription units with its customers. These subscription contracts typically have 12 to 24 month terms, and subscription income is recognized on a straight-line basis over the term of the contract.

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

In the six months ended June 30, 2022, the Company recognized revenue of $280 related to a $300 upfront royalty payment associated with a license and distribution agreement that expired. The unrecognized royalty balance of $280 was included in deferred revenue as of December 31, 2021.
 
As of June 30, 2022 and December 31, 2021, total accounts receivable, net of allowance for doubtful accounts, were $3,468 and $4,824, respectively, and are included in accounts receivable, net and other assets on the Company’s condensed consolidated balance sheets.
 
The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance 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.
 
Disaggregation of revenue

The following table disaggregates the Company’s revenue by major source for the three months ended June 30, 2022:
 EksoHealthEksoWorksTotal
Device revenue$2,369 $163 $2,532 
Service and support489 — 489 
Subscriptions225 51 276 
Parts and other117 23 140 
Collaborative arrangements28 — 28 
 $3,228 $237 $3,465 
 
The following table disaggregates the Company’s revenue by major source for the six months ended June 30, 2022:

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
 EksoHealthEksoWorksTotal
Device revenue$3,332 $472 $3,804 
Service and support956 — 956 
Subscriptions441 120 561 
Parts and other273 331 604 
Collaborative arrangements107 — 107 
 $5,109 $923 $6,032 

The following table disaggregates the Company’s revenue by major source for the three months ended June 30, 2021:
 EksoHealthEksoWorksTotal
Device revenue$1,090 $288 $1,378 
Service and support447 — 447 
Rentals and subscriptions185 52 237 
Parts and other140 9 149 
Collaborative arrangements— — — 
 $1,862 $349 $2,211 

The following table disaggregates the Company’s revenue by major source for the six months ended June 30, 2021:
 EksoHealthEksoWorksTotal
Device revenue$2,109 $386 $2,495 
Service and support935 — 935 
Rentals and subscriptions337 122 459 
Parts and other194 24 218 
Collaborative arrangements14 — 14 
 $3,589 $532 $4,121 

7.    Accrued Liabilities
 
Accrued liabilities consisted of the following:
June 30, 2022December 31, 2021
Salaries, benefits and related expenses$1,290 $2,015 
Device warranty205 195 
Other88 89 
Total$1,583 $2,299 
 
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 and six months ended June 30, 2022 is as follows:

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
Three Months EndedSix Months Ended
June 30, 2022June 30, 2022
Balance at beginning of period$286 $270 
Additions for estimated future costs 56 132 
Incurred costs(67)(127)
Balance at end of period$275 $275 
Balance as of June 30, 2022
Current portion$205 
Long-term portion70 
Total$275 
 
8.    Notes Payable, net
 
PWB Term Loan

In August 2020, the Company entered into a new 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 bears 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 is required to pay accrued interest on the current loan on the 13th day of each month through and including August 13, 2023. The principal balance of the PWB Term Loan matures on August 13, 2023, at which time all unpaid principal and accrued and unpaid interest shall be due and payable in full. The interest rate of the PWB Term Loan is subject to increase in the event of late payments 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 PWB Loan Agreement contains a liquidity covenant, which requires that the Company maintain unrestricted cash and cash equivalents 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 June 30, 2022. On June 30, 2022, with cash on hand of $31,912, the Company was compliant with this liquidity covenant and all other covenants.

The debt issuance costs and debt discounts combined with the stated interest resulted in an effective interest rate of 4.95% and 4.83% for the three and six months ended June 30, 2022. The debt issuance costs are amortized to interest expense using the effective interest method over the life of the loan.

The following table presents scheduled principal payments of the Company’s PWB term loan as of June 30, 2022:

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
PeriodAmount
Remainder of 2022$— 
20232,000 
Total principal payments2,000 
Less debt discount and issuance cost5 
Note payable, net$1,995 
 
Current portion$— 
Long-term portion1,995 
Note payable, net$1,995 

Paycheck Protection Program Loan

On April 20, 2020, the Company received an unsecured loan (the "PPP Loan") in the principal amount of $1,086 under the Paycheck Protection Program (the “PPP”) administered by the U.S. Small Business Administration (the "SBA"), pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), or the PPP loan. The PPP loan bore interest at 1.00% per annum, and matured two years after the date of initial disbursement. The terms of the PPP loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020, (the "PPP Flexibility Act"), which was enacted on June 5, 2020. The PPP loan was used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments and interest payments on other debt obligation that were incurred before February 15, 2020. Under the terms of the CARES Act and the PPP Flexibility Act, the Company could apply for and be granted forgiveness for all or a portion of loan granted under the PPP loan, with such forgiveness to be determined, subject to limitations (including where employees of the Company have been terminated and not re-hired by a certain date), based on the use of the loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The terms of any forgiveness were also subject to further requirements in regulations and guidelines adopted by the SBA.

On June 28, 2021, the Company received notification from the SBA that the Company’s forgiveness application of the PPP loan and accrued interest, totaling $1,099, was approved in full, and the Company had no further obligations related to the PPP loan. Accordingly, the Company recorded a gain on the forgiveness of the PPP loan as gain on forgiveness of note payable on the condensed consolidated statement of operations during the three months ended June 30, 2021.


9.    Lease Obligations

The Company maintained a five-year operating lease agreement for its headquarters and manufacturing facility in Richmond, California (the "Richmond Lease") which expired at the end of May 2022. As of June 30, 2022, the Company continued to maintain its tenancy at this location. Pursuant to the terms of the original lease agreement, the Company incurs monthly expenses equal to the most recent monthly lease payment under the now expired lease agreement and its allocable portion of common area maintenance costs plus a 25% mark-up.

In July 2022, the Company entered into an operating lease agreement for its new headquarters and manufacturing facility in San Rafael, California (the "San Rafael Lease") expiring in October 2026 with the option to renew for an additional three-year period at the prevailing market rate at the time of extension. The Company plans to relocate to its new headquarters and manufacturing facility to San Rafael in August 2022. Refer to Note 13. Commitments and Contingencies for further information regarding the amount of future obligations related to the Company's operating leases.

The Company maintained a five-year operating lease agreement for its European operations office in Hamburg, Germany, which was set to expire in July 2022. In February 2022, the Company executed a new lease agreement with the same landlord for a replacement office in Hamburg, Germany commencing May 1, 2022 and expiring June 30, 2025 with an option to renew for one five-year period. Upon the early termination of the previous lease agreement, it was agreed between the landlord and the Company that access to the previously leased office space would be revoked and the Company would be relieved of its payment obligations for the final two months of the lease term. Consequently, the Company removed the right of use asset and lease

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
liability, $15 and $16 respectively, recorded in its Condensed Consolidated Financial Statements related to the original Hamburg tenancy.

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.
 
The Company’s future lease payments as of June 30, 2022, which are presented as Lease liabilities, current and Lease liabilities on the Company’s condensed consolidated balance sheets are as follows:
PeriodOperating Leases
Remainder of 2022$28 
2023 - 2025148 
Total lease payments176 
Less: imputed interest(11)
Present value of lease liabilities$165 
Weighted-average remaining lease term (in years)3.0
Weighted-average discount rate4.7 %

Lease expense under the Company’s operating leases was $86 and $132 for the three months ended June 30, 2022 and 2021, respectively, and $212 and $265 for the six months ended June 30, 2022 and 2021, respectively.

10.    Capitalization and Equity Structure

Summary
 
The Company’s authorized capital stock at June 30, 2022 and December 31, 2021 consisted of 141,429 shares of common stock and 10,000 shares of preferred stock. As of June 30, 2022 and December 31, 2021, there were 13,010 and 12,693, respectively, shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.

Common Stock

February 2021 Offering

In February 2021, the Company entered into an amended and restated underwriting agreement (the "Underwriting Agreement") with H.C. Wainwright & Co., LLC ("Wainwright"), to sell 3,902 shares of the Company's common stock for a public price of $10.25 per share, for gross proceeds of $40,000 (the "February 2021 Offering"). The Company received net proceeds of $36,504 from the February 2021 Offering after deducting underwriting discounts, commissions and estimated offering expenses. Pursuant to the Underwriting Agreement, the Company issued, to certain designees of Wainwright, five year warrants (the “2021 Warrants”) to purchase shares of Common Stock in an amount equal to 7.0% of the aggregate number of shares sold in the February 2021 Offering, or 273 shares, at an exercise price of $12.81 per share.

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

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
time, to or through the Agent. The Company may offer and sell shares having an aggregate offering price of up to $7,500 under the registration statement and prospectus supplement filed with the SEC related to such offering. Under the ATM Agreement, shares of the Company's common stock may not be sold for a price lower than $6.75 per share. The Company did not sell any shares under the ATM agreement during the three and six months ended June 30, 2022. The Company did not sell any shares under the ATM Agreement during the three months ended June 30, 2021. During the six months ended June 30, 2021, the Company sold 78 shares of common stock at an average price of $10.72 for proceeds of $791, net of commissions and issuance costs. As of June 30, 2022, the Company has $6,668 available for future offerings under the prospectus filed with respect to the ATM Agreement.

Warrants
 
Warrants outstanding as of June 30, 2022 and December 31, 2021 were as follows:  
SourceExercise
Price		Term
(Years)		December 31, 2021IssuedExercisedJune 30, 2022
2021 Warrants$12.81 5273 — — 273 
June 2020 Investor Warrants$5.18 5.5127 — — 127 
June 2020 Placement Agent Warrants$5.64 539 — — 39 
December 2019 Warrants$8.10 5556 — — 556 
December 2019 Placement Agent Warrants$8.44 552 — — 52 
May 2019 Warrants$3.52 5193 — — 193 
 1,240 — — 1,240 

During the six months ended June 30, 2021, the Company received net proceeds of $1,417 from the exercise of 358 warrants and issued 300 shares of common stock, respectively, as a result of those exercises. No warrants were exercised during the six months ended June 30, 2022.
 
2021 Warrants

In February 2021, the Company issued 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.


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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 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:
June 30, 2022December 31, 2021
Current share price$1.65 $2.65 
Conversion price$12.81 $12.81 
Risk-free interest rate3 %1.13 %
Expected term (years)3.614.11
Volatility of stock97.5 %98.3 %

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. During the three months ended June 30, 2022 and 2021, no shares and 270 shares of the June 2020 Investor Warrants were exercised, respectively.

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 and exercise 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:
June 30, 2022December 31, 2021
Current share price$1.65 $2.65 
Conversion price$5.18 $5.18 
Risk-free interest rate2.99 %1.11 %
Expected term (years)3.453.94
Volatility of stock98.3 %103.9 %

June 2020 Placement Agent Warrants


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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
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. During the three months ended June 30, 2022 and 2021, no shares and 83 shares of the June 2020 Placement Agent Warrants were exercised, respectively.

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 and exercise 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:
June 30, 2022December 31, 2021
Current share price$1.65 $2.65 
Conversion price$5.64 $5.64 
Risk-free interest rate2.99 %1.03 %
Expected term (years)2.953.44
Volatility of stock102 %100 %

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.

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:
June 30, 2022December 31, 2021
Current share price$1.65 $2.65 
Conversion price$8.10 $8.10 
Risk-free interest rate2.99 %1.04 %
Expected term (years)2.973.47
Volatility of stock101.6 %99.7 %

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

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
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:
June 30, 2022December 31, 2021
Current share price$1.65 $2.65 
Conversion price$8.44 $8.44 
Risk-free interest rate2.95 %0.96 %
Expected term (years)2.472.97
Volatility of stock104.5 %102.9 %

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 $3.52 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 June 2020 Offering, the exercise price of the May 2019 Warrants was reduced to $3.52 per share, being the amount that is equal to the lower of (x) the consideration paid for the securities issued in the June 2020 Offering, or $4.51 per share, (y) the lowest exercise price of the June 2020 Investor Warrants, or $5.18, and (z) the lowest one-day volume-weighted average price of the Company’s Common Stock on the Nasdaq Capital Market as measured each day during the five trading day period starting on June 8, 2020, rounded to the nearest share, or $3.52. During the three months ended June 30, 2022 and 2021, no shares and 5 shares of the May 2019 Warrants were exercised, respectively.

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 to measure the fair value of the May 2019 Warrants:

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
June 30, 2022December 31, 2021
Share price$1.65 $2.65 
Conversion price$3.52 $3.52 
Risk-free interest rate2.91 %0.83 %
Expected term (years)1.92.4
Volatility of stock75.8 %109.1 %

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.


11.    Stock-based Compensation
 
Shares available to grant

On June 9, 2022, the Company held its 2022 annual meeting of stockholders and ratified an amendment to the Company's Amended and Restated 2014 Equity Incentive Plan to increase the total number of shares of common stock authorized for issuance by 550 shares. As of June 30, 2022, the total shares authorized for grant under the 2014 Plan was 2,524, of which 617 were available for future grants.
 
Stock Options
 
The following table summarizes information about the Company’s stock options outstanding as of June 30, 2022, and activity during the six months then ended:
Stock
Awards		Weighted-
Average
Exercise Price		Weighted-
Average
Remaining
Contractual
Life (Years)		Aggregate
Intrinsic
Value
Balance as of December 31, 2021491 $32.53 
Options forfeited(51)12.66 
Options cancelled(133)29.38 
Balance as of June 30, 2022307 $37.20 5.11$— 
Vested and expected to vest at June 30, 2022307 $37.20 5.11$— 
Exercisable as of June 30, 2022291 $38.57 5$— 
 
As of June 30, 2022, total unrecognized compensation cost related to unvested stock options was $124. This amount is expected to be recognized as stock-based compensation expense in the Company’s condensed consolidated statements of operations and comprehensive loss over the remaining weighted average vesting period of 1.05 years.

There were no stock options awarded for the three and six months ended June 30, 2022 or the three and six months ended June 30, 2021.

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.


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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
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 six months ended June 30, 2022 is summarized below:
 Number of
Shares		Weighted-
Average Grant
Date Fair Value
Unvested as of December 31, 2021655 $5.63 
Granted896 2.05 
Vested(292)4.96 
Forfeited(193)5.52 
Unvested at June 30, 20221,066 $2.85 
 
As of June 30, 2022, $2,543 of total unrecognized compensation expense related to unvested RSUs and PSUs was expected to be recognized over a weighted average period of 1.78 years.
   
Compensation Expense
 
Total stock-based compensation expense related to options, RSUs and PSUs granted to employees and non-employee members of the board of directors is included in the condensed consolidated statements of operations and comprehensive loss as follows:
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Sales and marketing$72 $92 $141 $191 
Research and development104 58 183 110 
General and administrative406 369 757 574 
 $582 $519 $1,081 $875 
 
401(k) Plan Share Match
 
During the six months ended June 30, 2022 and 2021, the Company issued 68 and 26 shares of common stock with a fair value of $176 and $152, 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 fiscal years ended December 31, 2021 and 2020, respectively.

The expense related to the accrual for the 401(k) plan share matching was $103 and $107 for the six months ended June 30, 2022 and 2021, respectively.
  
12.    Income Taxes

There were no material changes to the unrecognized tax benefits in the six months ended June 30, 2022, and the Company does not expect significant changes to unrecognized tax benefits through the end of the fiscal year. Because of the Company’s history of tax losses, all years remain open to tax examination.
 
13.    Commitments and Contingencies

Material Contracts
 
The Company enters various license, research collaboration and development agreements, which provide for payments to the Company primarily for technology transfer and license fees, and royalty payments on sales.
 

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
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.
 
The Company entered into a research and development collaboration agreement in December 2021 with a party that develops technologies having utility in robotic exoskeletons from research and development activities associated with a specific set of government funded research projects. Since January 2022, the Company has assisted with research and development activities in exchange for access to a worldwide, royalty free, transferable, sublicensable, exclusive license to design and market products that use or incorporate the jointly-developed technology within Ekso’s target market segments.

Under a license agreement with the developer of certain intellectual property related to mechanical balance and support arm technologies, which granted the Company an exclusive license with respect to the technology and patent rights for certain fields of use, the Company was required to pay the developer a single-digit royalty on net receipts, subject to a $50 annual minimum royalty requirement. At the end of the second quarter of 2022, the Company ceased commercialization of the ZeroG support arm and is no longer required to pay the developer any further royalties.
 
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. Due to a variety of factors, including the COVID-19 pandemic, various materials the Company used to manufacture its products are currently experiencing shortages and supply chain disruptions. Electronic components in general, semiconductor chips, battery cells, metals and plastics, all of which are used in the Company's products, are also in shorter supply compared to prior periods, and the Company is also experiencing longer lead times for manufacturing services such as machining and tool making and increased pricing. Numerous factors, such as the ongoing pandemic or further trade tensions between the U.S. and China, may prolong or deepen these challenges.

The Company had purchase obligations primarily for purchases of inventory and manufacturing related service contracts totaling $3,087 as of June 30, 2022, which are expected to be paid within two years, and $1,446 as of December 31, 2021. 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. 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 $1,455 payable over 52 months related to the San Rafael lease disclosed in Note 9. Lease Obligations.

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.
 

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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
14.    Net Loss Per Share
 
The following table sets forth the computation of basic and diluted net loss per share:

 Three Months Ended
June 30,		Six Months Ended
June 30,
 2022202120222021
Numerator:    
Net loss applicable to common stockholders, basic and diluted$(2,978)$(1,273)$(7,598)$(4,943)
Adjustment for gain on revaluation of warrant liabilities— (189)— (325)
Net loss applicable to common stockholders, diluted$(2,978)$(1,462)$(7,598)$(5,268)
Denominator:
Weighted-average number of shares, basic12,884 12,655 12,807 11,709 
Effect of dilutive warrants— 82 — 130 
Weighted-average number of shares, basic and diluted12,884 12,737 12,807 11,839 
Net loss per share, basic and diluted$(0.23)$(0.10)$(0.59)$(0.42)
Net loss per share, diluted$(0.23)$(0.11)$(0.59)$(0.44)
 
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
June 30,		Six Months Ended June 30,
 2022202120222021
Options to purchase common stock307 508 307 508 
Restricted stock units1,066 463 1,066 463 
Warrants for common stock1,240 920 1,240 881 
Total common stock equivalents2,613 1,891 2,613 1,852 

15.    Segment Disclosures
 
The Company has two reportable segments: EksoHealth and EksoWorks. The EksoHealth segment designs, engineers, manufactures, and markets exoskeletons for applications in the medical markets. The EksoWorks segment designs, engineers, 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 net assets as a segment measure and, accordingly, assets are not allocated.

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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:
 EksoHealthEksoWorksTotal
Three months ended June 30, 2022   
Revenue$3,228 $237 $3,465 
Cost of revenue1,631 193 1,824 
Gross profit$1,597 $44 $1,641 
Three months ended June 30, 2021   
Revenue$1,862 $349 $2,211 
Cost of revenue740 179 919 
Gross profit$1,122 $170 $1,292 

 EksoHealthEksoWorksTotal
Six months ended June 30, 2022 
Revenue$5,109 $923 $6,032 
Cost of revenue2,646 536 3,182 
Gross profit$2,463 $387 $2,850 
Six months ended June 30, 2021 
Revenue$3,589 $532 $4,121 
Cost of revenue1,282 312 1,594 
Gross profit$2,307 $220 $2,527 



























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Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
The Company operates in the following regions: (1) Americas, (2) Europe, the Middle East, and Africa (EMEA), and (3) Asia Pacific (APAC). Individual countries with revenue greater than 10% of total revenue for the three and six months ended June 30, 2022 and the three and six months ended June 30, 2021 are disclosed separately from the regional totals. Geographic information for revenue based on location of customers is as follows:

 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Americas
   United States$2,070$1,154$3,413 $2,135 
   Other121 44 176 82 
Americas2,191 1,198 3,589 2,217 
EMEA
   Germany126 95 250 532 
   Belgium— 296 — 305 
   Poland393 18 568 32 
   Other267 463 533 626 
EMEA786 872 1,351 1,495 
APAC
   Hong Kong442 — 485 — 
   Other46 141 607 409 
APAC488 141 1,092 409 
 Total Revenue$3,465 $2,211 $6,032 $4,121 

16. Subsequent Events

In July 2022, the Company entered into a four year, four month operating lease agreement for its new headquarters and manufacturing facility in San Rafael, California. See Note 9. Lease Obligations.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
In this Quarterly Report, the “Company”, “we”, “its” and “our” refers to Ekso Bionics Holdings, Inc. and its wholly-owned subsidiaries. The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (this “Quarterly Report”) and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which is incorporated herein by reference (the “Annual Report”).
 
This Quarterly Report contains forward-looking statements. These forward-looking statements include statements other than statements of historical facts contained or incorporated by reference in this Quarterly Report, including statements regarding (i) the plans and objectives of management for future operations, including those relating to the design, development and commercialization of exoskeleton products for humans, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the SEC, (iv) our beliefs regarding the potential for commercial opportunities for exoskeleton technology in general and our exoskeleton products in particular, (v) our beliefs regarding potential clinical and other health benefits of our medical devices, and (vi) the assumptions underlying or relating to any statement described in points (i), (ii), (iii), (iv) or (v) above. The words “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and similar expressions (including the negative of any of the foregoing) are intended to identify forward-looking statements.

The following factors, among others, including those described in the section titled “Risk Factors” included in our Annual Report, as updated and supplemented in this Quarterly Report under the heading “Part II – Item 1A. Risk Factors,” could cause our future results to differ materially from those expressed in the forward-looking information:
 
•our ability to obtain adequate financing to fund operations and to develop or enhance our technology;
•our ability to obtain or maintain regulatory approval to market our medical devices;
•our ability to complete clinical trials on a timely basis and that completed clinical trials will be sufficient to support commercialization of our products;
•the anticipated timing, cost and progress of the development and commercialization of new products or services, and improvements to our existing products, and related impacts on our profitability and cash position;
•our ability to effectively market and sell our products and expand our business, both in unit sales and product diversification;
•our ability to achieve broad customer adoption of our products and services;
•existing or increased competition;
•rapid changes in technological solutions available to our markets;
•volatility with our business, including long and variable sales cycles, which could have a negative impact on our results of operations for any given quarter;
•changes to our domestic or international sales and operations;
•our ability to obtain or maintain patent protection for our intellectual property;
•the scope, validity and enforceability of our and third-party intellectual property rights;
•significant government regulation of medical devices and the healthcare industry;
•our ability to receive regulatory clearance from certain government authorities, including any conditions, limitations or restrictions placed on such approvals;
•our customers’ ability to get third-party reimbursement for our products and services associated with them;
•the potential for our products to be subject to voluntary or involuntary recall;
•our product liability insurance may not adequately cover potential claims;
•warrant claims and our accelerated maintenance program results in additional operating costs to us;
•our failure to implement our business plan or strategies;
•our ability to successfully consummate acquisitions on acceptable terms and to integrate any such acquisitions;
•our early termination of leases, difficulty filling vacancies or negotiating improved lease terms;
•our ability to retain or attract key employees;
•scope, scale and duration of the impact of outbreaks of a pandemic disease, such as COVID-19 (coronavirus);
•stock volatility or illiquidity;
•our ability to maintain adequate internal controls over financial reporting;
•the impacts of foreign currency price fluctuations; and

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•overall economic and market conditions.

Although we believe that the assumptions underlying the forward-looking statements and forward-looking information contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, such statements and information included in this Quarterly Report may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements and forward-looking information included herein, the inclusion of such statements and information should not be regarded as a representation by us or any other person that the results or conditions described in such statements and information or that our objectives and plans will be achieved. Such forward-looking statements speak only as of the date of this Quarterly Report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
 
Overview
 
Our Business

We design, develop, and market exoskeleton products that augment human strength, endurance and mobility. Our exoskeleton technology serves multiple markets and can be utilized both by able-bodied persons and by persons with physical disabilities. We have sold or leased devices that (i) enable individuals with neurological conditions affecting gait, including ABI, SCI and MS, to rehabilitate, and in some cases, to walk again, (ii) assist individuals with a broad range of upper extremity impairments, and (iii) allow industrial workers to perform difficult repetitive work for extended periods.

We believe that the commercial opportunity for exoskeleton technology adoption is accelerating as a result of recent advancements in material technologies, electronic and electrical engineering, control technologies, and sensor and software development. Taken individually, many of these advancements have become ubiquitous in peoples’ everyday lives. Supported by an industry leading intellectual property portfolio, we believe that we have learned how to integrate these existing technologies and wrap the result around a human being efficiently, elegantly and safely. We further believe this endeavor is achievable across a broad spectrum of applications, from persons with lower limb paralysis to able-bodied users.

EksoHealth

EksoHealth is our business unit focused on developing and marketing exoskeletons for medical applications.

Our leading product in EksoHealth, the EksoNR, is a robotic exoskeleton used to provide physical therapy for patients with lower extremity impairment. EksoNR, which in 2019 superseded our EksoGT product in this segment, includes unique features designed specifically to assist physical therapists and other clinicians to teach patients to walk again after suffering a neurological impairment. Typical conditions that can be treated with the assistance of EksoNR include ABIs, such as stroke and traumatic brain injuries, as well as SCIs, MS, and others. The benefits of EksoNR rehabilitation can include earlier mobilization of patients, longer and more intense rehab sessions, and increased quality of sessions as compared to alternative therapies. EksoNR is typically used in clinical settings, most commonly at inpatient rehab facilities and stroke centers.

EksoUE, our exoskeleton device purposed for upper-extremity medical applications, is a wearable upper body exoskeleton used for rehabilitation. EksoUE is designed to assist patients with a broad range of upper extremity impairments and aims to provide them with a wider active range of motion and increased endurance for rehabilitation sessions of higher intensity.

EksoWorks

EksoWorks is our business unit focused on developing, marketing, and selling exoskeletons and other assistive tools for industrial applications. Target users for these devices are generally able-bodied, and, as such, the technologies are primarily employed to reduce worker fatigue. The benefits of fatigue reduction can include reduced rates of injuries, higher productivity, increased worker morale, and lower employee turnover. EksoWorks products are primarily sold to companies deploying the technologies for use directly in their operations.

Our wearable exoskeleton products in EksoWorks include EksoVest and the new EVO, both of which are designed to support the weight of a worker’s arms and tools during overhead applications, reducing the fatigue associated with working at or above shoulder height for extended periods. These products are currently targeted at end users in the aerospace, automotive, manufacturing, and construction trades.


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EksoZeroG is a tool holder that can mount on an aerial lift platform or scaffolding. This effectively reduces the weight of heavy tools as felt by the operator. EksoZeroG has been sold primarily through rental companies into the construction market. At the end of the second quarter of 2022, the Company ceased commercialization of the ZeroG support arm and related products and accessories. Refer to Note 13. Commitments and Contingencies in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Second Quarter 2022 Highlights

•Reported revenue of $3.5 million in the second quarter of 2022, an increase of 57% year-over-year
•Received 510(k) clearance from the FDA to market EksoNR for use with Multiple Sclerosis (MS) patients
•Booked a total of 17 EksoNR units in the second quarter of 2022
•Strong cash position of $31.9 million as of June 30, 2022

Economic and Industry Trends

Our revenue is highly dependent on market demand for our exoskeleton products. This market demand is influenced by many factors including the level of awareness of robotic exoskeleton rehabilitation among the rehabilitation clinics with significant ABI and SCI populations, the imperatives among construction and manufacturing companies to drive adoption of improved safety and health practices, as well as conditions relating to overall economic growth and general business activity. Difficult and challenging economic conditions, including growing supply chain issues amidst an increasingly inflationary environment, could lead to increased price-based competition. In particular, the effects of such increasing price-based competition may have an especially significant impact on certain products that we offer, including the EksoNR, which have a lengthy sale and purchase order cycle because they are major capital expenditure items and generally require the approval of senior management at purchasing institutions. Furthermore, our business includes operations in the Americas, EMEA and APAC, so we are affected by demand for our products in those regions, as well as the strengthening or weakening of local currencies relative to the U.S. Dollar.

The COVID-19 pandemic and related public health measures have also materially affected how we and our customers are operating our businesses, and have materially affected our operating results, as demand for our exoskeleton products decreased as many inpatient rehabilitation facilities temporarily shifted priorities and delayed capital expenditures. While the duration and extent to which this will impact our future results remain uncertain, we have seen certain recovery in the demand for our exoskeleton products following the gradual reopening and recovery of the broader global economy, and we believe the clinical need for our products has not diminished, as evidenced by clinical data showing the increased prevalence of strokes during the pandemic. Although concerns about the emergence of new, more infectious variants of the coronavirus remain, we have gradually resumed in-person engagements in addition to virtual meetings with our current and prospective customers through conferences, training events and educational demos to offer our support and showcase the value of our Ekso devices. Further, now that our clinical team is fully vaccinated and are active onsite at U.S. rehab centers, we expect to see an uptick in live in-person interactions going forward. Although market uncertainties related to the pandemic make it difficult for us to project the full impact on our business and customers, we believe that we are well-positioned to serve our customers when business conditions begin to normalize.

Throughout the pandemic, our top priority has been to protect the health and safety of our employees and our consumers. We have an optional work from home policy for many of our employees. Vaccinated employees are permitted to work in the office and we have allowed essential business travel to resume. We have also enhanced the use of personal protective equipment in our facilities.

Management continues to actively monitor the global situation, including the geopolitical instability arising out of military conflict and escalating tensions between Russia and Ukraine, and its effects on our financial position and operations.

Management Changes

On January 14, 2022, Jack Peurach, our former President and Chief Executive Officer, notified us of his intention to resign as an officer and member of the Board of Directors of the Company to pursue other endeavors. On January 20, 2022, our Board and Mr. Peurach reached an understanding regarding his decision to leave the Company and entered into an Executive Separation and Release Agreement pursuant to which Mr. Peurach’s last day of service as the President, Chief Executive Officer and as a member of the Company’s Board was January 21, 2022.


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In addition, our Board of Directors appointed Steven Sherman, who currently serves and previously had served as the Chairman of our Board, to become Chief Executive Officer of the Company effective January 22, 2022. Mr. Sherman continues to serve as the Chairman of the Board of the Company, and Board member Stanley Stern has been designated the Board’s lead independent director. Furthermore, our Board of Directors appointed Scott Davis to become President and Chief Operating Officer effective January 22, 2022.

On March 4, 2022, William Shaw, our former Chief Commercial Officer, notified our Board of Directors of his intention to resign as Chief Commercial Officer of the Company effective March 11, 2022 in connection with his retention as an employee at another company.

On May 23, 2022, John F. Glenn our former Chief Financial Officer, notified the Company of his decision to resign from his position as the Company’s Chief Financial Officer, effective June 17, 2022, in connection with his retention as an employee at another public company. Mr. Glenn’s resignation is not the result of any dispute or disagreement with the Company including any matters relating to the Company’s accounting practices or financial reporting. On May 25, 2022, our board of directors approved the appointment of Jerome Wong as Interim Chief Financial Officer, effective upon Mr. Glenn’s departure.


Critical Accounting Policies and Estimates
 
Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our estimates form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Our most critical accounting estimates include:

•the standalone selling prices used to allocate the contract consideration to the individual performance obligations in our device sales arrangements, which impacts revenue recognition;
•the unobservable inputs and assumptions used by management in estimating the fair value of our warrant liabilities, which impacts net income or loss;
•the valuation of inventory, which impacts gross profit margins; and
•the estimates made regarding the recoverability of our net deferred tax asset, which impacts our financial condition

Standalone Selling Prices

Our device sales arrangements contain multiple products and services, most often including the device(s) and service, both of which we have identified as distinct performance obligations. Revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which we separately sell the products or services. If a standalone selling price is not directly observable, then we estimate the standalone selling prices considering market conditions and entity-specific factors including, but not limited to, features and functionality of the products and services, geographies, type of customer, and gross margin targets. Changes in the relative standalone selling price between devices and service can have an impact on how transaction prices are allocated between revenue and deferred revenue.

Warrant Liabilities

We use the Black-Scholes option-pricing model to value our warrant liabilities at each reporting period, which requires the input of highly subjective assumptions, most notably the estimated volatility of our common stock over the expected term. We use our historical common stock volatility to estimate expected volatility over the warrant terms. Management must also make uncertain estimates regarding the likelihood and timing of certain future events for application of the Lattice Model for the valuation of certain warrants. Changes in these assumptions could have potential material impacts on the estimated fair value of warrant liabilities. During the three months ended June 30, 2022, management made no changes to its estimates regarding the likelihood of future events, but revised its estimates regarding the timing of future events. We do not believe the revision resulted in a material impact to the estimated fair value of warrant liabilities measured using the Lattice Model.

Inventory Valuation


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Inventory is stated 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. The cost basis of our inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions. If actual future demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which could have a material adverse effect on the results of our operations.


Deferred Tax Asset

We estimate a valuation allowance in consideration of the realizability of its net deferred tax assets, primarily based on our assessment of the timing, likelihood and amounts of potential future income during which such items become deductible. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes and estimate future amounts. Management does not believe it is more likely than not that we will generate future income in a timeframe and amount sufficient to realize our net deferred tax assets. Changes in management's estimate of future income in the timeframe during which the temporary differences and carryforwards comprising our deferred tax assets become deductible could result in a material impact to our financial position including the recognition of a net deferred tax asset.
 
Accounting Policies

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the condensed consolidated financial statements. We believe that our critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the condensed consolidated financial statements. Refer to Note. 2 Basis of Presentation and Summary of Significant Accounting Policies and Estimates in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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Results of Operations
 
The following table presents our results of operations for the three months ended June 30, 2022 and 2021 (in thousands, except percentages):
 Three Months Ended June 30,  
 20222021Change% Change
    
Revenue$3,465 $2,211 $1,254 57 %
Cost of revenue1,824 919 905 98 %
Gross profit1,641 1,292 349 27 %
Gross profit %47 %58 %
Operating expenses:    
Sales and marketing1,841 1,787 54 3 %
Research and development920 709 211 30 %
General and administrative2,109 2,144 (35)(2)%
Total operating expenses4,870 4,640 230 5 %
Loss from operations(3,229)(3,348)119 (4)%
Other income (expense), net:    
Interest expense(29)(27)(2)7 %
Gain on revaluation of warrant liabilities999 875 124 n/m(1)
Gain on forgiveness of note payable— 1,099 (1,099)n/m(1)
Unrealized (loss) gain on foreign exchange(718)131 (849)n/m(1)
Other expense, net(1)(3)2 (67)%
Total other income, net251 2,075 (1,824)(88)%
Net loss$(2,978)$(1,273)$(1,705)134 %
(1)Not Meaningful

 
Revenue
 
Revenue increased $1.3 million, or 57%, for the three months ended June 30, 2022, compared to the same period of 2021. Revenue in the second quarter of 2022 included approximately $3.2 million in EksoHealth revenue and approximately $0.2 million in EksoWorks revenue.

EksoHealth revenue increased approximately $1.4 million, or 73%, for the three months ended June 30, 2022, compared to the same period of 2021. The increase in revenue was primarily driven by an increase in the volume of EksoNR device sales, due to a $1.1 million multi-unit deal with a customer. EksoWorks revenue decreased approximately $0.1 million, or 32%, for the three months ended June 30, 2022, compared to the same period of 2021. The decrease in revenue was primarily driven by a reduction in the volume of EVO and EksoVest sales.
 
Gross Profit
 
Gross profit increased 27% for the three months ended June 30, 2022 compared to the same period of 2021, largely owing to the increase in EksoHealth revenue as discussed above. Gross margin was approximately 47% for the three months ended June 30, 2022, compared to a gross margin of 58% for the same period of 2021. The overall decrease in gross margin was primarily due to the increase in EksoHealth service costs for both labor and materials usage, and increases in inventory costs due to the continued global supply shortage. The decrease in gross margin was partially offset by the relative increase in EksoHealth revenue, which generally has higher gross margins, in overall revenue composition.

EksoHealth service costs increased due to increased headcount, significant increases in the cost of shipping and freight related to service activities, and the servicing of on an increased number of customer units.
 
Operating Expenses

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Sales and marketing expenses increased $0.1 million, or 3%, for the three months ended June 30, 2022, compared to the same period of 2021. The increase is primarily related to increased sales and marketing activities.

Research and development expenses increased $0.2 million, or 30%, for the three months ended June 30, 2022, compared to the same period of 2021, due to an increase in product development activity mostly related to sustaining engineering activity for the EksoNR and the development of next generation products.
 
Changes in general and administrative expenses were de minimis for the three months ended June 30, 2022, compared to the same period of 2021.

Total Other Income, Net

Gain on revaluation of warrant liabilities was $1.0 million for the three months ended June 30, 2022, and was associated with the revaluation of warrants issued in 2019, 2020 and 2021. Gain on warrant liabilities was $0.9 million for the three months ended June 30, 2021, and was associated with the revaluation of warrants issued in 2019, 2020 and 2021. Gains and losses on revaluation of warrants are primarily driven by changes in our stock price and changes to the risk free rate.

Gain on forgiveness of note payable for the three months ended June 30, 2021 related to the forgiveness of the PPP Loan for which there was no comparable item in the three months ended June 30, 2022.

Unrealized loss on foreign exchange for the three months ended June 30, 2022 was $0.7 million compared to an unrealized gain on foreign exchange of $0.1 million for the same period of 2021. The change in Unrealized (loss) gain was primarily due to foreign currency revaluations of our inter-company monetary assets and liabilities.

The following table presents our results of operations for the six months ended June 30, 2022 and 2021 (in thousands, except percentages):
 Six Months Ended June 30,  
 20222021Change% Change
    
Revenue$6,032 $4,121 $1,911 46 %
Cost of revenue3,182 1,594 1,588 100 %
Gross profit2,850 2,527 323 13 %
Gross profit %47 %61 %
Operating expenses:    
Sales and marketing3,470 3,580 (110)(3)%
Research and development1,919 1,312 607 46 %
General and administrative4,927 4,122 805 20 %
Total operating expenses10,316 9,014 1,302 14 %
Loss from operations(7,466)(6,487)(979)15 %
Other (expense) income, net:    
Interest expense(56)(53)(3)6 %
Gain on revaluation of warrant liabilities899 886 13 n/m(1)
Gain on forgiveness of note payable— 1,099 (1,099)n/m(1)
Unrealized loss on foreign exchange(972)(372)(600)n/m(1)
Other expense, net(3)(16)13 (81)%
Total other (expense) income, net(132)1,544 (1,676)(109)%
Net loss$(7,598)$(4,943)$(2,655)54 %

(1)Not Meaningful
 

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Revenue
 
Revenue increased $1.9 million, or 46%, for the six months ended June 30, 2022, compared to the same period of 2021. Revenue for the six months ended June 30, 2022 included approximately $5.1 million in EksoHealth revenue and approximately $0.9 million in EksoWorks revenue.

EksoHealth revenue increased approximately $1.5 million, or 42%, for the six months ended June 30, 2022, compared to the same period of 2021. The increase in revenue was primarily driven by an increase in the volume of EksoNR device sales, due to a $1.1 million multi-unit deal with a customer. EksoWorks revenue increased approximately $0.4 million, or 73%, for the six months ended June 30, 2022, compared to the same period of 2021. The increase in revenue was primarily related to the recognition of previously deferred prepaid royalties associated with a license and distribution agreement that expired.
 
Gross Profit
 
Gross profit increased 13% for the six months ended June 30, 2022 compared to the same period of 2021, largely owing to the increase in EksoHealth revenue as discussed above. Gross margin was approximately 47% for the six months ended June 30, 2022, compared to a gross margin of 61% for the same period of 2021. The overall decrease in gross margin was primarily due to an increase in EksoHealth service costs for both labor and materials usage, and increases in inventory costs due to the continued global supply shortage. The decrease in gross margin was partially offset by the recognition of previously deferred prepaid royalties associated with a license and distribution agreement that expired.

EksoHealth service costs increased due to increased headcount and the servicing of an increased number of customer units, owing to the receipt of service parts during the period, the shortage of which had previously precluded the completion of service. Additionally, we have experienced significant increases in the cost of shipping and freight related to service activities.
 
Operating Expenses
 
Sales and marketing expenses decreased $0.1 million, or 3%, for the six months ended June 30, 2022, compared to the same period of 2021. The decrease was primarily due to reduced compensation expense as a result of the departure of our former Chief Commercial Officer. This decrease was partially offset by increases in compensation expense related to additional headcount and increased sales and marketing activities.

Research and development expenses increased $0.6 million, or 46%, for the six months ended June 30, 2022, compared to the same period of 2021, due to an increase in product development activity mostly related to sustaining engineering activity for the EksoNR.
 
General and administrative expenses increased $0.8 million, or 20%, for the six months ended June 30, 2022, compared to the same period of 2021, primarily due to noncash stock-based compensation related to the appointment of our new Chief Executive Officer and severance expense associated with the departure of our former Chief Executive Officer.

Total Other (Expense) Income, Net

Gain on revaluation of warrant liabilities was $0.9 million for the six months ended June 30, 2022, and was associated with the revaluation of warrants issued in 2019, 2020 and 2021. Gain on warrant liabilities was $0.9 million for the six months ended June 30, 2021, and was associated with the revaluation of warrants issued in 2019, 2020 and 2021. Gains and losses on revaluation of warrants are primarily driven by changes in our stock price and changes to the risk free rate.

Gain on forgiveness of note payable for the six months ended June 30, 2021 related to the forgiveness of our PPP Loan for which there was no comparable item in the six months ended June 30, 2022.

Unrealized loss on foreign exchange for the six months ended June 30, 2022 was $1.0 million compared to an unrealized loss on foreign exchange of $0.4 million for the same period of 2021. The change in unrealized loss was primarily due to foreign currency revaluations of our inter-company monetary assets and liabilities.


Liquidity and Capital Resources
 
Since our inception, we have devoted substantially all of our efforts toward the development of exoskeletons for the medical and industrial markets, toward the commercialization of medical exoskeletons to rehabilitation centers and toward raising

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capital. We have financed our operations primarily through the issuance and sale of equity securities for cash consideration and through bank debt.
 
Liquidity and Capital Resources
 
On June 30, 2022, we had working capital of $34.5 million, compared to working capital of $40.9 million at December 31, 2021. The decrease in working capital is primarily due to a lower cash balance from cash used in operations. Our cash as of June 30, 2022, consisted of bank deposits with third party financial institutions. As of June 30, 2022, of our $31.9 million of cash, $31.3 million was held domestically while $0.6 million was held by foreign subsidiaries.

As described in Note 8 in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q under the caption Notes Payable, net, borrowings under our new secured term loan agreement with Pacific Western Bank have a requirement of minimum cash on hand equivalent to the current outstanding principal balance. As of June 30, 2022, $2.0 million of cash must remain as restricted. After considering cash restrictions, effective unrestricted cash as of June 30, 2022 is estimated to be $29.9 million. With this unrestricted cash balance, we believe that we currently have sufficient cash to fund our operations beyond the look forward period of one year from the issuance of these condensed consolidated financial statements.
   
Cash
 
The following table summarizes the sources and uses of cash (in thousands).
Six months ended June 30,
 20222021
Net cash used in operating activities$(8,454)$(5,606)
Net cash provided by financing activities— 38,712 
Effect of exchange rate changes on cash(40)(30)
Net (decrease) increase in cash(8,494)33,076 
Cash at the beginning of the period40,406 12,862 
Cash at the end of the period$31,912 $45,938 
 
Net Cash Used in Operating Activities
 
Net cash used in operations increased $2.8 million, or 51%, for the six months ended June 30, 2022, compared to the same period of 2021 primarily due to higher payments for business development costs incurred in late 2021, increased employee compensation related to higher headcount and increased inventory purchases.

Net Cash Provided by Financing Activities
 
Net cash provided by financing activities of $38.7 million for the six months ended June 30, 2021, was generated from the sale of common stock and warrants for net proceeds of $36.5 million in connection with the equity financing, net proceeds of $0.7 million from our “at the market offering” program, and proceeds of $1.4 million from the exercise of warrants. There was no comparable amount for the six months ended June 30, 2022.

Material Cash Requirements

Our material cash requirements include the following items, some of which are represented in the table of Contractual Obligations and Commitments: (1) employee wages, benefits and incentives, (2) the procurement of raw materials and components to support the manufacturing and sale of our products, (3) expenditures for the ongoing improvement and development of existing and new technologies, (4) debt repayments (for additional information see Note 8 in the notes to our condensed consolidated financial statements included elsewhere in the Quarterly Report on Form 10-Q), and (5) operating lease payments (for additional information see Note 9 in the notes to our condensed consolidated financial statements included elsewhere in the Quarterly Report on Form 10-Q).

We plan on utilizing our existing unrestricted cash balance to fund our material cash requirements in the short and long term.



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Contractual Obligations and Commitments
 
The following table summarizes our outstanding contractual obligations as of June 30, 2022, and the effect those obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

 Payments Due By Period:
TotalLess than
One Year		1-3 Years3-5 YearsAfter
5 Years
Note payable, principal and interest$2,123 $105 $2,018 $— $— 
Facility operating leases176 57 119 — — 
Purchase obligations3,087 2,922 165 — — 
Total$5,386 $3,084 $2,302 $— $— 

In response to, or in anticipation of, supplier disruptions and extended lead times, we may stockpile certain components or raw materials to help prevent disruption in our production of the EksoNR. Such purchasing behavior is a contributing factor to the increase in purchase obligations as compared to prior periods. These actions have, and could continue to have, a short-term adverse impact on our cash used in operating activities and increase our inventory balance. Obligations related to these activities are reflected in the line purchase obligations in the table above.

Refer to Note 13. Commitments and Contingencies in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding our license agreements, purchase obligations, and lease commitments.
 
Item 3. Quantitative and Qualitative Disclosure About Market Risk
 
There have been no material changes in our market risk during the six months ended June 30, 2022, compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021.
 
Item 4. Controls and Procedures
 
Disclosure Controls and Procedures.
 
Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed by us under the Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
 
It should be noted that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment and makes assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Management believes that the financial statements included in this Quarterly Report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

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PART II. OTHER INFORMATION
 
Item 1. Legal Proceedings

We are not the subject of any pending legal proceedings; and to the best of our management’s knowledge, no such proceeding is presently threatened, the results of which would have a material impact on the Company's properties, results of operations, or financial condition. Further, to the knowledge of management, no director or executive officer is party to any action in which any has an interest adverse to us.

Item 1A. Risk Factors

We have not identified any material changes to the risk factors previously disclosed in Part I - Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.






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Item 6. Exhibits
 
Exhibit
Number		 Description
 
   
 
   
 
   
 
101* The following financial statements from the Ekso Bionics Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Extensible Business Reporting Language (“XBRL”):
•unaudited condensed consolidated balance sheets;
•unaudited condensed consolidated statements of operations and comprehensive income (loss);
•unaudited condensed consolidated statements of stockholders’ equity;
•unaudited condensed consolidated statement of cash flows; and
•notes to unaudited condensed consolidated financial statements.
*Filed herewith.


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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, Ekso Bionics Holdings, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 EKSO BIONICS HOLDINGS, INC.
 
Date: July 28, 2022By:/s/ Steven Sherman
  Steven Sherman
  Chief Executive Officer and Chairman
(Duly Authorized Officer and Principal Executive Officer)
   
Date: July 28, 2022By:/s/ Jerome Wong
  Jerome Wong
  Interim Chief Financial Officer
  (Duly Authorized Officer and Principal Financial and Accounting Officer)