Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________________________ FORM 10-Q ____________________________________________________________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ...

Financial Data and Key Metrics Changes - In Q2 2019, revenue was $3.3 million, an increase from $3.0 million in Q2 2018, reflecting a growth of approximately 10% [10][20] - Gross margins expanded to approximately 48%, an increase of 15 percentage points from the same quarter last year [10][22] - Operating expenses decreased by more than 18% to $6.7 million compared to $8.2 million in Q2 2018 [10][23] - Net loss for the quarter was $3.1 million or $0.04 per share, compared to a net loss of $8 million or $0.13 per share in Q2 2018 [10][24] Business Line Data and Key Metrics Changes - EksoHealth revenue increased by approximately 18% compared to Q2 2018, driven by higher sales in the U.S. and improved rental-to-sale conversions [11] - The cumulative rental-to-sale conversion rate in the U.S. rose to 84%, up from 76% in the first quarter [11] - EksoWorks revenue decreased to approximately $415,000 from $555,000 in the same period last year, primarily due to delayed customer purchasing decisions [21] Market Data and Key Metrics Changes - U.S. market growth was strong, but performance in EMEA and APAC was softer, leading to adjustments in the European organization to better support distribution partners [15] - The company is optimistic about expanding its market opportunities with larger network operators in the U.S. [12] Company Strategy and Development Direction - The company aims to amplify human motion through advanced robotics in both medical and industrial applications [8] - A new product, the EksoUE, was introduced for upper extremity rehabilitation, expected to be available by the end of the year [16] - The company is committed to developing new technologies to enhance human mobility while optimizing its cost structure [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of EMEA and APAC markets despite current performance challenges [15] - The company expects to continue strengthening its customer pipeline with an expanded sales and marketing team [27] Other Important Information - Cash used in operating activities in Q2 2019 was $4.5 million, down from $5.2 million in Q1 2019, with a cash balance of $13.3 million as of June 30, 2019 [26] - The company completed treating all 30 patients in the WISE study and expects to report complete study data by the end of 2019 [27] Q&A Session Summary Question: What were the key drivers of revenue growth in Q2? - The revenue growth was primarily driven by higher U.S. sales and increased rental-to-sale conversions for Ekso GT units [27] Question: How is the company addressing the performance in EMEA and APAC? - The company is making changes to its European organization to better support distribution partners and expand customer awareness [15][27] Question: What are the expectations for future product launches? - The company plans to continue developing innovative products, including the recently announced EksoUE, to enhance rehabilitation solutions [16][27]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This item includes the company's unaudited condensed consolidated balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, statements of cash flows, and accompanying notes, providing a detailed financial overview for the reported periods [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show an increase in total assets and stockholders' equity from December 31, 2018, to June 30, 2019, primarily driven by an increase in cash and additional paid-in capital, despite an accumulated deficit Balance Sheet Summary (in thousands) | Metric | June 30, 2019 | December 31, 2018 | Change ($) | Change (%) | | :------------------------- | :------------ | :---------------- | :--------- | :--------- | | Cash | $13,262 | $7,655 | $5,607 | 73.2% | | Total Current Assets | $22,133 | $14,967 | $7,166 | 47.9% | | Total Assets | $25,583 | $17,655 | $7,928 | 44.9% | | Total Current Liabilities | $9,343 | $10,132 | $(789) | (7.8%) | | Total Liabilities | $20,179 | $14,927 | $5,252 | 35.2% | | Total Stockholders' Equity | $5,404 | $2,728 | $2,676 | 98.1% | | Accumulated Deficit | $(180,763) | $(171,146) | $(9,617) | (5.6%) | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three months ended June 30, 2019, the company reported a significant reduction in net loss and an increase in gross profit compared to the prior year, driven by higher revenue and a substantial gain on revaluation of warrant liabilities, despite increased warrant issuance expenses Three Months Ended June 30 (in thousands, except per share) | Metric | 2019 | 2018 | Change ($) | Change (%) | | :----------------------------------- | :---------- | :---------- | :--------- | :--------- | | Revenue | $3,262 | $2,967 | $295 | 10% | | Cost of Revenue | $1,702 | $2,000 | $(298) | (15%) | | Gross Profit | $1,560 | $967 | $593 | 61% | | Total Operating Expenses | $6,658 | $8,152 | $(1,494) | (18%) | | Loss from Operations | $(5,098) | $(7,185) | $2,087 | (29%) | | Gain (loss) on revaluation of warrant liabilities | $2,737 | $(213) | $2,950 | (1385%) | | Warrant issuance expense | $(706) | $0 | $(706) | N/A | | Net Loss | $(3,066) | $(7,978) | $4,912 | (62%) | | Basic and Diluted Net Loss Per Share | $(0.04) | $(0.13) | $0.09 | (69%) | Six Months Ended June 30 (in thousands, except per share) | Metric | 2019 | 2018 | Change ($) | Change (%) | | :----------------------------------- | :---------- | :---------- | :--------- | :--------- | | Revenue | $6,878 | $5,486 | $1,392 | 25% | | Cost of Revenue | $3,719 | $3,750 | $(31) | (1%) | | Gross Profit | $3,159 | $1,736 | $1,423 | 82% | | Total Operating Expenses | $13,169 | $17,532 | $(4,363) | (25%) | | Loss from Operations | $(10,010) | $(15,796) | $5,786 | (37%) | | Gain on revaluation of warrant liabilities | $1,615 | $520 | $1,095 | 211% | | Loss on modification of warrant | $(257) | $0 | $(257) | N/A | | Warrant issuance expense | $(706) | $0 | $(706) | N/A | | Net Loss | $(9,617) | $(15,877) | $6,260 | (39%) | | Basic and Diluted Net Loss Per Share | $(0.14) | $(0.26) | $0.12 | (46%) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased significantly from December 31, 2018, to June 30, 2019, primarily due to equity financing and stock-based compensation, despite ongoing net losses Stockholders' Equity Changes (in thousands) | Item | Six Months Ended June 30, 2019 | | :--------------------------------- | :----------------------------- | | Balance at December 31, 2018 | $2,728 | | Net loss | $(9,617) | | Equity financing, net | $9,698 | | Stock-based compensation expense | $1,193 | | Foreign currency translation adjustments | $42 | | Balance at June 30, 2019 | $5,404 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2019, the company experienced a net increase in cash, primarily driven by significant cash provided by financing activities, which offset the cash used in operating and investing activities Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2019 | 2018 | Change ($) | Change (%) | | :---------------------------------------- | :---------- | :---------- | :--------- | :--------- | | Net cash used in operating activities | $(9,708) | $(12,804) | $3,096 | (24%) | | Net cash used in investing activities | $(60) | $(31) | $(29) | 93.5% | | Net cash provided by (used in) financing activities | $15,368 | $(994) | $16,362 | (1646%) | | Net increase (decrease) in cash | $5,607 | $(13,923) | $19,530 | (140%) | | Cash at end of period | $13,262 | $13,890 | $(628) | (4.5%) | Non-cash Activities (Six Months Ended June 30, in thousands) | Item | 2019 | 2018 | | :---------------------------------------- | :------ | :------ | | Initial recognition of operating lease right-of-use assets | $1,454 | $0 | | Initial recognition of operating lease liabilities | $1,498 | $0 | | Share issuance for employee bonuses | $919 | $230 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the company's accounting policies, financial instruments, debt, equity, and other significant financial information, offering context to the condensed consolidated financial statements [1. Organization](index=11&type=section&id=1.%20Organization) Ekso Bionics designs, develops, and sells exoskeleton technology for medical rehabilitation (Ekso GT, EksoUE) and industrial use (EksoVest, EksoZeroG). The company has a significant accumulated deficit and negative cash flows from operations, raising substantial doubt about its ability to continue as a going concern beyond Q4 2019 without additional financing - Ekso Bionics designs, develops, and sells exoskeleton technology for medical (stroke, spinal cord injury rehabilitation) and industrial (heavy duty work) markets[21](index=21&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - The company had an accumulated deficit of **$180,763 thousand** as of June 30, 2019, and used **$9,708 thousand** cash in operations for the six months ended June 30, 2019[22](index=22&type=chunk) - Cash on hand at June 30, 2019, was **$13,262 thousand**, with **$4,546 thousand** restricted, leaving **$8,716 thousand** unrestricted. This raises substantial doubt about the company's ability to continue as a going concern for the next twelve months without additional financing, with current resources projected to last until late Q4 2019[24](index=24&type=chunk)[25](index=25&type=chunk) - The company is actively pursuing opportunities to obtain additional financing through public or private equity and/or debt financings and corporate collaborations[26](index=26&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies and Estimates](index=11&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies%20and%20Estimates) The financial statements are unaudited, prepared in accordance with SEC rules and U.S. GAAP, and include normal recurring adjustments. Key accounting policies cover revenue recognition, leases (adopted ASC 842 in Q1 2019), foreign currency, investments in unconsolidated affiliates, variable interest entities, inventory valuation, government grants, and concentration of credit risk - The unaudited condensed consolidated financial statements are prepared consistent with the 2018 10-K, include normal recurring adjustments, and adhere to SEC rules and U.S. GAAP[27](index=27&type=chunk)[29](index=29&type=chunk) - The company adopted ASC 842 (Leases) effective January 1, 2019, using the modified retrospective transition method, recognizing right-of-use assets and lease liabilities of **$1,454 thousand** and **$1,498 thousand**, respectively, upon adoption. This had no material impact on operations or cash flows[40](index=40&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Revenue is recognized upon transfer of control of products or services, disaggregated by medical (EksoHealth) and industrial (EksoWorks) segments[43](index=43&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - In the three months ended June 30, 2019, one customer accounted for **31% of total revenue**. For the six months ended June 30, 2019, one customer accounted for **21% of total revenue**[56](index=56&type=chunk)[57](index=57&type=chunk) [3. Accumulated Other Comprehensive Income (Loss)](index=16&type=section&id=3.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) The accumulated other comprehensive loss improved from $(92) thousand at December 31, 2018, to $(50) thousand at June 30, 2019, primarily due to positive foreign currency translation adjustments Accumulated Other Comprehensive Income (Loss) (in thousands) | Item | Amount | | :--------------------------------- | :----- | | Balance at December 31, 2018 | $(92) | | Current period other comprehensive income | $42 | | Balance at June 30, 2019 | $(50) | [4. Fair Value Measurements](index=16&type=section&id=4.%20Fair%20Value%20Measurements) The company measures certain financial liabilities, specifically warrant liabilities and contingent success fees, at fair value using Level 3 unobservable inputs, with warrant liabilities showing a significant increase from December 2018 to June 2019 due to new issuances Fair Value Hierarchy (in thousands) | Liability | June 30, 2019 | December 31, 2018 | Level | | :--------------------------------- | :------------ | :---------------- | :---- | | Warrant liabilities | $6,561 | $585 | 3 | | Contingent success fee liability | $35 | $34 | 3 | Changes in Level 3 Financial Liabilities (in thousands) | Item | Warrant Liability | Contingent Success Fee Liability | | :----------------------------------------------------------------- | :---------------- | :------------------------------- | | Balance at December 31, 2018 | $585 | $34 | | Initial fair value of warrants issued in May 2019 financing | $7,334 | — | | Gain on revaluation of warrants | $(1,615) | — | | Loss on modification of December 2015 warrants | $257 | — | | Loss on revaluation of contingent liabilities | — | $1 | | Balance at June 30, 2019 | $6,561 | $35 | [5. Inventories, net](index=17&type=section&id=5.%20Inventories,%20net) Net inventories increased to $3,724 thousand at June 30, 2019, from $3,371 thousand at December 31, 2018, primarily due to an increase in raw materials and work in progress, partially offset by a decrease in finished goods and inventory reserve Inventories, Net (in thousands) | Item | June 30, 2019 | December 31, 2018 | | :------------------ | :------------ | :---------------- | | Raw materials | $2,800 | $2,676 | | Work in progress | $446 | $331 | | Finished goods | $673 | $730 | | Less: inventory reserve | $(195) | $(366) | | **Inventories, net**| **$3,724** | **$3,371** | [6. Revenue Recognition](index=17&type=section&id=6.%20Revenue%20Recognition) Revenue is recognized when control of products or services transfers to customers. Deferred revenue, primarily from extended maintenance contracts, increased to $3,130 thousand at June 30, 2019, with a significant portion expected to be recognized in 2019 and 2020. The company also has a non-cancellable backlog of $642 thousand for rental units - Revenue is recognized upon transfer of control of promised products or services to customers[73](index=73&type=chunk) - The company has a non-cancellable backlog of **$642 thousand** related to rental units[80](index=80&type=chunk) Deferred Revenues (in thousands) | Item | June 30, 2019 | December 31, 2018 | | :---------------------------------- | :------------ | :---------------- | | Deferred extended maintenance and support | $2,705 | $2,114 | | Total deferred revenues | $3,130 | $2,597 | | Less current portion | $(1,369) | $(1,102) | | Deferred revenues, non-current | $1,761 | $1,495 | Disaggregation of Revenue (Six Months Ended June 30, 2019, in thousands) | Source | EksoHealth | EksoWorks | Other | Total | | :------------------------- | :--------- | :-------- | :---- | :---- | | Device revenue | $4,239 | $1,076 | $0 | $5,315 | | Service, support and rentals | $1,375 | $0 | $0 | $1,375 | | Parts and other | $40 | $140 | $0 | $180 | | Collaborative arrangements | $0 | $0 | $8 | $8 | | **Total Revenue** | **$5,654** | **$1,216** | **$8** | **$6,878** | [7. Investment in Unconsolidated Affiliate](index=19&type=section&id=7.%20Investment%20in%20Unconsolidated%20Affiliate) The company entered a Joint Venture (JV) Agreement in January 2019 to establish Exoskeleton Intelligent Robotics Co. Limited in China, aiming to develop the Asian exoskeleton market and create a global manufacturing center. The company will receive a 20% ownership interest in exchange for IP transfer and will earn royalties. The JV is a Variable Interest Entity (VIE) where the company is not the primary beneficiary, and its investment is accounted for using the equity method - Ekso Bionics entered a JV Agreement in January 2019 to establish Exoskeleton Intelligent Robotics Co. Limited in China, aiming to develop the exoskeleton market in China and other Asian markets and create a global manufacturing center[86](index=86&type=chunk) - The company has the right to receive a **20% ownership interest** in the Investee in exchange for the successful transfer of licenses for its manufacturing technology and relevant Chinese patent rights (IP)[87](index=87&type=chunk) - The Investee is a Variable Interest Entity (VIE) for which the company is not the primary beneficiary, and the investment is accounted for under the equity method[88](index=88&type=chunk) - ZYVC or its designees agreed to invest **$10,000 thousand** in equity in the company, with **$5,000 thousand** already received for **3,067 thousand shares** at **$1.63 per share**. The remaining **$5,000 thousand** is contingent upon the shipment of the first products from the manufacturing facility[92](index=92&type=chunk)[93](index=93&type=chunk) [8. Accrued Liabilities](index=20&type=section&id=8.%20Accrued%20Liabilities) Total accrued liabilities decreased to $2,768 thousand at June 30, 2019, from $3,541 thousand at December 31, 2018, primarily due to reductions in salaries, benefits, and severance-related expenses Accrued Liabilities (in thousands) | Item | June 30, 2019 | December 31, 2018 | | :---------------------------------- | :------------ | :---------------- | | Salaries, benefits and related expenses | $1,865 | $2,446 | | Device warranty | $294 | $307 | | Clinical trials | $307 | $227 | | Severance | $46 | $270 | | Other | $220 | $256 | | **Total** | **$2,768** | **$3,541** | Device Warranty Liability (Six Months Ended June 30, 2019, in thousands) | Item | Amount | | :---------------------------------- | :----- | | Balance at December 31, 2018 | $307 | | Additions for estimated future expense | $180 | | Incurred costs | $(193) | | Balance at June 30, 2019 | $294 | [9. Long-Term Debt](index=20&type=section&id=9.%20Long-Term%20Debt) The company has a $7,000 thousand loan agreement from December 2016, bearing interest at LIBOR plus 5.41%, maturing January 2021. It includes a $250 thousand contingent success fee liability (fair value $35 thousand at June 30, 2019) and a liquidity covenant requiring minimum unrestricted cash. The company was compliant with covenants as of June 30, 2019 - The company has a **$7,000 thousand** loan agreement from December 2016, bearing interest at 30-day U.S. LIBOR plus **5.41%**, with principal payments amortizing over 36 months and maturity on January 1, 2021[95](index=95&type=chunk)[96](index=96&type=chunk)[100](index=100&type=chunk) - A **$250 thousand** contingent success fee is due upon certain events (e.g., sale of assets, merger, stock price reaching $8.00 for five days), with a fair value of **$35 thousand** at June 30, 2019[101](index=101&type=chunk) - The loan agreement includes a liquidity covenant requiring minimum unrestricted cash equal to three months of 'Monthly Cash Burn,' which was **$4,546 thousand** as of June 30, 2019. The company was compliant with all covenants[102](index=102&type=chunk) Scheduled Principal Payments of Long-Term Debt (as of June 30, 2019, in thousands) | Period | Amount | | :-------------- | :----- | | 2019 - remainder| $1,167 | | 2020 | $2,333 | | 2021 | $440 | | **Total principal payments** | **$3,940** | [10. Lease Obligations](index=21&type=section&id=10.%20Lease%20Obligations) The company's lease liabilities, primarily for its Richmond headquarters and Hamburg office, totaled $1,327 thousand at June 30, 2019, following the adoption of ASC 842. The company also recorded a $125 thousand credit to sales and marketing expenses in H1 2019 due to the termination of a Freiburg office lease - The company's operating lease for its Richmond, CA headquarters expires in May 2022, and its European operations office in Hamburg, Germany, expires in July 2022 with a five-year extension option[105](index=105&type=chunk)[108](index=108&type=chunk) - A **$125 thousand** credit was recorded to sales and marketing expenses for the six months ended June 30, 2019, due to the termination of a Freiburg office lease[108](index=108&type=chunk) - The present value of lease liabilities was **$1,327 thousand** at June 30, 2019 (current: **$393 thousand**, non-current: **$934 thousand**), with a weighted-average remaining lease term of **2.94 years** and a weighted-average discount rate of **10.5%**[109](index=109&type=chunk) Future Lease Payments (as of June 30, 2019, in thousands) | Period | Operating Leases | | :-------------- | :--------------- | | 2019 - remainder| $273 | | 2020 | $553 | | 2021 | $565 | | 2022 | $262 | | **Total lease payments** | **$1,653** | [11. Capitalization and Equity Structure](index=22&type=section&id=11.%20Capitalization%20and%20Equity%20Structure) The company's authorized capital includes 141,429 thousand common shares and 10,000 thousand preferred shares. As of June 30, 2019, 74,895 thousand common shares were outstanding. Significant equity financing occurred in May 2019, raising $9.0 million net proceeds from common stock and warrant sales, and $5.0 million from JV-related equity investors in January 2019 - As of June 30, 2019, the company had **141,429 thousand** authorized common shares and **10,000 thousand** authorized preferred shares, with **74,895 thousand** common shares issued and outstanding[114](index=114&type=chunk) - In May 2019, the company sold **6,667 thousand** common shares and accompanying warrants for **$10,000 thousand** gross proceeds (net **$9,037 thousand**), with **$7,334 thousand** allocated to warrants and **$2,666 thousand** to common stock[23](index=23&type=chunk)[117](index=117&type=chunk) - In January 2019, the company sold **3,067 thousand** common shares for **$5,000 thousand** at **$1.63 per share** in connection with the JV Agreement[92](index=92&type=chunk)[116](index=116&type=chunk) - The 2019 Warrants, issued in May 2019, include price protection and put-option features, classifying them as a liability measured at fair value (Level 3)[119](index=119&type=chunk)[122](index=122&type=chunk) - The 2015 Warrants were modified in March 2019, reducing their exercise price from **$3.74 to $2.75**, resulting in a **$257 thousand** loss on modification[126](index=126&type=chunk) Warrant Shares Outstanding (in thousands) | Source | Exercise Price | Term (Years) | Dec 31, 2018 | Issued | Expired | June 30, 2019 | | :--------------------- | :------------- | :----------- | :----------- | :----- | :------ | :------------ | | 2019 Warrants | $2.00 | 5 | — | 6,667 | — | 6,667 | | Information Agent Warrants | $1.50 | 3 | 200 | — | — | 200 | | 2015 Warrants | $2.75 | 5 | 1,604 | — | — | 1,604 | | Pre-2014 warrants | $9.66 | 9-10 | 88 | — | — | 88 | | **Total** | | | **3,396** | **6,667** | **(1,504)** | **8,559** | [12. Stock-based Compensation](index=25&type=section&id=12.%20Stock-based%20Compensation) Stockholders approved an increase of 3,500 thousand shares for the 2014 Equity Incentive Plan, bringing the total authorized to 12,614 thousand shares. Total stock-based compensation expense for H1 2019 was $1,193 thousand, with significant unrecognized costs remaining for both stock options and RSUs - The 2014 Equity Incentive Plan's authorized shares increased by **3,500 thousand** to **12,614 thousand**, with **4,015 thousand** shares available for future grants as of June 30, 2019[130](index=130&type=chunk) - As of June 30, 2019, total unrecognized compensation cost related to unvested stock options was **$4,849 thousand** (expected over **2.84 years**) and for unvested RSUs was **$326 thousand** (expected over **2.98 years**)[131](index=131&type=chunk)[136](index=136&type=chunk) Stock Options Activity (Six Months Ended June 30, 2019, in thousands) | Item | Number of Shares | Weighted-Average Exercise Price | | :---------------------------------- | :--------------- | :------------------------------ | | Balance as of December 31, 2018 | 6,466 | $3.05 | | Options granted | 674 | $1.45 | | Options exercised | (186) | $1.23 | | Options forfeited | (451) | $2.12 | | Options cancelled | (180) | $3.75 | | Balance as of June 30, 2019 | 6,323 | $2.98 | Total Stock-based Compensation Expense (in thousands) | Expense Category | Q2 2019 | Q2 2018 | H1 2019 | H1 2018 | | :----------------------- | :------ | :------ | :------ | :------ | | Sales and marketing | $156 | $166 | $379 | $275 | | Research and development | $73 | $47 | $118 | $225 | | General and administrative | $328 | $189 | $696 | $794 | | **Total** | **$557** | **$402** | **$1,193** | **$1,294** | [13. Income Taxes](index=26&type=section&id=13.%20Income%20Taxes) No material changes to unrecognized tax benefits in H1 2019, and none expected for the fiscal year. All years remain open to tax examination due to the company's history of tax losses - There were no material changes to unrecognized tax benefits in the six months ended June 30, 2019, and no significant changes are expected through the end of the fiscal year[139](index=139&type=chunk) - All years remain open to tax examination due to the company's history of tax losses[139](index=139&type=chunk) [14. Commitments and Contingencies](index=26&type=section&id=14.%20Commitments%20and%20Contingencies) The company has license agreements requiring minimum annual royalties of $50 thousand for certain patents and a single-digit royalty on net receipts for mechanical balance and support arm technologies. Purchase obligations for inventory and manufacturing services totaled $803 thousand as of June 30, 2019, expected to be paid within a year. Management believes current legal matters will not materially affect financial statements - The company has two license agreements with the Regents of the University of California requiring minimum annual royalties of **$50 thousand**[143](index=143&type=chunk)[215](index=215&type=chunk) - A license agreement related to the Equipois acquisition requires a single-digit royalty on net receipts, subject to a **$50 thousand** annual minimum royalty[144](index=144&type=chunk)[216](index=216&type=chunk) - Purchase obligations for inventory and manufacturing related service contracts totaled **$803 thousand** as of June 30, 2019, expected to be paid within a year[145](index=145&type=chunk)[217](index=217&type=chunk) - Management believes the resolution of current legal matters will not have a material adverse effect on the company's condensed consolidated financial statements[146](index=146&type=chunk) [15. Net Loss Per Share](index=27&type=section&id=15.%20Net%20Loss%20Per%20Share) Basic and diluted net loss per share for Q2 2019 was $(0.04) and for H1 2019 was $(0.14). Potential common stock equivalents, including options, RSUs, and warrants, were anti-dilutive due to the net loss and thus excluded from diluted EPS calculations Net Loss Per Share (in thousands, except per share) | Metric | Q2 2019 | Q2 2018 | H1 2019 | H1 2018 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Net loss applicable to common stockholders | $(3,066) | $(7,978) | $(9,617) | $(15,877) | | Weighted-average shares outstanding | 70,702 | 60,621 | 67,886 | 60,386 | | **Net loss per share, basic and diluted** | **$(0.04)** | **$(0.13)** | **$(0.14)** | **$(0.26)** | Anti-dilutive Common Stock Equivalents (in thousands) | Item | Q2 2019 | Q2 2018 | H1 2019 | H1 2018 | | :--------------------------------- | :------ | :------ | :------ | :------ | | Options to purchase common stock | 6,323 | 2,916 | 6,323 | 2,916 | | Restricted stock units | 239 | 78 | 239 | 78 | | Warrants for common stock | 8,559 | 3,396 | 8,559 | 3,396 | | **Total common stock equivalents** | **15,121** | **6,390** | **15,121** | **6,390** | [16. Segment Disclosures](index=27&type=section&id=16.%20Segment%20Disclosures) The company operates in two reportable segments: EksoHealth (medical devices) and EksoWorks (industrial devices), managed separately due to distinct markets. Performance is evaluated based on segment gross profit margin. Both segments showed revenue growth for H1 2019, with EksoHealth significantly contributing to the overall gross profit increase - The company has two reportable segments: EksoHealth (medical devices) and EksoWorks (industrial devices), which are managed separately due to serving distinct markets[150](index=150&type=chunk) Segment Reporting (Six Months Ended June 30, 2019, in thousands) | Metric | EksoHealth | EksoWorks | Other | Total | | :----------- | :--------- | :-------- | :---- | :---- | | Revenue | $5,654 | $1,216 | $8 | $6,878 | | Cost of revenue | $2,627 | $1,085 | $7 | $3,719 | | Gross profit | $3,027 | $131 | $1 | $3,159 | Geographic Revenue (Six Months Ended June 30, in thousands) | Region | 2019 | 2018 | | :------------ | :------ | :------ | | United States | $4,728 | $3,131 | | All Other | $2,150 | $2,355 | | **Total** | **$6,878** | **$5,486** | [17. Related Party Transactions](index=28&type=section&id=17.%20Related%20Party%20Transactions) The company has a consulting agreement with Angel Pond Capital LLC, an entity affiliated with a director, for strategic positioning in Asia Pacific. Services amounted to $30 thousand in H1 2019. A $1,000 thousand payment to Angel Pond is contingent upon the consummation of the China joint venture - The company has a consulting agreement with Angel Pond Capital LLC, an entity solely owned and managed by director Dr. Ted Wang, for strategic positioning in the Asia Pacific region[153](index=153&type=chunk)[156](index=156&type=chunk) - Consulting services provided by Angel Pond Capital LLC amounted to **$30 thousand** during the six months ended June 30, 2019[156](index=156&type=chunk) - A **$1,000 thousand** payment to Angel Pond is contingent upon the consummation of the China joint venture, which has not yet been recorded as the JV has not completed registration[157](index=157&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, liquidity, and capital resources for the three and six months ended June 30, 2019. It highlights revenue growth, improved gross profit, reduced operating expenses, and the ongoing need for additional financing due to accumulated losses and negative cash flows, despite recent equity raises - The company designs, develops, and sells exoskeleton technology for medical (Ekso GT, EksoUE) and industrial (EksoVest, EksoZeroG) markets[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - In May 2019, the company sold **6,666,667 shares** of common stock and warrants for **$9.0 million** net proceeds. In Q2 2019, **22 EksoGT units** were booked, including **11 conversions** from rental to capital purchases[168](index=168&type=chunk)[203](index=203&type=chunk) - For the three months ended June 30, 2019, revenue increased by **10% ($0.3 million)**, gross profit increased by **61% ($0.6 million)**, and net loss decreased by **62% ($4.9 million)**, primarily due to a **$2.7 million** gain on warrant revaluation[176](index=176&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[183](index=183&type=chunk) - For the six months ended June 30, 2019, revenue increased by **25% ($1.4 million)**, gross profit increased by **82% ($1.4 million)**, and net loss decreased by **39% ($6.3 million)**, driven by higher EksoHealth sales and reduced operating expenses[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - The company had an accumulated deficit of **$180.8 million** and used **$9.7 million** cash in operations for H1 2019. Unrestricted cash was **$8.7 million** at June 30, 2019, raising substantial doubt about its ability to continue as a going concern beyond Q4 2019 without additional financing[202](index=202&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) Contractual Obligations (as of June 30, 2019, in thousands) | Obligation | Total | Less than One Year | 1-3 Years | 3-5 Years | After 5 Years | | :---------------------- | :------ | :----------------- | :-------- | :-------- | :------------ | | Term loan | $4,181 | $2,539 | $1,642 | $0 | $0 | | Facility operating leases | $1,654 | $548 | $1,106 | $0 | $0 | | Purchase obligations | $803 | $803 | $0 | $0 | $0 | | Financing lease | $39 | $36 | $3 | $0 | $0 | | **Total** | **$6,677** | **$3,926** | **$2,751** | **$0** | **$0** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, including inflation and foreign exchange rate fluctuations, but does not believe inflation has had a material effect. It conducts business in foreign countries (Germany, Singapore) and is susceptible to exchange rate risk, but does not use hedging agreements - The company does not believe that inflation has had a material effect on its business, financial condition, or results of operations[219](index=219&type=chunk) - The company is exposed to exchange rate risk due to conducting business in foreign countries (Germany and Singapore) but does not enter into foreign currency hedging agreements[220](index=220&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2019, ensuring timely and accurate reporting. No material changes in internal control over financial reporting occurred during the quarter - Management, with the participation of the principal executive officer and principal financial officer, concluded that disclosure controls and procedures were effective as of June 30, 2019[222](index=222&type=chunk) - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the most recent fiscal quarter[224](index=224&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several shareholder derivative actions alleging breach of fiduciary duties, unjust enrichment, and gross mismanagement, stemming from a previously disclosed material weakness in internal controls. Management believes these lawsuits are without merit and plans to defend against them - The company is defending against a Nevada state court derivative action (D'Arcy v. Looby et al.) filed in February 2018, alleging breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets[226](index=226&type=chunk) - Multiple California state court derivative actions (Elmes v. Peurach et al., Leung v. Peurach et al., and Herby v. Hamilton et al.) were consolidated, alleging similar claims. The court dismissed the consolidated complaint with leave to amend in July 2019[227](index=227&type=chunk) - Management believes these lawsuits are without merit and plans to defend against them[226](index=226&type=chunk)[227](index=227&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor highlights potential delays, restrictions, or adverse impacts on the China Joint Venture (JV) operations due to U.S. regulatory review, specifically inquiries from the Department of Defense (DoD) and CFIUS regarding export control classifications and national security concerns - A new risk factor addresses potential delays, restrictions, or other adverse impacts on the operations of the China Joint Venture (JV) due to U.S. regulatory review[230](index=230&type=chunk) - The Department of Defense (DoD) and the Treasury Department (CFIUS) have inquired about the China JV and related Share Purchase, concerning export control classifications and potential national security risks[231](index=231&type=chunk) - CFIUS has broad discretion to review foreign investments and could impose mitigation measures (e.g., prior U.S. government approval for technology transfer) or recommend Presidential action to compel abandonment or unwinding of the JV or Share Purchase[234](index=234&type=chunk)[235](index=235&type=chunk) - The Department of Commerce could also require licenses for technology export to the China JV, potentially delaying and restricting the transfer of manufacturing technology[236](index=236&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including warrant forms, amendments to the China JV contract, an offer letter, CEO/CFO certifications, and XBRL financial statements - Key exhibits include the Form of Warrant (4.1), Amendment to the Joint Venture Contract of Exoskeleton Intelligent Robotics Co. Limited (10.1†), Bill Shaw Offer Letter (10.2**), CEO/CFO Certifications (31.1*, 31.2*, 32.1*, 32.2*), and XBRL Financial Statements (101*)[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) [Signatures](index=40&type=section&id=Signatures) The report is signed by Jack Peurach, President and Chief Executive Officer, and John F. Glenn, Chief Financial Officer, on August 1, 2019, certifying its submission - The report was signed by Jack Peurach, President and Chief Executive Officer, and John F. Glenn, Chief Financial Officer, on August 1, 2019[249](index=249&type=chunk)

Ekso Bionics Holdings, Inc. (NASDAQ:EKSO) Q1 2019 Earnings Conference Call May 1, 2019 4:30 PM ET Company Participants David Carey - Lazar Partners Jack Peurach - President, CEO & Director John Glenn - CFO & Secretary Conference Call Participants Tyler Knisley - SunTrust Robinson Humphrey Nathan Weinstein - Aegis Capital Corporation Operator Greetings and welcome to Ekso Bionics First Quarter Financial Results Conference Call. [Operator Instructions]. Please note this conference is being recorded. I will n ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the first quarter of 2019 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining accounting policies, financial instruments, and significant transactions for the period ended March 31, 2019 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | March 31, 2019 (unaudited) | December 31, 2018 | | :-------------------- | :------------------------- | :------------------ | | Total Assets | $20,860 | $17,655 | | Total Liabilities | $16,326 | $14,927 | | Total Stockholders' Equity | $4,534 | $2,728 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's revenues, cost of revenues, operating expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $3,616 | $2,518 |\ | Cost of Revenue | $2,017 | $1,751 |\ | Gross Profit | $1,599 | $767 |\ | Total Operating Expenses | $6,511 | $9,380 |\ | Loss from Operations | $(4,912) | $(8,613) |\ | Net Loss | $(6,551) | $(7,901) |\ | Basic and Diluted Net Loss Per Share | $(0.10) | $(0.13) | - Revenue increased by **44% ($1,098 thousand)** for the three months ended March 31, 2019, compared to the same period in 2018[14](index=14&type=chunk)[171](index=171&type=chunk) - Gross profit increased by **108% ($832 thousand)** for the three months ended March 31, 2019, compared to the same period in 2018[14](index=14&type=chunk)[173](index=173&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's total stockholders' equity and its components over specific reporting periods Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Balance at Dec 31, 2018 | Net Loss | Equity Financing, net | Stock-based Compensation | Foreign Currency Translation Adjustments | Balance at Mar 31, 2019 | | :-------------------- | :---------------------- | :------- | :-------------------- | :----------------------- | :--------------------------------------- | :---------------------- | | Total Stockholders' Equity | $2,728 | $(6,551) | $7,305 | $636 | $148 | $4,534 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from the company's operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Used in Operating Activities | $(5,177) | $(6,745) |\ | Net Cash Used in Investing Activities | $(7) | $(31) |\ | Net Cash Provided by (Used in) Financing Activities | $6,769 | $(399) |\ | Net Increase (Decrease) in Cash | $1,581 | $(7,241) |\ | Cash at End of Period | $9,236 | $20,572 | - Net cash used in operating activities decreased by **$1.6 million (23%)** for the three months ended March 31, 2019, primarily due to decreased employment costs, lower consulting and marketing costs, and increased cash collections from sales[189](index=189&type=chunk) - Net cash provided by financing activities was **$6.8 million** in Q1 2019, driven by **$2.3 million** from common stock sales under the ATM program and **$5.0 million** from equity investors associated with the China JV, offset by **$0.6 million** in principal payments on debt[190](index=190&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for accounting policies, financial instruments, and significant transactions [1. Organization](index=10&type=section&id=1.%20Organization) This note describes the company's business, products, financial condition, and going concern considerations - Ekso Bionics designs, develops, and sells exoskeleton technology for medical rehabilitation (Ekso GT) and industrial use (EksoVest, EksoZeroG)[25](index=25&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - The Company had an accumulated deficit of **$177.7 million** as of March 31, 2019, and has incurred significant operating losses and negative cash flows since inception[26](index=26&type=chunk)[182](index=182&type=chunk) - Cash on hand was **$9.2 million** at March 31, 2019, but after considering restricted cash (**$4.9 million**), effective unrestricted cash was **$4.3 million**, raising substantial doubt about the Company's ability to continue as a going concern for the next twelve months[27](index=27&type=chunk)[183](index=183&type=chunk) - The Company is actively pursuing additional financing through equity/debt and corporate collaborations to fund operations and continued investments in clinical, sales, R&D, and commercialization activities[28](index=28&type=chunk)[29](index=29&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies and Estimates](index=10&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies%20and%20Estimates) This note outlines accounting principles, estimates, and the impact of new accounting standard adoptions - The Company adopted ASU No. 2016-02, Leases (Topic 842), effective January 1, 2019, recognizing right-of-use assets and corresponding lease liabilities of **$1.454 million** and **$1.498 million**, respectively, upon adoption[42](index=42&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - The adoption of ASC 842 did not materially impact the Company's condensed consolidated statements of operations or cash flows, nor its long-term debt financial covenants[60](index=60&type=chunk)[168](index=168&type=chunk) [3. Accumulated Other Comprehensive Income (Loss)](index=14&type=section&id=3.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note details the components of accumulated other comprehensive income, specifically foreign currency translation adjustments Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric (in thousands) | Foreign Currency Translation | | :-------------------- | :--------------------------- | | Balance at Dec 31, 2018 | $(92) |\ | Current period other comprehensive income | $148 |\ | Balance at Mar 31, 2019 | $56 | [4. Fair Value Measurements](index=14&type=section&id=4.%20Fair%20Value%20Measurements) This note presents the fair value hierarchy and measurements for financial instruments, including warrant and contingent liabilities Fair Value Measurements of Liabilities (in thousands) | Liability (in thousands) | March 31, 2019 | December 31, 2018 | | :----------------------- | :------------- | :---------------- | | Warrant liabilities | $1,964 | $585 |\ | Contingent success fee liability | $35 | $34 | - The warrant liability increased significantly from **$585 thousand** at December 31, 2018, to **$1,964 thousand** at March 31, 2019, primarily due to a **$1.122 million** loss on revaluation of warrants and a **$257 thousand** loss on modification of warrants[68](index=68&type=chunk) [5. Inventories, net](index=15&type=section&id=5.%20Inventories%2C%20net) This note provides a detailed breakdown of the company's inventory components and their net valuation Inventories, Net Breakdown (in thousands) | Inventory Component (in thousands) | March 31, 2019 | December 31, 2018 | | :--------------------------------- | :------------- | :---------------- | | Raw materials | $2,967 | $2,676 |\ | Work in progress | $303 | $331 |\ | Finished goods | $335 | $730 |\ | Less: inventory reserve | $(305) | $(366) |\ | **Inventories, net** | **$3,300** | **$3,371** | [6. Revenue Recognition](index=15&type=section&id=6.%20Revenue%20Recognition) This note explains the company's revenue recognition policies and provides details on deferred revenue and revenue by source Deferred Revenue (in thousands) | Deferred Revenue (in thousands) | March 31, 2019 | December 31, 2018 | | :------------------------------ | :------------- | :---------------- | | Deferred extended maintenance and support | $2,281 | $2,114 |\ | Total deferred revenues | $2,710 | $2,597 |\ | Less current portion | $(1,211) | $(1,102) |\ | Deferred revenues, non-current | $1,499 | $1,495 | - The Company expects to recognize approximately **$764 thousand** of deferred revenue in the remainder of 2019, **$788 thousand** in 2020, and **$1,103 thousand** thereafter[76](index=76&type=chunk) Revenue by Source (in thousands) | Revenue Source (in thousands) | EksoHealth | EksoWorks | Total | | :---------------------------- | :--------- | :-------- | :---- | | Device revenue | $2,075 | $717 | $2,792 |\ | Service, support and rentals | $705 | — | $705 |\ | Parts and other | $34 | $85 | $119 |\ | **Total Revenue** | **$2,814** | **$802** | **$3,616** | [7. Investment in Unconsolidated Affiliate](index=18&type=section&id=7.%20Investment%20in%20Unconsolidated%20Affiliate) This note describes the formation of a joint venture in China and the related equity investment and technology transfer agreements - The Company entered into a joint venture agreement on January 30, 2019, to establish Exoskeleton Intelligent Robotics Co. Limited (the 'Investee') in China, aiming to develop and serve the exoskeleton market in China and other Asian markets and create a global manufacturing center[83](index=83&type=chunk) - The Company will receive a **20% ownership interest** in the Investee by transferring licenses for its manufacturing technology and relevant Chinese patent rights, and will also receive royalties on the Investee's medical and industrial product sales in certain Asian markets[84](index=84&type=chunk) - In connection with the JV, ZYVC invested **$5.0 million** in the Company's common stock in February 2019, with a further **$5.0 million** investment contingent upon the first product shipment from the manufacturing facility[86](index=86&type=chunk)[113](index=113&type=chunk)[161](index=161&type=chunk) [8. Accrued Liabilities](index=19&type=section&id=8.%20Accrued%20Liabilities) This note details the composition of the company's accrued liabilities, including salaries, warranty, and clinical trial costs Accrued Liabilities Breakdown (in thousands) | Accrued Liability (in thousands) | March 31, 2019 | December 31, 2018 | | :------------------------------- | :------------- | :---------------- | | Salaries, benefits and related expenses | $2,458 | $2,446 |\ | Device warranty | $289 | $307 |\ | Clinical trials | $273 | $227 |\ | Severance | $116 | $270 |\ | Other | $114 | $256 |\ | **Total** | **$3,286** | **$3,541** | [9. Long-Term Debt](index=19&type=section&id=9.%20Long-Term%20Debt) This note outlines the terms of the company's long-term loan agreement, including interest rates, maturity, and liquidity covenants - The Company has a loan agreement from December 2016 for **$7.0 million**, bearing interest at 30-day U.S. LIBOR plus **5.41%**, maturing on January 1, 2021, with a final payment of **$245 thousand**[92](index=92&type=chunk)[93](index=93&type=chunk) - A liquidity covenant requires maintaining unrestricted cash equal to at least three months of 'Monthly Cash Burn,' which was **$4.908 million** as of March 31, 2019. The Company was compliant with **$9.236 million** cash on hand[98](index=98&type=chunk) Scheduled Principal Payments on Long-Term Debt (in thousands) | Scheduled Principal Payments (in thousands) | Amount | | :---------------------------------------- | :----- | | 2019 - remainder | $1,750 |\ | 2020 | $2,333 |\ | 2021 | $440 |\ | **Total principal payments** | **$4,523** | [10. Lease Obligations](index=20&type=section&id=10.%20Lease%20Obligations) This note describes the company's operating lease commitments for facilities and presents related financial metrics - The Company renewed its headquarters and manufacturing facility lease in Richmond, CA, expiring May 2022, and has an operating lease for its European office in Hamburg, Germany, ending July 2022[101](index=101&type=chunk)[102](index=102&type=chunk) Operating Lease Payments (in thousands) | Lease Payments (in thousands) | Operating Leases | | :---------------------------- | :--------------- | | 2019 - remainder | $406 |\ | 2020 | $551 |\ | 2021 | $564 |\ | 2022 | $261 |\ | **Total lease payments** | **$1,782** |\ | Present value of lease liabilities | $1,412 |\ | Weighted-average remaining lease term | 3.2 years |\ | Weighted-average discount rate | 10.5% | [11. Capitalization and Equity Structure](index=21&type=section&id=11.%20Capitalization%20and%20Equity%20Structure) This note provides details on the company's common stock, equity offerings, and modifications to warrant liabilities - As of March 31, 2019, the Company had **67,529 thousand** shares of common stock issued and outstanding[109](index=109&type=chunk)[18](index=18&type=chunk) - The Company sold **1,294 thousand** shares of common stock under its at-the-market (ATM) offering program for **$2.3 million** net proceeds in Q1 2019, with **$17.734 million** remaining available[112](index=112&type=chunk)[162](index=162&type=chunk) - In connection with the China JV, the Company sold **3,067 thousand** shares of common stock for **$5.0 million** at **$1.63 per share** on January 30, 2019[113](index=113&type=chunk)[161](index=161&type=chunk) - The Company recorded a **$257 thousand** loss on modification of 2015 Warrants due to a reduction in their exercise price from **$3.74 to $2.75 per share**[117](index=117&type=chunk)[179](index=179&type=chunk) [12. Stock-based Compensation](index=23&type=section&id=12.%20Stock-based%20Compensation) This note presents information on stock option activity, unrecognized compensation cost, and stock-based compensation expense Stock Options Activity (in thousands) | Stock Options Activity (in thousands) | Stock Awards | Weighted-Average Exercise Price | | :------------------------------------ | :----------- | :------------------------------ | | Balance as of Dec 31, 2018 | 6,466 | $3.05 |\ | Options granted | 65 | $2.23 |\ | Options exercised | (54) | $1.23 |\ | Options forfeited | (372) | $2.07 |\ | Balance as of Mar 31, 2019 | 6,105 | $3.12 | - Total unrecognized compensation cost for unvested stock options was **$4.856 million**, expected to be recognized over **2.85 years**[122](index=122&type=chunk) Stock-based Compensation Expense (in thousands) | Stock-based Compensation Expense (in thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Sales and marketing | $223 | $109 |\ | Research and development | $45 | $179 |\ | General and administrative | $368 | $604 |\ | **Total** | **$636** | **$892** | [13. Income Taxes](index=24&type=section&id=13.%20Income%20Taxes) This note discusses the company's income tax position, including unrecognized tax benefits and open tax examination years - There were no material changes to unrecognized tax benefits in Q1 2019, and due to a history of tax losses, all years remain open to tax examination[130](index=130&type=chunk) [14. Commitments and Contingencies](index=24&type=section&id=14.%20Commitments%20and%20Contingencies) This note outlines the company's contractual obligations, royalty agreements, purchase commitments, and legal matters - The Company has license agreements requiring **1% royalty** on net sales (excluding U.S. government sales) and minimum annual royalties of **$50 thousand**[134](index=134&type=chunk)[193](index=193&type=chunk) - Purchase obligations, primarily for inventory and manufacturing services, totaled **$1.221 million** as of March 31, 2019, expected to be paid within one year[136](index=136&type=chunk)[195](index=195&type=chunk) - Management believes the resolution of current legal matters will not have a material adverse effect on the condensed consolidated financial statements[137](index=137&type=chunk) [15. Net Loss Per Share](index=25&type=section&id=15.%20Net%20Loss%20Per%20Share) This note provides the calculation of basic and diluted net loss per share for the reporting periods Net Loss Per Share Calculation (in thousands) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :----- | :-------------------------------- | :-------------------------------- | | Net loss applicable to common stockholders | $(6,551) | $(7,901) |\ | Weighted-average number of shares, basic and diluted | 65,067 | 60,146 |\ | Net loss per share, basic and diluted | $(0.10) | $(0.13) | [16. Segment Disclosures](index=25&type=section&id=16.%20Segment%20Disclosures) This note presents financial performance data segmented by the company's operating segments and geographic regions - The Company operates in two reportable segments: EksoHealth (medical devices) and EksoWorks (industrial devices)[141](index=141&type=chunk) Segment Performance (in thousands) | Segment Performance (in thousands) | EksoHealth (2019) | EksoWorks (2019) | Total (2019) | EksoHealth (2018) | EksoWorks (2018) | Total (2018) | | :--------------------------------- | :---------------- | :--------------- | :----------- | :---------------- | :--------------- | :----------- | | Revenue | $2,814 | $802 | $3,616 | $2,122 | $396 | $2,518 |\ | Cost of revenue | $1,300 | $717 | $2,017 | $1,387 | $364 | $1,751 |\ | Gross profit | $1,514 | $85 | $1,599 | $735 | $32 | $767 | Geographic Revenue (in thousands) | Geographic Revenue (in thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | United States | $2,371 | $1,353 |\ | All Other | $1,245 | $1,165 |\ | **Total** | **$3,616** | **$2,518** | [17. Related Party Transactions](index=26&type=section&id=17.%20Related%20Party%20Transactions) This note details transactions with entities affiliated with the company's directors and major stockholders - The Company paid **$30 thousand** for consulting services to Angel Pond Capital LLC, an entity affiliated with a director and major stockholder, for strategic positioning in the Asia Pacific region[144](index=144&type=chunk) - A contingent payment of **$1.0 million** is due to Angel Pond upon the formation and registration of the China joint venture[145](index=145&type=chunk) [18. Subsequent Events](index=26&type=section&id=18.%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date, specifically an amendment to the China JV agreement - An amendment to the China JV Agreement on April 30, 2019, reduced the initial capital contributions required from JV Partners within 90 days from **30% (RMB 187.2 million)** to **10% (RMB 62.4 million)**[150](index=150&type=chunk) - The JV Partners are now required to contribute **RMB 124.8 million** upon notice by the China JV based on its operating plan, with the remaining **RMB 436.8 million** paid over 10 years[150](index=150&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, liquidity, and capital resources for the three months ended March 31, 2019, highlighting key operational achievements, critical accounting policies, and the impact of new accounting standards [Overview](index=29&type=section&id=Overview) This section provides a general description of the company's business, products, and market opportunities for exoskeleton technology - The Company designs, develops, and sells exoskeleton technology for medical rehabilitation (Ekso GT) and industrial applications (EksoVest, EksoZeroG)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - The Ekso GT is used for stroke and spinal cord injury rehabilitation, while EksoVest assists industrial workers with heavy-duty tasks[158](index=158&type=chunk)[159](index=159&type=chunk) - The Company believes the commercial opportunity for exoskeleton technology is accelerating due to advancements in material, electronic, control, sensor, and software technologies[160](index=160&type=chunk) [First Quarter 2019 Highlights](index=29&type=section&id=First%20Quarter%202019%20Highlights) This section summarizes key operational and financial achievements during the first quarter of 2019, including the China JV and equity offerings - Entered into a joint venture agreement in January 2019 to form a Chinese limited liability company for the exoskeleton market in China and other Asian markets, and to establish a global manufacturing center[161](index=161&type=chunk) - Received **$5.0 million** in proceeds from the sale of **3,067,485 shares** of common stock to a China JV partner affiliate in February 2019[161](index=161&type=chunk) - Sold **1.3 million shares** of common stock under the at-the-market offering program for **$2.3 million** net proceeds and booked **23 Ekso GT units** (9 rentals, 4 conversions to sales) in Q1 2019[162](index=162&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the significant accounting policies and estimates that require management's judgment in preparing the financial statements - The preparation of financial statements requires management to make estimates, judgments, and assumptions that affect reported amounts, including revenue recognition, deferred revenue, warranty costs, leases, inventory valuation, and stock options[163](index=163&type=chunk)[166](index=166&type=chunk) [Adoption of New Accounting Policy](index=30&type=section&id=Adoption%20of%20New%20Accounting%20Policy) This section explains the impact of adopting new accounting standards, specifically ASC 842 on leases, on the company's financial statements - The adoption of ASC 842 (Leases) on January 1, 2019, resulted in a material impact on the balance sheet, with the recognition of **$1.5 million** in right-of-use assets and **$1.5 million** in corresponding lease liabilities[167](index=167&type=chunk)[168](index=168&type=chunk) - The adoption did not materially impact the condensed consolidated statements of operations or cash flows, nor the financial covenants of the long-term debt agreement[168](index=168&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, gross profit, operating expenses, and net loss, for the reporting periods Results of Operations (in thousands) | Metric (in thousands) | 2019 | 2018 | Change | % Change | | :-------------------- | :---------- | :---------- | :---------- | :------- | | Revenue | $3,616 | $2,518 | $1,098 | 44% |\ | Cost of Revenue | $2,017 | $1,751 | $266 | 15% |\ | Gross profit | $1,599 | $767 | $832 | 108% |\ | Sales and marketing | $2,809 | $3,853 | $(1,044) | (27)% |\ | Research and development | $1,384 | $1,808 | $(424) | (23)% |\ | General and administrative | $2,317 | $3,738 | $(1,421) | (38)% |\ | Total operating expenses | $6,511 | $9,380 | $(2,869) | (31)% |\ | Loss from operations | $(4,912) | $(8,613) | $3,701 | (43)% |\ | Net loss | $(6,551) | $(7,901) | $1,350 | (17)% | - Revenue increased by **$1.1 million (44%)** in Q1 2019, driven by a **$0.7 million** increase in EksoHealth revenue and a **$0.4 million** increase in EksoWorks revenue due to higher device sales volume[171](index=171&type=chunk) - Operating expenses decreased significantly across sales and marketing (**-27%**), research and development (**-23%**), and general and administrative (**-38%**), primarily due to lower employment costs, reduced advertising, and the absence of a prior-year severance charge[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - A **$1.1 million** loss on revaluation of warrant liability in Q1 2019 (compared to a **$0.7 million** gain in Q1 2018) was caused by an increase in the Company's stock price, and a **$0.3 million** loss was recorded due to warrant modification[178](index=178&type=chunk)[179](index=179&type=chunk) [Financial Condition, Liquidity and Capital Resource](index=31&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resource) This section discusses the company's financial position, cash flows, liquidity, capital resources, and going concern considerations - The Company had an accumulated deficit of **$177.7 million** and used **$5.2 million** in cash from operations in Q1 2019, leading to substantial doubt about its ability to continue as a going concern[182](index=182&type=chunk)[183](index=183&type=chunk) - Cash on hand at March 31, 2019, was **$9.2 million**, with **$4.3 million** considered unrestricted after accounting for debt covenant requirements[183](index=183&type=chunk) - The Company is actively seeking additional financing through equity, debt, and corporate collaborations to fund ongoing operations and strategic investments[185](index=185&type=chunk)[186](index=186&type=chunk) Contractual Obligations (in thousands) | Contractual Obligation (in thousands) | Total | Less than One Year | 1-3 Years | 3-5 Years | After 5 Years | | :------------------------------------ | :---- | :----------------- | :-------- | :-------- | :------------ | | Term loan | $4,847 | $2,587 | $2,260 | — | — |\ | Facility operating leases | $1,782 | $543 | $1,239 | — | — |\ | Purchase obligations | $1,221 | $1,221 | — | — | — |\ | Financing lease | $48 | $36 | $12 | — | — |\ | **Total** | **$7,898** | **$4,387** | **$3,511** | **—** | **—** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the Company's exposure to market risks, specifically inflation and foreign exchange rate fluctuations, noting that inflation has not had a material effect to date but acknowledging exposure to foreign currency risk due to international operations - The Company does not believe inflation has had a material effect on its business, but an inability to offset higher costs from significant inflationary pressures could harm financial results[197](index=197&type=chunk) - The Company is exposed to exchange rate risk due to conducting business in foreign countries and having subsidiaries in Germany and Singapore[198](index=198&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2019, concluding they were effective. No material changes in internal control over financial reporting occurred during the quarter - Management concluded that disclosure controls and procedures were effective as of March 31, 2019, ensuring timely and accurate reporting of required information[200](index=200&type=chunk) - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[203](index=203&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides information on legal proceedings, risk factors, other disclosures, exhibits, and official signatures [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section provides updates on ongoing shareholder derivative actions filed against the Company and its officers/directors, primarily related to previously disclosed material weaknesses in internal controls. The Company maintains that the lawsuits are without merit and plans to defend against them - Multiple shareholder derivative actions (D'Arcy v. Looby et al., Elmes v. Peurach et al.) have been filed, alleging breach of fiduciary duties, unjust enrichment, and gross mismanagement, stemming from a material weakness in internal controls identified in December 2017[205](index=205&type=chunk)[206](index=206&type=chunk) - The Company's management believes these lawsuits are without merit and intends to defend against them[205](index=205&type=chunk)[206](index=206&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section updates previously disclosed risk factors, specifically highlighting new risks associated with the China Joint Venture, including potential U.S. regulatory review by CFIUS and the Department of Commerce, which could lead to delays, restrictions, or adverse impacts on the JV's operations and technology transfer - The China JV and related equity investment may be subject to review by the Committee on Foreign Investment in the United States (CFIUS), which has broad discretion to assert jurisdiction and impose mitigation measures or even compel abandonment if national security concerns are identified[209](index=209&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) - The Department of Commerce could also require licenses for exporting items or technology to certain destinations, potentially delaying or restricting the Company's ability to transfer manufacturing technology to the China JV[215](index=215&type=chunk) - Any U.S. government actions related to the China JV could materially and adversely affect the JV, and consequently, the Company's business, financial condition, and operating results[214](index=214&type=chunk)[216](index=216&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This section refers readers to Note 18, 'Subsequent Events,' within the financial statements for additional information - Refers to Note 18, 'Subsequent Events,' in the financial statements for additional information[217](index=217&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including key agreements, certifications, and financial statements in XBRL format - Key exhibits include the Equity Joint Venture Contract, Share Purchase Agreement, certifications of CEO and CFO, and financial statements in XBRL format[219](index=219&type=chunk) [Signatures](index=38&type=section&id=Signatures) This section contains the official signatures of the Company's President and Chief Executive Officer, and Chief Financial Officer, certifying the report - The report is signed by Jack Peurach, President and Chief Executive Officer, and John F. Glenn, Chief Financial Officer, on May 1, 2019[224](index=224&type=chunk)

Ekso Bionics Holdings, Inc. (NASDAQ:EKSO) Q4 2018 Results Earnings Conference Call February 28, 2019 4:30 PM ET Company Participants Matt Steinberg - Investor Relations Contact, Lazar Partners Jack Peurach - President and Chief Executive Officer Jack Glenn - Chief Financial Officer Conference Call Participants Bruce Nudell - SunTrust Robinson Humphrey Operator Greetings and welcome to the Ekso Bionics' Fourth Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-37854 Ekso Bionics Holdings, Inc. (Exact name of registrant as specified in its charter) Nevada (State or Other Jurisdiction of Incorporation or organization) 99-0367049 (I.R.S. Emp ...