The accompanying notes are an integral part
of these condensed consolidated financial statements
The accompanying notes are an integral part of these condensed consolidated financial statements
The accompanying notes are an integral part
of these condensed consolidated financial statements
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
Description of Business
Ekso Bionics Holdings, Inc. (the “Company”)
is a leading developer of exoskeleton solutions that amplify human potential by supporting or enhancing strength, endurance and
mobility across medical, industrial and defense applications. Founded in 2005, the Company continues to build upon its unparalleled
expertise to design some of the most cutting-edge, innovative wearable robots available on the market. Ekso Bionics is the only
exoskeleton company to offer technologies that range from helping those with paralysis to stand up and walk, to enhancing human
capabilities on job sites across the globe, to providing research for the advancement of R&D projects intended to benefit U.S.
defense capabilities. The Company is headquartered in the Bay Area and is listed on the Nasdaq Capital Market under the symbol
“EKSO”.
All common stock share and per share amounts
have been adjusted to reflect the one-for-seven reverse stock split completed on May 4, 2016. See
Note 12, Capitalization and
Equity Structure – Reverse Stock Split
.
Liquidity and Going Concern
As of December 31, 2016, the Company had
an accumulated deficit of $114,861 and cash on hand of $16,846. Largely as a result of significant research and development
activities related to the development of the Company’s advanced technology and commercialization of this technology into
its medical device business, the Company has incurred significant operating losses and negative cash flows from operations since
inception. The Company has also recognized significant non-cash losses in previous periods associated with the revaluation of certain
securities, which have contributed significantly to its accumulated deficit. In the nine months ended September 30, 2017, the Company
used $25,582 of cash in its operations.
In 2017, management has taken several actions
to alleviate the substantial doubt about the Company’s ability to continue as a going concern that existed as of the date
of issuance of the December 31, 2016 consolidated financial statements, including, but not limited to, the following:
|
·
|
streamlining its operations and reducing its workforce by approximately
27 employees to lower operating expenses and reduce cash burn;
|
|
·
|
conducting a registered direct offering of 3,732 shares of its common
stock for net proceeds of $10,919; and
|
|
·
|
conducting a rights offering, which resulted in the issuance of an
aggregate of 13,465 shares of its common stock for net proceeds of $13,179 and concurrently selling 20,535 shares of its common
stock to the backstop investor in a private placement for proceeds of $20,535.
|
With cash
on hand of
$33,439
as of
September 30, 2017, t
he Company
believes that it currently has sufficient cash to fund its operations beyond the look forward period of one year from the issuance
of these condensed consolidated financial statements
.
The Company’s actual capital requirements
may vary significantly and will depend on many factors. The Company plans to continue its investments (i) in its clinical, sales
and marketing initiatives to accelerate adoption of the Ekso robotic exoskeleton in the rehabilitation market, (ii) in its research,
development and commercialization activities with respect to an Ekso robotic exoskeleton for home use, and/or (iii) in the development
and commercialization of able-bodied exoskeletons for industrial use. Consequently, the Company may require significant additional
financing in the future, which the Company intends to raise through corporate collaborations, public or private equity offerings,
debt financings, or warrant solicitations. Sales of additional equity securities by us could result in the dilution of the interests
of existing stockholders. There can be no assurance that financing will be available when required in sufficient amounts, on acceptable
terms or at all. In the event that the necessary additional financing is not obtained, the Company may be required to further reduce
its discretionary overhead costs substantially, including research and development, general and administrative, and sales and marketing
expenses or otherwise curtail operations.
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
|
2.
|
Basis of Presentation
and Summary of Significant Accounting Policies and Estimates
|
Basis of Presentation
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, 2016, which included an explanatory paragraph expressing substantial doubt
about the Company’s ability to continue as a going concern in the report of our independent registered public accounting
firm, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set
forth herein. The condensed consolidated financial statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission (“SEC”) and therefore, omit certain information and footnote disclosure necessary
to present the financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”).
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, 2016, which was filed with the SEC
on March 15, 2017. The results of operations for the three months and nine months ended September 30, 2017 are not necessarily
indicative of the results to be expected for the entire fiscal year or any future periods.
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, future warranty costs, maintenance and planned
improvement costs associated with medical device units sold prior to 2016, useful lives assigned to long-lived assets, realizability
of deferred tax assets, the valuation of options and warrants, and contingencies. Actual results could differ from those estimates.
Going Concern
The Company assesses its ability to continue
as a going concern at every interim and annual period in accordance with Accounting Standards Codification 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 us to concentrations of credit risk consist principally of cash and accounts receivable. We maintain our cash accounts
in excess of federally insured limits. However, we believe we are not exposed to significant credit risk due to the financial position
of the depository institutions in which these deposits are held. We extend credit to customers in the normal course of business
and perform ongoing credit evaluations of our customers. Concentrations of credit risk with respect to accounts receivable exist
to the full extent of amounts presented in the consolidated financial statements. We do not require collateral from our customers
to secure accounts receivable.
Accounts receivable are derived from the
sale of products shipped to and services performed for customers. Invoices are aged based on contractual terms with the customer.
The Company reviews accounts receivable for collectability and records an allowance for credit losses, as needed. The Company has
not experienced any material losses related to accounts receivable as of September 30, 2017 and December 31, 2016.
Many of the sales contracts with customers
outside of the U.S. are settled in a foreign currency. The Company does not enter into any foreign currency hedging agreements
and is susceptible to gains and losses from foreign currency fluctuations. To date, we have not experienced significant gains or
losses upon settling foreign currency denominated accounts receivable.
As of September 30, 2017, we had one customer
with an accounts receivable balance totaling 10% or more of our total accounts receivable (13%) compared with three customers as
of December 31, 2016 (18%, 16% and 11%).
In the three months ended September 30,
2017, we had one customer with sales of 10% or more of total revenue (16%), compared with one customer in the three months ended
September 30, 2016 (15%). In the nine months ended September 30, 2017 and 2016, we had no customers with sales of 10% or more
of total revenue.
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
Medical Device Revenue and
Cost of Revenue Recognition
The Company builds medical device robotic
exoskeletons for sale and capitalizes into inventory materials, direct and indirect labor and overhead in connection with the manufacture
and assembly of these units.
When the Company brought its first version
medical device to market in 2012, the Company could not be certain as to the costs it would incur to support, maintain, service,
and upgrade these early stage devices. Primarily for this reason, prior to January 1, 2016, the sale of a device, associated software,
initial training, and extended support and maintenance were deemed as a single unit of accounting due to the uncertainty of the
Company’s follow-up maintenance and upgrade expenses, which were forecast to extend over three years. Accordingly, the revenue
from the sales of the device and associated cost of revenue were deferred at the time of shipment. Upon completion of training,
the amount of the arrangements was recognized as revenue and cost of revenue over a three-year period on a straight-line basis,
while all service expenses, whether or not covered by the Company’s original warranty, extended warranty contracts, or neither,
were recognized as incurred.
Effective January 1, 2016, the Company
determined it had established (i) separate individual pricing for training, extended warranty coverage, and out-of-contract service
or repairs, (ii) sufficient historical evidence of customer buying patterns for extended warranty and maintenance coverage, and
(iii) a basis for estimating and recording warranty and service costs to allow the Company to separate its multiple element arrangements
into two distinct units of accounting: (1) the device, associated software, original manufacturer warranty and training if required,
and (2) extended support and maintenance. As a result, in the first quarter of 2016, the Company began to recognize revenue related
to its sales transactions on a multiple element approach in which revenue is recognized upon the delivery of the separate elements
to the customer. Revenue relating to the undelivered elements is deferred using the relative selling price method, which allocates
revenue to each element using the estimated selling prices for the deliverables when vendor-specific objective evidence or third-party
evidence is not available. For sales on or after January 1, 2016, revenue and associated cost of revenue of medical devices is
recognized when delivered, or training has been completed, if required. Revenue for extended maintenance and support agreements
is recognized on a straight-line basis over the contractual term of the agreement, which typically ranges from one to four years.
As a result of this change, the Company recognized medical device revenue previously deferred at December 31, 2015 of $6,517 and
associated cost of revenue of $4,159, resulting in additional gross profit, reduction in net loss from operations, and reduction
of net loss applicable to common stockholders of $2,358, or $0.13 per share, in its results of operations for the nine months ended
September 30, 2016. In addition, the Company recorded $212 for warranty expenses and a one-time charge of $911 for a planned
preventative maintenance and upgrade program associated with the devices it had sold prior to 2016 in the same period.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,
Revenue from Contracts with Customers
.
The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits
the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued an update, ASU No.
2015-14,
Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date
, to defer the effective date
of this update by one year. In April 2016, the FASB issued a further update, ASU No. 2016-10
Revenue from Contracts with Customers
(Topic 606) Identifying Performance Obligations and Licensing
. ASU 2016-10 clarifies that contractual provisions that explicitly
or implicitly require an entity to transfer control of additional goods or services to a customer should be distinguished from
contractual provisions that explicitly or implicitly define the attributes of a single promised license. In May 2016, the FASB
issued a further update, ASU No. 2016-12
Revenue from Contracts with Customers (Topic 606) Narrow-Scope Improvements and Practical
Expedients
. ASU 2016-12 clarifies key areas concerning: (1) assessment of collectability, (2) presentation of sales taxes and
other similar taxes collected from customers, (3) non-cash consideration, (4) contract modifications at transition, (5) completed
contracts at transition, and (6) disclosing the accounting change in the period of adoption. The updated standard becomes effective
for the Company in the first quarter of fiscal year 2018. The Company has identified the existing contracts likely to fall under
ASC 606 and plans to adopt this guidance on January 1, 2018 applying the modified-retrospective approach.
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
In February 2016, the FASB issued ASU No.
2016-02,
Leases (Topic 842)
which will require lessees to recognize assets and liabilities for leases with lease terms of
more than 12 months. For finance leases, a lessee is required to: (1) recognize a right-of-use asset and a lease liability, initially
measured at the present value of the lease payments, in the statement of financial position, (2) recognize interest on the
lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income, and (3) classify
repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability
and variable lease payments within operating activities in the statement of cash flows. For operating leases, a lessee is required
to: (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments,
in the statement of financial position, (2) recognize a single lease cost, calculated so that the cost of the lease is allocated
over the lease term on a generally straight-line basis, and (3) classify all cash payments within operating activities in the statement
of cash flows. The new guidance is effective for fiscal years beginning after December 15, 2018. The Company is evaluating
the impact that ASU 2016-02 will have on its consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU No.
2017-04,
Simplifying the Test for Goodwill Impairment.
ASU 2017-04 eliminated the requirement to calculate the
implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities are required to record an impairment
charge based on the excess of the carrying amount over its fair value. The new standard will be effective for the Company beginning
January 1, 2020 and early adoption is permitted. The Company does not expect the impact of adopting ASU 2017-04 to be material
on its consolidated financial statements.
In May 2017, the FASB issued ASU No. 2017-09,
Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting
(ASU 2017-09). The FASB issued the update
to provide clarity and reduce the cost and complexity when applying the guidance in Topic 718. The amendments in this update provide
guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification
accounting in Topic 718. ASU 2017-09 will be effective for public companies for fiscal years beginning after December 15, 2017,
including interim periods. Early adoption is permitted. The Company is evaluating the effect that ASU 2017-09 will have on its
consolidated financial statements and related disclosures.
Recently Adopted Accounting Standards
In March 2016, the FASB issued ASU No.
2016-09
Compensation – Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting
.
ASU 2016-09 simplifies several aspects of the accounting for share-based payment award transactions for public companies, including:
(1) income tax consequences, (2) classification of awards as either equity or liabilities, and (3) classification on the statement
of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016. Effective January
1, 2017, the Company adopted ASU 2016-09 and elected to change its accounting policy to account for forfeitures as they occur
to more closely align compensation expense to services provided. The change was applied on a modified retrospective basis with
a cumulative effect adjustment to retained earnings of $171 as of January 1, 2017.
|
3.
|
Accumulated Other Comprehensive
(Loss) Income
|
The change in accumulated other comprehensive
(loss) income presented on the condensed consolidated balance sheets and the impact of significant amounts reclassified from accumulated
other comprehensive (loss) income on information presented in the condensed consolidated statements of operations and comprehensive
loss for the nine months ending September 30, 2017 are reflected in the table below, net of tax:
|
|
Foreign
|
|
|
|
Currency
|
|
|
|
Translation
|
|
Balance at December 31, 2016
|
|
$
|
79
|
|
Other comprehensive loss before reclassification
|
|
|
(356
|
)
|
Balance at September 30, 2017
|
|
$
|
(277
|
)
|
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
|
4.
|
Fair Value Measurements
|
Fair value is defined as the exchange price
that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Three levels
of inputs, of which the first two are considered observable and the last unobservable, may be used to measure fair value which
are the following:
|
•
|
Level 1
—Quoted prices in active markets for identical assets or liabilities. The Company considers a market to be active when transactions for the asset occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
•
|
Level 2
—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
•
|
Level 3
—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The valuation of Level 3 investments requires the use of significant management judgments or estimation.
|
The Company’s fair value hierarchies for its financial
assets and liabilities which require fair value measurement are as follows:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities
|
|
$
|
767
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
767
|
|
Contingent consideration liability
|
|
$
|
248
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
248
|
|
Contingent success fee liability
|
|
$
|
13
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability
|
|
$
|
3,546
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,546
|
|
Contingent consideration liability
|
|
$
|
217
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
217
|
|
Contingent success fee liability
|
|
$
|
116
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
116
|
|
The following table sets forth a summary of the changes in the
fair value of the Company’s Level 3 financial liabilities for the nine months ended September 30, 2017, which were measured
at fair value on a recurring basis:
|
|
|
|
|
Contingent
|
|
|
Contingent
|
|
|
|
Warrant
|
|
|
Consideration
|
|
|
Success Fee
|
|
|
|
Liabilities
|
|
|
Liability
|
|
|
Liability
|
|
Balance at December 31, 2016
|
|
$
|
3,546
|
|
|
$
|
217
|
|
|
$
|
116
|
|
Initial fair value of April 2017 Warrants
|
|
|
3,301
|
|
|
|
-
|
|
|
|
-
|
|
Revaluation of 2015 and April 2017 Warrants
|
|
|
(4,851
|
)
|
|
|
-
|
|
|
|
-
|
|
Repurchase of April 2017 Warrants
|
|
|
(2,296
|
)
|
|
|
-
|
|
|
|
-
|
|
Loss on repurchase of April 2017 Warrants
|
|
|
1,067
|
|
|
|
-
|
|
|
|
-
|
|
Loss on increase in fair value of obligation
|
|
|
-
|
|
|
|
31
|
|
|
|
-
|
|
Gain on decrease in fair value of obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
(103
|
)
|
Balance at September 30, 2017
|
|
$
|
767
|
|
|
$
|
248
|
|
|
$
|
13
|
|
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
Refer to Note 12 Capitalization and Equity Structure –
Warrants for additional information regarding the repurchase and valuation of warrants.
Inventories consisted of the following:
|
|
September 30, 2017
|
|
|
December 31, 2016
|
|
Raw materials
|
|
$
|
1,516
|
|
|
$
|
1,193
|
|
Work in progress
|
|
|
-
|
|
|
|
198
|
|
Finished goods
|
|
|
964
|
|
|
|
267
|
|
|
|
|
2,480
|
|
|
|
1,658
|
|
Less: inventory reserve
|
|
|
(102
|
)
|
|
|
(102
|
)
|
Inventories, net
|
|
$
|
2,378
|
|
|
$
|
1,556
|
|
In connection with our medical devices,
the Company often receives cash payments before the earnings process is complete. The Company records the payments as customer
deposits until a device is shipped to the customer. The cash received is recorded as a component of deferred revenue.
Deferred revenues consisted of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Customer deposits and advances
|
|
$
|
48
|
|
|
$
|
47
|
|
Deferred rental income
|
|
|
65
|
|
|
|
60
|
|
Deferred extended maintenance and support
|
|
|
1,814
|
|
|
|
1,523
|
|
Total deferred revenues
|
|
|
1,927
|
|
|
|
1,630
|
|
Less current portion
|
|
|
(1,242
|
)
|
|
|
(825
|
)
|
Deferred revenues, non-current
|
|
$
|
685
|
|
|
$
|
805
|
|
Deferred medical device unit costs
|
|
$
|
86
|
|
|
$
|
-
|
|
Less current portion
|
|
|
(86
|
)
|
|
|
-
|
|
Deferred cost of revenue, non-current
|
|
$
|
-
|
|
|
$
|
-
|
|
The following table reflects the amortization
of the purchased intangible assets as of September 30, 2017:
|
|
Cost
|
|
|
Accumulated Amortization
|
|
|
Net
|
|
Developed technology
|
|
$
|
1,160
|
|
|
$
|
(709
|
)
|
|
$
|
451
|
|
Customer relationships
|
|
|
70
|
|
|
|
(43
|
)
|
|
|
27
|
|
Customer trade name
|
|
|
380
|
|
|
|
(232
|
)
|
|
|
148
|
|
|
|
$
|
1,610
|
|
|
$
|
(984
|
)
|
|
$
|
626
|
|
Estimated future amortization for the remainder
of 2017 and 2018, is $135 and $491, respectively.
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
Accrued liabilities consisted of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Salaries, benefits and related expenses
|
|
$
|
1,648
|
|
|
$
|
2,349
|
|
Device maintenance
|
|
|
259
|
|
|
|
483
|
|
Device warranty
|
|
|
136
|
|
|
|
203
|
|
Professional fees
|
|
|
363
|
|
|
|
56
|
|
Clinical trials
|
|
|
99
|
|
|
|
35
|
|
Equipois earn-out
|
|
|
-
|
|
|
|
355
|
|
Other
|
|
|
241
|
|
|
|
75
|
|
Total
|
|
$
|
2,746
|
|
|
$
|
3,556
|
|
A reconciliation of the changes in the
current portion of maintenance and warranty liabilities for the period ended September 30, 2017 is
as follows:
|
|
Maintenance
|
|
|
Warranty
|
|
|
Total
|
|
Balance at December 31, 2016
|
|
$
|
483
|
|
|
$
|
203
|
|
|
$
|
686
|
|
Incurred costs
|
|
|
(224
|
)
|
|
|
(67
|
)
|
|
|
(291
|
)
|
Balance at September 30, 2017
|
|
$
|
259
|
|
|
$
|
136
|
|
|
$
|
395
|
|
In May of 2017, the Company streamlined
its operations and reduced its workforce by approximately 27 employees to lower operating expenses and reduce cash burn. The Company
will focus its efforts on the commercialization of its proprietary Ekso GT for rehabilitation and exploration of potential strategic
alternatives to accelerate product and market adoption of our industrial products, on our own and/or in collaboration with others.
The restructuring plan was completed by the end of the second quarter of 2017.
The Company recorded restructuring expense
of $665 for the nine months ended September 30, 2017, which was comprised of employee severance payments of $480, stock compensation
expense of $186 related to restricted stock units issued to terminated employees (
refer to Note 13, Stock-Based Compensation
for issuance of restricted stock units
) and other severance related benefits. As of September 30, 2017, $8 of the restructuring
expenses was included in other liabilities, current on the Company’s condensed consolidated balance sheet.
The following table summarizes accrued restructuring costs
as of September 30, 2017:
|
|
Employee Severance
|
|
|
|
and Other Benefits
|
|
Balance at December 31, 2016
|
|
$
|
-
|
|
Restructuring charges
|
|
|
665
|
|
Cash payments
|
|
|
(471
|
)
|
Stock based compensation expense
|
|
|
(186
|
)
|
Balance at September 30, 2017
|
|
$
|
8
|
|
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
In December 2016, the Company entered into
a loan agreement and received $7,000 that
bears interest on the outstanding daily balance
at a floating per annum rate equal to the 30-day U.S. LIBOR rate plus 5.41%
. The Company may further borrow an additional
$3,000.
The 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 first day of each month through and including January 1, 2018, or July 1, 2018
if the additional $3,000 is drawn. Commencing on February 1, 2018, or August 1, 2018 if the additional $3,000 is drawn, the Company
is required to make equal monthly payments of principal, together with accrued and unpaid interest. The principal balance of the
current loan amortizes ratably over 36 months and matures on January 1, 2021, at which time all unpaid principal and accrued and
unpaid interest shall be due and payable in full. In addition, a final payment of $245 will be due on the maturity date, of which
$72 has accreted as of September 30, 2017, to be paid in 2021 and is included as a component of note payable in the Company’s
condensed consolidated balance sheets.
In
December 2016, and pursuant to the loan agreement, the Company entered into a success fee agreement with the lender under which
the Company agreed to pay the lender a $250 success fee upon the first to occur of any of the following events: (a) a sale or other
disposition by the Company of all or substantially all of its assets; (b) a merger or consolidation of the Company into or with
another person or entity, where the holders of the Company’s outstanding voting equity securities immediately prior to such
merger or consolidation hold less than a majority of the issued and outstanding voting equity securities of the successor or surviving
person or entity immediately following the consummation of such merger or consolidation; or (c) the closing price per share for
the Company’s common stock being $8.00 or more for five successive business days. T
he estimated fair value of
the success fee was determined using the Binomial Lattice Model and was recorded as a discount to the debt obligation. The fair
value of the contingent success fee is re-measured each reporting period with any adjustments in fair value being recognized in
the condensed consolidated statements of operations and comprehensive loss. The success fee is classified as a liability on the
condensed consolidated balance sheets. At September 30, 2017, the fair value of the contingent success fee liability was $13.
The loan agreement includes a liquidity
covenant requiring 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 three months of “Monthly Cash Burn,” which is the
Company’s average monthly net income (loss) for the trailing six-month period plus certain expenses and plus the average
monthly principal due and payable on interest-bearing liabilities in the immediately succeeding three-month period. Such amount
was determined to be $6,984 as of September 30, 2017, the most current determination, with the amount subject to change on a month-to-month
basis. Pursuant to the restructuring and in anticipation of the Rights Offering, the lender and the Company executed an amendment
to the loan agreement on August 3, 2017, which suspended the minimum liquidity requirement until September 16, 2017. At September
30, 2017, with cash on hand of $33,439, the Company was compliant with this liquidity covenant and all other covenants.
The final payment
fee, debt issuance costs, and the initial fair value of the success fee combined with the stated interest result in an effective
annual interest rate of 9.20% for three-month period ended September 30, 2017 and 8.96% for the nine-month period ended September
30, 2017. The final payment fee, the initial fair value of the success fee and debt issuance costs will be accreted and amortized,
respectively, to interest expense using the effective interest method over the life of the loan.
The following table presents scheduled principal payments of
our long-term debt and final payment fee as of September 30, 2017:
Period
|
|
Amount
|
|
2017
|
|
$
|
-
|
|
2018
|
|
|
2,139
|
|
2019
|
|
|
2,333
|
|
2020
|
|
|
2,333
|
|
2021
|
|
|
440
|
|
Total principal payments
|
|
|
7,245
|
|
Less final payment fee, discount and issuance cost
|
|
|
(321
|
)
|
Long-term debt, net
|
|
$
|
6,924
|
|
|
|
|
|
|
Current portion
|
|
|
1,556
|
|
Long-term portion
|
|
|
5,368
|
|
Long-term debt, net
|
|
$
|
6,924
|
|
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
The Company renewed its operating lease
agreement in May 2017 for its headquarters and manufacturing facility in Richmond, California. Following renewal, the lease term
will expire in May 2022.
In July 2017, the Company entered into
an operating lease agreement having a five-year lease term for an office in Hamburg, Germany. The Company has an option to extend
the lease for another five-year term. The Company continues to lease an office in Freiburg with plans to sublease the office by
the end of 2017.
In August 2015, the Company entered into
a long-term capital lease obligation for equipment. The aggregate principal of the lease is $166, with an interest rate of 4.7%,
minimum monthly payments of $3 and a July 1, 2020 maturity. This capital lease is classified as a component of other liabilities,
current and other non-current liabilities in the condensed consolidated balance sheets.
The Company estimates future
minimum payments as of September 30, 2017 to be the following:
Period
|
|
Capital Lease
|
|
|
Operating Lease
|
|
2017 – remainder
|
|
$
|
9
|
|
|
$
|
149
|
|
2018
|
|
|
37
|
|
|
|
605
|
|
2019
|
|
|
37
|
|
|
|
620
|
|
2020
|
|
|
22
|
|
|
|
632
|
|
2021
|
|
|
-
|
|
|
|
556
|
|
Thereafter
|
|
|
-
|
|
|
|
251
|
|
Total minimum payments
|
|
|
105
|
|
|
$
|
2,813
|
|
Less interest
|
|
|
(7
|
)
|
|
|
|
|
Present value minimum payments
|
|
|
98
|
|
|
|
|
|
Less current portion
|
|
|
(33
|
)
|
|
|
|
|
Long-term portion
|
|
$
|
65
|
|
|
|
|
|
Rent expense under the Company’s
operating leases was $138 and $101 for the three months ended September 30, 2017, and 2016, respectively, and $347 and $299 for
the nine months ended September 30, 2017, and 2016, respectively.
|
12.
|
Capitalization and Equity
Structure
|
Reverse Stock Split
After the close of the stock market on
May 4, 2016, the Company effected a 1-for-7 reverse split of its common stock. As a result, all common stock share amounts included
in this filing have been retroactively reduced by a factor of seven, and all common stock per share amounts have been increased
by a factor of seven, with the exception of our common stock par value. Common stock outstanding, including the issuance of new
shares of common stock as a result of the conversion of preferred stock and the exercise of stock options and warrants, was affected
by the 1-for-7 reverse split.
Common Stock
In April 2017, the Company sold in
a registered direct offering an aggregate of 3,732 shares of its common stock, par value $0.001 per share, and warrants to purchase
1,866 shares of common stock. The aggregate net proceeds of the transaction were approximately $10,919.
Rights Offering
In August of 2017, the Company commenced
a $34,000 rights offering (the “Rights Offering”) to its existing stockholders and certain warrant holders of the Company
on the record date of August 10, 2017. The subscription price was $1.00 per share and each subscription right provided 1.1608 shares
of the Company’s common stock plus an oversubscription right, subject to availability. Concurrent with the rights offering,
the Company entered into a backstop investment agreement with Puissance Capital Management. The backstop investment agreement contemplated
the purchase of any unsubscribed shares from the Rights Offering under the same terms. The common shares issued to the backstop
investor were unregistered and subject to a cap of 40% of the Company’s total outstanding shares.
In connection with the rights offering,
the Company entered into a Warrant Repurchase and Amendment Agreement (“Repurchase Agreement”) with all of the holders
of the warrants issued in April 2017 (the “April 2017 Warrants”). Under the Repurchase Agreement, the Company agreed
to repurchase the April 2017 Warrants from each holder at a price of $1.23 per underlying share. The Company’s obligation
to repurchase the warrants was subject to the warrant holder’s participation in the Rights Offering. The Repurchase Agreement
also permitted the holders of the April 2017 Warrants to use all or a portion of the consideration received as a result of the
Company’s repurchase of the April 2017 Warrants to pay the subscription price for the exercise of their subscription rights
in the Rights Offering. Upon the closing of the Rights Offering the Company repurchased 1,866 warrant shares and applied consideration
of $2,245 to the subscribed shares in the Rights Offering.
The Company sold an aggregate of 13,465
shares of its common stock to existing stockholders and certain warrant holders in the Rights Offering for gross proceeds of $13,465,
which after deducting expenses, totaling approximately $286, resulted in net proceeds of $13,179 from the Rights Offering; and
20,535 shares of its common stock to the backstop investor in a private placement in conjunction with the Rights Offering for
gross proceeds of $20,535. Of the $286 in direct issuance costs, warrants with a fair value of $131 have been issued to an information
agent. The warrants are classified as equity in the statement of stockholders’ equity. The Company intends to use the proceeds
of the offering to broaden its footprint in Asia, support research, development and commercialization activities, and for working
capital.
Warrants
Warrant shares outstanding as of December
31, 2016 and September 30, 2017 were as follows:
Source
|
|
Exercise
Price
|
|
|
Term
(Years)
|
|
|
December 31,
2016
|
|
|
Issued
|
|
|
Repurchased
(1)
|
|
|
Expired
|
|
|
September 30,
2017
|
|
Information Agent Warrants
|
|
$
|
1.50
|
|
|
|
3
|
|
|
|
-
|
|
|
|
200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200
|
|
April 2017 Warrants
|
|
$
|
4.10
|
|
|
|
5
|
|
|
|
-
|
|
|
|
1,866
|
|
|
|
(1,866
|
)
|
|
|
-
|
|
|
|
-
|
|
2015 Warrants
|
|
$
|
3.74
|
|
|
|
5
|
|
|
|
1,634
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,634
|
|
2014 PPO and Merger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Placement agent warrants
|
|
$
|
7.00
|
|
|
|
5
|
|
|
|
426
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
426
|
|
Bridge warrants
|
|
$
|
7.00
|
|
|
|
3
|
|
|
|
371
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(371
|
)
|
|
|
-
|
|
PPO warrants
|
|
$
|
14.00
|
|
|
|
5
|
|
|
|
1,078
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,078
|
|
Pre-2014 warrants
|
|
$
|
9.66
|
|
|
|
9-10
|
|
|
|
88
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
3,597
|
|
|
|
2,066
|
|
|
|
(1,866
|
)
|
|
|
(371
|
)
|
|
|
3,426
|
|
|
(1)
|
April 2017 Warrants were repurchased at a price of $1.23 per underlying share, as a result of the
Rights Offering.
|
Information Agent Warrants
In September 2017, in connection with the
Rights Offering in August of 2017, the Company issued warrants to purchase 200 shares of the Company’s common stock with
an exercise price of $1.50 to an information agent (the “Information Agent Warrants”). The Information Agent Warrants
became exercisable immediately upon issuance. These warrants were recorded in stockholders’ equity on the Company’s
condensed consolidated balance sheet.
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
April 2017 Warrants
In April 2017, the Company issued the April 2017 Warrants to purchase 1,866 shares of
the Company’s common stock with an exercise price of $4.10 per share. The April 2017 Warrants were to become
exercisable six months following the issuance date and were to expire five years from the date they became exercisable. The
April 2017 Warrants contained a put-option provision. Under this provision, while the April 2017 Warrants were outstanding,
if the Company entered into a Fundamental Transaction, defined as a merger, consolidation or similar transaction, the Company
or any successor entity would, at the option of each warrant holder, exercisable at any time within 30 days after the
consummation of the Fundamental Transaction, purchase the warrant from the holder exercising such option by paying to the
holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such holder’s warrant
on the date of the consummation of the Fundamental Transaction. Because of this put-option provision, a portion of the
proceeds from the sale of common stock in the registered direct offering was recorded as a warrant liability equal to the
fair value of the warrants on the date of issuance and the April 2017 Warrants were marked to market at each reporting date.
Issuance costs allocated to the April 2017 Warrants were $185 and were expensed as financing costs on the date of issuance.
All of the issued and outstanding April 2017 warrants were repurchased at a price of $1.23 per underlying share, as a result
of the August 2017 Rights Offering. As of September 30, 2017, none of the April 2017 Warrants remained outstanding.
2015 Warrants
In December 2015, the Company issued warrants
to purchase 2,122 shares with an exercise price of $3.74 per share (the “2015 Warrants”). The 2015 Warrants contain
a put-option provision. Under this provision, while the 2015 Warrants are outstanding, if the Company enters into a Fundamental
Transaction, defined as a merger, consolidation or similar transaction, the Company or any successor entity will, at the option
of each warrant holder, exercisable at any time within 30 days after the consummation of the Fundamental Transaction, purchase
the warrant from the holder exercising such option by paying to the holder an amount of cash equal to the Black-Scholes value of
the remaining unexercised portion of such holder’s warrant on the date of the consummation of the Fundamental Transaction.
Because of this put-option provision, the 2015 Warrants are classified as a liability and are marked to market at each reporting
date.
The warrant liability related to the 2015
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 Option Pricing Model to measure the fair value
of the 2015 warrants as of September 30, 2017:
Current share price
|
|
$
|
1.21
|
|
Conversion price
|
|
$
|
3.74
|
|
Risk-free interest rate
|
|
|
1.66
|
%
|
Term (years)
|
|
|
3.25
|
|
Volatility of stock
|
|
|
95
|
%
|
13. Stock-based Compensation
In June 2017, the Company stockholders
approved an amendment of the Company’s Amended and Restated 2014 Equity Incentive Plan (the “2014 Plan”) to
increase the number of shares available for grant by 1,000 shares. The total shares authorized for grant under the 2014
Plan is 4,714, of which 534 are available for future grant as of September 30, 2017.
Stock Options
The following table summarizes information
about the Company’s stock options outstanding at September 30, 2017, and activity during the nine months then ended:
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Stock
|
|
|
Average
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Awards
|
|
|
Exercise Price
|
|
|
Life (Years)
|
|
|
Value
|
|
Balance as of December 31, 2016
|
|
|
2,477
|
|
|
$
|
6.50
|
|
|
|
|
|
|
|
|
|
Options granted
|
|
|
835
|
|
|
$
|
2.00
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
(73
|
)
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
|
Options forfeited
|
|
|
(162
|
)
|
|
$
|
6.79
|
|
|
|
|
|
|
|
|
|
Options cancelled
|
|
|
(105
|
)
|
|
$
|
6.63
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2017
|
|
|
2,972
|
|
|
$
|
5.36
|
|
|
|
7.57
|
|
|
$
|
33
|
|
Vested and expected to vest at September 30, 2017
|
|
|
2,972
|
|
|
$
|
5.36
|
|
|
|
7.57
|
|
|
$
|
33
|
|
Exercisable as of September 30, 2017
|
|
|
1,515
|
|
|
$
|
6.35
|
|
|
|
5.99
|
|
|
$
|
30
|
|
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
As of September 30, 2017, total unrecognized
compensation cost related to unvested stock options was $3,647. This amount is expected to be recognized as stock-based compensation
expense in the Company’s condensed consolidated statements of operations and comprehensive income over the remaining weighted
average vesting period of 2.35 years.
The per-share fair value of each stock
option was determined on the date of grant using the Black-Scholes option pricing model using the following assumptions:
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Risk-free interest rate
|
|
|
1.83% - 1.94
|
%
|
|
|
1.25% - 1.26
|
%
|
|
|
1.83% - 2.29
|
%
|
|
|
1.24% - 1.78
|
%
|
Expected term (in years)
|
|
|
5-6
|
|
|
|
6
|
|
|
|
5 - 9
|
|
|
|
5-10
|
|
Volatility
|
|
|
87
|
%
|
|
|
80
|
%
|
|
|
82
|
%
|
|
|
79
|
%
|
Restricted Stock Units
Beginning in 2017, the Company issued restricted
stock
units (“RSUs”), to employees and non-employees as permitted by the 2014
Plan. Each restricted stock unit corresponds to one share of the Company’s common stock and becomes issuable upon vesting.
The fair value of restricted stock units is determined based on the closing price of the Company’s common stock on the date
of grant.
In April 2017, the Company granted a total
of 153 RSUs to certain executive officers, which vest over four years, with 25% becoming exercisable on each yearly anniversary
of the date of grant.
In May 2017, the Company granted a
total of 120 RSUs to terminated employees, 115 of which vested in September 2017. The remaining RSUs are scheduled to vest in
January 2018.
In August 2017, the Company granted a total
of 451 RSUs to continuing employees, which will fully vest on March 31, 2018.
RSU activity for the nine months ended
September 30, 2017 is summarized below:
|
|
Number of Shares
|
|
|
Weighted-
Average Grant
Date Fair Value
|
|
Unvested as of January 1, 2017
|
|
|
-
|
|
|
|
|
|
Granted
|
|
|
724
|
|
|
$
|
1.64
|
|
Vested
|
|
|
115
|
|
|
$
|
1.59
|
|
Forfeited
|
|
|
-
|
|
|
|
|
|
Unvested at September 30, 2017
|
|
|
609
|
|
|
|
|
|
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
Compensation Expense
Total stock-based compensation expense
related to options and RSUs granted to employees and non-employees is included in the condensed consolidated statements of operations
and comprehensive loss as follows:
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Sales and marketing
|
|
$
|
187
|
|
|
$
|
103
|
|
|
$
|
365
|
|
|
$
|
541
|
|
Research and development
|
|
|
103
|
|
|
|
127
|
|
|
|
287
|
|
|
|
499
|
|
General and administrative
|
|
|
360
|
|
|
|
221
|
|
|
|
917
|
|
|
|
1,512
|
|
Restructuring charges
|
|
|
-
|
|
|
|
-
|
|
|
|
186
|
|
|
|
-
|
|
|
|
$
|
650
|
|
|
$
|
451
|
|
|
$
|
1,755
|
|
|
$
|
2,552
|
|
Employee Stock Purchase Plan
In June 2017, the Company’s stockholders
approved the Employee Stock Purchase Plan (the “2017 ESPP”). Under the 2017 ESPP, the Company reserved 500 shares of
common stock for issuance, subject to adjustment in the event of a stock split, stock dividend, combination or reclassification
or similar event. The 2017 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount
through payroll deductions of up to 25% of their eligible compensation, subject to any plan limitations. The 2017 ESPP provides
for six-month offering periods. At the end of each offering period, employees can purchase shares at 85% of the lower of the fair
market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of
the offering period. As of September 30, 2017, enrollment in the plan had not commenced.
401(k) Plan Share Match
In August 2017, the Company’s Board
of Directors approved a match benefit to the Ekso Bionics 401(k) plan (the “401(k) Plan”) in the form of shares of
the Company’s common stock. The Company will make a matching contribution to the 401(k) Plan in an amount equal to 100%
of each eligible employee’s elected deferral (up to the statutory limit) for the year ending December 31, 2017 and equal
to 50% of each employee’s elected deferral for each year thereafter.
There were no material changes to the unrecognized
tax benefits in the nine months ended September 30, 2017, 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.
|
15.
|
Commitments and Contingencies
|
Material Contracts
The Company enters various license, research
collaboration and development agreements which provide for payments to the Company for government grants, fees, cost reimbursements
typically with a markup, technology transfer and license fees, and royalty payments on sales.
The Company has two license agreements
with the Regents of the University of California to maintain exclusive rights to certain patents. Pursuant to those license agreements,
the Company is required to pay 1% of net sales of products sold to entities other than the U.S. government and, in the event of
a sub-license, the Company will owe 21% of license fees and must pass through 1% of the sub-licensee’s net sales of products
sold to entities other than the U.S. government. The agreements also stipulate minimum annual royalties of $50.
In connection with acquisition of Equipois,
the Company assumed the rights and obligations of Equipois under a license agreement with the developer of certain intellectual
property related to mechanical balance and support arm technologies, which grants the Company an exclusive license with respect
to the technology and patent rights for certain fields of use. Pursuant to the terms of the license agreement, the Company will
be required to pay the developer a single-digit royalty on net receipts, subject to a $50 annual minimum royalty requirement.
Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial
Statements
($ and share amounts in thousands, except
per share amounts)
(Unaudited)
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.
The following table sets forth the computation of basic and
diluted net loss per share:
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(6,335
|
)
|
|
$
|
(11,494
|
)
|
|
$
|
(20,144
|
)
|
|
$
|
(28,239
|
)
|
Adjustment for revaluation of warrant liability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,030
|
)
|
Diluted
|
|
$
|
(6,335
|
)
|
|
$
|
(11,494
|
)
|
|
$
|
(20,144
|
)
|
|
$
|
(31,269
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares, basic
|
|
|
34,720
|
|
|
|
19,005
|
|
|
|
27,425
|
|
|
|
16,888
|
|
Effect of dilutive warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
707
|
|
Weighted-average numbers of shares, diluted
|
|
|
34,720
|
|
|
|
19,005
|
|
|
|
27,425
|
|
|
|
17,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic
|
|
$
|
(0.18
|
)
|
|
$
|
(0.60
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(1.67
|
)
|
Net loss per share, diluted
|
|
$
|
(0.18
|
)
|
|
$
|
(0.60
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(1.78
|
)
|
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
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Options to purchase common stock
|
|
|
2,972
|
|
|
|
2,474
|
|
|
|
2,972
|
|
|
|
2,474
|
|
Restricted stock
|
|
|
609
|
|
|
|
-
|
|
|
|
609
|
|
|
|
-
|
|
Warrants for common stock
|
|
|
3,426
|
|
|
|
4,085
|
|
|
|
3,426
|
|
|
|
1,963
|
|
Total common stock equivalents
|
|
|
7,007
|
|
|
|
6,559
|
|
|
|
7,007
|
|
|
|
4,437
|
|
The Company has three reportable segments:
Medical Devices, Industrial Sales, and Engineering Services. The Medical Devices segment designs and engineers technology for,
and commercializes, manufactures, and sells exoskeletons for applications in the medical markets. The Industrial Sales segment
designs, engineers, commercializes, and sells exoskeleton devices to allow able-bodied users to perform heavy duty work for extended
periods. Engineering Services generates revenue principally from collaborative research and development service arrangements, technology
license agreements, and government grants where the Company uses its robotics domain knowledge in bionic exoskeletons to bid on
and procure contracts and grants from entities such as the National Science Foundation and the Defense Advanced Research Projects
Agency.
The Company evaluates performance and allocates resources based
on segment gross profit margin. The reportable segments are each managed separately because they serve distinct markets, and one
segment provides a service and the others manufacture and distribute unique products. The Company does not consider net assets
as a segment measure and, accordingly, assets are not allocated.
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:
|
|
Device and Related
|
|
|
Engineering
|
|
|
|
|
|
|
Medical
|
|
|
Industrial
|
|
|
Total
|
|
|
Services
|
|
|
Total
|
|
Three months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,320
|
|
|
$
|
267
|
|
|
$
|
1,587
|
|
|
$
|
10
|
|
|
$
|
1,597
|
|
Cost of revenue
|
|
|
880
|
|
|
|
165
|
|
|
|
1,045
|
|
|
|
8
|
|
|
|
1,053
|
|
Gross profit
|
|
$
|
440
|
|
|
$
|
102
|
|
|
$
|
542
|
|
|
$
|
2
|
|
|
$
|
544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,089
|
|
|
$
|
406
|
|
|
$
|
1,495
|
|
|
$
|
101
|
|
|
$
|
1,596
|
|
Cost of revenue
|
|
|
833
|
|
|
|
290
|
|
|
|
1,123
|
|
|
|
70
|
|
|
|
1,193
|
|
Gross profit
|
|
$
|
256
|
|
|
$
|
116
|
|
|
$
|
372
|
|
|
$
|
31
|
|
|
$
|
403
|
|
|
|
Device and Related
|
|
|
Engineering
|
|
|
|
|
|
|
Medical
|
|
|
Industrial
|
|
|
Total
|
|
|
Services
|
|
|
Total
|
|
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,692
|
|
|
$
|
1,170
|
|
|
$
|
4,862
|
|
|
$
|
38
|
|
|
$
|
4,900
|
|
Cost of revenue
|
|
|
2,786
|
|
|
|
807
|
|
|
|
3,593
|
|
|
|
15
|
|
|
|
3,608
|
|
Gross profit
|
|
$
|
906
|
|
|
$
|
363
|
|
|
$
|
1,269
|
|
|
$
|
23
|
|
|
$
|
1,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
10,321
|
|
|
$
|
682
|
|
|
$
|
11,003
|
|
|
$
|
631
|
|
|
$
|
11,634
|
|
Cost of revenue
|
|
|
8,543
|
|
|
|
535
|
|
|
|
9,078
|
|
|
|
452
|
|
|
|
9,530
|
|
Gross profit
|
|
$
|
1,778
|
|
|
$
|
147
|
|
|
$
|
1,925
|
|
|
$
|
179
|
|
|
$
|
2,104
|
|
Geographic information for revenue based
on location of customers is as follows:
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
United States
|
|
$
|
1,130
|
|
|
$
|
1,243
|
|
|
$
|
3,092
|
|
|
$
|
6,940
|
|
All Other
|
|
|
467
|
|
|
|
353
|
|
|
|
1,808
|
|
|
|
4,694
|
|
|
|
$
|
1,597
|
|
|
$
|
1,596
|
|
|
$
|
4,900
|
|
|
$
|
11,634
|
|
18. Related Party Transactions
On September 19, 2017, Ted Wang, Ph.D, was appointed to the
Board of Directors and as a member of the Nominating and Governance Committee of the Board. Dr. Wang is the Chief Investment Officer
and a founder of Puissance Capital Management LP. Dr. Wang was elected as a director following his nomination to the Board by Puissance
Cross-Border Opportunities II LLC (“Puissance”), a stockholder of the Company and an affiliate of Puissance Capital
Management LP. Puissance served as the committed investor in connection with the Company’s recently completed rights offering,
in connection with which Puissance purchased 20,535 shares of the Company’s common stock for an aggregate purchase price
of $20,535. Following completion of the rights offering, Puissance held approximately 34% of the Company’s issued and outstanding
shares.
Prior to Dr. Wang’s appointment
to the Board, the Company entered into a one-year consulting agreement with Angel Pond Capital LLC (“Angel Pond”),
an entity affiliated with Puissance. Angel Pond will assist the Company with strategic positioning in the Asia Pacific region,
including the introduction to potential strategic and capital partner(s) and the development of strategic partnership(s) for the
sale and manufacture of the Company’s products in that market. In the third quarter of 2017, the Company made aggregate
payments of $2,150 to Angel Pond representing consulting services for one year. These fees are recognized ratably to expense
over the one-year period.