Ekso Bionics(EKSO) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section details the company's financial performance, condition, and management's analysis, market risks, and internal controls Item 1. Financial Statements The financial statements show increased revenue, widened net losses, decreased cash, and a disclosed substantial doubt about going concern Condensed Consolidated Financial Statements The unaudited statements show increased revenue and net loss, with cash significantly decreasing due to operational usage Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and restricted cash | $13,307 | $20,525 | | Total current assets | $24,720 | $31,037 | | Total assets | $33,986 | $40,903 | | Total current liabilities | $10,129 | $9,201 | | Total liabilities | $16,179 | $15,461 | | Total stockholders' equity | $17,807 | $25,442 | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $4,703 | $3,465 | $8,825 | $6,032 | | Gross profit | $2,254 | $1,641 | $4,254 | $2,850 | | Loss from operations | $(4,284) | $(3,229) | $(8,732) | $(7,466) | | Net loss | $(4,230) | $(2,978) | $(8,619) | $(7,598) | | Net loss per share | $(0.31) | $(0.23) | $(0.64) | $(0.59) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,117) | $(8,454) | | Net decrease in cash | $(7,218) | $(8,494) | | Cash and restricted cash at end of period | $13,307 | $31,912 | Notes to Condensed Consolidated Financial Statements Notes detail the HMC acquisition, debt obligations, segment revenue, and the critical going concern disclosure due to recurring losses - The company has concluded that substantial doubt exists about its ability to continue as a going concern for at least 12 months from the issuance date of the financial statements, citing historical operating losses, negative cash flows, and the need for additional funding[23] - On December 5, 2022, the company acquired the Human Motion and Control (HMC) Business Unit for $9.055 million, adding the Ekso Indego product line[19][53][57] Revenue by Segment (in thousands) | Segment | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | EksoHealth | $8,684 | $5,109 | | EksoWorks | $141 | $923 | | Total | $8,825 | $6,032 | - The company has a $2.0 million term loan maturing August 13, 2023, and a $5.0 million promissory note with quarterly payments of $313k starting December 31, 2023[82][88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses revenue growth, increased operating expenses from the HMC acquisition, and significant liquidity concerns reinforcing going concern risk Results of Operations Q2 2023 revenue increased 36% driven by EksoHealth, but operating expenses rose 34% due to HMC acquisition, widening the loss from operations Q2 2023 vs Q2 2022 Performance (in thousands) | Metric | Q2 2023 | Q2 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $4,703 | $3,465 | $1,238 | 36% | | Gross Profit | $2,254 | $1,641 | $613 | 37% | | Gross Margin | 48% | 47% | - | - | | Total Operating Expenses | $6,538 | $4,870 | $1,668 | 34% | | Loss from Operations | $(4,284) | $(3,229) | $(1,055) | 33% | - EksoHealth revenue increased due to higher EksoNR and Indego device sales, while EksoWorks revenue decreased from lower EVO sales volume[188] - Operating expenses increased across all categories, including Sales and marketing (+28%), R&D (+60%), and General and administrative (+29%), primarily due to HMC acquisition headcount and integration costs[191][192][193] Liquidity and Capital Resources Liquidity weakened with cash falling to $13.3 million, deemed sufficient only into Q2 2024, reinforcing substantial doubt about future cash requirements without additional financing - As of June 30, 2023, the company had $13.3 million in cash, with $2.0 million restricted, leaving $11.3 million in unrestricted cash[208][209] - Management concluded that $13.3 million in cash is sufficient only into Q2 2024, and substantial doubt exists about meeting cash requirements for the next twelve months[215] Contractual Obligations as of June 30, 2023 (in thousands) | Obligation | Total | Payments Due < 1 Year | | :--- | :--- | :--- | | Term loan | $2,029 | $2,029 | | Promissory note | $5,000 | $625 | | Facility operating leases | $1,379 | $415 | | Purchase obligations | $3,455 | $3,455 | | Total | $11,863 | $6,524 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in its market risk exposure during the six months ended June 30, 2023, compared to the disclosures in its 2022 Annual Report on Form 10-K - There have been no material changes in the company's market risk during the six months ended June 30, 2023[219] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2023 - Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective[220] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[222] PART II. OTHER INFORMATION This section covers legal proceedings, updated risk factors, and a list of exhibits filed with the report Item 1. Legal Proceedings The company states it is subject to various legal proceedings in the ordinary course of business but believes that none are expected to have a material adverse effect on its financial condition or results of operations - The company is not aware of any legal proceedings that would have a material adverse effect on its business, results of operations, or financial condition[224] Item 1A. Risk Factors A material update to risk factors highlights substantial doubt about the company's going concern ability due to insufficient cash and recurring losses - A key updated risk factor is the company's ability to continue as a going concern, with recurring losses and cash burn raising substantial doubt[226] - The company's current cash is not sufficient to fund operations for the next 12 months, requiring additional capital with no certainty of availability on acceptable terms[226][227] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to the At the Market Offering Agreement and the Loan Agreement with Pacific Western Bank, as well as certifications by the CEO and CFO - The report includes several filed exhibits, such as amendments to its ATM offering agreement, loan agreement, officer certifications, and Inline XBRL financial statements[229]