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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________________________ 
FORM 10-Q 
____________________________________________________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______ 
Commission File Number: 001-37854 
____________________________________________________________________________________________ 
Ekso Bionics Holdings, Inc.

(Exact name of registrant as specified in its charter) 
____________________________________________________________________________________________
Nevada   99-0367049
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
 
1414 Harbour Way South, Suite 1201
Richmond, CA
  94804
(Address of principal executive offices)   (Zip Code)
 
(510) 984-1761
(Registrant’s telephone number, including area code)
________________________________
(Former name, former address, and former fiscal year, if changed since last report)
____________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Name of each exchange on which registered:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.001 par value per share EKSO
Nasdaq Capital Market


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No ¨
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x     No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨
  Accelerated filer
     
Non-accelerated filer ¨
  Smaller reporting company
   
Emerging growth company 
 


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x
 
The number of shares of registrant’s common stock outstanding as of July 28, 2020 was 8,271,271.



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

Table of Contents
  
  Page No.
   
     
4
     
 
4
     
 
5
     
6
 
8
     
 
     
     
     
     
   
     
     
Item 5.
Other Information
36
     
 

3

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
 
Ekso Bionics Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value)
 
  June 30, 2020 December 31, 2019
  (unaudited) (Note 2)
Assets    
Current assets:    
Cash $ 13,260    $ 10,872   
Accounts receivable, net of allowances of $100 and $121, respectively
3,741    5,208   
Inventories, net 2,384    2,489   
Prepaid expenses and other current assets 525    238   
Total current assets 19,910    18,807   
Property and equipment, net 1,248    1,657   
Right-of-use assets 885    1,084   
Goodwill 189    189   
Other assets 117    178   
Total assets $ 22,349    $ 21,915   
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable $ 1,902    $ 1,903   
Accrued liabilities 1,180    1,683   
Deferred revenues, current 1,345    1,492   
Notes payable, net, current 2,433    2,333   
Lease liabilities, current 269    421   
Total current liabilities 7,129    7,832   
Deferred revenues 1,706    1,789   
Notes payable, net 644    407   
Lease liabilities 508    711   
Warrant liabilities 12,361    4,307   
Other non-current liabilities 29    72   
Total liabilities 22,377    15,118   
Commitments and contingencies (Note 15)
Stockholders’ (deficit) equity:
Convertible preferred stock, $0.001 par value; 10,000 shares authorized; none issued and outstanding at June 30, 2020 and December 31, 2019
—    —   
Common stock, $0.001 par value; 141,429 shares authorized; 7,814 and 5,795 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
   
Additional paid-in capital 197,513    190,019   
Accumulated other comprehensive income 30    50   
Accumulated deficit (197,579)   (183,278)  
Total stockholders’ (deficit) equity (28)   6,797   
Total liabilities and stockholders’ (deficit) equity $ 22,349    $ 21,915   
 

The accompanying notes are an integral part of these condensed consolidated financial statements
4

Ekso Bionics Holdings, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended
June 30,
Six Months Ended
June 30,
  2020 2019 2020 2019
Revenue $ 2,264    $ 3,262    $ 3,731    $ 6,878   
Cost of revenue 1,005    1,702    1,835    3,719   
Gross profit 1,259    1,560    1,896    3,159   
Operating expenses:
Sales and marketing 1,712    3,039    4,232    5,848   
Research and development 452    1,499    1,163    2,883   
General and administrative 1,943    2,120    4,130    4,438   
Restructuring 244    —    244    —   
Total operating expenses 4,351    6,658    9,769    13,169   
Loss from operations (3,092)   (5,098)   (7,873)   (10,010)  
Other (expense) income, net:
Interest expense (38)   (107)   (90)   (228)  
(Loss) gain on revaluation of warrant liabilities (8,574)   2,737    (6,055)   1,615   
Loss on modification of warrant —    —    —    (257)  
Warrant issuance expense (329)   (706)   (329)   (706)  
Other income (expense), net 266    108    46    (31)  
Total other (expense) income, net (8,675)   2,032    (6,428)   393   
Net loss $ (11,767)   $ (3,066)   $ (14,301)   $ (9,617)  
Other comprehensive (loss) income (193)   (106)   (20)   42   
Comprehensive loss $ (11,960)   $ (3,172)   $ (14,321)   $ (9,575)  
Basic and diluted net loss per share applicable to common shareholders $ (1.88)   $ (0.65)   $ (2.37)   $ (2.12)  
Weighted average number of shares outstanding, basic and diluted 6,261    4,713    6,032    4,526   
 
The accompanying notes are an integral part of these condensed consolidated financial statements
5

Ekso Bionics Holdings, Inc.
Consolidated Statements of Stockholders’ (Deficit)
Equity
(In thousands)
(Unaudited)
Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive
Income (Loss)
Accumulated Deficit Total Stockholders’
(Deficit) Equity
Shares Amount Shares Amount
Balance at December 31, 2019 —    $ —    5,795    $   $ 190,019    $ 50    $ (183,278)   $ 6,797   
Net loss —    —    —    —    —    —    (2,534)   (2,534)  
Issuance of common stock under:
Matching contribution to 401(k) plan —    —    26    —    155    —    —    155   
In lieu of cash compensation —    —      —    50    —    —    50   
Shares issued as a result of rounding due to reverse-stock split —    —    13    —    —    —    —    —   
Stock-based compensation expense —    —    —    —    587    —    —    587   
Foreign currency translation adjustments —    —    —    —    —    173    —    173   
Balance at March 31, 2020 —    —    5,843      190,811    223    (185,812)   5,228   
Net loss —    —    —    —    —    (11,767)   (11,767)  
Issuance of common stock under:
Equity financing, net —    —    1,748      7,080    —    —    7,082   
Exercise of warrants —    —    223    —    1,436    —    —    1,436   
Issuance of warrants —    —    —    —    (2,322)   —    —    (2,322)  
Stock-based compensation expense —    —    —    —    508    —    —    508   
Foreign currency translation adjustments —    —    —    —    —    (193)   —    (193)  
Balance at June 30, 2020 —    $ —    7,814    $   $ 197,513    $ 30    $ (197,579)   $ (28)  

6

Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity
Shares Amount Shares Amount
Balance at December 31, 2018 —    $ —    4,198    $   $ 173,962    $ (92)   $ (171,146)   $ 2,728   
Net loss —    —    —    —    —    —    (6,551)   (6,551)  
Issuance of common stock under:
Equity financing, net —    —    291    —    7,305    —    —    7,305   
Equipois sales earn-out —    —      —    22    —    —    22   
Equity incentive plan —    —      —    55    —    —    55   
Matching contribution to 401(k) plan —    —      —    191    —    —    191   
Stock-based compensation expense —    —    —    —    636    —    —    636   
Foreign currency translation adjustments —    —    —    —    —    148    —    148   
Balance at March 31, 2019 —    $ —    4,502      182,171    56    (177,697)   4,534   
Net loss —    —    —    —    —    —    (3,066)   (3,066)  
Issuance of common stock under:
Equity financing, net —    —    444    —    2,393    —    —    2,393   
Equipois sales earn-out —    —      —    173    —    —    173   
Equity incentive plan —    —    37    —    919    —    —    919   
Stock-based compensation expense —    —    —    —    557    —    —    557   
Foreign currency translation adjustments —    —    —    —    —    (106)   —    (106)  
Balance at June 30, 2019 —    $ —    4,992    $   $ 186,213    $ (50)   $ (180,763)   $ 5,404   

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

7

Ekso Bionics Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
  Six Months Ended June 30,
  2020 2019
Operating activities:    
Net loss $ (14,301)   $ (9,617)  
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 320    493   
Provision for excess and obsolete inventories 47    24   
Changes in allowance for doubtful accounts 47    50   
Loss (gain) on revaluation of warrant liabilities 6,055    (1,615)  
Finance cost attributable to issuance of warrants 329    706   
Stock-based compensation expense 1,095    1,193   
Amortization of debt discount and accretion of final payment fee 23    55   
Gain on modification of operating lease liabilities (38)   —   
Loss on investment of unconsolidated affiliate 66    —   
Common stock contribution to 401(k) plan 99    103   
Loss on modification of warrants —    257   
Unrealized loss on foreign currency transactions   34   
Changes in operating assets and liabilities:
Accounts receivable 1,420    (931)  
Inventories 147    (260)  
Prepaid expenses, operating lease right-of-use assets, and other assets current and noncurrent (84)   (182)  
Accounts payable (1)   (654)  
Accrued and lease liabilities (746)   103   
Deferred revenues (230)   533   
Net cash used in operating activities (5,745)   (9,708)  
Investing activities:
Acquisition of property and equipment —    (60)  
Net cash used in investing activities —    (60)  
Financing activities:
Proceeds from issuance of common stock and warrants, net 7,082    16,325   
Principal payments on note payable (793)   (1,185)  
Proceeds from issuance of long-term debt 1,086    —   
Proceeds from exercise of warrants, net 785    —   
Proceeds from exercise of stock options —    228   
Net cash provided by financing activities 8,160    15,368   
Effect of exchange rate changes on cash (27)    
Net increase in cash 2,388    5,607   
Cash at beginning of period 10,872    7,655   
Cash at end of period $ 13,260    $ 13,262   
Supplemental disclosure of cash flow activities
Cash paid for interest $ 61    $ 183   
Cash paid for income taxes —     
8

Supplemental disclosure of non-cash activities
Initial recognition of operating lease right-of-use assets $ —    $ 1,454   
Initial recognition of operating lease liabilities —    1,498   
Transfer of inventory to property and equipment (89)   (117)  
Share issuance for common stock contribution to 401(k) plan 155    191   
Share issuance in lieu of cash compensation 50    919   
Equipois sales earn-out —    22   
 
The accompanying notes are an integral part of these condensed consolidated financial statements
9


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

1. Organization
 
Description of Business
 
The “Company”, “we”, “its” and “our” refers to Ekso Bionics Holdings, Inc. and its wholly-owned subsidiaries. The Company designs, develops, sells, and rents exoskeleton technology to augment human strength, endurance and mobility. The Company’s exoskeleton technology serves multiple markets and can be used both by able-bodied users as well as by persons with physical disabilities. The Company has sold and rented devices that (i) enable individuals with neurological conditions affecting gait (stroke and spinal cord injury) to rehabilitate and to walk again, (ii) assist individuals with a broad range of upper extremity impairments, and (iii) allow industrial workers to perform difficult repetitive work for extended periods. Founded in 2005, the Company is headquartered in the San Francisco Bay area and listed on the Nasdaq Capital Market under the symbol “EKSO”.

All common stock share and per share amounts have been adjusted to reflect the one-for-fifteen reverse stock split effected on March 24, 2020. See Note 12, Capitalization and Equity Structure – Reverse Stock Split.
 
Liquidity and Going Concern
 
As of June 30, 2020, the Company had an accumulated deficit of $197,579.  Largely as a result of significant research and development activities related to the development of the Company’s advanced technology and commercialization of such technology into its medical device business, the Company has incurred significant operating losses and negative cash flows from operations since inception. In the six months ended June 30, 2020, the Company used $5,745 of cash in its operations and had cash on hand of $13,260 as of June 30, 2020.
 
In 2020, 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, 2019 consolidated financial statements, including, but not limited to, the following:

streamlined the Company's operations and reduced its workforce by approximately 35% to lower operating expenses and reduce cash burn;
conducted a registered direct offering for net proceeds of $7,082;
invested in the development and reliability of its products;
restructured the Company's commercial organization and strategy which is showing accelerated adoption; and
received clearance from the U.S. Food and Drug Administration ("FDA") for Acquired Brain Injury ("ABI") to market the Company's product to a larger patient population increasing the value proposition to its customers.

The Company also received proceeds of $785 in the quarter ended June 30, 2020 and $2,422 subsequent to quarter-end from warrant exercises.

As described in Note 10, Notes payable, net, borrowings under the Company’s secured term loan agreement have a liquidity covenant requiring minimum cash on hand equivalent to the current outstanding principal balance. As of June 30, 2020, $1,750 of cash must remain as restricted. After considering cash restrictions, effective unrestricted cash as of June 30, 2020 is estimated to be $11,510. With this unrestricted cash balance and the impact of management's actions described above, the Company believes that it currently has sufficient cash to fund its operations beyond the look forward period of one year from the issuance of these condensed consolidated financial statements.
 
The Company’s actual capital requirements may vary significantly and will depend on many factors. The Company plans to continue its investments in its (i) sales initiatives to accelerate adoption of the Ekso robotic exoskeleton in the rehabilitation market, (ii) research, development and commercialization activities with respect to exoskeletons for rehabilitation, and (iii) 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 the Company 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,
10


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
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.
 
2. Basis of Presentation and Summary of Significant Accounting Policies and Estimates
 
Basis of Presentation
 
The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on February 27, 2020.

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, 2019, which included an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern in the report of the Company’s independent registered public accounting firm, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein.

Certain reclassifications have been made to the amounts in prior periods to conform to the current period’s presentation.

The results of operations for the three and six months ended June 30, 2020 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 consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet, and the reported amounts of revenues and expenses during the reporting period. For the Company, these estimates include, but are not limited to, revenue recognition, deferred revenue and the deferral of the associated costs, the valuation of warrants and employee stock options, future warranty costs, accounting for leases, useful lives assigned to long-lived assets, valuation of inventory, realizability of deferred tax assets, and contingencies. The estimates are based upon various factors including current and historical trends, as well as other pertinent industry and regulatory authority information, including the potential future effects of COVID-19. Actual results could differ from those estimates. Management regularly evaluates this information to determine if it is necessary to update the basis for its estimates and to adjust for known changes.

Foreign Currency

The assets and liabilities of foreign subsidiaries and equity investments, where the local currency is the functional currency, are translated from their respective functional currencies into U.S. dollars at the rates in effect at the balance sheet date, and revenue and expense amounts are translated at average rates during the period, with resulting foreign currency translation adjustments recorded in accumulated other comprehensive income as a component of stockholders’ (deficit) equity. Gains and losses from the re-measurement of balances denominated in currencies other than the entities' functional currencies, are recorded in other expense, net in the accompanying condensed consolidated statements of operations and comprehensive loss.
 
Inventory
 
Inventories are recorded at the lower of cost or net realizable value. Cost is computed using the standard cost method, which approximates actual cost on a first-in, first-out basis. Materials from vendors are received and recorded as raw material. Once the raw materials are incorporated in the fabrication of the product, the related value of the component is recorded as work in progress ("WIP"). Direct and indirect labor and applicable overhead costs are also allocated and recorded to WIP inventory. Finished goods are comprised of completed products that are ready for customer shipment. The Company periodically evaluates
11


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
the carrying value of inventory on hand for potential excess amounts over sales and forecasted demand. Excess and obsolete inventories identified, if any, are recorded as an inventory impairment charge within the condensed consolidated statements of operations and comprehensive loss. The Company's estimate of write-downs for excess and obsolete inventory is based on a detailed analysis which includes on-hand inventory and purchase commitments in excess of forecasted demand. Subsequent disposals of inventories are recorded as a reduction of an inventory reserve.

Leases

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”), No. 2016-02, Leases (Topic 842), to enhance the transparency and comparability of financial reporting related to leasing arrangements. The Company adopted the standard effective January 1, 2019.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items, such as initial direct costs paid or incentives received.

Lease expense is recognized over the expected lease term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, lease liabilities current and lease liabilities non-current. As a result, the Company no longer recognizes deferred rent on the balance sheet.

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

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which when capable of being distinct, are accounted for as separate performance obligations.

The Company’s medical device segment (EksoHealth) revenue is primarily generated through the sale and rental of the EksoNR and EksoGT, associated software (SmartAssist and VariableAssist), the sale and rental of the EksoUE, the sale of accessories, and the sale of support and maintenance contracts (Ekso Care). Revenue from medical device product sales is recognized at the point in time when control of the product transfers to the customer. Transfer of control generally occurs upon shipment from the Company’s facility for sales of the EksoNR or EksoGT, software and accessories. Ekso Care support and maintenance contracts extend coverage beyond the Company’s standard warranty agreements. The separately priced Ekso Care contracts range from 12 to 48 months. The Company receives payment at the inception of the contract and recognizes revenue over the term of the agreement. Revenue from medical device rentals is recognized over the rental term, typically over 12 months.

The Company’s industrial device segment (EksoWorks) revenue is generated through the sale and rental of the upper body exoskeleton (EksoVest) and the support arm (EksoZeroG). Revenue from industrial device sales is recognized at the point in time when control of the product transfers to the customer. Transfer of control generally occurs upon shipment from the Company’s facility. Revenue from industrial device rentals is recognized over the rental term, typically over 12 months.
 
Refer to Note 7, Revenue Recognition for further information, including revenue disaggregated by source.
 
Government Grants

The Company accounts for nonreciprocal government grants by applying the contributions received guidance in ASC Topic 958-605 by analogy. To determine if a grant is non-reciprocal or reciprocal and whether the application of ASC 606 is required, the Company considers whether the transfer of resources is one in which commensurate value is exchanged. If commensurate
12


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
value is not exchanged for the goods or services provided, the Company assesses whether the grant is conditional or unconditional.  Grants that contain both a barrier and right to return are considered conditional and revenue is deferred until such conditions are satisfied. In January 2019, the Company received a government grant from the Singapore Economic Development Board (“SEDB”) in the amount of approximately $1,500. The receipt of the funds is conditional upon certain operational milestones that must be met and maintained through December 31, 2021. Therefore, the Company has not recognized revenue related to the government grant from the SEBD nor received cash from the SEBD during the six months ended June 30, 2020 and prior periods. The Company does not expect to recognize revenue until December 31, 2021.

Going Concern
 
The Company assesses its ability to continue as a going concern at every interim and annual period in accordance with ASC 205-40. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
 
Concentration of Credit Risk and Other Risks and Uncertainties
 
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains its cash accounts in excess of federally insured limits. However, the Company believes it is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held. The Company extends credit to customers, most of which are hospitals or other large nationally recognizable institutions, in the normal course of business. Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the condensed consolidated financial statements. The Company does not require collateral from its customers to secure accounts receivable.
 
Accounts receivable are derived from the sale of products shipped 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 June 30, 2020 and December 31, 2019.
 
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, the Company has not experienced significant gains or losses upon settling foreign currency denominated accounts receivable.
 
At June 30, 2020, the Company had two customers with an accounts receivable balance totaling 10% or more of the Company’s total accounts receivable (10% and 17%), as compared with one customer at December 31, 2019 (11%).
 
During the three months ended June 30, 2020, the Company had two customers with sales of 10% or more of the Company’s total revenue (11% and 13%), as compared with one customer in the three months ended June 30, 2019 (31%).

During the six months ended June 30, 2020, the Company had no customers with sales of 10% or more of the Company’s total revenue, as compared with one customer in the six months ended June 30, 2019 (21%).
 
Recent Accounting Pronouncements

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


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
of 2023. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements and related disclosures.

Accounting Pronouncements Adopted in 2020

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the computation of the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record a goodwill impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The guidance is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company adopted the new guidance as of January 1, 2020, which reduced the complexity surrounding the evaluation of goodwill for impairment. The adoption of this guidance did not have a material impact on the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard modifies the disclosure requirements on fair value measurements in Topic 820 by removing the requirement to disclose the reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The standard expands the disclosure requirements for Level 3 fair value measurement, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The amendments in this update became effective for the Company in the first quarter of 2020. The Company adopted ASU 2018-03 as of January 1, 2020. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements and related disclosures.

3.  Restructuring

In May of 2020, the Company streamlined its operations and reduced its workforce by approximately 35% to lower operating expenses and reduce cash burn. The restructuring plan was completed by the end of the second quarter of 2020.

The Company recorded restructuring expense of $244 for the three and six months ended June 30, 2020 comprised of employee severance payments. As of June 30, 2020, there was no accrued restructuring cost remaining on the Company’s condensed consolidated balance sheets.

4. Accumulated Other Comprehensive Income
 
The following table sets forth the changes to accumulated comprehensive income, net of tax, by component for the six months ended June 30, 2020:
  Foreign Currency Translation
Balance at December 31, 2019 $ 50   
Net unrealized loss on foreign currency translation (20)  
Balance at June 30, 2020 $ 30   
 
5. 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.
14


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The valuation of Level 3 investments requires the use of significant management judgments or estimation.

The Company’s fair value hierarchies for its financial assets and liabilities, which require fair value measurement, are as follows:
  Total Level 1 Level 2 Level 3
June 30, 2020        
Liabilities        
Warrant liabilities $ 12,361    $ —    $ —    $ 12,361   
Contingent success fee liability $ —    $ —    $ —    $ —   
December 31, 2019
Liabilities
Warrant liabilities $ 4,307    $ —    $ —    $ 4,307   
Contingent success fee liability $   $ —    $ —    $  
 
The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities for the period ended June 30, 2020, which were measured at fair value on a recurring basis:
  Warrant Liability Contingent Success
Fee Liability
Balance at December 31, 2019 $ 4,307    $  
Initial valuation of warrants in connection with June 2020 financing 2,650    —   
Loss on revaluation of warrants issued in connection with the June 2020, December 2019, May 2019, and December 2015 equity financings 6,055    —   
Gain on revaluation of contingent liability —    (6)  
Reclassification of warrant liability to equity upon exercise of warrants (651)   —   
Balance at June 30, 2020 $ 12,361    $ —   
 
Refer to Note 12. Capitalization and Equity Structure – Warrants for additional information regarding the valuation of warrants.
 
6. Inventories, net
 
Inventories consisted of the following:
  June 30, 2020 December 31, 2019
Raw materials $ 2,041    $ 2,208   
Work in progress 29    29   
Finished goods 314    252   
Inventories, net $ 2,384    $ 2,489   

15


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

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which when capable of being distinct, are accounted for as separate performance obligations. Revenue recognition is evaluated based on the following five steps: (i) identification of the contract with the customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.
 
For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are determined based on observable prices at which the Company separately sells its products or services. If a standalone selling price is not directly observable, the Company estimates the selling price based on market conditions and entity-specific factors including features and functionality of the product and/or services, the geography of the Company’s customers, type of the Company’s markets. Any discounts or other reductions to the transaction price are allocated proportionately to all performance obligations within the multiple-element arrangement.
 
Contract Balances
 
Timing of revenue recognition may differ from the timing of invoicing to customers and receipt of payment. For the sale of its products, the Company generally recognizes revenue at a point in time through the ship-and-bill performance obligations. For the rental of its products, the Company generally recognizes revenue over the rental term commencing upon the completion of customer training. For service agreements, the Company generally invoices customers at the beginning of the coverage period and records revenue related to the billed amounts over time, equivalent to the coverage period of the maintenance and support contract.
 
Deferred revenue is comprised mainly of unearned revenue related to extended support and maintenance contracts (Ekso Care) but also includes other offerings for which the Company has been paid in advance and earns revenue when the Company transfers control of the product or service.
 
Deferred revenue consisted of the following:
June 30, 2020 December 31, 2019
Deferred extended maintenance and support $ 2,634    $ 2,837   
Deferred royalties 285    290   
Deferred device and rental revenues 117    131   
Customer deposits and advances 15    23   
Total deferred revenues 3,051    3,281   
Less current portion (1,345)   (1,492)  
Deferred revenues, non-current $ 1,706    $ 1,789   
 
Deferred revenue activity consisted of the following for the six months ended June 30, 2020:
Beginning balance $ 3,281   
Deferral of revenue 674   
Recognition of deferred revenue (904)  
Ending balance $ 3,051   
 
As of June 30, 2020, the Company’s deferred revenue was $3,051. Excluding customer deposits, the Company expects to recognize approximately $767 of the deferred revenue during the remainder of 2020, $1,060 in 2021, and $1,224 thereafter.

16


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
In addition to deferred revenue, the Company has non-cancellable backlog of $496 related to its contracts for rental units with its customers. These rental contracts are classified as operating leases, typically with 12-month lease terms, and rental income is recognized on a straight-line basis over the lease term.
 
As of June 30, 2020, and December 31, 2019, accounts receivable, net of allowance for doubtful accounts, were $3,741 and $5,208, respectively, and are included in current assets on the Company’s condensed consolidated balance sheets.
 
The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 90 days.
 
Disaggregation of revenue
 
The following table disaggregates the Company’s revenue by major source for the three months ended June 30, 2020:
  EksoHealth EksoWorks Total
Device sales $ 1,382    $ 161    $ 1,543   
Service and support 333    —    333   
Rentals 197      200   
Parts and other 69    14    83   
Collaborative arrangements 105    —    105   
  $ 2,086    $ 178    $ 2,264   

The following table disaggregates the Company’s revenue by major source for the six months ended June 30, 2020:
  EksoHealth EksoWorks Total
Device sales $ 1,688    $ 416    $ 2,104   
Service and support 715    —    715   
Rentals 478      481   
Parts and other 223    36    259   
Collaborative arrangements 172    —    172   
  $ 3,276    $ 455    $ 3,731   

The following table disaggregates the Company’s revenue by major source for the three months ended June 30, 2019:

  EksoHealth EksoWorks Total
Device sales $ 2,164    $ 359    $ 2,523   
Service and support 419    —    419   
Rentals 252    —    252   
Parts and other   55    60   
Collaborative arrangements   —    8
  $ 2,848    $ 414    $ 3,262   

The following table disaggregates the Company’s revenue by major source for the six months ended June 30, 2019:
17


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

  EksoHealth EksoWorks Total
Device sales $ 4,239    $ 1,076    $ 5,315   
Service and support 844    —    844   
Rentals 531    —    531   
Parts and other 40    140    180   
Collaborative arrangements   —    8
  $ 5,662    $ 1,216    $ 6,878   

8. Investment in Unconsolidated Affiliate

In May 2020, Company, Zhejiang Youchuang Venture Capital Investment Co., Ltd and another partner (collectively, the “JV Partners”) received notice from the Committee on Foreign Investment in the United States (“CFIUS”) in connection with its review of the Company’s and the JV Partners’ investment in Exoskeleton Intelligent Robotics Co. Limited (the “China JV”). The notice stated that CFIUS’s prior national security concerns regarding the China JV could not be mitigated. In connection with such determination, on July 13, 2020, the Company and the JV Partners entered into a National Security Agreement (“NSA”), which, among other things, requires the termination of the Company’s agreements and role with the China JV. The Company intends to work cooperatively with the JV Partners and CFIUS to implement the terms of the NSA.

In accordance with the above, during the six months ended June 30, 2020, the Company recorded a $66 loss on investment in unconsolidated affiliate in the condensed consolidated statements of operations and comprehensive loss related to the write-off of previously recorded direct costs related to establishing the China JV.


9. Accrued Liabilities
 
Accrued liabilities consisted of the following:
June 30, 2020 December 31, 2019
Salaries, benefits and related expenses $ 746    $ 1,098   
Device warranty 200    285   
Other 234    300   
Total $ 1,180    $ 1,683   
 
The current portion of the warranty liability is classified as a component of accrued liabilities, while the long-term portion of the warranty liability is classified as a component of other non-current liabilities in the condensed consolidated balance sheets. A reconciliation of the changes in the device warranty liability for the three and six months ended June 30, 2020 is as follows:
18


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
Three months ended Six months ended
  June 30, 2020 June 30, 2020
Balance at beginning of period $ 259    $ 350   
Additions for estimated future expense 55    73   
Incurred costs (85)   (194)  
Balance at end of period $ 229    $ 229   
Balance as of June 30, 2020
Current portion $ 200   
Long-term portion 29   
Total $ 229   
 
10. Notes Payable, net
 
Security Loan

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 plus 5.41%. 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 was required to pay accrued interest on the current loan on the first day of each month through and including January 1, 2018. Commencing on February 1, 2018, the Company was required to make equal monthly payments of principal, together with accrued and unpaid interest. Prior to the Company entering into a second amendment to the December 2016 loan agreement as discussed below, the principal balance of the loan was amortized ratably over 36 months maturing on January 1, 2021, at which time all unpaid principal and accrued and unpaid interest would be due and payable in full. A final payment of $245 will be due on the maturity date, of which $240 was accreted as of June 30, 2020 and is included as a component of notes payable on 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; or (c) the closing price per share for the Company’s common stock being $120.00 or more for five successive business days. 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. At June 30, 2020, the fair value of the contingent success fee liability was de minimis.

On April 29, 2020 the Company entered into a second amendment to the December 2016 loan agreement to defer principal payments for three months beginning in May 2020 and be re-amortized when principal payments resume on August 1, 2020. During the three-month deferral period the Company is required to make interest only payments. The amended loan agreement modified the original liquidity covenant, which now requires that the Company maintain unrestricted cash and cash equivalents in accounts of the lender or subject to control agreements in favor of the lender in an amount equal to at least the outstanding balance of the term loan, which was $1,750 as of June 30, 2020. On June 30, 2020, with cash on hand of $13,260, 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 resulted in an effective interest rate of 8.05% for the three months ended June 30, 2020 and 8.80% for the six months ended June 30, 2020. The final payment fee, initial fair value of the success fee and debt issuance costs are accreted/amortized to interest expense using the effective interest method over the life of the loan.

19


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
The following table presents scheduled principal payments of the Company’s note payable and final payment fee as of June 30, 2020:
Period Amount
Remainder of 2020 $ 1,458   
2021 537   
Total principal payments 1,995   
Less accreted portion of final payment fee, net of issuance cost and success fee discounts  
Note payable, net $ 1,991   

Paycheck Protection Program Loan

On April 20, 2020, the Company received an unsecured loan in the principal amount of $1,086 under the Paycheck Protection Program (the “PPP”) administered by the U.S. Small Business Administration, or the SBA, pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), or the PPP loan. The terms of the PPP Loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020, or the PPP Flexibility Act, which was enacted on June 5, 2020. The PPP loan provides for an interest rate of 1.00% per year, and matures two years after the date of initial disbursement. Beginning on the seventh month following the date of initial disbursement, The Company is required to make 18 monthly payments of principal and interest. The PPP loan may be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligation that were incurred before February 15, 2020. Under the terms of the CARES Act and the PPP Flexibility Act, the Company may apply for and be granted forgiveness for all or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations (including where employees of the Company have been terminated and not re-hired by a certain date), based on the use of the loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The terms of any forgiveness may also be subject to further requirements in regulations and guidelines adopted by the SBA. While the Company currently believes that the majority of the use of the PPP loan proceeds will meet the conditions for forgiveness under the PPP, no assurance is provided that the Company will obtain partial forgiveness of the loan.

The follow table presents the scheduled principal payments of the Company's PPP note payable as of June 30, 2020, shown if the loan is not forgiven:

Period Amount
Remainder of 2020 $ 57   
2021 770   
2022 259   
Total principal payments $ 1,086   
Current portion $ 442   
Long-term portion 644   
Note payable, net $ 1,086   


11. Lease Obligations

The Company's operating lease agreement for its headquarters and manufacturing facility in Richmond, California, or the Richmond Lease, is for 5 years and expires in May 2022, with no further options to extend or terminate. The lease includes non-lease components (i.e. common area maintenance costs) that are paid separately from rent based on actual costs incurred. In June 2020, the Company entered into an amendment to the Richmond Lease to make a one-time payment of $300 to cover its remaining lease obligations for the remainder of 2020, resulting in a $48 abatement and a lease payment deferral of $79 to be paid in equal monthly installments in 2021.

20


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
The Company's European operations office in Hamburg, Germany has a five-year operating lease agreement with an option to extend for another five-year term. The initial Hamburg lease term ends in July 2022.
 
The Company’s future lease payments as of June 30, 2020 are as follows, which are presented as lease liabilities, current and lease liabilities on the Company’s condensed consolidated balance sheets:
Period Operating Leases
Remainder of 2020 $ 50   
2021 589   
2022 232   
Total lease payments 871   
Less: imputed interest (94)  
Present value of lease liabilities $ 777   
Lease liabilities, current $ 269   
Lease liabilities, noncurrent 508   
Total lease liabilities $ 777   
Weighted-average remaining lease term (in years) 1.94
Weighted-average discount rate 10.5  %
 
Lease expense under the Company’s operating leases was $135 and $130 for the three months ended June 30, 2020 and 2019, respectively, and $273 and $270 for the six months ended June 30, 2020 and 2019, respectively.

Practical Expedients

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

As part of the transition to ASC 842, the Company elected to use the modified retrospective transition method with the new standard being applied as of the January 1, 2019 adoption date. Additionally, the Company has elected, as of the adoption date, not to reassess whether expired or existing contracts contain leases under the new definition of a lease; the lease classification for expired or existing leases; or whether previously capitalized initial direct costs would qualify for capitalization under ASC 842.

12. Capitalization and Equity Structure

Reverse Stock Split

After the close of the stock market on March 24, 2020, the Company effected a 1-for-15 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 fifteen, rounded up to the nearest whole share, and all common stock per share amounts have been increased by a factor of fifteen, with the exception of the Company's common stock par value and the Company's authorized shares. Amounts affected include common stock outstanding, restricted stock units, common stock underlying stock options and warrants.

Summary
 
The Company’s authorized capital stock at June 30, 2020 consisted of 141,429 shares of common stock and 10,000 shares of preferred stock. As of June 30, 2020, there were 7,814 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.

Common Stock
21


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

June 2020 Common Stock and Warrants to Purchase Common Stock Offering

In June 2020, the Company entered into a securities purchase agreement, or the June 2020 Purchase Agreement, with certain purchasers. Pursuant to the June 2020 Purchase Agreement, the Company agreed to sell in a registered direct offering, or the June 2020 Offering, an aggregate of 1,748 shares of its common stock. Pursuant to such agreement, the Company also agreed to sell, in a concurrent private placement offering, warrants to purchase 874 shares of its common stock, or the June 2020 Investor Warrants. The gross proceeds of the June 2020 Offering and the concurrent private placement offering were $7,890, the June 2020 Gross Proceeds. Each June 2020 Investor Warrant has an exercise price of $5.18 per share, subject to adjustment in certain circumstances, and is exercisable immediately and will expire five and one-half years from issuance, or on December 10, 2025.

As compensation for services provided by the placement agent for the June 2020 Offering, or the Placement Agent, the Company paid a cash fee equal to 7.0% of the June 2020 Gross Proceeds ($552) and a management fee equal to 1.0% of the June 2020 Gross Proceeds ($79), and issued, in a concurrent private placement offering, warrants to purchase shares of the Company's common stock, or the June 2020 Placement Agent Warrants, in an amount equal to up to 7.0% of the aggregate number of shares of common stock sold in the June 2020 Offering, or 122 shares in the aggregate, in substantially the same form as the June 2020 Investor Warrants, except that the June 2020 Placement Agent Warrants will expire five years from the effective date of the June 2020 Offering, or on June 7, 2025, and have an exercise price per share equal to $5.64. In connection with the June 2020 Offering, the Company also incurred $98 in other expenses of the Placement Agent paid for or reimbursed by the Company.

Of the $7,890 in proceeds, $2,650 was allocated to the June 2020 Investor Warrants and June 2020 Placement Agent Warrants, or, collectively, the June 2020 Warrants, based on the fair value method, with the remaining proceeds of $5,240 allocated to the common stock shares sold in the June 2020 Offering. In connection with the June 2020 Offering and concurrent private placement offerings, the Company incurred approximately $1,117 in direct financing costs, including a fair value of $309 of June 2020 Placement Agent Warrants. Financing costs, of $808, excluding the fair value of the June 2020 Placement Agents Warrants were allocated on the fair value basis between the common stock shares sold in the June 2020 Offering and the June 2020 Warrants as follows: $329 was allocated to the June 2020 Warrants and expensed immediately in other income, net in the accompanying condensed consolidated statements of operations and comprehensive loss and $788 was allocated to the common stock shares sold in the June 2020 Offering and recorded as a reduction to additional paid in capital.

At-the-Market Offering

In August 2018, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the "ATM Agreement") with Cantor Fitzgerald & Co. (the "Agent"), under which the Company may issue and sell shares of its common stock, from time to time, to or through the Agent, by methods deemed to be an “at the market offering.” The Company did not sell any shares of common stock under the ATM Agreement during six months ended June 30, 2020 and no prospectus in an effective registration statement filed under the Securities Act is currently available for the sale of shares under the ATM Agreement.
22


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

Warrants
 
Warrant shares outstanding as of December 31, 2019 and June 30, 2020 were as follows:  
Source Exercise
Price
Term
(Years)
December 31, 2019 Issued Exercised Expired June 30, 2020
June 2020 Investor Warrants $ 5.18    5.5 —    874    —    —    874   
June 2020 Placement Agent Warrants $ 5.64    5 —    122    —    —    122   
December 2019 Warrants $ 8.10    5 556    —    —    —    556   
December 2019 Placement Agent Warrants $ 8.44    5 52    —    —    —    52   
May 2019 Warrants $ 3.52    5 444    —    (223)   —    221   
2017 Information Agent Warrants $ 22.50    3 13    —    —    —    13   
2015 Warrants $ 41.25    5 107    —    —    —    107   
Pre-2014 warrants $ 144.90   
9-10
  —    —    (6)   —   
  1,178    996    (223)   (6)   1,945   

June 2020 Investor Warrants

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

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

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

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

23


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
June 30, 2020 June 10, 2020
Current share price $ 8.40    $ 3.81   
Conversion price $ 5.18    $ 5.18   
Risk-free interest rate 0.33  % 0.39  %
Expected term (years) 5.45 5.5
Volatility of stock 103.71  % 96.4  %


June 2020 Placement Agent Warrants

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

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

The warrant liability related to the June 2020 Placement Agent Warrants is measured at fair value at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the June 2020 Placement Agent Warrants:
June 30, 2020 June 10, 2020
Current share price $ 8.40    $ 3.81   
Conversion price $ 5.64    $ 5.64   
Risk-free interest rate 0.29  % 0.33  %
Expected term (years) 4.95 5
Volatility of stock 105.09  % 96.3  %

December 2019 Warrants

In December 2019, pursuant to a securities purchase agreement (the "December 2019 Offering"), the Company issued warrants (the "December 2019 Warrants") to purchase 556 shares of common stock. The December 2019 Warrants have an exercise price of $8.10 per share and will be exercisable six months and one day from their issuance date, or from and after June 21, 2020, and will expire five years from the date they initially became exercisable, or on June 21, 2025.

The December 2019 Warrants also contain a put option, under which, if the Company enters into a Fundamental Transaction, as defined in the December 2019 Warrants, the Company or any successor entity will, at the option of a holder of a December 2019 Warrant, exercisable concurrently with or at any time within 30 days after the consummation of such Fundamental Transaction, purchase such holder’s December 2019 Warrant by paying to such holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such holder’s December 2019 Warrant within five trading days after the notice of exercise by the holder of the put option. Because of this put-option provision, the December 2019 Warrants are classified as a liability and are marked to market at each reporting date.

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

24


Ekso Bionics Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
($ and share amounts in thousands, except per share amounts)
(Unaudited)
June 30, 2020 December 31, 2019
Current share price $ 8.40    $ 5.86   
Conversion price $ 8.10    $ 8.10   
Risk-free interest rate 0.29  % 1.73  %
Expected term (years) 4.97 5.5
Volatility of stock 104.9  % 95.7  %

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

The warrant liability related to the December 2019 Placement Agent Warrants is measured at fair value at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the December 2019 Placement Agent Warrants:
June 30, 2020 December 31, 2019
Current share price $ 8.40    $ 5.86   
Conversion price $ 8.44    $ 8.44   
Risk-free interest rate 0.26  % 1.69  %
Expected term (years) 4.47 5.0
Volatility of stock 108.17  % 93.1