UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20202022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File No. 001-37854
 
Ekso Bionics Holdings, Inc.
(Exact name of registrant as specified in its charter) 
Nevada99-0367049
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
 
1414 Harbour Way South,101 Glacier Point, Suite 1201A
Richmond,San Rafael, California 9480494901
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (510) 984-1761 
 
Securities registered pursuant to section 12(b) of the Act:
 
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueEKSONasdaq Stock Market LLC
 (Nasdaq Capital Market)
 
Securities registered pursuant to section 12(g) of the Act: None
 
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ¨   No ý
 
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ¨   No ý
 
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 ý   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 ý   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 “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer  ¨      Accelerated filer  ¨     Non-accelerated filer ý Smaller reporting company   ý  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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ¨

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes No

The aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $52,257,307$18,860,934 based on the last sale price for such stock on June 30, 2020,2022, the last business day of the registrant's most recently completed second fiscal quarter.
 
As of February 19, 2021March 23, 2023 the registrant had 12,599,90013,341,505 outstanding shares of common stock.
 
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant’s Proxy Statement for the 20212023 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2020.2022.


Table of Contents
Ekso Bionics Holdings, Inc.
ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 20202022
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, or this Annual Report, contains forward-looking statements, including, without limitation, in the sections captioned “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere. Any and all statements contained in this Annual Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Annual Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the design, development and commercialization of exoskeleton products for humans, (ii) the manufacturing of our products and strengthening our supply chain, and potential opportunities for strategic partnerships, (iii) futurebeliefs regarding regulatory path for our products, including potential approvals required and timing of approvals, (iv) statements regarding the financial performance, including any projectionand operational impacts on our business following the completion of income (including income/loss)our acquisition from Parker Hannifin Corporation of certain assets related to Parker Hannifin Corporation's human motion control business, and software applications, support services and cloud environments related to such business in December 2022 (the "HMC Acquisition"), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iv)(v) our future financial performance, including any statement contained in a discussion and analysis of our financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), (v)(vi) our beliefs regarding the potential for commercial opportunities, including for exoskeleton technology in general and, our exoskeleton products, in particular and for strategic partnerships, (vi)(vii) our beliefs regarding potential clinical and other health benefits of our medical devices, (vii)(viii) the impact and effects of the COVID-19 pandemic and other risk factors on our business, results of operations or prospects, and (viii)(ix) the assumptions underlying or relating to any statement described in points (i) through (viii)(ix) above.

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, the ongoing COVID-19 pandemic and its impact on the Company’s financial condition and business, the highly competitive markets in which the Company’s products are sold, the Company's significant losses to date and anticipated future losses, the new and unproven nature of the market for the Company’s products, the long and variable sales cycles for the Company’s products, the factors outside the Company’s control that affect the internationalproduction and sales of its products, which include but are not limited to disruptions in the global supply chain, the costs related to and impacts of potential failure of the Company to obtain or maintain protection for the Company's intellectual property rights, the inability to successfully consummate and integrate acquisitions, including the HMC Acquisition, the failure of the Company to obtain or maintain regulatory approval to market the Company's medical devices, risks related to product liability, recall and warranty claims, the volatility of the market price of and limited trading in our common stock. A description of some of the risks and uncertainties that could cause our actual results to differ materially from those described by the forward-looking statements in this Annual Report appears in the section captioned “Risk Factors” and elsewhere in this Annual Report.

Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We disclaim any obligation to update the forward-looking statements contained in this Annual Report to reflect any new information or future events or circumstances or otherwise.

Readers should read this Annual Report in conjunction with the discussion under the caption “Risk Factors,” our financial statements and the related notes thereto in this Annual Report, and other documents which we may file from time to time with the SEC.

Notes regarding references to Ekso Bionics

In this Annual Report, the “Company”, “we”, “its” and “our” refers to Ekso Bionics Holdings, Inc. and its wholly-owned subsidiaries, and “Ekso Bionics” refers to Ekso Bionics, Inc. as it existed prior to the January 15, 2014 merger of our wholly-owned subsidiary, Ekso Acquisition Corp., with and into Ekso Bionics, Inc. or the Merger. Ekso Bionics was the surviving corporation in the Merger and became our wholly-owned subsidiary, and all of the outstanding Ekso Bionics stock was converted into shares of our common stock. Ekso®, Ekso Bionics®, EksoVest®, EksoWorks®, EksoGT, EksoNR, EksoZeroG, EVOTM,EksoUE, and EksoPulse are registered and unregistered trademarks of the Company. All other trademarks that may appear in this Annual Report are the property of their respective owners.
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PART I

Item 1.    BUSINESS

Overview

We design, develop, sell, and rentmarket exoskeleton products that augment human strength, endurance and mobility. Our exoskeleton technology serves multiple markets and can be utilized both by able-bodied userspersons and persons with physical disabilities. We have sold or rentedmarketed devices that (i) enable individuals with neurological conditions affecting gait, (acquiredincluding acquired brain injury or ABI,(ABI) and spinal cord injury or SCI)(SCI), to rehabilitate, and in some cases, to walk again, (ii) provide ambulation assistance in home and community settings for individuals with certain SCI levels, (iii) assist individuals with a broad range of upper extremity impairments, and (iii)(iv) allow industrial workers to perform difficult repetitive work for extended periods.

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

On December 5, 2022, we acquired the Human Motion and Control (“HMC”) Business Unit from Parker Hannifin Corporation (“Parker”), an Ohio corporation (the "HMC Acquisition"). The assets acquired from the business unit include intellectual property rights for devices which are U.S. Food and Drug Administration (FDA) cleared lower-limb powered exoskeletons that enable task-specific, overground gait training to patients with weakness or paralysis in their lower extremities. The HMC acquisition has the potential to fuel growth by increasing top line revenue and expanding our reach throughout the continuum of care.

We continue to explore business development initiatives to fuel growth and long-term value and are committed to helping people improve mobility and live healthier lives through combining the use of technology with advanced rehabilitative programs.

For medical applications we have two primarythree main products.

EksoNR is a robotic exoskeleton specifically designed to be used asin a rehabilitation toolsetting to allow physiciansprogress neurorehab patients so they can walk out of the device and therapists to rehabilitate patients who have suffered aback into their communities. As an exoskeleton FDA-cleared for acquired brain injury, stroke, ormultiple sclerosis (MS) and spinal cord injury. In June 2020,injury, EksoNR offers what we received 501(k) clearance frombelieve is the U.S. Foodindustry’s most natural gait, re-teaching the brain and Drug Administration, ormuscles how to properly walk again.
Ekso Indego Therapy is a modular, adjustable, lightweight, lower-limb powered exoskeleton that can be custom-sized and fitted to patients for use in rehabilitation and wellness applications. Ekso Indego Therapy is cleared by the FDA to market our EksoNR for use with patients with ABI. With its unique features designed specifically for hospitalsstroke and its proprietary SmartAssist software, EksoNR allows for the early mobilization of patients and, increased endurance during rehabilitation sessions through higher step counts and extended training durations. The intent is to allow the patient's central nervous system to take advantage of a patient's neuroplasticity to maximize recovery.SCI patients.
EksoUEEkso Indego Personal is a wearable upper body exoskeletonlightweight powered lower limb orthosis that assistsenables people with mobility impairments the opportunity to walk independently. Ekso Indego Personal is cleared by the FDA for use with SCI patients with a broad range of upper extremity impairments and aimsinjury levels from T3 to provide a wider active range of motion, increased endurance, and heightened intensity during rehabilitation sessions.L5 in community or home settings.

For able-bodied industrial workers, we built on the leading market position we achieved with EksoVest and EksoZeroG by introducinghave offered three products.

Ekso EVO, a new wearable exoskeleton for overhead work.Like EksoVest, EVOis an upper body exoskeleton that elevates and supports a worker's arms to assist them with tasks ranging from chest height to overhead. EVO is intended to reduce worker fatigue and reduce on-site injuries while boosting productivity. Based on extensive customer feedback, we have engineered EVO was designed specifically to increase adoption of exoskeletons in the workplace. Compared to EksoVest, EVO is lighterbe light weight, lowerhave a low profile, lower cost, and hasallow for minimal contact with the body, making it comfortable to wear while enabling an even broader freeand offer a wide range of uninhibited arm motion. The goalEVO is for workers using EVO to experience lower levels of fatigue and reduce on-site injurieswhile boosting productivity. In 2020, we introduced EVO intocurrently targeted at vertical markets including food processing,aerospace, automotive, manufacturing, and specific construction trades,trades.
EksoVest is the predecessor product to EVO and manufacturing.has similar properties and applications. EksoVest was discontinued in 2022.
EksoZeroG is a mobile tool support arm that can be mounted on a fixed structure to reduce the load transferred from the tool to the user. EksoZeroG is used primarily in construction and demolition applications. EksoZeroG was discontinued in 2022.

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EksoHealth - Rehabilitation

Today, we focus our healthcare business on advanced technology in the rehabilitation robotics.market. We are leveraging our patented exoskeleton technology to develop and market products intended to enablerehabilitate patients with lower limb impairments to rehabilitate earlier and with better outcomes than the current standard of care.

As of December 31, 2022, we had shipped approximately 620 EksoNR and EksoGT units combined to over 400 rehabilitation facilities or customers worldwide. The number of units utilized at a facility varies from one to seven, and is driven by the number of beds and rehabilitation sessions a hospital can offer and that hospital’s adoption of robotics within its rehabilitation protocols. As of December 31, 2022, more than 300 Ekso Indego Therapy and Personal devices have been shipped to over 220 clinical centers or personal end users. The number of units at a center may vary for clinical sites based on the size of the site and ability to assist multiple patients simultaneously using Ekso Indego. Some sites that purchased Ekso Indego technology prior to the release of Ekso Indego Therapy received a 3-piece kit of Indego devices, one each of small/short, medium, and large/tall size configurations.

EksoNR

Our leading product, EksoNR is a wearable bionic suitexoskeleton that allows our hospitalhospitals and other rehabilitation customersproviders to provide in-patients and out-patients the ability to stand and walkdeliver over ground whilegait therapy and ambulation assistance. EksoNR incorporates hardware and software that can provide varying levels of support and assistance to the device makespatient in real-time, adjustments to correct issues with the patient’s reciprocal gait. Patients receive therapy in the device under the supervision of a physical therapist, and typically use an additional assistive device such as a cane, crutches or a walker. Walking is achieved by a user shifting their weight, requiring the user to achieve balance thereby replicating and reinforcing the movements of a natural gait. If needed, some patients utilizeUsing built-in software, EksoNR's sensors in the device which assist in step initiation.can detect weight shift and initiate steps. Battery-powered motors drive the legs detectingwith software determining the deficient neuromuscular function and providing theappropriate level of assistance necessary for a user to complete their step. Users can expect to walk, with aid from the device, the first time they put on the EksoNR exoskeleton (after passing an assessment). Physical therapists can transfer patients to or from their wheelchair and don or remove the EksoNR in less than ten minutes.gait sequence.

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The EksoNR incorporates SmartAssist, our proprietary, adaptive softwareis used by customers in both in-patient and out-patient settings. Our customers believe that allowsfor patients with some preserved motor ability (for example, after a patient to perform to their capability but dynamically provides 0-100% power on either side of the body as needed for successful walking. SmartAssist can promote a greater number of high-quality steps in a short time period and support the early re-learning of correct stepstroke, an ABI, or an incomplete SCI), EksoNR offers unique benefits. It helps therapists teach proper gait patterns and weight shifts, allowing some patients to potentially mitigating compensatory behaviors. SmartAssist also has allowed our customersmobilize earlier and ultimately to significantly expand the spectrumwalk again. By allowing individuals to stand and walk in a full weight-bearing setting, early clinical evidence is beginning to show that EksoNR may offer potential healthcare benefits (inclusive of patients that can potentially benefit from robotic rehabilitation.with complete SCIs). These benefits include a reduction in secondary complications such as pressure sores, urinary tract infections, bowel problems, pneumonia and other respiratory issues, bone loss/osteoporosis, cardiovascular disease and psychological disorders resulting in reduced post-injury medical costs.

In addition, SmartAssist can aid in promoting early mobility by training patients (PreGait) to walk in an exoskeleton.We believe this expands access of care to additional patients. SmartAssist alsoEksoNR includes next generation Variable Assist technology. Variable Assist allows healthcare providers to adjust the level of assistance provided by the EksoNR as necessary, in some instances allowing patients to power themselves (FreeGait).

Another important feature of our EksoNR is itscloud connectivity through EksoPulse, Analytics, a real-time data capture program. EksoPulsewhich gathers and transmits statistics and device information during EksoNR walking sessions. This information can be used to track patient progression and to monitor device utilization. The EksoNR records data such as steps, speed, step size, and other settings along with error logs and operating parameters. Data is sent securely to our serversthe cloud where it is available for customers to view, filter, and export through a secure web portal. This feature enables more thorough patient care while reducing manual data entry. It also enables us to provide a higher level of service through early identification and thorough reporting of device errors, saving customers the time and expense of unnecessary on-site visits.

Ekso Indego Therapy

Ekso Indego Therapy is an adjustable, lower-limb powered exoskeleton that can be custom-sized and tailor fitted to patients allowing for swift donning. A comprehensive software suite further enhances training sessions by providing a variety of options, settings, and analytics on patient and device performance that therapists can use to improve treatment plans in real-time. The EksoNR is used by customers in both in-patientEkso Indego Therapy enables therapists to deliver task specific, over-ground and out-patient settings. Our customers believe thatindividualized gait training.

Ekso Indego Therapy enables individualized gait therapy for patients with some preserved motor ability (for example, afterlower extremity weakness or paralysis (such as complete/incomplete spinal cord injury and stroke). Ekso Indego's lightweight, modular, and quick-adjust design allows clinicians to offer intensive gait therapy, custom-tailored to patients across the entire continuum of care from inpatient facilities to in-home sessions and everything in between.

Ekso IndegoTherapy+ software is designed to provide effective gait therapy for patients with lower extremity weakness, such as partially impaired stroke survivors. Patients are required to initiate leg movement and Ekso Indego provides support when necessary while providing auditory, real-time feedback.

Ekso Indego Motion+ software allows clinicians to practice task-specific gait therapy with patients through a stroke,predictable, guided gait pattern. Powerful motors in the hip and knee, customizable within the Ekso Indego app, enable patients with little to
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no gait function to stand and walk with postural controls. The patient leans forward to initiate movement, and Ekso Indego responds accordingly

Ekso Indego Personal

Ekso Indego Personal is a traumatic brain injury (TBI), or an incomplete SCI),powered lower limb orthosis, also known as a powered exoskeleton, which enables people with mobility impairments the EksoNR exoskeleton offers unique benefits. It helps therapists teach proper step patterns and weight shifts, allowing patients potentially to mobilize earlier and ultimatelyopportunity to walk again. By allowingindependently. Power is provided by sophisticated motors in the knee and hip joints, and combined with advanced sensors and control strategies, the device allows gait impaired individuals to stand and walk again, granting them a new level of independence at home and in a full weight-bearing setting, early clinical evidence is beginning to show, that EksoNR may offer potential healthcare benefits (inclusive of patients with complete SCI). These benefits include a reduction in secondary complications such as pressure sores, urinary tract infections, bowel problems, pneumonia and other respiratory issues, bone loss/osteoporosis, cardiovascular disease and psychological disorders resulting in reduced post injury medical costs.the community.

EksoGTEkso Indego Personal offers a modular quick connect design, which allows its users to put on and take off the device without assistance. At just 29 lb (13 kg), Ekso Indego Personal is a lightweight commercial exoskeleton offering ease of handling, transportation, and storage.

EksoGT, previously our leading rehabilitation product, has been superseded by EksoNR. We may still sell small quantitiesEkso Indego Personal can currently be used with spinal cord injury levels of EksoGT into certain foreign countries while awaiting regulatory clearanceT3 to L5 in community or home settings, but is not intended for our EksoNR. For existing customers with onesports or more previously purchased EksoGT, we offer an upgrade package.stair climbing.

As of December 31, 2020, we had shipped over 500 EksoGTWith its slim profile, Ekso Indego Personal offers a modular quick-connect design, which allows users to put on and EksoNR units combined to over 400 rehabilitation facilitiestake off the device without assistance even while seated in most standard-frame wheelchairs. It is compatible with stability aids such as rolling walkers or customers worldwide. The number of units utilized at a facility varies from one to six,forearm crutches. With no backpack or exposed wiring, Ekso Indego Personal allows for safe use in most home and is driven by the number of bedscommunity environments and rehabilitation sessions a hospital can offeron surfaces like pavement, grass, carpet and that hospital’s adoption of robotics within its rehabilitation protocols.tile.

EksoUE

In 2019, we entered the market for upper extremity rehabilitation devices with EksoUE. EksoUE is a wearable assistive device that helps to reduce the effect of gravity on the wearer’s shoulders and arms. While worn, EksoUE allows longer, more intense rehabilitation sessions by reducing fatigue, while also allowing the patient to achieve a larger active range of motion. Similar to EksoNR, EksoUE is a tool for use by trained clinicians, primarily physical and occupational therapists, during rehabilitation sessions. Based on the same technology that is used in our industrial products, EksoUE uses a passive (non-motorized) design which avoids the need to charge or manage batteries and other electrical systems.

Market Overview
 
Rehabilitation clinics with significant stroke, TBI,ABI, and SCI populations comprise the primary market for our medical products. Due to their chronic nature, we believe that these conditions have an enormous clinical and economic impact on both people with the conditions and the healthcare system. According to the Centers for Disease Control, there are approximately 800,000 strokes suffered per year in the U.S. and approximately 15 million worldwide, making stroke rehabilitation our largest target market. Likewise, according to the National Spinal Cord Injury Statistical Center, there are approximately 18,000 incidences of SCI per year in the U.S., and according to the World Health Organization, between 250,000 to 500,000 incidences worldwide.

While the market opportunity for robotic exoskeleton rehabilitation may be large, weWe also recognize that the path for medical devices to become the standard of careserve individual users with Ekso Indego Personal, which is long and challenging. We believe that our ability to accelerate adoption will also be based, in part, on our ability to build on our partners’ early efforts: (i) to expand clinical evidence and (ii) to drive toward
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standard of care. We are already seeing customers appreciate that one way for stroke patients at in-patient facilities to receive the recommended amount of rehabilitation per guidelines is by using an EksoNR, the only device currently in the market that has the versatilityintended to provide an over-ground gait training intervention thatoverground ambulation in community and home settings. The primary use case for Ekso Indego Personal is task-specific, high intensityfor users with certain spinal cord injuries. For this patient population, confinement to a wheelchair can cause severe physical and allows forpsychological deterioration. As a marginresult, the secondary medical consequences of error, across the continuumparalysis can include difficulty with bowel and urinary tract function, osteoporosis, loss of care.lean mass, gain in fat mass, insulin resistance, diabetes, and heart disease. The cost of treating these conditions is substantial.

Clinical Evidence

Many of our early clinical customers have participated in research focusing on safety and feasibility of exoskeletons and robotics in rehabilitation market development. These early studies were favorable and have further developed to focus on efficacy and outcomes. EksoNR technology is oneA particular subset of the most studied exoskeletons inSCI population that we address with Ekso Indego Therapy are U.S. veterans treated by the market. World-renowned institutionsU.S. Department of Veterans Affairs (the "VA"). According to VA data there are leadingapproximately 42,000 of such patients are veterans and are eligible for medical care and other benefits from the charge in research focused on acquired brain injury, stroke,VA out of which 27,000 are receiving treatment annually. With 25 VA spinal cord injury multiple sclerosis and others. EksoNR is involvedcenters, the VA has the largest single network of spinal cord injury care in over 115 investigator-initiated studies with greater than 2000 enrolled patient participants. Notable gains have been observed with increased heart rate, rating of perceived exertion and metabolic responses when walking in EksoNR. Also discussed is improved gait speed, walking distance and standing balance out of EksoNR demonstrating improvements in motor activity and functional mobility independence. Our latest company sponsored WISE (Walking Improvement for SCI with Exoskeleton) study demonstrates clinically meaningful improvement in independent walking speed, functional gains in shorter timeframe and influence of factors that may modify gait recovery. The data is currently being submitted to journals for publication.the United States.

The European Union also requiresincludes a two-trackunique approach to market penetration and subsequent coverage, requiring separate claims for purchasing the device and for requests for reimbursement. We are well represented in clinics run by German and Austrian accident insurers, with four out of nine rehabilitation sites in Germany, and four out of four rehabilitation sites in Austria. We operate out-patient rehabilitation sessions paid for by anthe accident insurer, where a patient trainspatients train using our EksoGT or EksoNR device twice a week.devices in rehabilitation setting. We are using these examples to integrate exoskeletal therapy in existing care pathways. Inpathways as well as to pursue personal device sales.

While the United Kingdom,market opportunity for robotic exoskeleton rehabilitation may be large, we also recognize that the National Institutepath for Health and Care Excellence, or NICE, has selected us as the first exoskeleton company to produce a Medtech Innovation Briefing, or MIB, which are designed to support National Health Services, or NHS, and social care commissioners and staff who are considering using new medical devices to become the standard of care is long and other medicalchallenging. We believe that our ability to accelerate adoption will also be based, in part, on our ability to build on our partners’ early efforts to: (i) expand clinical evidence and (ii) drive toward standard of care. We are already seeing customers use our products with patients post stroke, ABI, SCI, or diagnostic technologies. The MIB highlightedMS to facilitate the innovative aspectrecommended amount of rehabilitation per guidelines defined by the American Heart Association. All of our proprietary SmartAssist software, which differentiateslower extremity products have the versatility to provide an over-ground gait training intervention that is task-specific, high intensity and patient-centered throughout the continuum of care.

Clinical Evidence
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Many of our early clinical customers have participated in research focusing on safety and feasibility of exoskeletons and robotics in rehabilitation market development. These early studies were favorable and have further developed to focus on efficacy, outcomes, dosage, and comparing this technology to other therapeutic interventions. Currently, a search for “robotic exoskeleton” on PubMed, a search engine for biomedical literature and life science journal articles, garners approximately 289 unique publications on the topic. The Ekso exoskeletons (Ekso1.1, EksoGT, EksoNR, and EksoGT from other available exoskeletons.Ekso Indego) have been utilized in many of these protocols. The body of research has been carried out by world-renowned institutions and examines a wide variety of diagnoses including ABI, SCI, stroke, MS, and others. The findings of this research are overall positive and promote use of an Ekso exoskeleton in rehabilitation to provide patient outcomes that are equal to or superior to traditional physical therapy in both the inpatient and outpatient setting. Some of these outcomes include faster gait speed, increased gait endurance, improvements in cardiometabolic responses, enhanced quality of life, more typical gait kinematics, and increased function. More recent research has focused on session duration and demonstrates that patients are able to complete significantly greater numbers of steps using an Ekso exoskeleton than in traditional therapy. This is important because the number of repetitions required to master a skill is high, so being able to utilize this equipment to get more intense practice will lead to improved outcomes.

Economic Value Proposition

We believe that our EksoNR allows our customers to benefit economically without modifying the reimbursement model or reimbursement codes. First, many of our customers have reported that utilizing the EksoNR promotes continuous patient improvement beginning sooner than with traditional rehabilitation methods, potentially leading to a commensurate increase in insurance reimbursements. Second, many of our customers report that facilities equipped with the EksoNR as part of their rehabilitation programs attract more patients, thereby driving positive economic benefits. Lastly, we believe that improvements in patient outcomes, such as those seen with the use of EksoNR, translate positively to other metrics including discharge to community, staffing efficiency in the rehabilitation unit, and reductions in readmission rates.

Ekso Indego Personal addresses the home and community use market for patients with specific spinal cord injuries—further extending the continuum of care beyond the rehabilitation or clinical setting. Today the primary source of revenue for Ekso Indego Personal is from the VA, who purchases devices on behalf of veterans who qualify. Since 2015 the VA has supported coverage for US qualified veterans who have suffered spinal cord injury & further expanded the program in 2018 to support more convenient training options that are closer to patients’ homes. As the industry continues to work to extend Centers for Medicare and Medicaid Services codes for reimbursement through traditional means the market opportunity will expand.

Today, in the United States wearable at home assisted exoskeleton medical technology is generally not covered for reimbursement by private insurance providers. However, reimbursement may be approved on a case-by-case basis as in the case of workers compensation or accident settlements. In some instances, devices are paid for by individual users from their own personal funds or through charitable donations or organizations.

Additional future commercial opportunities are possible but require more traditional programs for adequate coverage for potential partial or full reimbursement from third party payors, which may include; private health insurance companies, managed care, and government facilities (such as Medicare and Medicaid programs in the United States).


Current Sales and Marketing Efforts

Our key marketing goal today is the broad-based commercial adoption of our portfolio of robotic wearable exoskeletons, including the EksoNR, Ekso Indego Therapy and the Ekso Indego Personal, in the rehabilitationHospital and Home setting. We are focusing our go-to-market protocols and collateral on our three target audiences: medical administrators, medical directors/ therapists, and patients. Working closely with thought leaders, we will continue to build upon our early user-group exchanges, develop clinical education programs, and grow our medical advisory council.

There continues to be high market interest in expanding neurosciences service lines. In alignment with this interest, our sales priority involves the education of clinical and executive stakeholders on the economic and clinical value of our robotic exoskeleton portfolio, including the EksoNR Robotics Neuro Rehabilitation Program under our FDA indications of Stroke, Acquired Brain Injury, and Spinal Cord Injury. the Ekso Indego Therapy devices.In tandem, we continue to leverage our EksoNR and Ekso Indego customer base to educate and mentor strategic target centers that specialize in Stroke,stroke, ABI and SCI rehabilitation in key market service areas across the US and Canada.specific geographies. Geographically, the priorities have been Canada, the U.S., and Mexico in the Americas, Germany in EMEA (the Europe, the Middle East, and Africa region), and Singapore, Hong Kong, and Australia in APAC (the Asia Pacific region). Currently, we utilize a direct sales force for customers located in the U.S., Canada, Singapore, Hong Kong, Australia, Germany, Austria and Switzerland. We also have an expanding distributor network in EMEA and Asia.APAC.

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The sales and marketing team is principally based in the U.S., Germany, and Singapore, and is structured as follows:

One commercial leader each for the Americas, EMEA, and APAC;
Americas, EMEA, and APAC sales professionals thatwho pursue new prospects and organize demonstrations;
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Clinical professionals and physical therapists thatwho provide peer-to-peer demonstrations and trainings;
Marketing professionals and consultants towho build awareness and generate demand; and
Ambassadors, who are stroke and SCI survivors, thatwho provide demonstrations and personal experiences.

The sales cycle for the EksoNR averagesand Ekso Indego Therapy devices average approximately eight to 12 months for a first device and six to eight months for subsequent devices. OurThe typical sale isof our EksoNR and Ekso Indego Therapy is a complete package, which includes the device and all relevant components, two sets of batteries for continuous run-time, training through two levels of certification, and SmartAssist software.certification. Customers also typically purchase Ekso Care, which is our one- to four-year after-sales service package.

For products sold to hospitals or other rehabilitation clinics, we offer a range of purchase options. In most cases and when capital is available, the product is sold outright to the customer as a capital sale and the full price is invoiced to the customer after title transfers. For customers who prefer to finance the purchase of their device, we have finance partners who facilitate such transactions. Often these arrangements will be marketed as a subscription offer to the end customer. Typically, in a subscription arrangement we will sell the device to the 3rd party financing partner who then contracts with the end customer for payment terms. In some subscription cases we may elect to maintain ownership of the product provided to the customer in lieu of selling it to a 3rd party financing partner.

Rehabilitation treatments that can benefit from the use of our EksoNR and Ekso Indego Therapy products take place in a range of different types of facilities. These include inpatient rehab facilities (IRF), long term acute care hospitals (LTACH), skilled nursing facilities (SNF), and outpatient rehab clinics, among others. The primary facility types we currently serve are IRFs. Among these facilities, ownership structures also vary from small independent rehab centers to larger networks of providers. Our current market focus is on the larger network providers, referred to as integrated delivery networks (IDN). Sales to IDNs typically involve multi-unit transactions that can benefit from lower selling costs, better pipeline visibility, and better economies of scale. In 2022, approximately 54% of our new unit shipments for EksoNR were to IDNs, and globally, multi-unit sales comprised approximately 61% of our unit shipments.

The sales cycle for the Ekso Indego Personal device averages 8-12 months from the first interaction we have with the potential Personal user. The Ekso Indego Personal device is regulated by the FDA and the patient must have an injury level of T3 to L5 and have a support person when utilizing the device. The majority of Personal users will be Veterans, as we work closely with VA hospitals located throughout the county. The Veteran will need to complete a screening, in-clinic training and a home trial prior to the VA purchasing the device for the Veteran.

We sell our medical products through a combination of direct and indirect (i.e., distribution) channels. In the US, our hospital and clinical sales are primarily made through our direct salesforce, with the exception of sales to the VA which are handled through distribution. In EMEA, we sell through a combination of direct and indirect channels, with DACH countries typically handled direct, and other countries and regions served through distributors. In APAC we also use a combination of direct and indirect channels depending on the country.

Clinical Services and Customer Success

We have developed a leading clinical capability in robotic rehabilitation, and we provide extensive training and support to our customers to ensure they are successful. All rentalssales or salessubscriptions include customer training. This is comprised of both on-lineonline and in-person training of our customers’ physical therapists. We have made this a high priority as we recognize getting customers comfortable using our product is a prerequisite to them successfully implementing a robotic rehabilitation program. In addition to the training that is included with each sale or rental, we also offer additional training services for customers who are interested in more advanced uses of the product or who desire more supervised experiences.

After Sales ServiceProduct Pipeline

As described previously, our current medical products broadly target the rehabilitation and mobility spaces. We provide direct service for the EksoNRbelieve there are further opportunities in these and adjacent use cases, and we plan to expand our product portfolio accordingly. Our internal medical product development activities are targeted at a combination of next generation versions of our facilitiescurrent products as well as new applications in Richmond, California,both rehabilitation and Germany.In addition, we utilize third-party service providers for some customers in EMEA and APAC. When maintenance or service is required, a customer schedules service by contacting us directly. We then arrange for the appropriate service, depending on the level of Ekso Care the customer has purchased and the nature of the service required. In some cases, we may decide it is appropriate to send an Ekso field technician onsite to service the device. However, many service issues are diagnosable remotely with the use of EksoPulse.mobility.

In addition to our internal development activities, we are continuously evaluating complementary external products and services that have the Ekso Care service programs we provide a Fee-for-Service option. In this program, EksoNR repair is fulfilled per quote on demandpotential to leverage our existing infrastructure and go-to-market capacity to further expand our industry presence. This includes the possibility of the customer and as per our repair price list.pursuing business relationships ranging from acquisitions to licensing activities.
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Manufacturing and Supply Chain

We produce the EksoNR at our facilities in Richmond, California for worldwide sales. We currently run one line for one shift per day and believe we have the capacity to eventually run additional lines and shifts should we deem it appropriate. The EksoNR uses over 700 purchased parts, which we source globally from over 70 suppliers. Whenever possible, we seek to secure dual source suppliers for our components.

Our commitment to the philosophy of continuous improvement has continued to increase product performance and reliability over the past year. As a result, we expect our cost of field service will continue to decline over the next 12 months.

EksoWorks - Able-Bodied Industrial Applications

We continue to pursue market and product development opportunities for able-bodied industrial applications. Injuries caused by repetitive tasks and overexertion are leading causes of lost work days due to workplace injuries. Ekso Bionics believes that human augmentation and exoskeletons in particular have a key role to play in solving these workplace issues and strives to alleviate the industrial market. Our initial efforts have included EksoZeroG Arm, a mobile arm mount that makes heavy tools feel weightless and enablesburden on skilled workers, to be more productivedrastically reduce the number of workplace injuries, and safe, and EksoVest,to cut down on worker fatigue.

Our primary product for able-bodied industrial applications is EVO, an upper body exoskeleton that elevates and supports a worker's arms to assist them with tasks ranging from chest height to overhead.overhead

Building. EVO builds on our existing EksoVest technology,nearly a decade of design and development history in August of 2020 we introduced EVO, an endurance-boosting assistive upper body exoskeleton that alleviates the burden of repetitive work. EVO’s innovative designextremity applications and is our latest product for able-bodied applications.based on extensive customer feedback. EVO is a passive, spring-loaded assistive upper-body exoskeleton that aids workers with overhead work. It is designed to reduce fatigue and shoulder and back muscle strain, with the goal of eliminating work-related injuries to the neck, shoulder, and back. EVO offers 5-15five to fifteen pounds of lift assistance in each arm to elevate and alleviate the day-to-day strain on workers across all industries. Shoulder injuries causedWhile EVO is a general purpose product, we currently target specific vertical markets including aerospace, automotive, general manufacturing, and some construction trades.

EksoVest is a shoulder support product targeted at overhead work. EksoVest was superseded by overhead work, repetitive tasks,EVO upon its release. We continued to produce EksoVest and overexertionassociated accessories for existing customers in 2022. EksoVest was discontinued at the end of 2022.

EksoZeroG is a tool holder that can mount on an aerial lift platform or scaffolding. This effectively reduces the leading causeweight of lost work days due to workplace injuries. Ekso Bionics is striving to alleviateheavy tools as felt by the burden on skilled workers, drastically reducingoperator. EksoZeroG has been sold primarily through rental companies into the number of workplace injuries and cutting down on worker fatigue.construction market. EksoZeroG was discontinued in 2022.

Market feedback continues to indicate a growing imperative among construction and manufacturing companies to drive adoption of improved safety and health practices. Furthermore, based on initial field-testing and market research, we believe that industrial exoskeletons have the potential to help prevent workforce injuries, improve productivity and over time reduce
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workers’ compensation and related costs. In the U.S. alone, our target manufacturing and construction verticals employ a total of 18.4 million workers (according to U.S. Bureau of Labor Statistics), many of whom can potentially benefit from our assistive technology.

In addition, human augmentation technology is being viewed by senior managers of companies that have participated in field-testing as an opportunity to extend the careers of experienced and skilled workers while also changing the work environment to attract future workers to these careers.

While we believe that the evidence clearly demonstrates that there is significant demand for human augmentation in industrial applications, adoption rates remain a challenge due to the nascent nature of the technology. That said, we believe that there is significant mid-to-long-term potential in the industrial markets, and accordingly, we will continue our product development efforts to expand our EksoWorks product offerings. Given the fragmented nature of the industrial market we believe that the best approach in this market involves collaboration with established strategic partners thatwho can help us target applications tailored for specific use cases. We believe that leveraging our extensive exoskeleton expertise and intellectual property portfolio with the established channel and applying the expertise of one or more strategic partners unlockswill unlock the highest value for us and our stockholders. We continue to engage with multiple potential industrial partners, and plan to continue this approach going forward.
China Joint Venture
Manufacturing and Service

After Sales Service

Maintenance and service support, primarily provided under the Ekso Care program for the EksoNR or extended warranty program for Ekso Indego, helps to maximize operational efficiency for our customers and reduces unplanned equipment downtime. We provide direct service for our customers’ devices at our facilities in San Rafael, California, Macedonia, Ohio and Ratingen, Germany. For some customers in EMEA and APAC, we utilize third-party service providers. Our team consists of service technicians, who perform repairs at our facilities or onsite as required and provide remote technical support, and customer care agents who resolve and troubleshoot issues that could inhibit optimal customer utilization. Beyond our extended warranty and Ekso Care service programs, we provide a fee-for-service option through which device repairs are fulfilled per quote on demand of the customer and as per our repair price list.
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Manufacturing and Supply Chain

We entered intocurrently manufacture our EksoNR and EVO products at our facilities in San Rafael, California for worldwide sales. Our Ekso Indego Therapy and Ekso Indego Personal devices are manufactured at our facilities in Macedonia, Ohio. We currently run one shift per day at both facilities and believe we have the capacity to eventually run additional shifts should we deem it appropriate.

In addition to our in-house manufacturing capabilities, we are in the process of adding contract manufacturing partners for both EksoNR and EVO. In 2022, we completed the process of transferring sufficient technology and know-how to build EksoNR at a joint venture, ordomestic contract manufacturing partner. For the China JV,full year of 2022, contract manufacturing represented approximately 20% of our production output for EksoNR. We expect the share of contracted manufacturing production for EksoNR to developexpand further in 2023.

Starting in 2022, we also began the process of adding external manufacturing capability for our EVO product line at a contract manufacturing partner located in Malaysia. We believe that manufacturing EVO at a contract manufacturing partner will help us to expand capacity, lower cost, and serveimprove quality. We expect this process to be completed in the exoskeleton market in Chinafirst half of 2023. For 2023, we expect the majority of our manufacturing output for EVO to be provided by this contract manufacturing partner.

We purchase both custom and certain other Asian marketsoff-the-shelf components from a large number of suppliers and subject them to create a global exoskeleton manufacturing center. The Equity Joint Venture Contract, dated January 30, 2019, between us, Zhejiang Youchuang Venture Capital Investment Co., Ltd.,stringent quality specifications and another partner, collectively referredprocesses. Whenever possible, we seek to as,secure dual source suppliers for our components. Some of the JV Partners, as amended by the Amendment to the Joint Venture Contract, dated April 30, 2019, or the JV Agreement, providedcomponents necessary for the establishmentassembly of our products are currently provided to us by single-sourced suppliers (the only approved supply source for us among other sources). We purchase the China JV as a limited liability company pursuant to the Law on Sino-foreign Equity Joint Venturesmajority of our components and the Regulations for the Implementationmajor assemblies through purchase orders rather than long-term supply agreements and generally do not maintain finished goods in excess of the Law on Sino-foreign Equity Joint Ventures. In May 2020, the Company, and the JV Partners received notice from the Committee on Foreign Investmentour anticipated demand. We currently support our domestic contract manufacturing partner in the United States, or CFIUS, in connection with its reviewprocurement of the Company’s and the JV Partners’ investment in 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, or NSA, which, among other things, required the termination of the Company’s agreements and role with the China JV. On August 12, 2020, the Company and the JV Partners agreed to terminate the agreements underlying the China JV. As of December 31, 2020, all agreements related to the China JV had been terminated.raw materials for EksoNR.

Intellectual Property

We have established an extensive intellectual property portfolio that includes various U.S. patents and patent applications. The table below provides a summary of U.S. patents by issuing status and ownership status.status as of December 31, 2022.
Issuing StatusIssuing Status
License StatusLicense StatusIssued
Patents
Pending
Applications
License StatusIssued
Patents
Pending
Applications
Licensed to the CompanyLicensed to the Company15 — Licensed to the Company
Exclusively licensed to the CompanyExclusively licensed to the Company— Exclusively licensed to the Company10 — 
Co-owned with Regents of the University of California, exclusively licensed to the Company— 
Co-owned with the Regents of the University of California— 
Co-owned with a third party, exclusively licensed to the CompanyCo-owned with a third party, exclusively licensed to the Company— 
Co-owned with a third partyCo-owned with a third party— 
Sole ownership by the CompanySole ownership by the Company33 Sole ownership by the Company61 11 
Total: 6561 4 
TotalTotal88 14 

Pending applications mean a complete application has been filed with the applicable patent authority and additional action is pending.

Many of these applications have also been filed internationally as appropriate for their respective subject matter. As of December 31, 2020, 2032022, 299 applications have issued or have been allowed as patents internationally. Our patent portfolio contains 227334 cases that have issued or are in prosecution in 21 countries outside the U.S.

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Our patent portfolio includes product and method type claims, since the devices that we produce and the processes performed by those devices are patentable. Our patents encompass technologies relevant to our devices, including medical exoskeletons, commercial exoskeletons, actuators, and strength-enhancing exoskeletons. The earliest priority date of the portfolio reaches back to 2003, and new applications may continue to be filed from time-to-time.

Licensors include the Regents of the University of California, or UC Berkeley, and Garrett Brown (as a resultVanderbilt University.
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Table of our acquisition of technology of Equipois, LLC, or Equipois).Contents

The license with UC Berkeley consists of two agreements and one amendment to the agreement covering ten patent cases exclusively licensed to us, nine of which have issued and one of which remains in prosecution, or the UC Berkeley License Agreements. Inventions covered by a further three patent applications are co-owned by us and UC Berkeley, with no license agreement between us and UC Berkeley. As a result, UC Berkeley may license its rights in these patents to a third party. With respect to two of these co-owned patent applications, UC Berkeley has licensed their rights in the U.S. to an unrelated third party. The third patent application will need to be fully prosecuted before it can be determined which claims are exclusive to us (through a previous license) and which claims UC Berkeley may license to other entities.

Pursuant to the UC Berkeley License Agreements, Ekso Bionics initially paid UC Berkeley consideration consisting of $5,000 in cash and 310,400 common shares of Ekso Bionics, and committed to pay a 1% royalty on sales, including sales generated by sublicenses. In addition, the UC Berkeley License Agreements call for minimum annual payments of $50,000. We do not pay royalties to UC Berkeley on products sold or to be resold to the U.S. government.

As part of the HMC acquisition, Ekso acquired and assumed certain intangible assets including license agreements with Vanderbilt University.

On October 15, 2012, PH entered a license agreement (“Exoskeleton License Agreement”) with Vanderbilt University and was granted exclusive license within the HMC field of use to specific licensed patents and licensed software by paying a non-refundable, non-creditable license issue fee and running royalties. Subsequently, PH entered three amendments with Vanderbilt University and was granted license to additional patents and software from 2014 to 2019 by paying license issue fee and running royalties. The royalties were set to be calculated at 6% of Net Sales for Licensed Patent Products (or a minimum of $250,000) and 3% of Net Sales for Licensed Software products.

On March 1, 2022, Parker Hannifin Corporation entered a license agreement (“P-H Knee License Agreement”) with Vanderbilt University and was granted exclusive license to specific licensed patents, licensed software and copyrightable technical information by paying a non-refundable, non-creditable license issue fee and running royalties. Included in this agreement was the right to sublicense beginning in March 2024. We will pay Vanderbilt $100,000 as the second of two payments due April 30, 2023. In addition, royalties were set to be calculated at 3.75% of net sales of the licensed product. Beginning July 1, 2027, minimum annual royalties will be set at $75,000 (for the 12 month period through June 30, 2028) and $100,000 for each 12 month period thereafter.

In addition to the aforementioned agreements, various other subsidized research and development agreements have been entered into with Vanderbilt covering specific work product as articulated in those documents.

In some cases, as a result of government funding we receive, theour patents have a government use license, granting the U.S. government a non-exclusive, non-transferable, irrevocable, paid-up license for use of the inventions for or on behalf of the U.S. government, as is typical in the case of government sponsored research.

In connection with our acquisition of assets of Equipois, we assumed the rights and obligations of Equipois underUnder a license agreement with Garrett Brown, the developer of certain intellectual property related to mechanical balance and support arm technologies, which grants usthe Company an exclusive license with respect to the technology and patent rights for certain fields of use. Pursuant touse, the terms of the license agreement, we will beCompany is required to pay Mr. Brownthe developer a single-digit royalty on net receipts, subject to a $50,000 annual minimum royalty requirement. The license agreement with this developer was terminated as of June 30, 2022.

In addition, the Company entered into a license agreement in December of 2021 with a third party that develops technologies having utility in robotic exoskeletons from research and development activities associated with a specific set of government funded research projects. Commencing in January 2022, the Company assists with research and development activities in exchange for access to a worldwide, royalty free, transferable, sublicensable, exclusive license to design and market products that use or incorporate the jointly-developed technology within Ekso’s target market segments.

Intellectual Property Out-Licensing

We believe that the breadth of the coverage across various bionic systems and technologies, together with our freedom to grant sub-licenses under the UC Berkeley License Agreements gives us the potential to generate licensing revenue in fields outside our present areas of commercialization. Since 2009, we have generated approximately $1.8 million in such licensing revenue from our two licensees: Lockheed Martin Corporation or Lockheed and OttoBock Healthcare Product GmbH or OttoBock.

We receive revenue pursuant to a Government Field Cross License Agreement dated as of July 1, 2013 between Ekso Bionics, Inc. and Lockheed and a Cross License Agreement dated as of July 1, 2013 between Ekso Bionics, Inc. and Lockheed. Pursuant to these agreements, we have licensed to Lockheed certain rights with respect to our anthropomorphic exoskeleton technology for which Lockheed is obligated to pay us a royalty on sales of products incorporating such technology. Royalty fees from Lockheed were either de minimus or nil for the years ended December 31, 2020 and 2019, respectively.

With respect to OttoBock, we received exclusivity payments pursuant to the License and Services Agreement dated October 27, 2014. The License and Services Agreement grants OttoBock exclusive rights in order to develop a semi-active prosthetic knee prototype for use in medical prosthetics and provides that OttoBock will pay us a royalty based on sales by OttoBock of products incorporating the licensed technology. We did not receive any royalty fees from Ottobock during the years ended December 31, 2020 and 2019, respectively. In November of 2019, OttoBock informed us that they will not be pursuing commercialization of products based on our intellectual property. As a result, we do not expect additional royalty revenue from OttoBock in the future.

In March 2018, we entered into a set of agreements with Daydo Co, Ltd., or Daydo, related to distribution and cross-licensing of the EksoVest. Under these agreements, Daydo has exclusive distribution rights for the EksoVest within Japan and rights to modify the EksoVest as needed to address the Japanese market in exchange for royalty payments to us. We also have rights to use any improvements made by Daydo. Daydo released its localized version of the EksoVest (called Task AR) in January of 2019. Revenue from relatedThese agreements were terminated in 2022, resulting in the recognition of all deferred prepaid royalty payments was de minimis in 2020 and 2019.revenue.

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In June 2020, we entered into a non-exclusive license agreement with HAWE Hydraulik of Germany for rights to develop hydraulic pumps covered by a family of our patents.The agreement additionally includes an exclusivity option. We did not receive any royalty revenue from this license in 2020.the years ended December 31, 2022 and 2021.

Competition

The medical technology and industrial robotics industries are characterized by intense competition and rapid technological change. We believe that a number of other companies are developing competitive technology and devices for both the able-bodied and medical fields of use and many of these competitors have significantly more financial and other resources than we possess.use.

In the medical field, we face competition from companies that are focused on technology for rehabilitation of patients suffering from stroke and related neurological disabilities as well as from companies that are focused on SCI. In stroke, Cyberdyne, Parker Hannafin’s Indego,ReWalk, Wandercraft, and ReWalk all nowExoAtlet offer ambulatory exoskeletons for rehabilitationvarying use in variouscases within the rehabilitation markets where we operate. While not functionally equivalent, Hocoma, AlterG, Aretech and Reha Technology are sellingsell end-effector or treadmill-based gait therapies. In SCI, ReWalk Robotics and Parker Hannafin also sell ambulatory exoskeletons. Other companies whothat have announced plans to commercialize robotic exoskeletons include:include Bionik Laboratories and SuitX.

The EksoNR device is the only FDA-cleared device for SCI, ABI (including stroke), and MS. Technologies developed by competitors in the areas of stroke rehabilitation and SCI represent therapeutic interventions with utility at varying points ofon the continuum of care. Clinically, the EksoNR is unique in its broad ability to mobilize pre- or even non-ambulatory patients using a full weight bearing, over ground, task-based platform. From a practice management perspective, the EksoNR is less expensive than many other systems, has a smaller footprint, has the ability to move around the hospital, and uses standard power requirements that make it easy to integrate into existing infrastructure. Other over-ground exoskeletons were initially designed for an individual to achieve ambulation reliant on the device. By contrast, the EksoNR’s design accommodates patients with complete paraplegia and additionally includes features that are optimized to assist therapists in helping patients with some motor ability learn to walk again in a clinical setting, treating several patients and indications in a single day.

In the home and community ambulation use market ReWalk and Cyberdyne offer products that address similar use cases to Ekso Indego Personal in certain markets. We believe Ekso Indego Personal is a more robust and easier to use product than the competition. We also believe that given our strong position in rehabilitation clinics, we have a better channel to direct patients from clinical settings to our specific personal devices.

Notwithstanding the foregoing, the most pressing challenges we face are not necessarily competitive technologies, but rather achieving rapid market awareness and adoption of this emerging technology while acclimating prospects to a fundamentally new paradigm in neuro-rehabilitation and mobility. In addition, it may be difficult for the rehabilitation department of a hospital or clinic to secure the funds for acquisition of anto acquire Ekso devicedevices in an environment where capital expenditures of this magnitude are not commonly incurred by those rehabilitation departments.

In the able-bodied field, Lockheed Martin, Raytheon, BAE Systems, Panasonic, Honda, Daewoo, Noonee, Revision Military, SuitX,industrial business, there are multiple competitors with shoulder devices including products from Ottobock, Levitate, Skel-ex, Levitate and Cyberdyne - among others - are each developing or commercializing some formothers. While these products all address similar use cases in overhead work, we believe that EVO provides a better solution. In particular EVO provides i) optionally more support for larger users and those using heavy tools, ii) a wider range of exoskeleton for military and/or industrial applications.shoulder motion free of obstructions from the device, especially when reaching directly overhead, iii) a more rugged, durable design, and iv) minimal contact points with the body to reduce heat and sweat generation.
The field of robotic exoskeleton
Exoskeleton technology remains in its infancy. As this field develops, we believe that we will face increased competition on the basis of product features, clinical outcomes, price, services and other factors. Our competitive position will depend on multiple, complex factors, including our ability to achieve market acceptance for our products, develop new products, implement production and marketing plans, secure regulatory approvals for products under development and protect our intellectual property. In some instances, competitors may also offer, or may attempt to develop, alternative therapies for disease states that may be delivered without a medical device.

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Governmental Regulation and Product Approval

U.S. Medical Device Regulation

The U.S. government regulates the medical device industry through various agencies, including but not limited to the FDA, which administers the Federal Food, Drug and Cosmetic Act or FDCA.(FDCA). The design, testing, manufacturing, storage, labeling, distribution, advertising, and marketing of medical devices are subject to extensive regulation by federal, state, and local governmental authorities in the United States, including the FDA, and by similar agencies in other countries. Any medical device product that we develop must receive all requisite regulatory approvals or clearances, as the case may be, before it may be marketed in a particular country.

Device Development, Marketing Clearancedevelopment, marketing clearance and Approval.approval. The FDA classifies medical devices into one of three classes (Class I, II or III) based on the degree of risk the FDA determines to be associated with a device and the extent of control deemed necessary to ensure the device’s safety and effectiveness. Devices requiring fewer controls because they are deemed to pose
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lower risk are placed in Class I or II. Class I devices are deemed to pose the least risk and are subject only to general controls applicable to all devices, such as requirements for device labeling, premarket notification, and adherence to the FDA’s current good manufacturing practice requirements, as reflected in its Quality System Regulation or QSR.(QSR). Class II devices are intermediate risk devices that are subject to general controls and may also be subject to special controls such as performance standards, product-specific guidance documents, special labeling requirements, patient registries or post-market surveillance. Class III devices are those for which insufficient information exists to assure safety and effectiveness solely through general or special controls, and include life- sustaining, life-supporting, or implantable devices, and devices not “substantially equivalent” to a device that is already legally marketed. Most Class I devices, and some Class II devices are exempted by regulation from the 510(k) clearance requirement and can be marketed without prior authorization from the FDA. Class I and Class II devices that have not been so exempted are eligible for marketing through the 510(k) clearance pathway. By contrast, devices placed in Class III generally require premarket approval or PMA,(PMA), prior to commercial marketing.

To obtain 510(k) clearance for a medical device, an applicant must submit a premarket notification application to the FDA demonstrating that the device is “substantially equivalent” to a predicate device, which is typically a Class II device that is legally marketed in the United States. A device is substantially equivalent to a predicate device if it has the same intended use and (i) the same technological characteristics, or (ii) has different technological characteristics and the information submitted demonstrates that the device is as safe and effective as a legally marketed device and does not raise different questions of safety or effectiveness. A showing of substantial equivalence sometimes, but not always, requires clinical data. Generally, the 510(k) clearance process can exceed 90 days and may extend to a year or more. After a device has received 510(k) clearance for a specific intended use, any modification that could significantly affect its safety or effectiveness, such as a significant change in the design, materials, method of manufacture or intended use, will require a new 510(k) clearance, or if the device as modified is not substantially equivalent to a legally marketed predicate device, a PMA. While the determination as to whether new authorization is needed is initially left to the manufacturer, the FDA may review this determination and evaluate the regulatory status of the modified product at any time and may request the manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA is obtained. The manufacturer may also be subject to significant regulatory fines or penalties.

The second, more comprehensive, approval process applies to a new device that is not substantially equivalent to a predicate device or that is to be used in supporting or sustaining life or preventing impairment. These devices are normally Class III devices requiring PMA. The FDA will approve the PMA application if it finds there is reasonable assurance that the device is safe and effective for its intended use. The PMA process takes substantially longer than the 510(k) process, taking approximately one to two years or more.more for approval.

In some instances, the FDA may find that a device is new and not substantially equivalent to a predicate device but is also not a high-risk device as is generally the case with Class III PMA devices. In these instances, the FDA may allow a device to be reclassified from Class III to Class I or II. The de novoDe Novo reclassification option is an alternate pathway to classify novel devices of low to moderatelow-to-moderate risk that had automatically been placed in Class III after receiving a “not substantially equivalent” (NSE) determination in response to a 510(k) notification. The FDCAFDA also allows a sponsor to submit a de novoDe Novo reclassification request to the FDA for novel low to moderate risk devices without first being required to submit a 510(k) application. These types of applications are referred to as “Evaluation of Automatic Class III Designation” or “de novo.“De Novo requests.” In instances where a device is deemed not substantially equivalent to a Class II predicate device, the candidate device may be filed as a de novoDe Novo application which may lead to delays inlengthen regulatory decisions by the FDA. FDA review of a de novoDe Novo application may lead the FDA to identify the device as either a Class I or II device and subject to or exempt from 510(k) premarket notification.

Clinical trials are generally required to support a PMA or de novoDe Novo reclassification application and are sometimes required for 510(k) clearance. Clinical trials generally require an investigational device exemption application or IDE,(IDE), approved in advance
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by the FDA for a specified number of patients and study sites, unless the product is deemed a non-significant risk device eligible for more abbreviated IDE requirements. Clinical trials are subject to extensive monitoring, recordkeeping and reporting requirements. Clinical trials must be conducted under the oversight of an institutional review board or an IRB,(IRB), for the relevant clinical trial sites and must comply with FDA regulations, including but not limited to those relating to good clinical practices. Conducting a clinical trial also requires obtaining the patients' informed consent in form and substance compliant with both FDA requirements and state and federal privacy and human subject protection regulations. The FDA or the IRB could suspend a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Even if a trial is completed, the results of clinical testing may not adequately demonstrate the safety and efficacy of the device or may otherwise not be sufficient to obtain FDA approval to market the product in the U.S. To date, the EksoNR and EksoGT hashave been the subject of several clinical studies, some sponsored by us, as well as non-Ekso-sponsored independent studies conducted by rehabilitation institutions. In addition, we are currently conducting several studies to investigate additional indications for use for the EksoGT, as well as to evaluate clinical and non-clinical outcomes of using the device.

Our current indicationindications for use or IFU,(IFU) clearance for stroke,ABI (including stroke), SCI, and ABI.MS. On April 4,1, 2016, we received clearance from the
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FDA to market our EksoGT robotic exoskeleton for use in the treatment of individuals with hemiplegia due to stroke, individuals with SCI at levels T4 to L5, and individuals with SCI at levels of T3 to C7 (ASIA D), in accordance with the device’s labeling. On July 19, 2016, we received clearance from the FDA to expand/clarify the indications and labeling to expressly include individuals with hemiplegia due to stroke who have upper extremity function of at least 4 out of 5 strength in at least one arm. On August 25, 2019, our EksoNR device was introduced with the same IFU as EksoGT.On June 15, 2020, we received clearance from FDA to expand the indications for use, or IFU, and labeling to expressly include individuals with acquired brain injury,ABI, including traumatic brain injury and stroke who have upper extremity function of at least 4 out of 5 strength in at least one arm. On June 9, 2022, we received further clearance from FDA to expand the IFU and labeling to expressly include individuals with multiple sclerosis (MS).

After a device is placed on the market, numerous regulatory requirements apply. These include:
product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;
The quality system regulation, or QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process;
labeling regulations and FDA prohibitions against the promotion of products for un-cleared, unapproved or off-label use or indication;
510(k) clearance of product modifications that could significantly affect safety or efficacy or that would constitute a major change in intended use of one of our cleared devices;
medical device reporting regulations, which require that manufacturers comply with FDA requirements to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur;
post-approval restrictions or conditions, including post-approval study commitments;
post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device;
the FDA's recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations;
regulations pertaining to voluntary recalls; and
notices provision regarding corrections or removals.

The FDA has broad post-market and regulatory enforcement powers. We are subject to unannounced inspections by the FDA to determine our compliance with the QSR and other regulations. Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions: adverse publicity, warning letters, fines, injunctions, civil or criminal penalties, consent decrees, recall or seizure of our products, operating restrictions, partial suspension or total shutdown of production, refusing our request for 510(k) clearance or pre-market approval of new products, rescinding previously granted 510(k) clearances or withdrawing previously granted pre-market approvals.

In the year ended December 31, 2022, there were no reports of an adverse event relating to our EksoNR or EksoGT devices reported to the FDA under the Manufacturer and User Facility Device Experience Database.

Federal Anti-Kickback and Self-referral Laws

The Federal Anti-Kickback Statute prohibits, among other things, the knowing and willful offer, payment, solicitation or receipt of any form of remuneration overtly or covertly, in cash or in kind, in return for, or to induce the:
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referral on an individual to a person for the furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid, or other federal healthcare programs; or
purchase, lease, or order of, or the arrangement or recommendation of the purchasing, leasing, or ordering of any good, facility, item or service reimbursable under Medicare, Medicaid or other federal healthcare programs

The Federal Anti-Kickback Statute applies to our arrangements with our United States sales representatives, customers and healthcare providers. Although we believe that we have structured such arrangements to comply with the Anti-Kickback Statute and other applicable laws, regulatory authorities may determine otherwise. Non-compliance with the Federal Anti-Kickback Statute can result in cancellation of our provider numbers and exclusion from Medicare, Medicaid or other federal healthcare programs, restrictions on our ability to operate in certain jurisdictions, as well as civil and criminal penalties, any of which could have an adverse effect on our business and results of operations.

Federal law also includes the Physician Self-Referral Law, commonly known as the “Stark Law,” which prohibits a physician from referring a patient to an entity with which the physician (or an immediate family member of the physician) has a financial relationship, for the furnishing of certain designated health services for which payment may be made by Medicare or Medicaid, unless an exception applies. Violation of the Stark Law could result in denial of payment, disgorgement of reimbursements received under a non-compliant arrangement, civil penalties and fees, and exclusion from Medicare, Medicaid or other federal healthcare programs. Although we believe that we have structured our provider arrangements to comply with current Stark Law requirements, regulatory authorities may determine otherwise.

Additionally, regulations issued for the Federal Anti-Kickback Statute and the Stark Law have undergone significant revisions, and it is reasonable to assume that revisions will occur in the future. While we have attempted to operate in compliance with these laws and regulations, our arrangements may ultimately be found to be not in compliance with applicable federal law.

Federal False Claims Act

The Federal False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment to the federal government, or who has made a false statement or used a false record to get a claim approved. In addition, amendments in 1986 to the Federal False Claims Act have made it easier for private parties to bring “qui tam” or whistleblower lawsuits against companies. Although we believe that we are in compliance with the federal government’s laws and regulations, if we are found in violation of these laws, penalties of up to $0.025 million for each false claim, plus three times the amount of damages that the federal government sustained because of the act, can be assessed.

Civil Monetary Penalties Law

The Federal Civil Monetary Penalties Law grants authority to the U.S. Department of Health & Human Services Office of Inspector General (OIG) to seek civil monetary penalties (CMPs) against an individual or entity based on a wide variety of conduct including violations of the Anti-Kickback Statute, Stark Law, and False Claims Act. An entity that offers to or transfers remuneration to any individual eligible for benefits under Medicare or Medicaid that such entity knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any Medicare or Medicaid payable item or service may be liable for CMPs. We sometimes offer customers various discounts and other financial incentives in connection with the sales of our products. While it is our intent to comply with all applicable laws, the federal government may find that our marketing activities violate the law. If we are found to be in non-compliance, we could be subject to CMPs of up to $0.112 million for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from Medicare, Medicaid and other federal healthcare programs. In addition, to the extent we are found to not be in compliance, we may be required to curtail or restructure our operations. Any penalties, damages, fines, exclusions, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results.

State Fraud and Abuse Provisions

Many states have also adopted some form of anti-kickback and self-referral laws and false claims act that may apply to DMEPOS suppliers regardless of the payor source. We believe that we are in compliance with such laws. Nevertheless, a determination of liability under such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions.

HIPAA

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The Health Insurance Portability and Accountability Act of 1996, or HIPAA, established uniform standards governing the conduct of certain electronic healthcare transactions and protecting the security and privacy of individually identifiable health information maintained or transmitted by healthcare providers, health plans and healthcare clearinghouses, which are referred to as “covered entities.” Three standards have been promulgated under HIPAA’s regulations: the Standards for Privacy of Individually Identifiable Health Information, which restrict the use and disclosure of certain individually identifiable health information, the Standards for Electronic Transactions, which establish standards for common healthcare transactions, such as claims information, plan eligibility, payment information and the use of electronic signatures, and the Security Standards, which require covered entities to implement and maintain certain security measures to safeguard certain electronic health information, including the adoption of administrative, physical and technical safeguards to protect such information.

In 2009, Congress passed the American Recovery and Reinvestment Act of 2009, or ARRA, which included sweeping changes to HIPAA, including an expansion of HIPAA’s privacy and security standards. ARRA includes the Health Information Technology for Economic and Clinical Health, or HITECH, which, among other things, made HIPAA’s privacy and security standards directly applicable to business associates of covered entities effective February 17, 2010. A business associate is a person or entity that performs certain functions or activities on behalf of a covered entity that involve the use or disclosure of protected health information in connection with recognized healthcare operations activities. As a result, business associates are now subject to significant civil and criminal penalties for failure to comply with applicable standards. Moreover, HITECH created a requirement to report certain breaches of unsecured, individually identifiable health information and imposes penalties on entities that fail to do so. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney fees and costs associated with pursuing federal civil actions. The 2013 final HITECH omnibus rule modified the breach reporting standard in a manner that made more data security incidents qualify as reportable breaches.

In addition to federal regulations issued under HIPAA, some states have enacted privacy and security statutes or regulations that, in some cases, are more stringent than those issued under HIPAA. In those cases, it may be necessary to modify our planned operations and procedures to comply with the more stringent state laws. If we fail to comply with applicable state laws and regulations, we could be subject to additional sanctions. Any liability from failure to comply with the requirements of HIPAA, HITECH or state privacy and security statutes or regulations could adversely affect our financial condition. The costs of complying with privacy and security related legal and regulatory requirements are burdensome and could have a material adverse effect on our results or operations.

Patient Protection and Affordable Care Act

In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians and other healthcare providers. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, among other things, imposed public reporting requirements on medical device manufacturers for payments or other transfers of value made by them to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act enacted in 2018, extends the reporting and transparency requirements under the Physician Payments Sunshine Act to physician assistants, nurse practitioners and other mid-level practitioners, with reporting requirements going into effect in 2022 for payments made in 2021. Failure to submit required ownership and investment interest information may result in civil monetary penalties of up to an aggregate of $0.18 million per year (or up to an aggregate of $1.191 million per year for “knowing failures”), for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission. Certain states also mandate implementation of compliance programs, impose restrictions on device manufacturer marketing practices and/or require the tracking and reporting of gifts, compensation and other remuneration to physicians and other healthcare professionals.

The Patient Protection and Affordable Care Act also requires healthcare providers to voluntarily report and return an identified Medicare or Medicaid overpayment within 60 days after identifying the overpayment. Failure to repay the overpayment within 60 days will result in the claim being considered a “false claim” and the healthcare provider will be subject to False Claims Act liability, and additional CMPs of $0.112 million for each item or service that is not reported and returned.

Industrial and Medical Device Advertising

Advertising and promotion of medical devices, in addition to being regulated by the FDA, are also regulated by the Federal Trade Commission (FTC) and by state regulatory and enforcement authorities. Recently, promotional activities for FDA-regulated products of other companies have been the subject of enforcement action brought under healthcare reimbursement laws and consumer protection statutes. In addition, under the federal Lanham Act and similar state laws, competitors and others can initiate litigation relating to advertising claims. If the FDA determines that promotional or training material related to an approveda cleared device constitute
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constitutes the promotion of an un-cleared or unapproved use, the FDA could request that the promotional or training materials related to such device be modified or it could subject the manufacturer to regulatory or enforcement actions. It is also possible that other federal, stateactions under the FDCA or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as lawslaw prohibiting false claims for reimbursement. In that event, our reputation could be damaged and adoption of the products would be impaired.

The FDA has broad post-marketFTC regulates the advertising and regulatory enforcement powers. Wepromotion of products that are subjectmedical devices as well as non-medical medical products under the Federal Trade Commission Act (FTC Act). The FTC Act requires that an advertiser possess, at a minimum, a “reasonable basis” to unannounced inspections bysubstantiate all product claims before the FDAclaims are made, and competent and reliable scientific evidence to determine oursubstantiate health and therapeutic claims. A lack of adequate substantiation may render such claims deceptive and/or misleading. The FTC may enforce compliance with the QSRlaw in a variety of ways, both administratively and judicially, using compulsory process, cease and desist orders, and injunctions. FTC enforcement can result in orders requiring, among other regulations.things, limits on advertising, corrective advertising, customer redress, restitution, divestiture of assets, rescission of contracts, and such other relief as the agency deems necessary to protect the public. Violation of these orders could result in substantial financial or other penalties. Although we have not been the subject of any action by the FTC, no assurance can be given that the FTC will not question our advertising or other operations in the United States in the future. Any action in the future by the FTC could materially and adversely affect our ability to successfully market our products in the United States.

Since January 2020, there has been one report of an adverse eventIn addition, under the federal Lanham Act and similar state laws, competitors and others can initiate litigation relating to advertising claims. Failure by us to comply with applicable regulations could result in substantial penalties, which could have a material adverse effect on our EksoNRfinancial condition or results of operations and none relatedadversely affect our ability to successfully market our EksoGT devices reported toproducts in the FDA under the Manufacturer and User Facility Device Experience Database.United States.

Foreign Medical Device Regulation

In addition to regulations in the U.S.,United States, we are subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products in foreign countries. Regardless of the FDA’s approval requirements for a particular product, we must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

In the EU, our products are subject to the medical device regulations of the various member states, which for many years were based on Directives of the European Commission. However, in May 2017, the EU adopted new, formal regulations to replace such Directives; specifically, the EU Medical Device Regulation (the “EU MDR”), which imposes stricter requirements for the marketing and sale of medical devices, including in the area of clinical evaluation requirements, quality systems and post-market surveillance. The EU regulations were adopted with staggered transitional periods that have since been updated. In January 2023, the European Commission endorsed a proposal to extend the original compliance dates for EU MDR, subject to approval by the European Parliament and European Council. The proposal would extend the current EU MDR transitional period deadline of May 2024 to 2027 or 2028, based upon the risk class of the device. Regulatory requirements in the United Kingdom (“UK”) are also changing as a result of Brexit (the UK’s withdrawal from the EU), and regulatory requirements in Switzerland are changing as a result of the country’s withdrawal from its Mutual Recognition Agreement with the EU Commission. Complying with the EU MDR and the evolving regulatory regimes in the UK and Switzerland requires modifications to our quality management systems, additional resources in certain functions and updates to technical files, among other changes. As of December 31, 2022, none of our products had yet been approved under EU MDR.

The European Union requires that manufacturers of medical devices obtain the right to bear the “CE” conformity marking which designates compliance with existing directives and standards regulating the design, manufacture and distribution of medical devices in member countries of the European Union. In 2017, the European Union adopted the European Medical Device Regulation (Council Regulations 2017/745) which imposes stricter requirements for the marketing and sale of medical devices, including new clinical evaluation, quality system, and post-market surveillance requirements. The regulation had a three-year implementation period, with full application of the regulation occurring in May 2021 and replacing the pre-existing directives on medical devices in the European Union. Since May 2021, medical devices marketed in the European Union require certification according to these new requirements, except those devices with valid CE Marks, issued pursuant to the Medical Device Directive before May 2021, including our oxygen therapy products with CE Marks issued under the Medical Device Directive (MDD), may be placed on the market until May 2024. Only medical devices that comply with certain conformity requirements of the Medical Device Directive are currently allowed to be marketed within the European Union and our products will be required to comply with the EU MDR. New products that failed to be certified with the EU MDR by May 2021 may not be marketed or sold in the European Union. Similarly, existing products with CE Marks issued under the MDD may not be placed on the market in the European Union after May 2024. The extension of the existing certificates under the MDD or obtaining a new certificate under the MDR is required for continued marketing in the EU after May 18, 2022.
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On November 5, 2021, we received notification from Health Canada that our EksoNR was reclassified from Class I to Class II, and requested that we reapply for registration under the Medical Device License (MDL) program. Until that license is established, we are restricted from marketing in that country. We are updating our quality system and applying for registration with the expectation that this matter will be resolved by early 2023.

The policies of the FDA and foreign regulatory authorities may change, and additional government regulations may be enacted which could prevent or delay regulatory approval of our products and could also increase the cost of regulatory compliance. We
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cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the U.S. or abroad.

Human Capital Resources and Management

As of February 19, 2021,March 23, 2023, we had 4073 employees, including 3960 full time employees and one part-time employee. Sevenemployee in the United States. Ten employees reside in Europe and two in Singapore. None of our employees are covered by a collective bargaining agreement and we consider our relationship with our employees to be good.

We endeavor to maintain a workplace that is free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by applicable law. We conduct annual training to prevent harassment and discrimination and monitor employee conduct year-round, including by providing employees with access to an anonymous whistleblower hotline to report any violations. The basis for recruitment, hiring, development, training, compensation and advancement at the Company isincludes qualifications, performance, skills, and experience. OurWe believe our employees are fairly compensated, without regard to gender, race and ethnicity, and routinely recognized for outstanding performance and provided withare offered training and professional development opportunities. Our compensation program is designed to attract and retain talent. We continually assess and strive to enhance employee satisfaction and engagement. Our employees, many of whom have been employed by us for the majority of our existence, frequently express satisfaction with management including by responding positively about our management in anonymous surveys.

Corporate Information

We were incorporated as PN Med Group Inc. in Nevada on January 30, 2012. Prior to the Merger and Split-Off (each as defined below), our business was to distribute medical supplies and equipment in Chile.

On January 15, 2014, we consummated the Merger, in which our wholly-owned subsidiary, Ekso Acquisition Corp., a corporation formed in the State of Delaware on January 3, 2014, merged with and into Ekso Bionics, Inc., a corporation incorporated in the State of Delaware on January 19, 2005. Ekso Bionics was the surviving corporation in the Merger and became our wholly-owned subsidiary. All of the outstanding Ekso Bionics' capital stock was converted into shares of our common stock in the Merger.

In connection with the Merger and pursuant to a split-off agreement and general release, we transferred our pre-Merger assets and liabilities to our pre-Merger majority stockholders, in exchange for the surrender by them and cancellation of 2,497,586 shares of our common stock, or the Split-Off, after adjusting to give effect to the 1-for-7 reverse stock split, which occurred on May 4, 2016 and the subsequent 1-for-15 reverse stock split, which occurred on March 24, 2020.

As a result of the Merger and Split-Off, we discontinued our pre-Merger business and acquired the business of Ekso Bionics, and have continued the existing business operations of Ekso Bionics as a publicly-traded company under the name Ekso Bionics Holdings, Inc.

Our principal executive office is located at 1414 Harbour Way South,101 Glacier Point, Suite 1201, Richmond,A, San Rafael, California, 94901 and our telephone number is (510) 984-1761.

We make available free of charge on or through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Our internet address is www.eksobionics.com. This website address is intended to be an inactive, textual reference only; none of the material on this website is part of this Annual Report. Copies of our annual reports on Form 10-K will be furnished without charge to any person who submits a written request directed to the attention of our Secretary, at our offices located at 1414 Harbour Way South,101 Glacier Point, Suite 1201, Richmond,A, San Rafael, California, 94804.94901. The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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Item 1A.    RISK FACTORS

An investmentInvesting in our securities is highly speculative andcommon stock involves a high degree of risk. We face a variety of risks that may affect our operations or financial results and many of those risks are driven by factors that we cannot control or predict.  Before investing in our securities, youYou should carefully consider the following risks and uncertainties described below, together with all of the financial and other information contained in this prospectus.Annual Report on Form 10-K including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before making a decision to invest in our common stock. Our business, results of operations, financial condition or prospects could also be harmed by risks and uncertainties that are not presently known to us or that we currently believe are not material. If any of the following risks actually occurs,occur, our business, prospects, financial condition and results of operations and financial condition could be materially adversely affected. In that case,event, the tradingmarket price of our common stock would likelycould decline, and investors mayyou could lose all or a part of theiryour investment.

This Annual Report contains certain statements relatingSummary of Risk Factors

Our business is subject to future events or our future financial performance. Readers are cautioned that such forward-looking statements are only predictions and involvenumerous risks and uncertainties that you should consider before investing in our company, as fully described below. The principal factors and uncertainties that actual events or results may differ materially. In evaluating such statements, readers should specifically consider the various factors identifiedmake investing in this Annual Report, including the matters set forth below, which could cause actual results to differ materially from those indicated by such forward-looking statements.our company risky include, among others:

The risks described below do not purport to be all the risks to which we could be exposed. This section is a summary of certain risks and is not set out in any particular order of priority. They are the risks that we presently believe are material to our operations. Additional risks of which we are not presently aware or which we presently deem immaterial may also impair our business, financial condition or results of operations.
The ongoing COVID-19 pandemic has adversely affected our financial condition and there is little future certainty.
The markets in which our products are sold are highly competitive and continue to develop.
We may not be able to reduce the cost to manufacture or service our products as planned.
If we or our third-party manufacturers are unable to produce our products at a satisfactory quality, in a timely manner, in sufficient quantities or at an acceptable cost, our business could be negatively impacted.
Shortages in the materials used to manufacture our products, as well as reductions in manufacturer capacity, could impact our future results.
Coverage policies and reimbursement levels of third-party payers may impact sales of our products.
The acquisition and integration of other companies, businesses, or technologies could result in operating difficulties, dilution, and other harmful consequences.
We may not be able to enhance our product offerings through our research and development efforts.
We have incurred significant losses to date and anticipate continuing to incur losses in the future, and we may not achieve or maintain profitability.
Our loan agreement imposes certain financial, and operational restrictions on us, limiting the discretion of our management in operating our business.
Protecting our intellectual proprietary rights can be costly, and our success in doing so is not certain.
If we fail to obtain or maintain necessary regulatory clearances or approvals for our medical device products, or if clearances or approvals for future products or modifications to existing products are delayed or not issued, our commercial operations would be harmed.
Modifications to our EksoNR and our future products may require new 510(k) clearances or premarket approvals, or may require us to cease marketing or recall the modified products until clearances are obtained
Our failure to meet strict post-market regulatory requirements with respect to our products could require us to pay fines, incur other costs or even close our facilities.
Our success depends on our management team, and on our ability to hire, train, retain, and motivate employees.


Business and Operational Risks

The ongoing COVID-19 pandemic has adversely affected our financial condition and there is little future certainty.
The COVID-19 pandemic has negatively impacted our business, including our employees, suppliers, customers and other business partners. Werelated public health measures have seen demand for our exoskeleton products decrease in the current business environment, as many inpatient rehabilitation facilities temporarily shift prioritiesmaterially affected how we and delay capital expenditures. Many of our customers are operating our businesses, and have materially affected our operating results; the duration and extent to which this will impact our future results remain uncertain. Although vaccine rollouts have improved the outlook of the global economy generally, renewed waves and new variants still pose concerns. Growth and investor confidence may be weakened by a variety of factors, including but not ablelimited to, access their facilities, are not performing elective surgeries and are sending patients home sooner than they otherwise would, all of which may reduce their need for our products and impact their decisions as to leasing or acquiring our products. It is also harder for us to drive growth when our sales teams cannot visit rehabilitation facilities and demonstrate our products in person and given difficulties in presenting new data tocontaining the publicvirus and attending professional conferences.related variants, limited availability of effective vaccines and other medical treatments, and stringent social distancing or lockdowns efforts. In addition, there could bethe broader economy, supply chain disruption and resulting inflationary pressures, a potential effectglobal labor shortage, and the ebb and flow of a slowdown at FDA,COVID-19, including in specific geographies, are currently impacting the pace of global economic recovery and outlook, which could result in delaysadversely affect our business.
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Additionally, hospitals are facing significant financial pressure as supply chain constraints and inflation drive up operating costs and fiscal stimulus programs enacted during the COVID-19 pandemic wind down. As a consequence of the financial pressures and decreased profitability, some hospitals have indicated that they are necessary for us to maintain or advance our product candidates in clinical studies.lowering their capital investment plans and tightening their operational budgets.
We are also subject to other risks applicable to businessbusinesses operating in the current environment. For example, our business insurance may not provide coverage against economic loss or claims specifically tied to COVID-19. A greater number of our employees are working remotely, which exposes us to a greater risk of cybersecurity breaches. The COVID-19 outbreak may also adversely impact our ability to make requisite filings under federal securities laws on a routine and timely basis. In addition, any deterioration in economic conditions due to the COVID-19 pandemic or any related market volatility may impact our ability to access the capital markets or ability to obtain financing on favorable terms or at all, which may affect our liquidity. The situation is constantly evolving, however, so the extent to which the COVID-19 outbreak will impact business and the economy is uncertain. Accordingly, consequences stemming from the ongoing COVID-19 pandemic could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have a limited operating history upon which investors can evaluate our future prospects.
Although we were incorporated in 2005, we did not sell our first Ekso medical device until 2012 and did not sell our first industrial unit until 2016. Therefore, we have limited operating history upon which an evaluation of our business plan or performance and prospects can be made. Our business and prospects must be considered in light of the potential problems, delays, uncertainties and complications encountered in connection with a newly established business and creating a new industry. The risks include, but are not limited to, the possibility that we will not be able to develop functional and scalable products and services, or that although functional and scalable, our products and services will not be economical to market; that our competitors hold proprietary rights that preclude us from marketing such products; that our competitors market a superior or equivalent product; that we are not able to upgrade and enhance our technologies and products to accommodate new features and expanded service offerings; or that we fail to receive necessary regulatory clearances for our products. To successfully introduce and market our products at a profit, we must establish brand name recognition and competitive advantages for our products. There are no assurances that we can successfully address these challenges. If we are unsuccessful, we and our business, financial condition and operating results could be materially and adversely affected.

The markets in which our products are sold are highly competitive.competitive and continue to develop.
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We face competition within the medical devices and industrial robotics markets on the basis of product features, clinical outcomes, price, services and other factors.
Our competitive position will depend on multiple, complex factors, including our ability to achieve market acceptance for our products, develop new products, implement production and marketing plans, secure regulatory approvals for products under development and protect our intellectual property. Competitors may offer, or may attempt to develop, more efficacious, safer, cheaper, or more convenient alternatives to our products, including alternatives that could make the need for robotic exoskeletons obsolete. The entry into the market of manufacturers located in low-cost manufacturing locations may also create pricing pressure, particularly in developing markets. Our future success depends, among other things, upon our ability to compete effectively against current technology, as well as to respond effectively to technological advances, and upon our ability to successfully implement our marketing strategies and execute our research and development plan. If customers do not perceive our product offerings to be of value or to be easy and comfortable to use, we may not be able to attract and retain customers. If we are unable to successfully retain existing customers and attract new customers and achieve volume sales of our products, our business, prospects, financial condition and operating results will be materially and adversely affected.

The market for our products is new and unproven, and susceptible to technological change and scientific developments.
The marketFurthermore, the markets for medical and industrial robotic exoskeletons is new and unproven.are continuing to develop. We cannot be certain that the marketmarkets for robotic exoskeletons will continue to develop as we expect, or that robotic exoskeletons for medical or industrial use will achieve market widespread market acceptance. Additionally, the development of new or improved products, processes or technologies by other companies may render our products or proposed products obsoleteless competitive or less competitive. Furthermore, theobsolete. The use of robotic devices is not universally accepted in the rehabilitation community. The exoskeleton marketcommunity and may fail to develop, or may develop more slowly than we anticipate, or we may be unable to respond effectively to technological changes or fail to gain acceptance of our product in our target markets.never be. Current or future clinical trials and studies may not provide sufficient data that the rehabilitation community interprets to support the use of exoskeletons in rehabilitation, or such trials and studies may actually prove the opposite.rehabilitation. Any of these outcomes could materially and adversely affect our business, financial condition and operating results.results and prospects.

Coverage policies and reimbursement levels of third-party payers may impact sales of our products.
To the extent that the adoption of our product by our customers becomes dependent in the future on their ability to obtain adequate reimbursement for treatments provided using our product from third-party payers, the coverage policies and reimbursement levels of these third-party payers may impact the decisions of healthcare providers and facilities to purchase our products or the prices they would be willing to pay for those products. Reimbursement rates could also affect the acceptance rates of new technologies. We have no control over these factors.

We will experience long and variable sales cycles.
The EksoNR has a lengthy sale and purchase order cycle because it is a major capital expenditure item and generally requires the approval of senior management at purchasing institutions, which may contribute to substantial fluctuations in our quarterly operating results.

International sales of our products are subject to factors outside of our control.
Our business currently depends in part on our activities in the EMEA, APAC, and other foreign markets. Our international activities are subject to a number of risks inherent in selling and operating abroad, including failure of local laws to provide the same degree of protection against infringement of our intellectual property rights; protectionist laws and business practices that favor local competitors, which could slow our growth in international markets; the expense of establishing facilities and operations in new foreign markets; building an organization capable of supporting geographically dispersed operations, challenges caused by distance, language and cultural differences; challenges caused by differences in legal regulations, markets, and customer preferences, which may limit our ability to adapt our products or succeed in other regions; multiple, conflicting, and changing laws and regulations, including complications due to unexpected changes in regulatory requirements, foreign laws, tax schemes, international import and export legislation, trading and investment policies, exchange controls and tariff and other trade barriers; foreign tax consequences; fluctuations in currency exchange rates and foreign currency translation adjustments; foreign exchange controls that might prevent us from repatriating income earned outside the United States; imposition of public sector controls; differing payer reimbursement regimes, governmental payers or patient self-pay systems and price controls; political, economic and social instability; and restrictions on the export or import of technology.

We rely on independent distributors for the sale and marketing of our products in certain geographies.
In non-German-speaking European countries, other EMEA countries and Central and South American countries, we rely on independent distributors to distribute and assist us with the marketing and sale of our products. These distributors are our principal customers, and revenue growth will depend in large part on our success in establishing and maintaining this sales and distribution channel. However, there can be no assurance that our distributors will be successful in selling our products to end users, or will focus adequate resources on selling them, and they may not continue to purchase or market our products for a
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number of reasons.

Our business may suffer if we are not able to attract and retain key employees.
Our success depends on our ability to identify, hire, train and retain highly qualified managerial, technical and sales and marketing personnel. In addition, as we introduce new products or services, we will need to hire additional personnel. Currently, competition for personnel with the required knowledge, skill and experiences is intense, particularly in the San Francisco Bay area, where we are headquartered, and we may not be able to attract, assimilate or retain such personnel. The inability to attract and retain the necessary managerial, technical and sales and marketing personnel could have a material adverse effect on our business, results of operations and financial condition.

The acquisition of other companies, businesses, or technologies could result in operating difficulties, dilution, and other harmful consequences.
We may selectively pursue strategic acquisitions, any of which could be material to our business, operating results, and financial condition. Future acquisitions could divert management’s time and focus from operating our business. In addition, integrating an acquired company, business or technology is risky and may result in unforeseen operating difficulties and expenditures associated with integrating employees from the acquired company into our organization and integrating each company’s accounting, management information, human resources and other administrative systems to permit effective management. The anticipated benefits of future acquisitions may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill, any of which could harm our financial condition. Future acquisitions may also require us to obtain additional financing, which may not be available on favorable terms or at all.

Natural or other disasters could disrupt our business and result in loss of revenue or in higher expenses.
Natural disasters, terrorist activities, military conflict and other business disruptions could seriously harm our revenue and financial condition and increase our costs and expenses. Our corporate headquarters are located in California, a seismically active region. A natural disaster in any of our major markets in North America or Europe could have a material adverse impact on our operations, operating results and financial condition. Further, any unanticipated business disruption caused by Internet security threats, damage to global communication networks or otherwise could have a material adverse impact on our operating results.
Financial & Accounting Risks

We have incurred significant losses to date and anticipate continuing to incur losses in the future, and we may not achieve or maintain profitability.
We have thus far been largely dependent on capital raised through the sale of equity securities in various public and private offerings, and we have incurred losses in each fiscal year since our incorporation in 2005. Our net losses were $15.8 million and $12.1 million for the years ended December 31, 2020 and 2019, respectively (with losses from an increase in common stock purchase warrant liabilities due to an increase in our stock price accounting for a $3.1 million increase in net losses in 2020). As of December 31, 2020 and 2019, we had an accumulated deficit of $199.1 million and $183.3 million, respectively.
The operation of our business and our growth efforts will require significant cash outlays and advance capital equipment expenditures and commitments. We believe we have sufficient resources to operate for the foreseeable future based upon our current cash resources, the recent rate of using cash for operations and investment, and assuming modest increases in current revenue offset by incremental increases in expenses related to increased sales and marketing and research and development, and a potential increase in rental activity from our medical device business. However, unless we are able to generate significant revenues from sales and rentals of our products, we will not be able to achieve or maintain profitability in the near future or at all, and we will remain largely dependent on capital raised from past and future financings to implement our business plan, support our operations and service our debt obligations, which totaled $3.1 million as of January 31, 2021. Our lack of profitability may depress our stock price, and if we are unable become profitable, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results, or to cease our operations entirely.

Our loan agreement imposes certain financial, and operational restrictions on us, limiting the discretion of our management in operating our business.

Our loan agreement with Pacific Western Bank, which we entered into in August 2020, or our PWB Loan Agreement, contains, subject to certain carve-outs, various restrictive covenants that limit our management's discretion in operating our business. In particular, these instruments limit our ability to, among other things incur additional debt, grant liens on assets, sell or acquire
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assets outside the ordinary course of business, pay dividends and make certain fundamental business changes. Our obligations are also secured by a security interest in all of our assets, exclusive of intellectual property. As a result, we may need to use our capital resources to repay the PWB Loan in order to undertake certain financing or strategic transactions.

Management will have broad discretion as to our use of capital resources.

As of December 31, 2020, we had $12.9 million in cash and cash equivalents, and our recently completed public offering in February 2021 resulted in our receiving an additional $36.4 million in estimated net proceeds. Our management will have broad discretion in the application of these capital resources, including for working capital and other general corporate purposes, which may include repayment of debt, acquisitions and other business opportunities. The amounts and timing of our use of proceeds will vary depending on a number of factors, including the amount of cash generated or used by our operations, and the rate of growth, if any, of our business. In addition, while we have not entered into any agreements, commitments or understandings relating to any significant transaction as of the date of this Annual Report, we may use a portion of the net proceeds to pursue acquisitions of other businesses, products or technologies that are complementary to our business, joint ventures and licensing arrangements, and other strategic transactions and business opportunities. Our broad use of these funds may not always align with the focus of our investors, and our investors may not have the opportunity as part of their investment decision in any such offering to assess whether the net proceeds of such offering are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from any offering, their ultimate use may vary from the intended use as may be stated in the relevant prospectus related to such offering. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from any offering in a variety of capital preservation investments. These investments may not yield a favorable return to our securityholders.

We may not be able to reduce the cost to manufacture or service our products as planned.
Our business plan assumes that exoskeletons can be manufactured more inexpensively than they are currently being manufactured. However, we have not yet found a way to significantly reduce the manufacturing cost of our products and doing so may prove more difficult than expected or even impossible. For example, if expectations for greater functionality of the products drive costs up as other factors drive costs down, the result may be that the overall cost of manufacturing the product stays the same or even increases. Likewise, we currently provide service and support of our products for our customers at a high standard (both in and out of warranty), and plan on continuing to do so. Our business plan also assumes that as we continue to improve our product, we achieve improved levels of product reliability and decreased service cost and frequency, which also may prove more difficult than expected.

If we or our third-party manufacturers are unable to produce our products at a satisfactory quality, in a timely manner, in sufficient quantities or at an acceptable cost, our business could be negatively impacted.
In order to reduce manufacturing costs, we intend to transition a significant amount of our manufacturing processes to third parties. Reliance on third parties to manufacture our products presents significant risks to us, including the potential that manufacturing costs may be higher than if we had kept manufacturing in house, as well as risks of reduced control over delivery schedules and product reliability, manufacturing deviations from internal and regulatory specifications, failure of a manufacturer to perform its obligations to us for technical, market or other reasons, misappropriation of our intellectual property, and other risks in meeting schedules and satisfying requirements of our customers.
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We have not entered into any long-term manufacturing or supply agreements for any of our products, and we may need to enter into additional agreements for the commercial development, manufacturing and sale of our products. There can be no assurance that we can do so on favorable terms, if at all.
Our products have been produced in quantities, and on timelines, sufficient to meet commercial demand and for us to satisfy our delivery schedules. However, our dependence upon others for the production of a portion of our products, or for a portion of the manufacturing process, may adversely affect our ability to satisfy demand, as well as to develop and commercialize new products, on a timely and competitive basis. If manufacturing capacity is reduced or eliminated at one or more of our third-party manufacturers’ facilities, we could have difficulties fulfilling our customer orders, which could adversely affect customer relationships, and our net revenues and results of operations could decline.

Shortages in the materials used to manufacture our products, as well as reductions in manufacturer capacity, could impact our future results.
Due to a variety of factors, including the COVID-19 pandemic, various materials we and the third-party manufacturers we rely on use to manufacture our products are currently, or may in the future, experience shortages and supply chain disruptions. For example, the global semiconductor industry has faced significant supply chain shortages and other disruptions as a result of increased demand, the inability of fabrication plants to produce sufficient quantities of chips to meet that demand, including as a result of government restrictions on staffing and facility operations in light of the COVID-19 pandemic, and other causes. Electronic components in general, battery cells, metals and plastics, all of which we use in our products, have, in the recent past, been are also in shorter supply compared to prior periods, and we are also experiencing longer lead times for manufacturing services such as machining and tool making. These and other factors are also causing plant shutdowns, reductions in capacity, delays and increased costs with our third-party manufacturers. Numerous factors, such as the ongoing pandemic or further trade tensions between the United States and China, may prolong or deepen these challenges. Our operating results may be negatively impacted if global supply chains of semiconductors and other important commodities in short supply do not normalize.

Coverage policies and reimbursement levels of third-party payers may impact sales of our products.
To the extent that the adoption of our products by our customers is dependent in the future on their ability to obtain adequate reimbursement for treatments provided using our product from third-party payers, the coverage policies and reimbursement levels of these third-party payers may impact the decisions of healthcare providers and facilities to purchase our products or the prices they would be willing to pay for those products. Reimbursement rates could also affect the acceptance rates of new technologies. We have no control over these factors.

We will experience long and variable sales cycles.
The EksoNR and Ekso Indego have a lengthy sale and purchase order cycle because it is a major capital expenditure item and generally requires the approval of senior management at purchasing institutions, which may contribute to substantial fluctuations in our quarterly operating results.

International sales of our products are subject to factors outside of our control.
Our business currently depends in part on our activities in the EMEA, APAC, and other foreign markets. Our international activities are subject to a number of risks inherent in selling and operating abroad, including failure of local laws to provide the same degree of protection against infringement of our intellectual property rights; protectionist laws and business practices that favor local competitors, which could slow our growth in international markets; the expense of establishing facilities and operations in new foreign markets; building an organization capable of supporting geographically dispersed operations; challenges caused by distance, language and cultural differences; challenges caused by differences in legal regulations, markets, and customer preferences, which may limit our ability to adapt our products or succeed in other regions; multiple, conflicting, and changing laws and regulations, including complications due to unexpected changes in regulatory requirements, foreign laws, tax schemes, international import and export legislation, trading and investment policies, exchange controls and tariff and other trade barriers; foreign tax consequences; fluctuations in currency exchange rates and foreign currency translation adjustments; foreign exchange controls that might prevent us from repatriating income earned outside the United States; imposition of public sector controls; differing payer reimbursement regimes, governmental payers or patient self-pay systems and price controls; political, economic and social instability; and restrictions on the export or import of technology.

We may not be able to enhance our product offerings through our research and development efforts.

In order to increase our sales and our market share in the exoskeleton market, we continue to invest in our research and development efforts and product offerings in response to the evolving demands of people with lower extremity impairment, other medical conditions and healthcare providers, as well as competitive technologies. We may decide to invest our business
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development resources in partnerships, licensing agreements, business acquisition and other ways that will provide us new product offerings without significant research and development activities. We may not be successful in developing, obtaining regulatory approval for, or marketing our currently proposed products, or our approved products for additional indications, products proposed to be created in the future or products that will be available for us through business acquisitions. In addition, notwithstanding our market research efforts, our future products may not be accepted by consumers, their caregivers, healthcare providers or third-party payors who reimburse consumers for our products. The success of any proposed product offerings will depend on numerous factors, including our ability to:

identify the product features that people with lower extremity impairment, their caregivers, and healthcare providers are seeking in a medical device that restores mobility and successfully incorporate those features into our products;
identify the product features that people with lower extremity impairment or other similar indications require while the products are used at home as well as what items are valuable to the clinics that provide them rehabilitation;
develop and introduce proposed products in sufficient quantities and in a timely manner;
adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third-parties;
demonstrate the safety, efficacy, and health benefits of proposed products; and
obtain the necessary regulatory clearances and approvals for proposed products.

If we fail to generate demand by developing products that incorporate features desired by consumers, their caregivers or healthcare providers, or if we do not obtain regulatory clearance or approval for proposed products in time to meet market demand, we may fail to generate sales sufficient to achieve or maintain profitability. We have in the past experienced, and we may in the future experience, delays in various phases of product development, including during research and development, manufacturing, limited release testing, marketing, and customer education efforts. Such delays could cause customers to delay or forgo purchases of our products, or to purchase our competitors’ products. Even if we are able to successfully develop proposed products when anticipated, these products may not produce sales in excess of the costs of development, and they may be quickly rendered obsolete by changing consumer preferences or the introduction by our competitors of products embodying new technologies or features.

We may never complete the development of any of our proposed products or product improvements into marketable products.

We do not know when or whether we will successfully complete the development of the planned development-stage or next generation exoskeletal technologies, or any other proposed, developmental, or contemplated product for any of our target markets. We continue to seek to improve our technologies before we are able to produce a commercially viable product. Failure to improve on any of our technologies could delay or prevent their successful development for any of our target markets.

Developing any technology into a marketable product is a risky, time consuming and expensive process. You should anticipate that we will encounter setbacks, discrepancies requiring time consuming and costly redesigns and changes and that there is the possibility of outright failure. We may not meet our product development, manufacturing, regulatory, commercialization and other milestones.
We have historically relied, and in the future may rely, on sales of our EksoNR, Ekso Indego Therapy and Ekso Indego Personal for a significant portion of our revenue.

We currently rely, and in the future will rely, on sales of our EksoNR, Ekso Indego Therapy and Ekso Indego Personal for a large portion of our revenue. These products are relatively new, and market acceptance and adoption depends on educating people with lower extremity impairment, physical therapists and other clinicians as to the distinct features, ease-of-use, improved quality of life and other benefits when compared to alternative therapies. These products may not be perceived to have sufficient potential benefits compared with their alternatives. In addition, physical therapists and other clinicians may be slow to change their treatment practices because of perceived liability risks arising from the use of new products. Accordingly, physical therapists and other clinicians may not recommend these products until there is sufficient evidence to convince them to alter the treatment methods they typically recommend. Such evidence may include endorsements from prominent healthcare providers or other key leaders in the lower extremity impairment and neurological impairment communities attesting to the effectiveness of these products in providing identifiable immediate and long-term quality of life benefits, and the publication of peer-reviewed clinical studies demonstrating their value. Any factors that negatively impact sales of these products would adversely affect our business, financial condition and operating results.
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We rely on independent distributors for the sale and marketing of our products in certain geographies.
In non-German-speaking European countries, other EMEA countries and Central and South American countries, we rely on independent distributors to distribute and assist us with the marketing and sale of our products. While we expect that the percentage of our sales generated from independent distributors will decrease over time as we continue to focus our resources on achieving reimbursement within our direct markets in non-German-speaking European countries, other EMEA countries and Central and South American countries, we believe that some percentage of our sales will continue to be generated by independent distributors in the future. Additionally, since closing the HMC Acquisition, we have relied on other independent distributors for the sale and marketing of our Ekso Indego Therapy and Ekso Indego Personal These distributors are our principal customers, and revenue growth will depend in large part on our success in establishing and maintaining this sales and distribution channel. However, there can be no assurance that our distributors will be successful in selling our products to end users, or will focus adequate resources on selling them, and they may not continue to purchase or market our products for a number of reasons. If any of our key independent distributors were to cease to distribute our products, our sales could be adversely affected. In such a situation, we may need to seek alternative independent distributors or increase our reliance on our other independent distributors or our direct sales representatives, which may not prevent our sales from being adversely affected. Further, to the extent our newly acquired distribution channels have contractual or other limitations that may impact the economies of scale we would otherwise receive as a result of the HMC Acquisition, our business and prospects may be adversely affected.
Our success depends on our management team, and on our ability to hire, train, retain, and motivate employees.
Our success depends on our management team and on our ability to identify, hire, train and retain highly qualified managerial, technical and sales and marketing personnel. Any significant leadership change and accompanying senior management transition, such as the recent change in our chief executive officer, and the hiring of other new leaders in key roles, involves inherent risk and any failure to ensure a smooth transition could hinder our strategic planning, execution and future performance. In addition, as we introduce new products or services, we will need to hire additional personnel. Currently, competition for personnel with the required knowledge, skill and experiences is intense, particularly in the San Francisco Bay area, where we are headquartered, and we may not be able to attract, assimilate or retain such personnel. The inability to attract and retain the necessary managerial, technical and sales and marketing personnel could have a material adverse effect on our business, results of operations and financial condition.

The acquisition and integration of other companies, businesses, or technologies could result in operating difficulties, dilution, and other harmful consequences.

We may selectively pursue strategic acquisitions, any of which could be material to our business, operating results, and financial condition, like the HMC Acquisition. Future acquisitions could divert management’s time and focus from operating our business. In addition, integrating an acquired company, business or technology is risky and may result in unforeseen operating difficulties and expenditures associated with integrating employees from the acquired company into our organization and integrating each company’s accounting, management information, human resources and other administrative systems to permit effective management. For example, in connection with the HMC Acquisition, we expanded our manufacturing footprint to Ohio through a temporary lease at Parker Hannifin Corporation's Ohio facilities that is generally set to expire in December 2023, it continues to require internal resources and may ultimately be unsuccessful. While we believe this expansion will be beneficial for our business and that we will be able to find a more permanent location in Ohio. The anticipated benefits of future acquisitions may not materialize, including our ability to expand our product offerings as a result of overlap in the addressable market for our existing products and the addressable market for products we may acquire. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill, any of which could harm our financial condition. Future acquisitions may also require us to obtain additional financing, which may not be available on favorable terms or at all.
If we fail to manage the complex and lengthy reimbursement process, our business and operating results could be adversely affected.

We accept assignment of insurance benefits from customers and, in a majority of cases, invoice and collect payments directly from Medicare, private payors and Medicaid, as well as direct from patients under co-insurance provisions. We also distribute our products through the VA hospitals. The VA maintains its policy of covering the cost of our devices for qualifying veterans. Our financial condition and results of operations may be affected by the VA coverage policy and the healthcare industry’s reimbursement process, which is complex and can involve lengthy delays between the time that a product is delivered to the consumer and the time that the reimbursement amounts are settled. Depending on the payor, we may be required to obtain certain payor-specific documentation from physicians and other healthcare providers before submitting claims for reimbursement. Certain payors have filing deadlines and they will not pay claims submitted after such time. We are also subject to extensive pre-payment and post-payment audits by governmental and private payors that could result in material delays,
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refunds of monies received or denials of claims submitted for payment under such third-party payor programs and contracts. We cannot ensure that we will be able to continue to effectively manage the process which would adversely affect our business, financial condition and results of operations.

Shutdowns of the U.S. federal government could materially impair our business and financial condition.

Development of our product candidates or regulatory approval may be delayed for reasons beyond our control. For example, in 2018 and 2019 the U.S. government shut down several times and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical FDA, SEC, and other government employees and stop critical activities. If a prolonged government shutdown or budget sequestration occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public markets, such as through the declaration of effectiveness of registration statements and obtain necessary capital in order to properly capitalize and continue our operations.

Financial & Accounting Risks

We have incurred significant losses to date and anticipate continuing to incur losses in the future, and we may not achieve or maintain profitability.
We have thus far been largely dependent on capital raised through the sale of equity securities in various public and private offerings, and we have incurred losses in each fiscal year since our incorporation in 2005. Our net losses were $15.1 million and $9.8 million for the years ended December 31, 2022 and 2021, respectively (with gains on revaluation of warrant liabilities from a decrease in our common stock purchase price resulting in a $1.3 million reduction to our net loss for 2022 and gain on revaluation of warrant liabilities from an decrease in our common stock purchase price resulting in a $4.0 million reduction to our net loss in 2021). As of December 31, 2022 and 2021, we had an accumulated deficit of $223.9 million and $208.9 million, respectively.
The operation of our business and our growth efforts will require significant cash outlays and advance capital equipment expenditures and commitments. We believe we have sufficient resources to operate for the foreseeable future based upon our current cash resources, the recent rate of using cash for operations and investment, and assuming modest increases in current revenue offset by incremental increases in expenses related to increased sales and marketing and research and development, and a potential increase in subscription activity from our medical device business. However, unless we are able to generate significant revenues from sales and subscriptions of our products, we will not be able to achieve or maintain profitability in the near future or at all, and we will remain largely dependent on capital raised from past and future financings to implement our business plan, support our operations and service our debt obligations. Our lack of profitability may depress our stock price, and if we are unable to become profitable, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results, or to cease our operations entirely.

Our loan agreement imposes certain financial, and operational restrictions on us, limiting the discretion of our management in operating our business.

Our loan agreement with Pacific Western Bank, which we entered into in August 2020 (the "PWB Loan Agreement"), contains, subject to certain carve-outs, various restrictive covenants that limit our management's discretion in operating our business. In particular, these instruments limit our ability to, among other things incur additional debt, grant liens on assets, sell or acquire assets outside the ordinary course of business, pay dividends and make certain fundamental business changes. Our obligations, which become due in August 2023, are also secured by a security interest in all of our assets, exclusive of intellectual property. As a result, we may need to use our capital resources to repay the PWB Loan in order to undertake certain financing or strategic transactions.

We may be unable to generate sufficient cash flow to service our debt obligations and operate our business.

As described in Note 10 to the consolidated financial statements, we have material near-term indebtedness due to the PWB Loan Agreement and the $5 million unsecured, subordinated promissory note (the “Promissory Note”) we delivered to Parker Hannifin Corporation in connection with the HMC Acquisition.

Servicing our debt requires a significant amount of cash. While we anticipate that we will have adequate cash resources to fund our operations and satisfy our debt obligations, our ability to generate sufficient cash depends on numerous factors beyond our control and our business may not generate sufficient cash flow from operating activities. Our ability to make payments on, and refinance, our debt and fund planned capital expenditures will depend on our ability to generate cash in the future. To some
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extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including rising interest rates.

We cannot assure our business will generate sufficient cash flow from operations, or future borrowings will be available to us in an amount sufficient to fund our liquidity needs.

If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

We may not have sufficient funds to meet our future capital requirements.

As of December 31, 2022, we had $20.5 million in cash. While we believe we have sufficient cash to fund our operations for at least twelve months from the issuing date of this Annual Report, we cannot provide assurance that these funds will be sufficient to meet our future capital requirements. Our management will have broad discretion in the application of these capital resources, including for working capital and other general corporate purposes, which may include repayment of debt, acquisitions and other business opportunities. The amounts and timing of our use of proceeds will vary depending on a number of factors, including the amount of cash generated or used by our operations, and the rate of growth, if any, of our business, as well as our debt repayment obligations. In addition, we may use our cash on hand to pursue acquisitions of other businesses, products or technologies that are complementary to our business, joint ventures and licensing arrangements, and other strategic transactions and business opportunities. Our ability to secure financing and the cost of raising such capital are dependent on numerous factors, including general economic and capital markets conditions, credit availability from lenders, investor confidence and the existence of regulatory and tax incentives that are conducive to raising capital. Uncertainty in the financial markets has caused banks and financial institutions to decrease the amount of capital available for lending and has significantly increased the risk premium of such borrowings. In addition, such turmoil and uncertainty has significantly limited the ability of companies to raise funds through the sale of equity or debt securities. If we are unable to raise additional funds, we may need to delay, modify or abandon some or all of our business plans or cease operations. If we raise funds through the issuance of debt, the amount of any indebtedness that we may raise in the future may be substantial, and we may be required to secure such indebtedness with our assets and may have substantial interest expenses. If we default on any future indebtedness, our lenders could declare all outstanding principal and interest to be due and payable and our secured lenders may foreclose on the facilities securing such indebtedness. The incurrence of indebtedness could require us to meet financial and operating covenants, which could place limits on our operations and ability to raise additional capital, decrease our liquidity and increase the amount of cash flow required to service our debt. If we raise funds through the issuance of equity securities, such issuance could result in dilution to our stockholders and the newly issued securities may have rights senior to those of the holders of our common stock.

We may not be able to leverage our cost structure or achieve better margins.
Due to the early stage of our commercial efforts, and particularly the early stage of customer adoption of our products, our current sales and marketing, research and development, and general and administrative expenses are each a higher percentage of sales than they will need to be for us to reach profitability. While we do expect these expenses to grow as our business grows, we also expect these expenses to decline as a percentage of revenues over time. If we are unable to leverage these costs and grow revenues at a greater pace than these operating expenses as we expect, we will not be able to achieve viable operating margins and profitability.

We could fail to maintain effective internal control over our financial reporting.
Section 404 of the Sarbanes-Oxley Act of 2002 requires us to include in our annual reports on Form 10-K and quarterly reports on Form 10-Q an assessment by management of the effectiveness of our internal control over financial reporting. While we believe that the policies, processes and procedures we have put in place will be sufficient to render our internal controls over financial reporting effective, our initiatives may not prove successful. If so, management may not be able to conclude that our internal control over financial reporting is effective. This could result in a loss of investor confidence in the reliability of our financial statements, which in turn could negatively affect the price of our common stock. In addition, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404. Our compliance with Section 404 may require that we incur substantial accounting expense and expend significant management efforts.

Intellectual Property Risks

Protecting our intellectual proprietary rights can be costly, and our success in doing so is not certain.
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Our long-term success largely depends on our ability to market technologically competitive products. Failure to protect or to obtain, maintain or extend adequate patent and other intellectual property rights could materially adverselyhave a material adverse impact on our competitive advantage and impair our business. Our issued patents may not be sufficient to protect our intellectual property and our patent applications may not result in issued patents. Even if our patent applications issue as patents, they may not issue in a
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form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner or may challenge the validity of our patents. Our attempts to prevent third parties from circumventing our intellectual property and other rights ultimately may be unsuccessful. We may also fail to take the required actions or pay the necessary fees to maintain any of our patents that issue.
Furthermore, we have not filed applications for all of our inventions internationally and may not be able to prevent third parties from using our proprietary technologies or may lose access to technologies critical to our products in other countries. These include, in some cases, countries in which we are currently selling products and countries in which we intend to sell products in the future.

Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products.
The industries in which we operate, including, in particular, the medical device industry, are characterized by extensive intellectual property litigation and, from time to time, we might be the subject of claims by third parties of potential infringement or misappropriation. Regardless of outcome, such claims are expensive to defend and divert the time and effort of our management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringement against us could result in our payment of significant monetary damages and/or royalty payments or negatively impact our ability to sell current or future products in the affected category and could have a material adverse effect on our business, cash flows, financial condition or results of operations.
Because competition in our industry is intense, competitors may infringe or otherwise violate our issued patents, patents of our licensors or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly, or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. We may also elect to enter into license agreements in order to settle patent infringement claims or to resolve disputes prior to litigation, and any such license agreements may require us to pay royalties and other fees that could be significant. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure.

Some of the patents and patent applications in the intellectual property portfolio are not within our complete control, which could reduce the value of such patents.
Some of our U.S. patents (which have associated international patents and applications) are co-owned by UC Berkeley. UC Berkeley has exclusively licensed its rights under many of these patents to us, but we do not have an exclusive license to UC Berkeley’s rights under three of these patents.
UC Berkeley has licensed their U.S. rights in two of these three co-owned patents to an unrelated third-party.
The third patent is a continuation-in-part of a patent that UC Berkeley has licensed to us. Under the terms of the relevant license agreement between us and UC Berkeley, we have exclusive rights to any claims that are fully supported by the specification in the parent application. However, any claims that are not based on the specification in the parent application are co-owned by UC Berkeley and us, and UC Berkeley’s rights in respect of such claims are not exclusively licensed to us. There is no assurance that we will be able to obtain a license to UC Berkeley’s rights in any such claims on commercially reasonable terms or at all, and UC Berkeley may choose to license its rights to third parties instead of us.
In addition, in connection with our acquisition of certain assets from Equipois, we assumed the rights and obligations of Equipois with respect to certain patents and patent applications under an in-license of intellectual property from a third-party and subject to an out-license of that intellectual property to an unrelated third-party for use in a particular field. We do not have complete control over the prosecution of these patent applications. As well, the license of intellectual property rights under these patents to third parties could reduce the value of our patent portfolio and limit any income or license fees that we might receive if we were to attempt to transfer or license our rights under any of our co-owned or licensed patents.

If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third-partiesthird-
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parties or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business.
We are a party to two exclusive license agreements and one amendment to the license agreement with UC Berkeley, covering ten patents exclusively licensed to us. In addition, in connection with our acquisition of certain assets from Equipois, we
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assumed the rights and obligations of Equipois with respect to certain patents and patent applications under an in-license of intellectual property from a third-party and subject to an out-license of that intellectual property to an unrelated third-party for use in a particular field. We may also need to obtain additional licenses from others to advance our research and development activities or allow the commercialization of our devices or any other devices we may identify and pursue. Our license agreements with UC Berkeley and the rights and obligations that we assumed in connection with the Equipois acquisition impose various development, diligence, commercialization, and other obligations on us, and any future license agreements may impose similar or other obligations on us. For example, under our license agreements with UC Berkeley we are required to submit a commercialization plan with performance milestones and progress report to UC Berkeley, and must satisfy specified minimum annual royalty payment obligations. In spite of our efforts, our licensors might conclude that we have materially breached our obligations under such license agreements and might therefore terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technology covered by these license agreements. If our license agreements with UC Berkeley are terminated, or if our agreements granting us intellectual property rights in connection with the Equipois acquisition or any future agreements granting us material intellectual property rights are terminated or impeded in a material way, competitors or other third parties would have the freedom to seek regulatory approval of, and to market, products that may be identical or functionally similar to our devices and we may be required to cease our development and commercialization of such devices. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.
Moreover, disputes may arise between us and our counterparties regarding intellectual property subject to a licensing agreement, including the scope of rights granted under the license agreement and other interpretation-related issues; the extent to which our devices, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; the sublicensing of patent and other rights under our collaborative research and development relationships; our diligence obligations under the license agreement and what activities satisfy those diligence obligations; the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and the priority of invention of patented or patentable technology. In addition, certain provisions in our license agreement with UC Berkeley may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected devices, which could have a material adverse effect on our business, financial conditions, results of operations and prospects.

Patent terms may be inadequate to protect our competitive position on our devices for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our devices are obtained, once the patent life has expired, we may be open to competition from competitive products. Given the amount of time required for the development, testing and regulatory review of new devices, patents protecting such devices might expire before or shortly after such devices are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

Legal and Regulatory Compliance Risks

If we fail to obtain or maintain necessary regulatory clearances or approvals for our medical device products, or if clearances or approvals for future products or modifications to existing products are delayed or not issued, our commercial operations would be harmed.
Our EksoGT, EksoNR, EksoUE, and EksoUEEkso Indego products are medical devices and are regulated by the FDA, the European Union and other governmental authorities both inside and outside of the United States. These agencies enforce laws and regulations that govern the development, testing, clinical trials, manufacturing, labeling, advertising, marketing and distribution, recordkeeping, recalls and field safety corrective actions, and market surveillance of our medical products. Our failure to comply with these complex laws and regulations could have a material adverse effect on our business, results of operations, financial condition and cash flowsflows.
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In the United States, before we can market a new medical device, or a new use of, new claim for or significant modification to an existing product, we must first receive either clearance under Section 510(k) of the FDCA or approval of a premarket approval or PMA application from the FDA, unless an exemption applies. Both the PMA and the 510(k) clearance process can be expensive, lengthy and uncertain. The FDA’s 510(k) clearance process may take anywhere from several months to over a year. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes
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from one to three years, or even longer, from the time the application is filed with the FDA. In addition, PMA generally requires the performance of one or more clinical trials.
The FDA also has substantial discretion in the medical device review process. Despite the time, effort and cost, we cannot assure you that any particular device will be approved or cleared by the FDA. Any delay or failure to obtain necessary regulatory approvals could harm our business. Failure can occur at any stage, and we could encounter problems that cause us to repeat or perform additional development, standardized testing, pre-clinical studies and clinical trials. Any delay or failure to obtain necessary regulatory approvals could harm our business.
The FDA or other non-U.S. regulatory authorities can delay, limit or deny clearance or approval of a medical device candidate for many reasons, including a medical device candidate may not be deemed to be substantially equivalent to a device lawfully marketed either as a grandfathered device or one that was cleared through the 510(k) premarket notification process; a medical device candidate may not be deemed to be substantially equivalent to a device lawfully marketed either as a grandfathered device or one that was cleared through the 510(k) premarket notification process; a medical device candidate may not be deemed to be in conformance with applicable standards and regulations; FDA or other regulatory officials may not find the data from pre-clinical studies and clinical trials or other product testing date to be sufficient; other non-U.S. regulatory authorities may not approve our processes or facilities or those of any of our third-party manufacturers, thereby restricting export; or the FDA or other non-U.S. regulatory authorities may change clearance or approval policies or adopt new regulations.
Even after regulatory clearance or approval has been granted, a cleared or approved product and its manufacturer are subject to extensive regulatory requirements relating to manufacturing, labeling, packaging, adverse event reporting, storage, advertising and promotion, forrecordkeeping, and recalls and field safety corrective actions of the product. If we fail to comply with the regulatory requirements of the FDA or other non-U.S. regulatory authorities, or if previously unknown problems with our products or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions, including restrictions on the products, manufacturers or manufacturing process; adverse publicity; adverse inspectional observations (Form 483), warning letters, non-warning letters incorporating inspectional observations; consent decrees; civil or criminal penalties or fines; injunctions; product seizures, detentions or import bans; voluntary or mandatory product recalls and publicity requirements; suspension or withdrawal of regulatory clearances or approvals; total or partial suspension of production; imposition of restrictions on operations, including costly new manufacturing requirements; refusal to clear or approve pending applications or premarket notifications; and import and export restrictions.
If imposed on us, any of these sanctions could have a material adverse effect on our reputation, business, results of operations and financial condition.

Modifications to our EksoNR and our future products may require new 510(k) clearances or premarket approvals, or may require us to cease marketing or recall the modified products until clearances are obtained
On April 4, 2016, we received clearance from the FDA to market our EksoGT robotic exoskeleton for use in the treatment of individuals with hemiplegia due to stroke, individuals with SCI at levels T4 to L5, and individuals with SCI at levels of T3 to C7 (ASIA D), in accordance with the device’s labeling. On July 19, 2016, we received clearance from the FDA to expand/clarify the indications and labeling to expressly include individuals with hemiplegia due to stroke who have upper extremity function of at least four-fifths in only one arm. Our prior cleared indications for use statement required that individuals with hemiplegia due to stroke have upper extremity function of at least four-fifths in both arms. On June 9, 2022, we received further clearance from FDA to expand the IFU and labeling to expressly include individuals with MS.
An element of our strategy is to continue to upgrade our robotic exoskeleton platform to incorporate new software and hardware enhancements. Any modification to a 510(k)-cleared device, including our EksoGT, that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design, or manufacture, requires a new 510(k) clearance or, possibly, a PMA. The FDA requires every manufacturer to make this determination in the first instance based on the final guidance document issued by the FDA in October 2017 addressing when to submit a new 510(k) application due to modifications to 510(k)-cleared devices and a separate guidance document on when to submit a new 510(k) application due to software changes to 510(k)-cleared devices. Although largely aligned with the FDA’s longstanding guidance document issued in 1997, the 2017 guidance includes targeted changes intended to provide additional clarity on when a new 510(k) application is needed. The FDA may review our determinations regarding whether new clearances or approvals are necessary, and may not agree with our decisions. If the FDA disagrees with our determinations for any future changes, or prior changes to previously marketed products, as the case may be, we may be required to cease marketing or to recall the modified products until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.
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We may introduce new products with enhanced features and extended capabilities from time to time. The products may be subject to various regulatory processes, and we may need to obtain and maintain regulatory approvals in order to sell our new products. If a potential purchaser of our products believes that we plan to introduce a new product in the near future or if a potential purchaser is located in a country where a new product that we have introduced has not yet received regulatory approval, planned purchases may be deferred or delayed. As a result, new product introductions may adversely impact our financial results.
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We must obtain certain regulatory approvals in the EU, which could be costly and time-consuming and subject us to unanticipated delays or prevent us from marketing certain devices.

In the EU, we are required to comply with the EU MDR and obtain CE Certificates of Conformity in order to affix the CE Mark and market medical devices. As of December 31, 2022, none of our products had yet been approved under the EU MDR. We are currently in the process of obtaining Parker’s CE Certificates of Conformity in order to affix the CE Mark to the products we acquired in the HMC Acquisition, including Ekso Indego Personal and Ekso Indego Personal. Any delay in, or failure to receive or maintain the CE Mark as required under the EU MDR for the products acquired in the HMC Acquisition may prevent us from selling those products within the EU. In addition, changes in regulatory policy for the approval or CE marking of a medical device during the period of product development and regulatory agency review or notified body review of each submitted new application may cause delays or rejections. In January 2023, the European Commission endorsed a proposal to extend the original compliance dates for the EU MDR, subject to approval by the European Parliament and European Council. The proposal would extend the current MDR transitional period deadline of May 2024 to 2027 or 2028, based upon the risk class of the device. Failure to comply with the EU MDR requirements by the MDR transitional period deadline would prevent us from generating revenue from sales of our products in the EU, which could adversely affect our business, results of operations and financial condition.

Our failure to meet strict post-market regulatory requirements with respect to our products could require us to pay fines, incur other costs or even close our facilities.
We are required to comply with the FDA’s Quality System Regulation, or QSR, which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of our marketed products. These regulatory requirements may significantly increase our production costs and may even prevent us from making our products in amounts sufficient to meet market demand. If we change our approved manufacturing process, the FDA may need to review the process before it may be used. The FDA enforces the QSR through periodic announced and unannounced inspections of manufacturing facilities. Failure to comply with regulatory requirements such as QSR may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.
Federal, state and non-U.S. regulations regarding the manufacture and sale of medical devices are subject to future changes. The complexity, timeframes and costs associated with obtaining marketing clearances are unknown. Although we cannot predict the impact, if any, these changes might have on our business, the impact could be material.

We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or “off-label” uses.
Any cleared or approved product may be promoted only for its indicated uses and our promotional materials must comply with FDA and other applicable laws and regulations. We believe that the specific use for which our products are marketed fall within the scope of the indications for use that have been cleared by the FDA. However, if the FDA determines that our promotional materials or training constitutes promotion of an unapproved use, it could request that we modify our promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine and criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, our reputation could be damaged and adoption of the products would be impaired.

We may be subject to adverse medical device reporting obligations, voluntary corrective actions or agency enforcement actions.
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Under the FDA’s medical device reporting or MDR regulations, we are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. For example, we have been informed of a limited number of events with respect to our EksoNR or EksoGT devices that have been determined to be reportable pursuant to the MDR regulations. In each case, the required MDR report was filed with the FDA.
In addition, all manufacturers bringing medical devices to market in the European Economic Area are legally bound to report any incident that led or might have led to the death or serious deterioration in the state of health of a patient, user or other person, and which the manufacturer’s device is suspected to have caused, to the competent authority in whose jurisdiction the incident occurred. In such case, the manufacturer must file an initial report with the relevant competent authority, which would be followed by further evaluation or investigation of the incident and a final report indicating whether further action is required. The events described above that were reported to the FDA were also reported to the relevant EU regulatory authorities.
We are also required to follow detailed recordkeeping requirements for all Company-initiated medical device corrections and removals, and to report such corrective and removal actions to the FDA if they are carried out in response to a risk to health and have not otherwise been reported under the MDR regulations. The FDA and similar foreign governmental authorities also have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design, labeling or manufacture of a product or in the event that a product poses an unacceptable risk to health. Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected device. Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including adverse publicity, FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines. We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, including our ability to market our products in the future.
Any adverse event involving our products could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Recalls of our products, or agency actions relating to our failure to comply with our reporting or recordkeeping obligations, could harm our reputation and financial results.

Failure to comply with anti-kickback and fraud regulations could result in substantial penalties and changes in our business operations.
Although we do not provide healthcare services, submit claims for third-party reimbursement, or receive payments directly from Medicare, Medicaid or other third-party payers for our products, we are subject to healthcare fraud and abuse regulation and enforcement by federal, state and foreign governments, which could significantly impact our business. These laws may
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constrain the business and financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute any product for which we have obtained regulatory approval, or for which we obtain regulatory approval in the future. The principal U.S. federal laws implicated include, but are not limited to, those that prohibit, among other things, (i) filing, or causing to be filed, false or improper claims for federal payment, known as the false claims laws, (ii) payment, solicitation or receipt of unlawful inducements, directly or indirectly, for the referral of business reimbursable under federally-funded health care programs, known as the anti-kickback laws, and (iii) health care service providers from seeking reimbursement for providing certain services to a patient who was referred by a physician who has certain types of direct or indirect financial relationships with the service provider, known as the Stark law. Many states have similar laws that apply to reimbursement by state Medicaid and other government funded programs as well as in some cases to all payers. In addition, we may be subject to federal and state data privacy laws that govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Efforts to ensure that our business arrangements will comply with applicable healthcare laws and regulations will involve substantial costs. We are subject to the risk that a person or government could allege we have engaged in fraud or other misconduct, even if none occurred. It is possible that governmental and enforcement authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement, exclusion from governmental health care programs, additional integrity oversight and reporting obligations, contractual damages, reputational harm and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.

Changes in law or regulation could make it more difficult and costly for us to manufacture, market and distribute our products or obtain or maintain regulatory approval of new or modified products.
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From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated devices. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of future products. In addition, FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. Elections could result in significant changes in, and uncertainty with respect to, legislation, regulation and government policy that could significantly impact our business and the health care industry. It is impossible to predict whether legislative changes will be enacted or FDA regulations, guidance or interpretations changed, and what the impact of such changes, if any, may be.
Any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market, and distribute existing products. Significant delays in receiving clearance or approval, or the failure to receive clearance or approval, for any new products would have an adverse effect on our ability to expand our business.

Healthcare changes in the U.S.United States and other countries, including recently enacted legislation reforming the U.S. healthcare system, could have a negative impact on our future operating results.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the health care system in ways that could affect our ability to sell our products profitably. For example, in 2010, the Patient Protection and Affordable Care Act, or ACA, was enacted into law. The legislation seeks to reform the United States healthcare system. It is far-reaching and is intended to expand access to health insurance coverage, improve quality and reduce costs over time. We expect the law will have a significant impact upon various aspects of our business operations. The ACA reduces Medicare and Medicaid payments to hospitals, clinical laboratories and pharmaceutical companies, and could otherwise reduce the volume of medical procedures. These factors, in turn, could result in reduced demand for our products and increased downward pricing pressure. It is also possible that the ACA will result in lower reimbursements. While the ACA is intended to expand health insurance coverage to uninsured persons in the United States, the impact of any overall increase in access to healthcare on sales of our products remains uncertain. The current U.S. Presidential administration and the majority party in both Houses of U.S. Congress have indicated their desire to repeal all or certain provisions of the ACA. It is unclear whether, when and how that repeal could be effectuated and what the effect on the healthcare sector might be. A number of lawsuits
Since its enactment, there have been filed challenging variousnumerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA, and related regulations.we expect there will be additional challenges in the future. As a result, there have been delays in the implementation of, and action taken to repeal or replace, certain aspects of the ACA. Most recently, under President Biden, the Department of Justice dropped support of two Supreme Court cases challenging the ACA in addition to a case before the U.S. Court of Appeals for the Fifth Circuit.
We cannot predict the impact that such actions against the ACA or other health care reform under the Biden administration will have on our business, and there is uncertainty as to what healthcare programs and regulations may be implemented or changed at the federal and/or state level in the United States, or the effect of any future legislation or regulation. However, it is possible that such initiatives could have an adverse effect on our ability to obtain approval and/or successfully commercialize products in the United States in the future. For example, any changes that reduce, or impede the ability to obtain, reimbursement for the type of products we intend to commercialize in the United States (or our products more specifically, if approved) could adversely affect our business plan to introduce our products in the United States.
Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. For example, in August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2012 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2030 unless additional Congressional action is taken.
Further, there has been heightened governmental scrutiny in recent years over the manner in which manufacturers set prices for their marketed products and the cost of prescription drugs to consumers and government healthcare programs, which have resulted in several recent Congressional inquiries and proposed and enacted bills designed to, among other things, reduce the cost of prescription drugs, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. In addition, the efficacyUnited States government, state legislatures, and foreign governments have shown significant interest in implementing cost containment programs, including price-controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs to limit the ACA isgrowth of government paid health care costs. For example, the subject of much debate among members ofUnited States government has passed legislation requiring pharmaceutical manufacturers to provide rebates and discounts to certain entities and governmental payors to participate in federal healthcare programs. Further, Congress and the public. On December 14, 2018, the U.S. District Court for the Northern District of Texas held the individual mandate provisions, and therefore the entirety of ACA, unconstitutional. The impact of the ruling is stayed as it is appealed to the Fifth Circuit Court of Appeals. Our business may be materially and adversely impactedcurrent administration
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have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs, and the current administration recently released a “Blueprint”, or plan, to reduce the cost of drugs. The current administration’s Blueprint contains certain measures that the U.S. Department of Health and Human Services is already working to implement. Individual states in the event that the ACAUnited States have also been increasingly passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in part, or in its entirety, is ruled unconstitutional. Furthermore, the uncertainty regarding the constitutionality of the ACA, or specific provisions therein,some cases, designed to encourage importation from other countries and bulk purchasing.
Additional changes may negatively affect our business.business, including those governing enrollment in federal healthcare programs, reimbursement changes, fraud and abuse enforcement, and expansion of new programs, such as Medicare payment for performance initiatives.
In December 2017,These initiatives, as well as other healthcare reform measures that may be adopted in the Tax Cutsfuture, may result in more rigorous coverage criteria and Jobs Act was enacted and signed into law, one part of which repeals the “individual mandate” introduced by the ACA starting in 2019. The repeal of the “individual mandate” may have an adverse effect on ACA insurance markets and lead to further legislative changes. In addition, the new law imposes a 2.3% excise tax on medical devices that will apply to U.S. sales of our medical device products. In January 2018, President Trump signed into law a spending package that included a two-year moratoriumadditional downward pressure on the medical device excise tax, which lapsed on December 31, 2019. This tax has had,price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms could result in reduced demand for our product candidates or additional pricing pressures and may continueprevent us from being able to have, a negative impact ongenerate revenue, attain profitability, or commercialize our gross margin. There have been other changes to the ACA since the enactment of the Tax Cuts and Jobs Act, and Congress could still consider additional legislation to repeal or replace all or certain elements of the ACA. In addition, other reform legislation has been passed subsequent to the enactment of the ACA, including measures that reduced reimbursement for certain providers and entities under federal health care programs. The outlook for the healthcare sector is unclear, and we are unable to predict the future course of federal or state healthcare legislation and regulations. Changes in the law or regulatory framework that reduce our revenues or increase our costs could also harm our business, financial condition and results of operations and cash flows.products.
FutureFinally, future elections in the United States could result in significant changes in, and uncertainty with respect to, legislation, regulation, implementation of Medicare and/or Medicaid, and government policy that could significantly impact our business and the healthcare industry. In the event that legal challenges are successful, or the ACA, is repealed or materially amended, particularly any elements of the ACA that are beneficial to our business or that cause changes in the health insurance industry, including reimbursement and coverage by private payers or, Medicare or Medicaid payers, our business, operating results and financial condition could be harmed. While it is not possible to predict whether and when any such changes may occur, certain proposals, including a repeal or material amendment of the ACA, could harm our business, operating results and financial condition. In addition, even if the ACA is not amended or repealed, theThe President and the executive branch of the federal government have a significant impact on the implementation of the provisions of the ACA, and the current or future administrations could make changes impacting the implementation and enforcement of the ACA, which could harm our business, operating results and financial condition. If we are slow or unable to adapt to any such changes, our business, operating results and financial condition could be adversely affected.
Failure to comply with the Federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, and implementing regulations could result in significant penalties.

Numerous federal and state laws and regulations, including HIPAA and the HITECH Act, govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information. HIPAA and the HITECH Act require us to comply with standards for the use and disclosure of such protected health information within our company and with third parties. The Privacy Standards and Security Standards under HIPAA establish a set of basic national privacy and security standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services. Notably, whereas HIPAA previously directly regulated only these covered entities, the HITECH Act, which was signed into law in 2009, makes certain of HIPAA’s privacy and security standards directly applicable to covered entities’ business associates. Both covered entities and business associates are subject to significant civil and criminal penalties for failure to comply with the Privacy Standards and Security Standards under HIPAA.

HIPAA requires healthcare providers like us to develop and maintain policies and procedures with respect to protected health information that is used or disclosed, including the adoption of administrative, physical and technical safeguards to protect such information from unauthorized disclosure. The HITECH Act expanded the notification requirement for breaches of patient-identifiable health information, restricts certain disclosures and sales of patient-identifiable health information and provides a tiered system for civil monetary penalties for HIPAA violations. The HITECH Act also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney fees and costs associated with pursuing federal civil actions. The 2013 final HITECH omnibus rule modified the breach reporting standard in a manner that made more data security incidents qualify as reportable breaches. Additionally, certain states have adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.

If we are determined to be out of compliance with existing or new laws and regulations related to patient health information, we could be subject to criminal or civil sanctions. New health information standards, whether implemented pursuant to HIPAA, the HITECH Act, congressional action or otherwise, could have a significant effect on the manner in which we handle healthcare related data and communicate with payors, and the cost of complying with these standards could be significant.
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Any liability from a failure to comply with the requirements of HIPAA or the HITECH Act could adversely affect our results of operations and financial condition. The costs of complying with privacy and security related legal and regulatory requirements are burdensome and could have a material adverse effect on our results of operations.

Regulations requiring the use of “standard transactions” for healthcare services issued under HIPAA may negatively affect our profitability and cash flows.

Pursuant to HIPAA, final regulations have been implemented to improve the efficiency and effectiveness of the healthcare system by facilitating the electronic exchange of information in certain financial and administrative transactions while protecting the privacy and security of the information exchanged.

The HIPAA transaction standards are complex, and subject to differences in interpretation by third-party payors. For instance, some third-party payors may interpret the standards to require us to provide certain types of information, including demographic information not usually provided to us by physicians. As a result of inconsistent application of transaction standards by third-party payors or our inability to obtain certain billing information not usually provided to us by physicians, we could face increased costs and complexity, a temporary disruption in accounts receivable and ongoing reductions in reimbursements and net revenue. Changes and updates to HIPAA transaction standards could prove technically difficult, time-consuming or expensive to implement, all of which could harm our business.

Regulatory requirements under Proposition 65 could adversely affect our business.

We are subject to California’s Proposition 65, or Prop 65, which requires a specific warning on any product that contains a substance listed by the State of California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level. Prop 65 required that all businesses must be in compliance by August 30, 2018 with new regulations that require modifications to product warnings and for businesses to coordinate with upstream vendors or downstream customers for the 800+ regulated chemicals in consumer products and assess whether new occupational exposure warnings need to be posited in California facilities. We have taken steps to add warning labels to our products packaged in California and manufactured after August 30, 2018. Although we cannot predict the ultimate impact of these requirements, they could reduce overall consumption of our products or leave consumers with the perception (whether or not valid) that our products do not meet their health and wellness needs, all of which could adversely affect our business, financial condition and results of operations.

We are subject to evolving laws, regulations, and other obligations related to privacy, data protection, and information security, and our actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability or otherwise adversely affect our business, financial condition, and operating results.

The regulatory frameworks for privacy, data protection, and information security issues worldwide are rapidly evolving and likely to remain uncertain for the foreseeable future. The U.S. federal and various state, local, and foreign government bodies and agencies have adopted or are considering adopting laws and regulations governing the collection, distribution, use, disclosure, storage, security, and other processing of personal information.

For example, California adopted the California Consumer Privacy Act (CCPA), which became effective in January 2020. The CCPA establishes a privacy framework for covered businesses, including an expansive definition of personal information and data privacy rights for California residents. The CCPA includes a framework with potentially severe statutory damages and private rights of action. Additionally, a new privacy law, the California Privacy Rights Act (CPRA), was approved by California voters in the November 2020 election and went into effect on January 1, 2023. The CPRA significantly modifies the CCPA, potentially resulting in further uncertainty. Other states have begun to propose and enact similar laws. The U.S. federal government also is contemplating federal privacy legislation. Compliance with these laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms to comply with such laws and regulations.

The collection and use of health data and other personal data is governed in the EU by the General Data Protection Regulation (GDPR), which imposes substantial obligations upon companies and rights for individuals, and by certain EU member state-level legislation. Failure to comply with the GDPR may result in fines up to the greater of €20,000,000 or 4% of the total worldwide annual turnover of the preceding financial year. The UK has implemented legislation similar to the GDPR, referred to as the UK GDPR, which provides for fines of up to the greater of £17.5 million or 4% of global turnover. Many other jurisdictions globally are considering or have enacted legislation providing for local storage of data or otherwise imposing privacy, data protection, and data security obligations in connection with the collection, use, and other processing of personal data. As a general matter, compliance with laws, regulations, contractual obligations, and other actual and asserted obligations,
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such as industry standards, and any rules or guidance from self-regulatory organizations, relating to privacy, data protection, and data security that apply, or are asserted to apply, to our operations may result in substantial costs and may necessitate changes to our policies and practices, which may compromise our growth strategy, adversely affect our ability to acquire customers, and otherwise adversely affect our business, results of operations, and financial condition.

With laws, regulations, and other obligations relating to privacy, data protection, and information security imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other obligations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices. We also may incur significant costs and expenses in an effort to do so. Additionally, if third parties we work with, such as contractors or service providers, violate applicable laws or regulations or our policies, such violations may also put our data at risk and could in turn have an adverse effect on our business. Any failure or perceived failure by us or our contractors or service providers to comply with our applicable policies or notices, our contractual or other obligations to third parties, or any of our other actual or asserted legal obligations relating to privacy or data protection, may result in governmental investigations or enforcement actions, litigation, claims, and other proceedings, harm our reputation, and could result in significant liability. Any such event may adversely affect our business, operating results, and financial condition.

We are subject to cybersecurity risks to our systems, infrastructure, and technology, and data processed by us or third-party vendors.

Our business and operations involve the collection, storage, transmission, and other processing of personal data and certain other sensitive and proprietary data. Numerous organizations have disclosed breaches of their information security systems and other information security incidents, some of which have involved sophisticated and highly targeted attacks. We have been and may in the future be a target for cybersecurity attacks designed to disrupt our operations or to attempt to gain access to our systems, data processed or maintained in our business, trade secrets, or other proprietary information or financial resources. Many of our personnel work remotely all or part of the time, which increases certain security risks. In addition, the risk of state-supported and geopolitical-related cybersecurity attacks is believed to be heightened in connection with the war in Ukraine and any related political or economic responses and counter-responses.

We are at risk for interruptions, outages, and breaches of our operational systems, including business, financial, accounting, product development, data processing or production processes, as well as our security systems, in-product software and technology, and customer data. We use third parties to process some data on our behalf, and they face similar security risks. Because techniques used to obtain unauthorized access to or to sabotage information systems change frequently and may not be known until launched against a target, we and the third parties on which we rely may be unable to anticipate or prevent these attacks, react in a timely manner or implement adequate preventive measures, and we may face delays in our detection or remediation of, or other responses to, security breaches and other privacy-and security-related incidents. Such incidents could materially disrupt our systems, result in loss of intellectual property and misappropriation of trade secrets or other proprietary or competitively sensitive information, compromise the confidentiality, security, and integrity of our information, including employees’ personal information, and information of customers or others, jeopardize the security of our facilities, or affect the performance of our products. The loss, corruption, or unavailability of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the impacted data. Certain efforts may be state-sponsored or supported by significant financial and technological resources, making them even more difficult to detect, remediate and otherwise respond to.

Although we have implemented and are in the process of implementing additional systems and processes that are designed to protect our data and systems within our control, prevent data loss, and prevent other security breaches and security incidents, these measures cannot guarantee security. The systems and infrastructure used in our business may be vulnerable to cyberattacks or security breaches or incidents, and third parties may be able to access data, including personal data and other sensitive and proprietary data or other sensitive and proprietary data, or such data otherwise may be subject to unauthorized use, disclosure, unavailability, modification, or other processing. Employee error, malfeasance or other errors in the storage, use or transmission of any of these types of data could result in an actual or perceived privacy or security breach or other security incident.

Any security breach or security incident impacting our systems or infrastructure, or data we or third parties on which we rely maintain or otherwise process, or any outages or other disruptions to systems used in our business, could interrupt our operations and result in the loss of or improper access to, or acquisition or disclosure of, data or a loss of intellectual property protection. Any such breach or incident, or the perception it has occurred, also may harm our reputation and competitive position, harm our product development and regulatory approval efforts, reduce demand for our products, damage our relationships with customers, partners, collaborators or others, and result in claims, demands, litigation, regulatory investigations and proceedings and significant legal, regulatory and financial exposure. Any such event may adversely affect
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our business, operating results, and financial condition. We expect to incur significant costs in an effort to detect and prevent privacy and security breaches and other privacy- and security-related incidents, and may face increased costs and requirements to expend substantial resources in the event of an actual or perceived privacy or security breach or other incident.
While we maintain insurance that may cover certain liabilities in connection with certain disruptions, security breaches, and incidents, our insurance policies may not be adequate to compensate us for the potential losses arising from any disruption in or, failure or security breach or incident of or impacting our systems or third-party systems where information important to our operations or product development is stored or processed. In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all. Further, our insurance may not cover all claims made against us and could have high deductibles in any event, and defending a suit, regardless of its merit, could be costly and divert management attention.

Product Liability Risks

Our products may become subject to voluntary or involuntary recall.
The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture or in the event that a product poses an unacceptable risk to health. In addition, manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. To date, we have initiated only one field action in which we voluntarily accelerated our maintenance schedule based on field usage.
When a medical human exoskeleton is used by a paralyzed individual to walk, the individual relies completely on the exoskeleton to hold them upright. There are many exoskeleton components that, if they were to fail catastrophically, could cause a fall resulting in severe injury or death of the patient. Certain of our competitors have reported injuries caused by the malfunction of human exoskeleton devices (in at least one case to the FDA). Injuries caused by the malfunction or misuse of human exoskeleton devices, even where such malfunction or misuse occurs with respect to one of our competitor’s products, could cause regulatory agencies to implement more conservative regulations on the medical human exoskeleton industry, which could significantly increase our operating costs.
Similarly, when an industrial exoskeleton is used by a healthy individual - for example to operate heavy machinery overhead - malfunction of the device at an inopportune moment could result in severe injury or death of the person using the device. Such occurrences could result in regulatory action on the part of OSHA or its foreign counterparts.
Any future recalls of any of our products could divert managerial and financial resources, impair our ability to manufacture our products in a cost-effective and timely manner, and have an adverse effect on our reputation, results of operations and financial condition. In some circumstances, such adverse events could also cause delays in new product approvals. We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits.
In addition, personal injuries relating to the use of our products could also result in product liability claims being brought against us. Any product liability claim brought against us, with or without merit, could result in substantial damages, be costly and time-consuming to defend and could increase our insurance rates or prevent us from securing insurance coverage in the future.
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Our product liability insurance may not adequately cover potential claims or recalls.
The testing, manufacture, marketing and sale of medical devices and industrial products entail the inherent risk of liability claims or product recalls. Although we maintain product liability insurance, the coverage is subject to deductibles and limitations, and may not be adequate to cover future claims. A successful product liability claim or product recall could inhibit or prevent the successful commercialization of our products, cause a significant financial burden on us, or both, which in either case could have a material adverse effect on our business and financial condition.

Warranty claims and our accelerated maintenance program results in additional operating costs to us.
Sales of our EksoNR and EksoGTEkso Indego products generally include a one-year warranty for parts and services in the U.S.United States and a two-year warranty in Europe, the Middle East and Africa.EMEA. We also generally provide customers with an option to purchase an extended warranty for up to an additional three to four years. The costs associated with such warranties, including any warranty-related legal proceedings, could have a material adverse effect on our results of operations, cash flows and liquidity. As we enhance our product and in an effort to build our brand and drive adoption, we have elected to incur increased service expenses related to an accelerated maintenance program, field corrections and the implementation of technological improvements developed subsequent to many of our units being placed into service, sometimes outside of its warranty and contractual obligations. Continuation of these activities could have a material adverse effect on our results of operations, cash flows and liquidity.
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Risks Related to Ownership of Common Stock

You may be diluted from future issuances of our equity securities, including from compensatory equity awards, exercise of outstanding warrants, or issuances of securities in financing or strategic transactions, and such issuances, or perception that such issuances may occur, could depress the market price of our common stock.

Future operating or business decisions may cause dilution to our stockholders. For example, we may sell equity securities or issue securities exercisable or convertible into shares of our common stock in connection with strategic transactions or for financing purposes, including under an At The Market Offering Agreement we entered into in October 2020 with H.C. Wainwright & Co., LLC ("Wainwright") or otherwise through our “shelf” registration statement on Form S-3 (File No. 333-239203) which was declared effective by the SEC on June 26, 2020. While in 2020,. Through Fenruary 28, 2023, we sold no shares of common stock under our “at the market offering” program, but from year-end to February 25, 2021, we sold $0.8 million of common stock under the program, leavinghave $6.7 million available for future offerings under our current prospectus for the offering. After giving effect to our public offering in February 2021, registered warrant transactions and potential sales under our prospectus for the “at the market offering” program, approximately $16.7 million of registered securities are available for issuance under our shelf registration statement.. We havemay also registered all of the shares of common stock that we may issue pursuant to the exercise of 0.5 million stock options and settlement of 0.1 million restricted stock units outstanding as of December 31, 2020 and grantedmake equity grants under our Amended and Restated 2014 Incentive Plan (the “Incentive Plan”), the 1.1 million shares reserved for future issuance under the Incentive Plan, and all of the 0.5 million shares of common stock that we may issue in the future under our Employee Stock Purchase Plan. You may also be subject to dilution from the exercise or settlement of outstanding options or restricted stock units under the Incentive Plan, and from the exercise of warrants, with respect to which as of February 25, 2021, 1.0 million were exercisable at a weighted average exercise price of $6.63 per share.our warrants. In addition, sales or issuances of a substantial number of shares of our common stock, or other equity-related securities in the public markets, or the perception that such sales or issuances could occur, could depress the market price of our common stock.

We do not expect, nor do our historical operating results suggest, that cash flows generated from operations will be sufficient to meet our material cash requirements in the long term. Management expects that our historical reliance on external financing, from both equity and debt financings, will continue to provide the capital necessary to meet our material cash requirements in the long term. Management has not yet determined the form such additional financing may take, but management expects that the most likely forms include one or more of the following: (i) underwritten offerings of shares of our common stock, (ii) sales of shares of our common stock under an "at the market" offering program, (iii) incurring indebtedness with one or more financial institutions, and (iv) the factoring of trade receivables.

The ability of our Board of Directors to issue additional stock may prevent us from making more difficult transactions, including a sale or merger.
Our Board of Directors is authorized to issue up to 10 million shares of preferred stock with powers, rights and preferences designated by it. Shares of voting or convertible preferred stock could be issued, or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of us. The ability of the Board of Directors to issue such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of us by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price that such an attempt could cause. Moreover, the issuance of such additional shares of preferred stock to persons friendly to the Board of Directors could make it more difficult to remove incumbent officers and directors from office even if such change were to be favorable to stockholders generally.

We have never paid and do not intend to pay cash dividends.
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Cash dividends have never been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their shares of common stock. If we do not pay dividends, our common stock may be less valuable because a return on investment will only occur if our stock price appreciates

The market price of our common stock has been, and may continue to be, highly volatile.
During the period from our initial listing on Nasdaq on August 9, 2016 through December 31, 2020,2022, the closing price of our common stock fluctuated from a high of $93.15 per share to a low of $2.54$1.04 per share (on a split-adjusted basis), and our stock price continues to fluctuate. The market price of our common stock may continue to fluctuate significantly in response to numerous factors, some of which are beyond our control, such as our ability to grow our revenue and customer base; the announcement of new products or product enhancements by us or our competitors; developments concerning regulatory oversight and approvals; variations in our and our competitors’ results of operations; changes in earnings estimates or recommendations by securities analysts, if our common stock is covered by analysts; successes or challenges in our collaborative arrangements or alternative funding sources; developments in the rehabilitation and industrial robotics markets; the results of product liability or intellectual property lawsuits; future issuances of common stock or other securities; the addition or departure of key personnel; announcements by us or our competitors of acquisitions, investments or strategic alliances; and general market conditions and other factors, including factors unrelated to our operating performance.performance or otherwise disclosed herein.
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Trading of our common stock is limited, which may affect our stock price.
Trading of our common stock is currently conducted on Nasdaq. The liquidity of our common stock is limited, not only in terms of the number of shares that can be bought and sold at a given price, but also as it may be adversely affected by delays in the timing of transactions and low coverage by research analysts’analysts and the media, if at all. These factors may result in different prices for our common stock than might otherwise be obtained in a more liquid market and could also result in a larger spread between the bid and asked prices for our common stock. In addition, without a large public float, our common stock is less liquid than the stock of companies with broader public ownership, and, as a result, the trading prices of our common stock may be more volatile. In the absence of an active public trading market, an investor may be unable to liquidate his or her investment in our common stock. Trading of a relatively small volume of our common stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger. Additionally, sales by stockholders of substantial amounts of our shares of common stock, the issuance of new shares of common stock by us or the perception that these sales may occur in the future could materially and adversely affect the market price of our common stock, and you may lose all or a portion of your investment in our common stock.

Item 1B.    UNRESOLVED STAFF COMMENTS

None.

Item 2.    PROPERTIES

Our principal executive offices are currently located at 1414 Harbour Way South,101 Glacier Point, Suite 1201, Richmond, CA 94804,A, San Rafael, California, 94901, where we leasedlease approximately 45,00017,000 square feet. The RichmondSan Rafael office serves as headquarters for our medical device and industrial device sales segments. In addition,We currently lease manufacturing facilities in Macedonia, Ohio from Parker Hannifin Corporation to support the production and service of the Ekso Indego product lines. Outisde of the United States, we lease approximately 1,4003,000 square feet of office space at Friesenweg 4, House 13, 4th floor, 22763 Hamburg, Germany for our European headquarters.

We do not own any real property.

Item 3.    LEGAL PROCEEDINGS

From time to time we may be involvedare subject to legal proceedings and claims arising in litigation thatthe ordinary course of business. Based on our current knowledge, we believe is of the type common to companies engaged in our line of business, including intellectual property and employment issues. While the outcome of these other claims cannot be predicted with certainty, we do not believe that the outcomeamount or range of any of these other legal mattersreasonably possible losses will not, either individually or in the aggregate, have a material adverse effect on our business, results of operations, or financial conditioncondition.

The results of any litigation cannot be predicted with certainty, and an unfavorable resolution in any legal proceedings could materially affect our future business, results of operations, or cash flows.financial condition. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. For additional information, please refer to Note 16. Commitments and Contingencies in our notes to the consolidated financial statements.

Item 4.    MINE SAFETY DISCLOSURES

Not applicable.

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PART II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Dividend Policy

Our common stock has been traded on the Nasdaq Capital Market under the symbol “EKSO” since August 9, 2016. Prior to August 9, 2016, our common stock was eligible for quotation and traded on the OTC Market. The quotation of our common stock on the OTC market began on or about January 16, 2014. The closing price of EKSO stock as of February 19, 2021March 23, 2023 was $9.22.$1.47.

As of February 19, 2021,March 23, 2023, we had approximately 185175 stockholders of record of our common stock. This number does not include stockholders whose shares are held in investment accounts by other entities. We believe that the actual number of stockholders is greater than the number of holders of record.

We have never declared or paid cash dividends on our common stock and do not intend to pay cash dividends in the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, restrictions imposed by financing arrangements, if any, legal and regulatory restrictions on the payment of dividends, current and anticipated cash needs and other factors the board of directors deems relevant. 

Securities Authorized for Issuance Under Equity Compensation Plans

See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K for information regarding securities authorized for issuance under equity compensation plans.

Item 6.         SELECTED FINANCIAL DATAUnregistered Sales of Equity Securities

Not applicable.None.

Issuer Purchases of Equity Securities

None.

Item 6.         RESERVED


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Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TheYou should read the following discussion containsand analysis of our financial condition and results of operations together with the consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion and other parts of this Annual Report on Form 10-K contain forward-looking statements. Actualthat involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions, which are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results maycould differ significantlymaterially from those projecteddiscussed in theor implied by these forward-looking statements. Factors that mightcould cause future resultsor contribute to differ materially from those projected in the forward-looking statementssuch differences include, but are not limited to, those discussed in "Risk Factors" and elsewhere inthe section of this Annual Report. See also "Cautionary Note Regarding Forward-Looking Statements."

On MarchReport on Form 10-K titled “Risk Factors.” For a discussion related to the results of operations for 2021 compared to 2020, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2020, we effected a one-for-fifteen reverse stock split, or the Reverse Stock Split, reducing the number of our common shares outstanding on that date from 87.4 million shares to approximately 5.8 million shares. Additionally, the exercise price and number of all outstanding options and warrants, and the number of shares reserved for future issuance pursuant to our equity compensation plan were all adjusted proportionately. All such amounts presented herein have been adjusted retroactively to reflect these changes. The number of the Company’s authorized shares were not proportionately reduced in the Reverse Stock Split and remain at 141,428,571 shares.2022.

Overview

The following discussion highlights the results of our operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of our financial condition and results of operations presented herein. The following discussion and analysis is based on our audited consolidated financial statements contained in this Annual Report on Form 10-K, which have been prepared in accordance with generally accepted accounting principles in the United States. You should read the discussion and analysis together with such financial statements and the related notes thereto.

COVID-19

In March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic. In response to this pandemic, public health officials and governments across the world have recommended and mandated actions to curb the spread of the SARS-COV-2 virus, the pathogen that causes COVID-19. The COVID-19 pandemic and the related responses to the pandemic have caused a significant adverse impact on the global economy, including disruptions to supply chains, sharp increases in unemployment and overall economic uncertainty.

This pandemic has negatively impacted our business, including our employees, suppliers, customers and other business partners, resulting in our terminating 23 employees in 2020. We have seen demand for our exoskeleton products decrease in the current business environment, as many inpatient rehabilitation facilities temporarily shift priorities and delay capital expenditures, resulting in 61 units booked (non-cancellable customer orders) in 2020 compared to 98 in 2019, a decrease of 38%. We have seen that the clinical need has not diminished as more data is coming out about the increase prevalence of strokes during this pandemic. As such, we continue to engage with our current and prospective customers through video conferencing, virtual training events and online education demos to offer our support and showcase the value of our Ekso devices. Although market uncertainties related to the pandemic make it difficult for us to project the full impact on our business and customers, we believe that we are well-positioned to serve our customers when business conditions begin to normalize.

We continue to instruct the majority of our employees to work from home, restrict non-critical business travel and have enhanced the use of personal protective equipment in our facilities.

We are hopeful that COVID cases and hospitalizations will continue to decrease, and now that our clinical team is fully vaccinated and are active onsite at rehab centers, we expect to see an uptick in live in-person interactions going forward. In fact, we are now close to the number of onsite demos in the first quarter of 2021 compared to the previous three quarters combined. While we are cautiously optimistic about the current COVID outlook, the successful completion of our first virtual training sessions leave us well-positioned to address existing pipeline opportunities, mitigating the effects of future COVID-related lock downs or travel restrictions.

Management continues to actively monitor the global situation and its effects on our financial position and operations.

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Our Business

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

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

EksoHealth

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

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

EksoUE is a wearable upper body exoskeletonEksoHealth expanded its product offerings to include Ekso Indego Therapy and Ekso Indego Personal with the HMC acquisition in the fourth quarter of 2022. The Ekso Indego devices are FDA-cleared lower-limb powered exoskeletons that is also used as a tool during rehabilitation. EksoUE is designedenable task-specific, overground gait training to assists patients with weakness or paralysis in their lower extremities. Ekso Indego Personal, a broad rangelight-weight exoskeleton for safe use in most home and community environments, and Ekso Indego Therapy, an adjustable exoskeleton for patients with spinal cord injury and stroke, address market opportunities across the continuum of upper extremity impairmentscare, particularly within outpatient facilities, complementary to those most typically addressed by the EksoNR, expanding Ekso’s product offering to home and aims to provide them with a wider active range of motion and increased endurance for rehabilitation sessions of higher intensity.community use markets.

EksoWorks

EksoWorks is our business unit focused on developing, marketing, and selling exoskeletons and other assistive tools for industrial applications. The target users for these devices are generally able-bodied, and as such the goal of these products is to reduce fatigue for workers. The benefits of fatigue reduction can include reduced rates of injuries, higher productivity, higher worker morale, and lower turnover. Currently, we primarily sell these products primarily directly to companies that deploy them for use in their operations.

Within EksoWorks we have two main categories
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EVO, our wearable upper body exoskeleton, products includesupersedes the EksoVest and the new EVO, both of whichas our primary product designed to support the weight of a worker’s arms and tools, reducing the fatigue associated with working at or above shoulder height for extended periods. These products areIn 2022 the EksoWorks unit refocused its product offerings and go to market strategies, placing increased emphasis on EVO and its placement into large industrial settings within our identified target markets. We believe EVO has industrial applications across a broad range of market verticals, and the unit is currently targeted attargeting end markets in Manufacturing, Aerospace, Construction,aerospace, automotive, manufacturing, commercial construction, and Food Processing.renewable energy.

Prior to ceasing commercialization of the EksoZeroG is asupport arm and related products and accessories, at the end of the second quarter of 2022, we manufactured and sold our EksoZeroG tool holder, that canwhich could mount on an aerial lift platform or scaffolding. This effectively reduces the weight of heavy tools as felt by the operator. EksoZeroG has been sold primarily through rental companies into the construction market.

2022 Operational and Financial Highlights
In 2020, we booked a total of 61 EksoGT and EksoNR units, 19 of which were subscription units and 9 of which were previously rented units that were converted to sales.
We recorded annual gross margins of approximately 57% in 2020, compared to 49% in 2019.Completed the HMC Acquisition including the Indego product line
In February 2020, we announced the worldwide launchBooked a total of our upgraded EksoPulse platform, an innovative cloud-based information technology platform that measures and analyzes progress using the EksoNR robotic exoskeleton. The improved analytics system provides an easy-to-use dashboard to chart activity100 EksoHealth devices units in rehabilitation sessions, enhancing the clinician, institutional, and patient experience of the most clinically used exoskeleton. 2022
In June 2020, we received FDA clearance toGenerated revenue of $12.9 million for the 2022 full year, an increase of 15%
Strong cash position of $20.5 million as of December 31, 2022


Economic and Industry Trends

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

The current economic environment is impacting our customers financially and operationally. Hospitals are experiencing staffing shortages and supply chain issues that affect their ability to provide patient care. Additionally, hospitals are facing significant financial pressure as supply chain constraints and inflation drive up operating costs and fiscal stimulus programs enacted during the COVID-19 pandemic wind down. As a consequence of the financial pressures and decreased profitability, some hospitals have indicated that they are lowering their capital investment plans and tightening their operational budgets. We believe that these factors could contribute to a reduced demand for our offerings, particularly in the United States, which may have a material adverse effect on our business, financial condition, results of operations, or cash flows.

We believe the clinical need for our products has not diminished, as evidenced by clinical data showing the increased prevalence of strokes during the pandemic. We continue to engage with acquired brain injury patientsour current and prospective customers both onsite and virtually through video conferencing, virtual training events and online education demos to offer our support and showcase the value of our Ekso devices. While the impacts of the COVID-19 pandemic are starting to dissipate, it is possible a resurgence of COVID-19 could result in adverse effects on our business, financial condition, and results of operations in the future.


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Also in June 2020, we were named “Best Healthcare Robotics Company” in 2020 MedTech Breakthrough Awards Program
In August 2020, we launched EVO, an endurance-boosting assistive upper body exoskeleton designed for industrial use.
2020 Financing Activities
In April 2020, we received proceedsResults of a $1.1 million unsecured loan under the Paycheck Protection Program, or the PPP.
In June 2020, we sold 1,747,704 shares of our common stock and warrants to purchase up to 873,852 shares of our common stock, or June 2020 Investor Warrants, at a combined public offering price of $4.51 per share for proceeds, net of expenses and underwriting discount and commission, of $7.1 million.
In August 2020, we paid off the entire amount of $1.5 million of the Company's indebtedness to Western Alliance Bank with proceeds from a new loan of $2.0 million from Pacific Western Bank. The terms of the new loan agreement include monthly interest-only payments over the next three years.
During the year ended December 31, 2020, we received $3.3 million in proceeds from the exercise of 723,426 warrants.
Subsequent to year end, we received estimated net proceeds of $36.4 million from an underwritten public offering, $1.4 million from warrant exercises, and $0.7 million from sales under our "at the market offering" program. Refer to Note. 18 in the notes to our consolidated financial statements under the caption Subsequent Events.Operations

Critical Accounting Policies, Estimates, and Judgments

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparationConsolidated Results of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified below that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.

Revenue Recognition

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

Our EksoHealth segment revenue is primarily generated through the sale and rental of our EksoNR and associated software (SmartAssist and VariableAssist), EksoUE, sale of accessories, and support and maintenance contracts (Ekso Care). Revenue from EksoHealth 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 our facility for sales of our EksoNR, software, and accessories. Ekso Care support and maintenance contracts extend coverage beyond our standard warranty agreements. The separately priced Ekso Care contracts range from 12 to 48 months. We receive payment at the inception of the contract and recognize revenue over the term of the agreement. Revenue from medical device rentals is recognized over the lease term, typically over 12 months.

Our EksoWorks segment revenue is generated by the sales of our EksoVest, EksoZeroG and EVO. Revenue from EksoWorks 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 our facility. 

Inventory valuation

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Inventories are recorded at the lower of cost or net realizable value. Cost is computed using standard cost, 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, or 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. We periodically evaluate 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 to the consolidated statements of operations and comprehensive loss. Our estimate of write-downs for excess and obsolete inventory is based on a detailed analysis of on-hand inventory and purchase commitments in excess of forecasted demand.  Subsequent disposals of inventories are recorded as a reduction of an inventory reserve.

Stock-based Compensation

We measure stock-based compensation expense for certain stock-based awards made to employees and directors based on the estimated fair value of the award on the date of grant using the Black-Scholes option-pricing model, or the Black-Scholes Model, and recognize the fair value on a straight-line basis over the requisite service periods of the awards.

Our determination of the fair value of stock options on the date of grant using the Black-Scholes Model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. We adopted the simplified method of estimating the expected term pursuant to SEC Staff Accounting Bulletin Topic 14. On this basis, we estimate the expected term of options granted by taking the average of the vesting term and the contractual term of the option.

We have, from time to time, modified the terms of stock options granted to our employees. We account for the incremental increase in the fair value over the original award on the date of the modification as an expense for vested awards or over the remaining service (vesting) period for unvested awards. The incremental compensation cost is the excess of the fair value based measure of the modified award on the date of modification over the fair value of the original award immediately before the modification.

Warrant Valuation

We generally account for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include a conditional obligation to issue a variable number of shares or there is a deemed possibility that we may need to settle the warrants in cash.

Where there is a possibility that we may have to settle warrants in cash, we estimate the fair value of the issued warrants as a liability at each reporting date and record changes in the estimated fair value as a non-cash gain or loss in the consolidated statements of operations and comprehensive loss. The fair values of these warrants have been determined using the Black-Scholes option-pricing model (the “Black-Scholes Model”) and the Binomial Lattice model (the “Lattice Model”). The Black-Scholes Model requires inputs, such as the expected volatility, expected term, exercise price, risk-free interest rate, and the value of the underlying security. The Lattice Model provides for assumptions regarding expected volatility, expected term, exercise price, risk-free interest rates, the value of the underlying security, and the probability of and likely timing of a specific event within the period to maturity. These values are subject to a significant degree of judgment on our part. Our common stock price represents a significant input that affects the valuation of our warrants.

Going Concern
We assess our ability to continue as a going concern at every interim and annual period in accordance with Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements – Going Concern. The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern.
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Comparison of the year endedOperations: December 31, 20202022 compared to the year ended December 31, 20192021 (dollars in thousands):

Years ended December 31,Years ended December 31,
20202019Change% Change20222021Change% Change
RevenueRevenue$8,882 $13,917 $(5,035)(36)%Revenue$12,912 $11,246 $1,666 15 %
Cost of revenueCost of revenue3,812 7,153 (3,341)(47)%Cost of revenue6,698 4,497 2,201 49 %
Gross profitGross profit5,070 6,764 (1,694)(25)%Gross profit6,214 6,749 (535)(8)%
Gross profit %Gross profit %57 %49 %Gross profit %48 %60 %
Operating expenses:Operating expenses:Operating expenses:
Sales and marketingSales and marketing7,752 11,398 (3,646)(32)%Sales and marketing7,157 7,305 (148)(2)%
Research and developmentResearch and development2,474 4,596 (2,122)(46)%Research and development3,626 2,549 1,077 42 %
General and administrativeGeneral and administrative7,702 7,409 293 %General and administrative10,987 10,723 264 %
Impairment of goodwill189 — 189 
nm(1)
Restructuring244 — 244 
nm(1)
Total operating expensesTotal operating expenses18,361 23,403 (5,042)(22)%Total operating expenses21,770 20,577 1,193 %
Loss from operationsLoss from operations(13,291)(16,639)3,348 (20)%Loss from operations(15,556)(13,828)(1,728)12 %
Other (expense) income, net:Other (expense) income, net:Other (expense) income, net:
Interest expenseInterest expense(139)(384)245 (64)%Interest expense(156)(113)(43)38 %
Finance cost associated with warrant issuance(329)(1,096)767 (70)%
(Loss) gain on warrant liabilities(3,056)6,376 (9,432)
nm(1)
Loss on modification of warrants— (257)257 
nm(1)
Other income (expense), net990 (132)1,122 
nm(1)
Total other (expense) income, net(2,534)4,507 (7,041)(156)%
Gain on revaluation of warrant liabilitiesGain on revaluation of warrant liabilities1,317 3,962 (2,645)
nm(1)
Gain on forgiveness of note payableGain on forgiveness of note payable— 1,099 (1,099)
nm(1)
Unrealized loss on foreign exchangeUnrealized loss on foreign exchange(655)(867)212 (24)%
Other expense, netOther expense, net(30)(17)(13)
nm(1)
Total other income, netTotal other income, net476 4,064 (3,588)(88)%
Net lossNet loss$(15,825)$(12,132)$(3,693)30 %Net loss$(15,080)$(9,764)$(5,316)54 %
(1) Not meaningful

Revenue

Revenue decreased $5.0increased $1.7 million, or 36%15%, for the year ended December 31, 2020,2022, compared to the same period of 2019.2021. This decreaseincrease was comprised of a $3.9$2.1 million increase in EksoHealth revenue, partially offset by a $0.4 million decrease in EksoWorks. The increase in EksoHealth and a $1.1 million decrease in EksoWorksrevenue is primarily due to a decreasean increase in the volume of medical device sales driven byin the impactAmericas and EMEA regions for the EksoHealth reporting segment as a result of partially normalizing business conditions from the COVID-19 pandemic, particularly in the EMEA region. EksoWorks revenue decreased due to a lower volume of device sales as our customers shifted their prioritiesthe unit temporarily rescaled its sales and marketing resources while it refocuses and refines its market approach.

The Indego product line was acquired in December 2022. As such, the inputs from that product line were not meaningful to prepare for and manage their business during the pandemic.EksoHealth revenue in 2022.

Gross Profit and Gross Margin

Gross profit decreased $1.7$0.5 million, or 25%8%, for the year ended December 31, 2020,2022, compared to the same period of 2019, primarily attributable2021, due to a decreased volume$2.2 million increase in the cost of device sales. revenue as compared to the same period of 2021.

Gross margin wasdeclined to approximately 57%48% for the year ended December 31, 2020,2022, compared to a gross margin of 49%60% for the same period in 2019.2021. Gross margins increaseddeclined across both reporting segments, EksoHealth and EksoWorks, with the decline primarily due to higherdriven by inflationary pressures throughout the supply chain, elevated labor costs, and lower average selling prices for EksoNR, an increased proportion of medical device sales for both segments.

Based on management's assessment of revenue per device, service selling prices and associated cost of sales for products and revenue streams in overall revenue composition, lower unit production costs, the introductionrecently added Indego product line, we do not expect our gross margin to deviate meaningfully from historical results as a result of EVO, and higher service margins.the HMC Acquisition.
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Operating Expenses

Sales and marketing expenses decreased $3.6$0.1 million, or 32%2%, for the year ended December 31, 2020,2022, compared to the same period of 2019, primarily due to a decrease in employee compensation expenses2021, as a result of a furlough and a reduction in forcelower compensation costs from the departure of our former Chief Commercial Officer in March 2022, With the HMC Acquisition, we added significant headcount related to sales and May 2020, respectively, lower selling expense asmarketing activities, which we shifted to video conferencing, virtual training eventsexpect will result in an increase in our sales and online education demonstrations, lower general marketing and trade show activities, andexpenses for periods following the absence of clinical trials expense due to the completion of our main clinical trial in the first quarter of 2019.acquisition.

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Research and development expenses decreased $2.1increased $1.1 million, or 46%42%, for the year ended December 31, 2020,2022, compared to the same period of 2019,2021, primarily due to a decreasean increase in employeeproduct development activity for next generation products which drove an increase in compensation, outside services, and material usage expenses. With the HMC Acquisition, we added significant headcount related to research and development activities, and expanded our commercialized product portfolio and our pipeline of products currently under development. These additions, in conjunction with our ongoing development activities are expected to result in an increase in our research and development expenses as a result of a furlough and a reduction in force in March and May 2020, respectively, and a decrease in patent and licensing costs.for periods following the acquisition.

General and administrative expenses increased $0.3 million, or 4%2%, for the year ended December 31, 2020,2022, compared to the same period of 2019,2021, primarily due to increased compensation and benefits expense, one time expenses for severance costs related to the departure of our Chief Executive Officer in January 2022, and costs related to the relocation of our corporate headquarters and manufacturing facility. These increases were partially offset by a decrease in legal and consulting expenses incurred in connection with business development activities. With the HMC Acquisition, we added headcount related to general and administrative activities, which we expect will result in an increase in legal expense.

Goodwill impairment charge of $0.2 million was recorded inits general and administrative expenses for periods following the year ended December 31, 2020, reducing the goodwill balance to zero. No goodwill impairment charge was recorded in 2019.

Restructuring expense of $0.2 million was recorded in the year ended December 31, 2020, and related to the completion of a restructuring plan in May of 2020. We streamlined our operations and reduced our workforce by approximately 35% to lower operating expenses and reduce cash burn. The restructuring expense consisted of employee severance payments.

The reduction in operating expenses reflects the continuation of the company-wide initiatives we implemented last year, the restructuring completed in May 2020, as well as improving overall operational efficiencies. Our focus remains on optimizing the cost structure of our organization.acquisition.

Other (Expense) Income, Net

Interest expense decreased $0.2 million, or 64% for the year ended December 31, 2020, compared to the same period of 2019, primarily due to lower effective interest rates on our term loans.

LossGain on revaluation of warrant liabilities of $3.1$1.3 million for the year ended December 31, 2020,2022, was associated with the revaluation of warrants issued in 2015, 2019, 2020 and 2020.2021. Gain on revaluation of warrant liabilities of $6.4$4.0 million for the year ended December 31, 2019,2021, was related to warrants issued in 20152019, 2020 and 2019.2021. Gains and losses on revaluation of warrants are primarily driven by changes in our stock price.

LossGain on modificationforgiveness of warrantsnote payable of $0.3$1.1 million was recorded for the year ended December 31, 2021, as a result of the PPP loan forgiveness approval we received from our lender and the U.S. Small Business Administration in June 2021. There was no comparable amount for the same period of 2022.

Unrealized loss on foreign exchange was $0.7 million for the year ended December 31, 2019, was due to the reduction of the exercise price of the 2015 Warrants from $56.10 per share to $41.25 per share, in connection with an amendment of the 2015 Warrant Agreement, which retroactively removed a provision from such securities purchase agreement that prohibited the Company from effecting or entering into an agreement to effect any issuance by the Company of its common stock at a price determined based on the trading price of the Company’s common stock or otherwise at a future determined price. There was no comparable amount during the same period in 2020.

Warrant issuance expense of $0.3 million for the year ended December 31, 2020 was recorded in connection with our private placement offerings of warrants to purchase common stock concurrently with a registered direct offering of our common stock in June 2020. We incurred $1.1 million in direct financing costs, which were allocated on a relative fair value basis between the common stock and warrant issuances, of which $0.3 million was allocated to warrants and expensed immediately. Warrant issuance expense of $1.1 million for the year ended December 31, 2019 was recorded in connection with our May 2019 and December 2019 financings. We incurred $1.7 million in direct financing costs, which were allocated on a relative fair value basis between the common stock and warrant issuances, of which $1.1 million was allocated to warrants and expensed immediately.

Other income, net was $1.0 million for the year ended December 31, 2020,2022, compared to other expense, netunrealized loss on foreign exchange of $0.1$0.9 million for the same period of 2019,2021, mostly due to foreign currency exchange rate fluctuations producing unrealized gains and losses on foreign currency revaluations of our inter-company monetary assets and liabilities.

Financial Condition, Liquidity and Capital Resources

Since our inception, we have devoted substantially all of our efforts toward the development of exoskeletons for the medical and industrial markets, toward the commercialization of medical exoskeletons to rehabilitation centers and toward raising capital. We have financed our operations primarily through the issuance and sale of equity securities for cash consideration and through bank debt.

Liquidity and Capital Resources

AtAs of December 31, 2020,2022, we had working capital of $13.4$21.8 million, compared to working capital of $11.0$40.9 million atas of December 31, 2019.2021. The increasedecrease in working capital is primarily due to higher cash balanceoutflows from equity financings, warrants exercises,operations of $14.7 million and
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$5.2 million mostly related to the reduction of notes payable, current as a result of retiring our WAB Term Loan.HMC Acquisition. Our cash and cash equivalents as of December 31, 20202022 consisted of bank deposits with third party financial institutions. As of December 31, 2020,2022, of our $12.9$20.5 million of cash, $12.3$19.6 million was held domestically while $0.6and $0.9 million was held by our foreign subsidiaries.

As of December 31, 2020,2022, we had an accumulated deficit of $199.1$223.9 million and cash on hand of $12.9$20.5 million. Largely as a result of significant research and development activities related to our advanced technology and commercialization of such technology into our medical device business, we have incurred significant operating losses and negative cash flows from operations since inception. We have incurred net losses of $15.8$15.1 million and $12.1$9.8 million for the years ended December 31, 20202022 and 2019,2021, respectively. In the year ended December 31, 2020,2022, we received net proceeds of $7.1 million from a registered direct offering and $3.3 million from warrant exercises, and used $8.8$14.7 million of cash in our operations.

SubsequentIn October 2020, we entered into an At The Market Offering Agreement (the "ATM Agreement") with Wainwright, under which we may issue and sell shares of our common stock from time to year-endtime, to or through Wainwright. Offers and sales of
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shares of common stock by us through Wainwright may be made by any method deemed to be an “at the market offering” as defined under SEC Rule 415 or in privately negotiated transactions, subject to certain conditions. Such shares may be offered pursuant to the registration statement on Form S-3 (File No. 333-239203) (the “Registration Statement”), which was declared effective by the SEC on June 26, 2020, and a related prospectus supplement filed with the SEC on October 9, 2020 (the “ATM Prospectus”). Pursuant to the Registration Statement and the ATM Prospectus, shares having an aggregate offering price of up to $7.5 million may be offered and sold, subject to certain SEC rules limiting the amount of shares of our common stock that we may sell under the Registration Statement. Under the ATM Agreement, shares of our common stock may not be sold for a price lower than $6.75 per share. During the year ended December 31, 2022, we did not sell any shares under the ATM Agreement. As of December 31, 2022, we had $6.7 million available for future offerings under the prospectus filed with respect to the ATM Agreement.

In February 25, 2021, wethe Company entered into an amended and restated underwriting agreement (the "Underwriting Agreement") with H.C. Wainwright & Co., LLC ("Wainwright"), to sell 3,902 shares of the Company's common stock for a public price of $10.25 per share, for gross proceeds of $40.0 million (the "February 2021 Offering"). The Company received estimated net proceeds of $36.4$36.5 million from an underwritten public offering,the February 2021 Offering. In addition to the cash proceeds received in the February 2021 Offering, the Company received $1.4 million in cash proceeds from warrant exercises,the exercise of warrants issued in connection with financings in June 2020 and $0.7May 2019 and $0.8 million in net proceeds of $0.8 million from sales under our "at“at the market offering"offering” program. Refer to Note. 18

As described in Note 10. Notes Payable, Net in the notes to our consolidated financial statements, under the caption Subsequent Events.

In 2020, management took several actions to alleviate the substantial doubt about the our 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 our operations and reduced our workforce by approximately 35% to lower operating expenses and reduce cash burn;
•conducted a registered direct offering of 1,747,704 shares of our common stock for net proceeds of $7.1 million;
•paid off the entire amount of $1.5 million of our indebtedness to Western Alliance Bank with proceeds from a new loan of $2.0 million from Pacific Western Bank. The terms of the new loan agreement include monthly interest-only payments over the next three years.
•invested in the development and reliability of our products;
•restructured our commercial organization and strategy which has been gaining traction;
•received FDA clearance for ABI to market our product to a larger patient population increasing the value proposition to our customers.

As described in Note 9 in the notes to our consolidated financial statements under the caption Notes Payable, net, borrowings under our new secured term loan agreement with Pacific Western Bank have a requirement of minimum cash on hand equivalent to the current outstanding principal balance.balance, which is due in full in August 2023. As of December 31, 2020,2022, $2.0 million of cash must remain as restricted. After considering cash restrictions, effective unrestricted cash as of December 31, 20202022 is estimated to be $10.9$18.5 million. With this unrestricted cash balance, and the impact of management's actions described above, and additional cash received after year-end, we believe that we currently have sufficient cash to fund our operations twelve months beyond the look forward period of one year from the issuance of these consolidated financialthe financials statements.

Our actual capital requirements may vary significantly and will depend on many factors. We plan to continue our investments in our (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, we may require significant additional financing in the future, which we intend 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, we may be required to further reduce our discretionary overhead costs substantially, including research and development, general and administrative, and sales and marketing expenses or otherwise curtail operations.

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Cash and Restricted Cash Equivalents

The following table summarizes the sources and uses of cash for the periods stated (in thousands):
Years ended December 31,Years ended December 31,
2020201920222021
Cash, beginning of year$10,872 $7,655 
Cash and restricted cash, beginning of yearCash and restricted cash, beginning of year$40,406 $12,862 
Net cash used in operating activitiesNet cash used in operating activities(8,755)(15,772)Net cash used in operating activities(14,688)(11,156)
Net cash used in investing activitiesNet cash used in investing activities— (60)Net cash used in investing activities(5,175)(59)
Net cash provided by financing activitiesNet cash provided by financing activities10,704 19,039 Net cash provided by financing activities— 38,712 
Effect of exchange rate changes on cashEffect of exchange rate changes on cash41 10 Effect of exchange rate changes on cash(18)47 
Cash, end of year$12,862 $10,872 
Cash and restricted cash, end of yearCash and restricted cash, end of year$20,525 $40,406 

Net Cash Used in Operating Activities

Net cash used in operations decreased $7.0operating activities increased $3.5 million or 44%, for the year ended December 31, 2020,2022, compared to the same period of 2019,2021, primarily due to the reductionpayment of business development expenses incurred in operating expenses by improving overall operational efficiencies, including but not limitedlate 2021, employee compensation related to the reduction of employee headcount. In addition,higher headcount, increased collection efforts resulted in higher ratio of accounts receivable collectionsinventory purchases, and costs related to sales.moving our new headquarters and manufacturing facility to San Rafael, California.

Net Cash Used in Investing Activities

Net cash used in investing activities decreased $0.1increased $5.1 million or 100%, duringfor the year ended December 31, 2020,2022, compared to the same period of 2019, primarily2021 due to lower hardwarepayment of $5.0 million for the HMC Acquisition and software purchases due to lower headcount.leasehold improvements for our new headquarters and manufacturing facility in San Rafael, California.

Net Cash Provided by Financing Activities

Net cash provided by financing activities of $10.7$38.7 million for the year ended December 31, 20202021, was from the sale of our common stock for net proceeds of $7.1 million in connection with the equity financing in June 2020, proceeds of $1.1 million from our PPP loan, and proceeds of $3.3 million from the exercise of June 2020 Warrants and May 2019 Warrants, partially offset by aggregate principal payments of $1.3 million against our term loan and the $1.5 million payoff of our loan with Western Alliance Bank.

Net cash provided by financing activities of $19.0 million for the year ended December 31, 2019 wasgenerated from the sale of common stock and warrants for net proceeds of $9.0$36.5 million in connection with the equity financing, in May 2019, net proceeds of $4.2 million with the equity financing in December 2019, net proceeds of $2.8$0.8 million from our “at the market offering” program, net proceeds of $5.0 million from equity investors associated with the JV Agreement, and proceeds of $0.2$1.4 million from the exercise of stock options, partially offset by aggregate principal paymentswarrants. There were no comparable amounts of $2.4 million against our term loan.

Off-Balance Sheet Arrangements

Our liquidity is not dependent oncash inflows generated in financing activities for the use of off-balance sheet financing arrangements (as that term is defined in Item 303(a) (4) (ii) of Regulation S-K) and as of December 31, 2020, we had no such arrangements. There has been no material change in our contractual obligations other than in the ordinary course of business since our fiscal year ended December 31, 2020.2022.
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Material Cash Requirements

The Company's material cash requirements include the following items, some of which are represented in the table of Contractual Obligations and Commitments: (1) employee wages, benefits and incentives, (2) the procurement of raw materials and components to support the manufacturing and sale of the Company's products, (3) expenditures for the ongoing improvement and development of existing and new technologies, (4) debt repayments (for additional information see Note 10 in the notes to the Company's consolidated financial statements included elsewhere in the Annual Report on Form 10-K), and (5) operating lease payments (for additional information see Note 11. Lease Obligations in the notes to our consolidated financial statements included elsewhere in the Annual Report on Form 10-K).

The Company expects that its operating cash requirements in the near term will continue to exceed cash provided by operations with the additional headcount and product development activities assumed in the HMC Acquisition. Additionally, the Company's term loan with Pacific Western Bank will mature in August 2023 requiring cash outflows of $2.0 million for the repayment of principal. Principal payments on the Company's promissory note with Parker Hannifin begin in December 2023. Notwithstanding the Company's ability to refinance its maturing loan obligation, coordinate with its suppliers to delay the receipt of materials on order, or delay product development activities, management believes it has sufficient cash on hand of $20.5 million at December 31, 2022 to meet its cash requirements twelve months from the issuance of the financial statements.

The Company does not expect, nor do our historical operating results suggest, that cash flows generated from operations will be sufficient to meet our material cash requirements in the long term. Management expects that the Company's historical reliance on external financing, from both equity and debt financings, will continue to provide the capital necessary to meet its material cash requirements in the long term. Management has not yet determined the form such additional financing may take, but management expects that the most likely forms include one or more of the following: (i) underwritten offerings of shares of our common stock (ii) sales of shares of our common stock under an "at the market" offering program, (iii) incurring indebtedness with one or more financial institutions, and (iv) the factoring of trade receivables.


Contractual Obligations and Commitments

The following table summarizes our outstanding contractual obligations, including interest payments, as of December 31, 20202022 and the effect those obligations are expected to have on our liquidity and cash flows in future periods (in thousands):
Payments Due By PeriodPayments Due By Period
TotalLess than one year1-3 Years3-5 YearsAfter 5 YearsTotalLess than one year1-3 Years3-5 YearsAfter 5 Years
Term loanTerm loan$3,356 $90 $3,266 $— $— Term loan$2,107 $2,107 $— $— $— 
Promissory NotePromissory Note5,000 313 2,500 2,187 
Facility operating leasesFacility operating leases836 599 237 — — Facility operating leases1,578 408 821 349 — 
Purchase obligationsPurchase obligations396 396 — — — Purchase obligations3,480 3,480 — — — 
TotalTotal$4,588 $1,085 $3,503 $— $— Total$12,165 $6,308 $3,321 $2,536 $— 
In response to, or in anticipation of, supplier disruptions and extended lead times, in 2022, we stockpiled certain components or raw materials to help prevent disruption in our production of the EksoNR and Ekso Indego Therapy and Ekso Indego Personal devices. Such purchasing behavior is a contributing factor to the increase in purchase obligations as compared to prior periods. These actions have, and could continue to have, a short-term adverse impact on our cash used in operating activities and increase our inventory balance. Obligations related to these activities are reflected in the line purchase obligations in the table above.

Refer to Note 16. Commitments and Contingencies in our notes to the consolidated financial statements for additional information regarding our contractual obligations and commitments.

Off-Balance Sheet Arrangements

As of December 31, 2022, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K promulgated under the Exchange Act.

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

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

Standalone Selling Prices

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

Warrant Liabilities

We use the Black-Scholes option-pricing model to value our warrant liabilities at each reporting period, which requires the input of highly subjective assumptions, most notably the estimated volatility of our common stock over the expected term. We use our historical common stock volatility to estimate expected volatility over the warrant terms. Management must also make uncertain estimates regarding the likelihood and timing of certain future events for application of the Lattice Model for the valuation of certain warrants. Changes in these assumptions could have potential material impacts on the estimated fair value of warrant liabilities. During the year ended December 31, 2022, management made changes to its estimates regarding the likelihood and timing of future events. We do not believe the revision resulted in a material impact to the estimated fair value of warrant liabilities measured using the Lattice Model.

Inventory Valuation

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

Deferred Tax Asset

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

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In additionAn accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the table above, which reflects only fixed payment obligations, wetime the estimate is made, and if different estimates that reasonably could have two license agreementsbeen used, or changes in the accounting estimate that are reasonably likely to maintain exclusive rights to certain patents. Under these license agreements, we are required to pay 1% of net sales of products sold to entities other thanoccur, could materially impact the U.S. government. Inconsolidated financial statements. We believe that our critical accounting policies reflect the event of a sublicense, we will owe 21% of license feesmore significant estimates and must pass through 1%assumptions used in the preparation of the sub-licensee’s net salesconsolidated financial statements. Refer to Note. 2 Summary of products soldSignificant Accounting Policies and Estimatesin the notes to entities other than the U.S. government. The license agreements also stipulate minimum annual royalties of $50,000 per year.

our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
In connection with our acquisition of Equipois in December 2015, we 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 us an exclusive license with respect to the technology and patent rights for certain fields of use. Pursuant to the terms of the license agreement, we will be required to pay a single-digit royalty on net receipts, subject to a $50,000 annual minimum royalty requirement.

We purchase components from a variety of suppliers and use contract manufacturers to provide manufacturing services for our products. Purchase obligations are defined as agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. We had purchase obligations primarily for purchases of inventory and manufacturing related service contracts totaling $0.4 million as of December 31, 2020, which is expected to be paid within a year. Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.

Recent Accounting Pronouncements

See Note 22. Summary of Significant Accounting Policies and EstimatesRecent Accounting Pronouncements in the notes to our consolidated financial statements under the caption Recent Accounting Pronouncements for a discussion of new accounting pronouncements.
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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

We report our financial results in U.S. dollars; however, we conduct business in foreign countries. For U.S. reporting purposes, we translate all assets and liabilities of our non-U.S. subsidiaries at the period-end exchange rate, equity at historical exchange rates, and revenue and expenses at the average exchange rates in effect during the periods. The net effect of these translation adjustments is shown in the accompanying consolidated financial statements as a component of stockholders’ equity.

We generate a portion of our revenue and collect receivables in foreign currencies outside of the U.S. and, as such, we have foreign currency exposure. Currently, we sell our products mainly in United States dollars, Euros, and Singapore dollars although we may in the future transact business in other currencies. Future fluctuations in the foreign exchange rates of these currencies can result in foreign exchange gains and losses which may impact our financial results. In the past, we have not hedged our exposures to foreign currencies or entered into any other derivative instruments and we have no current plans to do so. For the year ended December 31, 2020,2022, sales denominated in foreign currencies were approximately 33%44% of total revenue. A hypothetical 10% increase in the United States dollar exchange rate used would have resulted in a $0.3$0.6 million decrease to revenues for 2020.2022.

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates relates primarily to our term loan. The variable interest rate related to our long-term debt is charged at the greater of 0.50% above the variable rate of interest announced by the lender as its “prime rate” then in effect or 4.50.4.50%. A hypothetical 10% change in the lender's prime rate would have an immaterial impact on our annualized interest expense.
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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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The following consolidated financial statements are filed as part of this Annual Report on Form 10-K
Page
Number
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
Ekso Bionics Holdings, Inc.
Richmond, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Ekso Bionics Holdings, Inc. (the “Company”) as of December 31, 20202022 and 2019,2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2020,2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20202022 and 2019,2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020,2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidatedthese financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that waswere communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinionopinions on the critical audit matter or on the accounts or disclosures to which it relates.they relate.

Revenue Recognition – transaction price allocation for contracts with customers containing multiple performance obligations

Description of the Matter

As described in Note 2 to the consolidated financial statements, the Company’s contracts with customers sometimesmay contain multiple performance obligations, which are accounted for separately if they are distinct. In such cases, the transaction price is then allocated to the distinct performance obligations on a relative standalone selling price basis and revenue is recognized when the distinct performance obligation is satisfied. For example, device revenue is recognized at the point in time that the customer takes control of the device, generally upon shipment, and subscription and service revenues are recognized over time as the services are performed.

Auditing the Company’s revenue recognition was challenging, specifically related to the identification and determination of the distinct performance obligations, the allocation of the transaction price to the identified performance obligations and the timing of revenue recognition. For example, certain arrangements required judgment to determine the distinct performance obligations,
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how the transaction price is allocated to the identified performance obligations, and the appropriate timing of revenue recognition.

How We Addressed the Matter in Our Audit

We obtained an understanding and evaluated the design of the Company’s process and controls to determine the distinct performance obligations, allocation of the transaction price to the identified performance obligations and the timing of revenue recognition.

Among the procedures we performed to test the determination of the distinct performance obligations, allocations of the transaction price to the identified performance obligations and the timing of revenue recognition, we read executed contracts and purchase orders to understand the rights and obligations conveyed in the contractual arrangement, evaluated management’s assessment of the performance obligations and whether they were distinct, determined the reasonableness of the standalone selling price used by management in the allocation of the transaction price to the performance obligations, and tested the timing of revenue recognition for a sample of individual sales transactions. We evaluated the accuracy of the Company’s accounting conclusions, specifically related to the identification and determination of distinct performance obligations, allocation of the transaction price to the identified performance obligations, and the timing of revenue recognition.

/s/ OUM & CO. LLP
/s/ WithumSmith+Brown, PC

San Francisco, California
February 25, 2021
We have served as the Company's auditor since 2010.

San Francisco, California
March 28, 2023

PCAOB ID Number 100


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Ekso Bionics Holdings, Inc.
Consolidated Balance Sheets
(In thousands, except par value amounts)

December 31,December 31,
2020201920222021
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash$12,862 $10,872 
Accounts receivable, net of allowances of $42 and $121, respectively3,389 5,208 
Cash and restricted cashCash and restricted cash$20,525 $40,406 
Accounts receivable, net of allowances of $40 and $28, respectivelyAccounts receivable, net of allowances of $40 and $28, respectively4,625 4,662 
InventoriesInventories1,978 2,489 Inventories5,187 2,242 
Prepaid expenses and other current assetsPrepaid expenses and other current assets191 238 Prepaid expenses and other current assets700 485 
Total current assetsTotal current assets18,420 18,807 Total current assets31,037 47,795 
Property and equipment, netProperty and equipment, net1,172 1,657 Property and equipment, net2,680 991 
Right-of-use assetsRight-of-use assets685 1,084 Right-of-use assets1,307 216 
Intangible assets, netIntangible assets, net5,217 — 
GoodwillGoodwill189 Goodwill431 — 
Other assetsOther assets320 178 Other assets231 164 
Total assetsTotal assets$20,597 $21,915 Total assets$40,903 $49,166 
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityLiabilities and Stockholders' Equity
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$1,501 $1,903 Accounts payable$3,151 $3,107 
Accrued liabilitiesAccrued liabilities1,429 1,683 Accrued liabilities2,278 2,299 
Deferred revenues, currentDeferred revenues, current1,496 1,492 Deferred revenues, current1,121 1,220 
Note payable, current2,333 
Notes payable, currentNotes payable, current2,310 — 
Lease liabilities, currentLease liabilities, current548 421 Lease liabilities, current341 229 
Total current liabilitiesTotal current liabilities4,974 7,832 Total current liabilities9,201 6,855 
Deferred revenuesDeferred revenues1,806 1,789 Deferred revenues1,032 1,475 
Notes payable, netNotes payable, net3,075 407 Notes payable, net3,767 1,993 
Lease liabilitiesLease liabilities233 711 Lease liabilities1,087 — 
Warrant liabilitiesWarrant liabilities6,037 4,307 Warrant liabilities233 1,550 
Other non-current liabilitiesOther non-current liabilities38 72 Other non-current liabilities141 74 
Total liabilitiesTotal liabilities16,163 15,118 Total liabilities15,461 11,947 
Commitments and contingencies (Note 16)Commitments and contingencies (Note 16)00Commitments and contingencies (Note 16)
Stockholders' equity:Stockholders' equity:Stockholders' equity:
Convertible preferred stock, $0.001 par value; 10,000 shares authorized; 0 shares issued and outstanding at December 31, 2020 and 2019
Common stock, $0.001 par value; 141,429 shares authorized; 8,349 and 5,795 shares issued and outstanding at December 31, 2020 and 2019, respectively
Convertible preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued and outstanding at December 31, 2022 and 2021Convertible preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued and outstanding at December 31, 2022 and 2021— — 
Common stock, $0.001 par value; 141,429 shares authorized; 13,203 and 12,693 shares issued and outstanding at December 31, 2022 and 2021, respectivelyCommon stock, $0.001 par value; 141,429 shares authorized; 13,203 and 12,693 shares issued and outstanding at December 31, 2022 and 2021, respectively13 13 
Additional paid-in capitalAdditional paid-in capital204,376 190,019 Additional paid-in capital248,813 246,090 
Accumulated other comprehensive (loss) income(847)50 
Accumulated other comprehensive gain (loss)Accumulated other comprehensive gain (loss)563 (17)
Accumulated deficitAccumulated deficit(199,103)(183,278)Accumulated deficit(223,947)(208,867)
Total stockholders' equityTotal stockholders' equity4,434 6,797 Total stockholders' equity25,442 37,219 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$20,597 $21,915 Total liabilities and stockholders' equity$40,903 $49,166 


See accompanying notes to consolidated financial statements
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Ekso Bionics Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)

Years ended December 31,Years ended December 31,
2020201920222021
RevenueRevenue$8,882 $13,917 Revenue$12,912 $11,246 
Cost of revenueCost of revenue3,812 7,153 Cost of revenue6,698 4,497 
Gross profitGross profit5,070 6,764 Gross profit6,214 6,749 
Operating expenses:Operating expenses:Operating expenses:
Sales and marketingSales and marketing7,752 11,398 Sales and marketing7,157 7,305 
Research and developmentResearch and development2,474 4,596 Research and development3,626 2,549 
General and administrativeGeneral and administrative7,702 7,409 General and administrative10,987 10,723 
Impairment of goodwill189 
Restructuring244 
Total operating expensesTotal operating expenses18,361 23,403 Total operating expenses21,770 20,577 
Loss from operationsLoss from operations(13,291)(16,639)Loss from operations(15,556)(13,828)
Other (expense) income, net:Other (expense) income, net:Other (expense) income, net:
Interest expenseInterest expense(139)(384)Interest expense(156)(113)
Finance cost associated with warrant issuance(329)(1,096)
(Loss) gain on warrant liabilities(3,056)6,376 
Loss on modification of warrants(257)
Other income (expense), net990 (132)
Total other (expense) income, net(2,534)4,507 
Gain on revaluation of warrant liabilitiesGain on revaluation of warrant liabilities1,317 3,962 
Gain on forgiveness of note payableGain on forgiveness of note payable— 1,099 
Unrealized loss on foreign exchange Unrealized loss on foreign exchange(655)(867)
Other expense, netOther expense, net(30)(17)
Total other income, netTotal other income, net476 4,064 
Net lossNet loss(15,825)(12,132)Net loss(15,080)(9,764)
Foreign currency translation adjustmentsForeign currency translation adjustments(897)142 Foreign currency translation adjustments580 830 
Comprehensive lossComprehensive loss$(16,722)$(11,990)Comprehensive loss$(14,500)$(8,934)
Basic and diluted net loss per share applicable to common shareholders$(2.21)$(2.53)
Weighted average number of shares outstanding, basic and diluted7,164 4,794 
Basic net loss per share applicable to common shareholdersBasic net loss per share applicable to common shareholders(1.16)(0.80)
Diluted net loss per share applicable to common shareholdersDiluted net loss per share applicable to common shareholders(1.16)(0.88)
Weighted average number of shares outstanding, basicWeighted average number of shares outstanding, basic12,962 12,193 
Weighted average number of shares outstanding, dilutedWeighted average number of shares outstanding, diluted12,962 12,269 

See accompanying notes to consolidated financial statements
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Ekso Bionics Holdings, Inc.
Consolidated Statements of Stockholders’ Equity
(In thousands)
Convertible
Preferred Stock
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
Convertible
Preferred Stock
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 2018$4,198 $$173,962 $(92)$(171,146)$2,728 
Net loss— — — — — — (12,132)(12,132)
Issuance of common stock under:
Equity financing, net— — 1,534 12,442 — — 12,444 
Equipois sales earn-out— — — 22 — — 22 
Equity incentive plan— — 12 — 228 — — 228 
Matching contribution to 401(k) plan— — — 191 — — 191 
In lieu of employee cash bonus— — 41 — 919 — — 919 
Stock-based compensation— — — — 2,255 — — 2,255 
Foreign currency translation adjustments— — — — — 142 — 142 
Balance at December 31, 2019$5,795 $$190,019 $50 $(183,278)$6,797 
Balance at December 31, 2020Balance at December 31, 2020— $— 8,349 $$204,376 $(847)$(199,103)$4,434 
Net lossNet loss— — — — — — (15,825)(15,825)Net loss— — — — — — (9,764)(9,764)
Issuance of common stock under:Issuance of common stock under:Issuance of common stock under:
Equity financing, netEquity financing, net— — 1,748 7,080 — — 7,082 Equity financing, net— — 3,980 35,356 — — 35,360 
Equity incentive planEquity incentive plan— — 35 — — — — — Equity incentive plan— — 38 — — — — — 
Exercise of warrantsExercise of warrants— — 723 — 7,310 — — 7,310 Exercise of warrants— — 300 3,877 — — 3,878 
Matching contribution to 401(k) planMatching contribution to 401(k) plan— — 26 — 155 — — 155 Matching contribution to 401(k) plan— — 26 — 152 — — 152 
In lieu of cash compensation— — — 50 — — 50 
Shares issued as a result of rounding due to reverse-stock split— — 13 — — — — — 
Issuance of warrants— — — — (2,322)— — (2,322)
Stock-based compensationStock-based compensation— — — — 2,084 — — 2,084 Stock-based compensation— — — — 2,329 — — 2,329 
Foreign currency translation adjustmentsForeign currency translation adjustments— — — — — (897)— (897)Foreign currency translation adjustments— — — — — 830 — 830 
Balance at December 31, 2020$8,349 $$204,376 $(847)$(199,103)$4,434 
Balance at December 31, 2021Balance at December 31, 2021— $— 12,693 $13 $246,090 $(17)$(208,867)$37,219 
Net lossNet loss— — — — — — (15,080)(15,080)
Issuance of common stock under:Issuance of common stock under:
Equity incentive planEquity incentive plan— — 442 — — — — — 
Matching contribution to 401(k) planMatching contribution to 401(k) plan— — 68 — 177 — — 177 
Stock-based compensationStock-based compensation— — — — 2,546 — — 2,546 
Foreign currency translation adjustmentsForeign currency translation adjustments— — — — — 580 — 580 
Balance at December 31, 2022Balance at December 31, 2022— $— 13,203 $13 $248,813 $563 $(223,947)$25,442 

See accompanying notes to consolidated financial statements

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Ekso Bionics Holdings, Inc.
Consolidated Statement of Cash Flows
(In thousands)
Years ended December 31,Years ended December 31,
2020201920222021
Operating activitiesOperating activitiesOperating activities
Net lossNet loss$(15,825)$(12,132)Net loss$(15,080)$(9,764)
Adjustments to reconcile net loss to net cash used in operating activitiesAdjustments to reconcile net loss to net cash used in operating activitiesAdjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortizationDepreciation and amortization620 690 Depreciation and amortization887 1,023 
Changes in allowance for doubtful accountsChanges in allowance for doubtful accounts65 52 Changes in allowance for doubtful accounts33 75 
Impairment of goodwill189 
Amortization of debt discount, change in contingent liability and accretion of final payment fee28 64 
Gain on modification of operating lease liabilities(38)
Loss on investment of unconsolidated affiliate66 
Gain on forgiveness of note payableGain on forgiveness of note payable— (1,099)
Common stock contribution to 401(k) planCommon stock contribution to 401(k) plan169 142 Common stock contribution to 401(k) plan186 171 
Stock-based compensation expenseStock-based compensation expense2,410 2,255 Stock-based compensation expense2,546 2,329 
Finance cost attributable to issuance of warrants329 1,096 
Loss (gain) on revaluation of warrant liabilities3,056 (6,376)
Loss on modification of warrants257 
Unrealized (gain) loss on foreign currency transactions(947)133 
Gain on revaluation of warrant liabilitiesGain on revaluation of warrant liabilities(1,317)(3,962)
Other adjustmentsOther adjustments(18)134 
Unrealized loss on foreign currency transactionsUnrealized loss on foreign currency transactions655 867 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Accounts receivableAccounts receivable1,754 (1,599)Accounts receivable(67)(1,624)
InventoriesInventories379 959 Inventories(1,400)(752)
Prepaid expense, operating lease right-of-use assets, and other assets, current and noncurrent247 369 
Prepaid expenses and other assets current and noncurrentPrepaid expenses and other assets current and noncurrent(303)19 
Accounts payableAccounts payable(402)(1,231)Accounts payable(102)1,612 
Accrued and lease liabilities(876)(1,135)
Accrued, lease and other current and noncurrent liabilitiesAccrued, lease and other current and noncurrent liabilities(197)379 
Deferred revenuesDeferred revenues21 684 Deferred revenues(511)(564)
Net cash used in operating activitiesNet cash used in operating activities(8,755)(15,772)Net cash used in operating activities(14,688)(11,156)
Investing activitiesInvesting activitiesInvesting activities
Payment in connection with acquisitionPayment in connection with acquisition(5,000)— 
Acquisition of property and equipmentAcquisition of property and equipment(60)Acquisition of property and equipment(194)(59)
Proceeds from sales of equipmentProceeds from sales of equipment19 — 
Net cash used in investing activitiesNet cash used in investing activities(60)Net cash used in investing activities(5,175)(59)
Financing activitiesFinancing activitiesFinancing activities
Proceeds from issuance of common stock and warrants, netProceeds from issuance of common stock and warrants, net7,082 21,188 Proceeds from issuance of common stock and warrants, net— 37,295 
Principal payments on notes payable(1,278)(2,377)
Payment of remaining balance on long-term debt(1,512)
Proceeds from exercise of stock options228 
Proceeds from exercise of common stock warrantsProceeds from exercise of common stock warrants3,334 Proceeds from exercise of common stock warrants— 1,417 
Proceeds from issuance of long-term debt, net of financing costs3,078 
Net cash provided by financing activitiesNet cash provided by financing activities10,704 19,039 Net cash provided by financing activities— 38,712 
Effect of exchange rate changes on cashEffect of exchange rate changes on cash41 10 Effect of exchange rate changes on cash(18)47 
Net increase in cash1,990 3,217 
Cash at beginning of the year10,872 7,655 
Cash at end of the year$12,862 $10,872 
Net (decrease) increase in cashNet (decrease) increase in cash(19,881)27,544 
Cash and restricted cash at beginning of the yearCash and restricted cash at beginning of the year40,406 12,862 
Cash and restricted cash at end of the yearCash and restricted cash at end of the year$20,525 $40,406 
Supplemental disclosure of cash flow activitiesSupplemental disclosure of cash flow activitiesSupplemental disclosure of cash flow activities
Cash paid for interestCash paid for interest$109 $309 Cash paid for interest$126 $104 
Cash paid for income taxesCash paid for income taxes$13 $
Supplemental disclosure of non-cash activitiesSupplemental disclosure of non-cash activities
Reclassification of warrant liability to equity upon exercise of warrantsReclassification of warrant liability to equity upon exercise of warrants$— $2,461 
Share issuance for common stock contribution to 401(k) planShare issuance for common stock contribution to 401(k) plan$176 $152 
Transfer of inventory to property and equipmentTransfer of inventory to property and equipment$385 $434 
Issuance of promissory note, net in connection with acquisitionIssuance of promissory note, net in connection with acquisition$4,055 $— 
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Cash paid for income taxes$$23 
Supplemental disclosure of non-cash activities
Reclassification of warrant liability to equity upon exercise of warrants$3,976 $
Share issuance for common stock contribution to 401(k) plan$155 $191 
Transfer of inventory to (from) property and equipment$132 $(77)
Share issuance in lieu of cash compensation$50 $919 
Initial recognition of operating right-of-use assets$$1,454 
Initial recognition of operating lease liabilities$$1,498 
Share issuance for vesting of restricted stock$$63 
Change in deferred rent associated with ASC 842$$44 
Equipois sales earn-out$$22 
Fair value of warrants issued upon equity financing$— $1,936 
Initial recognition of operating lease liabilities and right of use assets$1,459 $— 

See accompanying notes to consolidated financial statements
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
1. Organization

Description of Business

Ekso Bionics Holdings, Inc. (the "Company"“Company”), designs, develops, sells, and rentsmarkets exoskeleton products to augment human strength, endurance and mobility.

The Company’s exoskeleton technology serves multiple markets and can be utilized both by able-bodied users and by persons with physical disabilities. The Company has sold and rentedmarketed devices that (i) enable individuals with neurological conditions affecting gait, (acquiredincluding acquired brain injury ("ABI") and multiple sclerosis ("MS"), and spinal cord injury)injury ("SCI"), to rehabilitate and to walk again, (ii) assist individuals with a broad range of upper extremity impairments, and (iii) allow industrial workers to perform difficult repetitive work for extended periods.

Founded in 2005, the Company is headquartered in the San Francisco Bay area and listed on the Nasdaq Capital Market under the symbol “EKSO”.

On December 5, 2022, the Company acquired the Human Motion and Control (“HMC”) Business Unit from Parker Hannifin Corporation (“Parker”), an Ohio corporation. The assets acquired from the business unit include intellectual property rights for devices which are FDA-cleared lower-limb powered exoskeletons that enable task-specific, overground gait training to patients with weakness or paralysis in their lower extremities. Products include Ekso Indego Personal, a light-weight exoskeleton for safe use in most home and community environments, and Ekso Indego Therapy, an adjustable exoskeleton for patients with spinal cord injury and stroke complementing Ekso’s product offering in outpatient facilities.

Unless otherwise indicated, all dollar and share amounts included in these notes to the consolidated financial statements are in thousands.

Liquidity and Going ConcernCapital Resources

As of December 31, 2020,2022, the Company had an accumulated deficit of $199,103.$223,947. 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 year ended December 31, 2020,2022, the Company received net proceeds of $7,082 from a registered direct offering and of $3,334 from warrant exercises, and used $8,755$14,688 of cash in its operations. Cash on hand at December 31, 20202022 was $12,862.

Subsequent to year-end through February 25, 2021 the Company received estimated net proceeds of $36,404 from an underwritten public offering, $1,416 from warrant exercises, and $664 from ATM sales. Refer to Note. 18, Subsequent Events.

In 2020, management took 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;
paid off the entire amount of $1,512 of the Company's indebtedness to Western Alliance Bank with proceeds from a new loan of $2,000 from Pacific Western Bank. The terms of the new loan agreement include monthly interest-only payments until August 2023.
invested in the development and reliability of its products;
restructured the Company's commercial organization and strategy which has been gaining traction; 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.$20,525.

As described in Note 9,10, Notes payable, net, borrowings under the Company’s new secured term loan agreement with Pacific Western Bank have a liquidity covenant requiring minimum cash on hand equivalent to the current outstanding principal balance. As of December 31, 2020,2022, $2,000 of cash must remain as restricted. After considering cash restrictions, effective unrestricted cash as of December 31, 20202022 is approximately $10,862. With$18,525.

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of our plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this unrestrictedmethodology, we evaluate whether the mitigating effect of its plans sufficiently alleviates substantial doubt about our ability to continue as a going concern. The mitigating effect of our plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. In performing this analysis, we excluded certain elements of our operating plan that cannot be considered probable.

Our expectation to generate operating losses and negative operating cash balance,flows in the impact of management's actions described above,future and the need for additional cash received after year-end, the Company believes that it currently has sufficient cashfunding to fund itssupport our planned operations beyond the look forwardraise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that the financial statements are issued. Management intends on completing additional equity financings, However, due to several factors, including those outside management’s control, there can be no assurance that the Company will be able to complete additional equity financings. If we are unable to complete sufficient additional financings, management’s plans include delaying or abandoning certain product development projects, cost reduction efforts for our products, and refocused sales efforts to accelerate revenue growth above historical results. We have concluded the likelihood that our plan to successfully reduce expenses to align with our available cash is probable. Accordingly, we believe our plan will be sufficient to alleviate substantial doubt for a period of at least 12 months from the date of issuance of these 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
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
market, (ii) research, developmentThe accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and commercialization activities with respect to exoskeletons for rehabilitation, and (iii) development and commercializationsatisfaction of able-bodied exoskeletons for industrial use. Consequently, the Company may require significant additional financingliabilities in the future, whichordinary course of business. The financial statements do not include any adjustments relating to the Company intends to raise through corporate collaborations, publicrecoverability and classification of recorded asset amounts or private equity offerings, debt financings, or warrant solicitations. Salesthe amounts and classification of additional equity securities byliabilities that might result from the Company could result in the dilutionoutcome 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.

uncertainties described above.

2. Summary of Significant Accounting Policies and Estimates

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States or ("U.S. GAAP. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included and are normal and recurring in nature.GAAP").

All significant intercompany transactions and balances have been eliminated in consolidation.

Certain reclassificationsReclassifications

For the year ended December 31, 2022, the Company reclassified the amortization of operating lease right-of-use assets in its consolidated statements of cash flows. Amounts amortized related to operating lease right-of-use assets have been madereclassified to "Depreciation and amortization" from "Prepaid expenses and other assets, current and noncurrent" as applicable. Accordingly, prior yearperiod amounts have been reclassified to conform to the current year’s presentation.period presentation, in all material respects. These reclassifications did not affect changes in cash flow used in operating activities or net (decrease) in cash for the year ended December 31, 2021.

All common shareFor the year ended December 31, 2022, the Company reclassified certain expenses presented in the consolidated statement operations and per share amountscomprehensive loss. Amounts associated with the maintenance of patents which had previously been presented as research and development operating expenses have been adjustedreclassified to reflectgeneral and administrative operating expenses. Accordingly, prior period amounts of $175 for the one-for-fifteen reverse stock split completed on March 24, 2020. See Note 13, Capitalizationyear ended 2022 and Equity Structure – Reverse Stock Split.$199 for the year ended 2021, have been reclassified to conform to the current period presentation, in all material respects. These reclassifications did not affect total operating expenses, net operating loss, or net loss for the year ended December 31, 2022 and December 31, 2021.

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, assets acquired and liabilities assumed in business combinations, revenue recognition, deferred revenue, and the deferral of the associated costs, the valuation of warrants and employee stock options,equity awards, future warranty costs, accounting for leases, useful lives assigned to long-lived assets, valuation of inventory, realizability of deferred tax assets, and contingencies. Actual results could differ from those estimates.

Foreign Currency

The assets and liabilities of foreign subsidiaries and equity investments, where the local currency is the functional currency, are translated from their respective functional currencies into U.S. dollars at the rates in effect at the balance sheet date and revenue and expense amounts are translated at average rates during the period, with resulting foreign currency translation adjustments recorded in accumulated other comprehensive (loss) incomeloss as a component of stockholders’ equity. Gains and losses from the re-measurement of balances denominated in currencies other than the entities' functional currencies, are recorded in other expense, net in the accompanying consolidated statements of operations and comprehensive loss.

Accumulated Other Comprehensive Gain (Loss) Income

The Company's accumulated other comprehensive (loss) incomegain consists of the accumulated net unrealized gains or losses on foreign currency translation adjustments. The change in accumulated other comprehensive gain (loss) income presented on the consolidated balance sheets for the year ended December 31, 2020,2022, is reflected in the table below net of tax:
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Accumulated Other Comprehensive Gain (Loss) Income
Balance at December 31, 2019$50 
Net unrealized loss on foreign currency translation(897)
Balance at December 31, 2020$(847)
Net unrealized gain on foreign currency translation830 
Balance at December 31, 2021(17)
Net unrealized gain on foreign currency translation580 
Balance at December 31, 2022$563 

Cash

The Company places its cash in the custody of, financial institutions with high credit ratings. The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents or investments in money market funds as of December 31, 2020 and 2019.

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 maintainshas significant cash accounts in excess ofbalances at financial institutions which throughout the year regularly exceed the federally insured limits. However,limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company believes it is not exposed to significant credit risk due to theCompany's financial positioncondition, results of the depository institutions in which these deposits are held.operations, and cash flows. The Company extends credit to customers in the normal course of business and performs ongoing credit evaluations of its customers. Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the consolidated financial statements. The Company does not require collateral from its customers to secure accounts receivable.

Accounts receivable are derived from the sale of products shipped and services performed for customers primarily located in the U.S., Europe, Asia, and Australia. Invoices are aged based on contractual terms with the customer. The Company reviews accounts receivable for collectability and provides an allowance for potential credit losses. The allowance for potential credit losses on trade receivables reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance 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. The Company has not experienced material losses related to accounts receivable during the years ended December 31, 20202022 and 2019. 2021.

Many of the sales contracts with customers outside of the U.S. are settled in a foreign currency other than the U.S. dollar. The Company does not enter into any foreign currency hedging agreements and is susceptible to gains and losses from foreign currency fluctuations. To date, the Company has not experienced significant gains or losses upon settling contracts denominated in a foreign currency.

At December 31, 2020, theThe Company had twono customers with an accounts receivable balance totaling 10% or more of the Company’sCompany's total accounts receivable (13% and 10%, respectively), as compared with one customer atof December 31, 2019 (11%).2022 and December 31, 2021.

The Company had no customersone customer with sales of 10% or more of the Company’s total revenue for the yearyears ended December 31, 2020, as compared with one for the year ended December 31, 2019 (15%). Refer to Note 17. Segment Disclosures for more information.2022 and 2021.

Inventories

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.materials. Once the raw materials are incorporated in the fabrication of the product, the related value of the component is recorded as work in progress ("WIP"). Direct and indirect labor and applicable overhead costs are also allocated and recorded to WIP inventory. Finished goods are comprised of completed products that are ready for customer shipment. The Company periodically evaluates the carrying value of inventory on hand for potential excess amounts over sales and forecasted demand. Excess and obsolete inventories identified, if any, are recorded as an inventory impairment charge within the consolidated statements of operations and comprehensive loss. The Company's estimate of write-downs for excess and obsolete inventory is based on a detailed analysis which includes on-hand inventory and purchase commitments in excess of forecasted demand.  Subsequent disposals of inventories are recorded as a reduction of inventory.

Inventories consisted of the following:
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
December 31,
20202019
Raw materials$1,724 $2,208 
Work in progress18 29 
Finished goods236 252 
Inventories$1,978 $2,489 
Inventories consisted of the following:
December 31,
20222021
Raw materials$3,837 $2,061 
Work in progress487 145 
Finished goods863 36 
Inventories$5,187 $2,242 

Leases

In February 2016,The Company records its leases in accordance with the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”Standards Codification ("ASC"), 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.

Topic 842, Leases. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items, such as initial direct costs paid or incentives received.

Lease expense is recognized over the expected lease term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, lease liabilities current and lease liabilities non-current. 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.

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 year ended December 31, 2020 comprised of termination benefit costs. As of December 31, 2020, there was no accrued restructuring cost remaining on the Company’s consolidated balance sheets.

Property and Equipment, net

Property and equipment are stated at cost less accumulated depreciation and are depreciated on a straight-line basis over the estimated useful lives of the assets, generally ranging from three to ten years. Leasehold improvements are amortized over the shorter of the estimated useful life or the related term of the lease. The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. 

Impairment of Long-Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable from the estimated future cash flows expected to result from the Company’s use or eventual disposition. If estimates of future undiscounted net cash flows are insufficient to recover the carrying value of the assets, the Company will record an impairment loss in the amount by which the carrying value of the assets exceeds the fair value. If the assets are determined to be recoverable, but the useful lives are shorter than originally estimated, the Company will depreciate or amortize the net book value of the assets over the newly determined remaining useful lives. None of the Company’s property and equipment or intangible assets were impaired as of December 31, 20202022 and 2019. NaN2021. No impairment loss has been recognized in the years ended December 31, 20202022 and 2019.2021.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Goodwill

The Company records goodwill when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired. The Company performs an annual impairment assessment, or more frequently if indicators of potential impairment exist, which includes evaluating qualitative and quantitative factors to assess the likelihood of an impairment of goodwill. The Company performs impairment tests usingSuch indicators include, among others, material departures from projected sales volume, deteriorating gross margins, and uncertainties regarding continued commercialization as a fair value approach when necessary.result of changing business strategies.

The Company previously maintained a goodwill balance as a result of a prior acquisition of intangible assets from Equipois, LLC indetermined no impairment exists for the years ended December 2015 consisting of mechanical balance31, 2022 and support arms technologies, including the rights to the ZeroG product.December 31, 2021.

As a result
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Table of declining salesContents
Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Intangible Assets

Other intangible assets include developed technology, acquired intellectual property, and gross margin, combined withcustomer relationships, in the overall uncertainty aboutcase of finite-lived intangibles, and trade names in the futurecase of indefinite-lived intangibles. Finite-lived intangibles are amortized over their estimated useful lives and are tested for impairment whenever events or changes in circumstances indicate that the carrying value of the ZeroG product line, theassets may not be recoverable. Indefinite lived intangible assets are tested for impairment annually, or as deemed necessary if potential indicators of impairment exist.

The Company performed andetermined no impairment assessment of goodwill utilizing the simplified method, which resulted in an impairment of goodwill of $189 reducing the goodwill balance to zero. In estimating the fair value, the Company utilized a discounted cash flow model, which is dependent on a number of assumptions, including forecasted revenues and profit margins. The following table sets forth the changes to goodwillexists for the yearyears ended December 31, 2020:
Goodwill
Balance at December 31, 2019$189 
Impairment of goodwill(189)
Balance at Balance at December 31, 2020$
2022 and December 31, 2021.

Warrant Valuation

The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include a conditional obligation to issue a variable number of shares or there is a deemed possibility that it may need to settle the warrants in cash.

Where there is a possibility that the Company may have to settle warrants in cash, it estimates the fair value of the issued warrants as a liability at each reporting date and record changes in the estimated fair value as a non-cash gain or loss in the consolidated statements of operations and comprehensive loss. The fair values of these warrants have been determined using the Black-Scholes option-pricing model (the “Black-Scholes Model”) and the Binomial Lattice model (the “Lattice Model”). The Black-Scholes Model requires inputs, such as the expected volatility, expected term, exercise price, risk-free interest rate, and the value of the underlying security. The Lattice Model provides for assumptions regarding expected volatility, expected term, exercise price, risk-free interest rates, the value of the underlying security, and the probability of and likely timing of a specific event within the period to maturity. These values are subject to a significant degree of the Company’s judgment. The Company’s common stock price represents a significant input that affects the valuation of the warrants.

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, Presentation of Financial Statements – Going Concern. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

Revenue Recognition

The Company records its revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which when capable of being distinct, are accounted for as separate performance obligations. Revenue recognition is evaluated based on the following five steps: (i) identification of the contract with the customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.
For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are determined based on observable prices at which the Company separately sells its products or services. If a standalone selling price is not directly observable, judgment is made to estimate the selling price based on market conditions and entity-specific factors including cost plus analyses, features and functionality of the product and/or services, the geography of the Company’s customers, and type of customer. Any discounts or other reductions to the transaction price are allocated proportionately to all performance obligations within the multiple-element arrangement. The Company periodically validates the stand-alone selling price for performance obligations by evaluating whether changes in the key assumptions used to determine the stand-alone selling prices will have a significant effect on the allocation of transaction price between multiple performance obligations.

The Company exercised judgement to determine that a product returns reserve was not required as historical returns activity have not been material.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
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 12 months.

The Company’s industrial device segment (EksoWorks) revenue is generated through the sale and rental of the upper body exoskeletons (EksoVest and the recently introduced EVOTM) 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 12 months.

Government Grants

The Company accounts for nonreciprocal government grants by applying the contributions received in accordance with guidance in ASC Topic 958-605. 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 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. The Company expects to recognize revenue related to this grant in 2021.

Research and Development

Research and development costs consist of costs incurred for internal research and development activities. These costs primarily include salaries and other personnel-related expenses, contractor fees, legal fees associated with developing and maintaining intellectual property, prototype materials, facility costs, supplies, and depreciation of equipment associated with the design and development of new products prior to the establishment of their technological feasibility. Such costs are expensed as incurred.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, income tax expense or benefit is recognized for the amount of taxes payable or refundable for the current year and for deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company's consolidated financial statements or tax returns. The Company accounts for any income tax contingencies in accordance with accounting guidance for income taxes. The measurement of current and deferred tax assets and liabilities is based on provisions of currently enacted tax laws. The effects of any future changes in tax laws or rates have not been considered.

For the preparation of the Company's consolidated financial statements included herein, the Company estimates its income taxes and tax contingencies in each of the tax jurisdictions in which it operates prior to the completion and filing of its tax returns. This process involves estimating actual current tax expense together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue, for tax and accounting purposes. These differences result in net deferred tax assets and liabilities. The Company must then assess the likelihood that the deferred tax assets will be realizable, and to the extent they believe that realizability is not likely, the Company must establish a valuation allowance. In assessing the need for any additional valuation allowance, the Company considers all the evidence available to it, both positive and negative, including historical levels of income, legislative developments, expectations and risks associated with estimates of future taxable income, and ongoing prudent and feasible tax planning strategies.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Stock-based Compensation

The Company measures stock-based compensation expense for certain stock-based awards madestock options granted to employees and directors based on the estimated fair value of the award on the date of grant using the Black-Scholes Model and recognizes the fair value on a straight-line basis over the requisite service periods of the awards.

The Company’s determination ofCompany determines the fair value of stock options on the date of grant using the Black-Scholes Model, which is affected by the Company’s stock price as well asand assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s stock price, volatility over the term of the awards, and actual and projected employee stock option exercise behaviors (expected term). Due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term, the Company adopted the simplified method of estimating the expected term pursuant to SEC Staff Accounting Bulletin Topic 14. On this basis, the Company estimated the expected term of options granted by taking the average of the vesting term and the contractual term of the option. 

The valuation ofCompany measures stock-based compensation expense for restricted stock units (“RSUs”) is determined atand performance stock units ("PSUs") made to employees and directors based on the Company’s closing stock price on the date of grant usingand recognizes the Company’s closing stock price.value on a straight-line basis over the requisite service periods of the awards.

The Company records compensation expense for service-based awards on a straight-line basis over the requisite service period, which is generally the vesting period of the award, or to the date on which retirement eligibility is achieved, if shorter.award. For awards with performance-based conditions, at the point that it becomes probable that the performance conditions will be met, the Company records a cumulative catch-up of the expense from the grant date to the current date, and then amortizes the remainder of the expense over the remaining service period. Management evaluates when the achievement of a performance-based condition is probable based on the expected satisfaction of the performance conditions as of the reporting date. The amount of stock-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The Company accounts for forfeitures as they occur.

The Company has, from time to time, modified the terms of its stock options to employees. The Company accounts for the incremental increase in the fair value over the original award on the date of the modification as an expense for vested awards or over the remaining service (vesting) period for unvested awards. The incremental compensation cost is the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before the modification. 
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB")FASB issued Accounting Standard 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 updateCompany will be effective foradopt ASU 2016-13 as of January 1, 2023, using the Company in the first quarter of 2023. Early adoption is permitted.modified retrospective transition method. The Company is currently evaluating the impact the adoption of this standard willASU 2016-13 is not expected to have a material impact on its consolidatedthe Company's financial statements and related disclosures.position or the results of operations.

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for convertible instruments. ASU 2020-06 eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is effective for the Company beginning in the first quarter of 20222024 and must be applied using either a modified or full retrospective approach. Early adoption is permitted. The Company is currently evaluatingdoes not expect the impact this guidance will haveof adopting ASU 2020-06 to be material on its consolidated financial statements.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
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 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. Net Loss Per Share of Common Stock

Basic net loss per share of common stock is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed, when applicable, using the weighted average number of shares of common stock, adjusted to include conversion of certain"in-the-money" stock options and warrants for common stock and release of common stock in connection with restricted stock units during the period, net of tax as follows:
Years ended December 31,Years ended December 31,
2020201920222021
Numerator:Numerator:Numerator:
Net lossNet loss$(15,825)$(12,132)Net loss$(15,080)$(9,764)
Adjustment for gain on fair value of warrant liabilityAdjustment for gain on fair value of warrant liability— (1,029)
Adjusted net loss used for dilution calculationAdjusted net loss used for dilution calculation$(15,825)$(12,132)Adjusted net loss used for dilution calculation$(15,080)$(10,793)
DenominatorDenominatorDenominator
Weighted-average number of shares outstandingWeighted-average number of shares outstanding7,164 4,794 Weighted-average number of shares outstanding12,962 12,193 
Effect of potential dilutive sharesEffect of potential dilutive shares— 76 
Dilutive weighted-average number of shares outstandingDilutive weighted-average number of shares outstanding7,164 4,794 Dilutive weighted-average number of shares outstanding12,962 12,269 
Net loss per shareNet loss per shareNet loss per share
BasicBasic$(2.21)$(2.53)Basic$(1.16)$(0.80)
DilutedDiluted$(2.21)$(2.53)Diluted$(1.16)$(0.88)

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
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:
Years ended December 31,Years ended December 31,
2020201920222021
Options to purchase common stockOptions to purchase common stock529 494 Options to purchase common stock270 491 
Restricted stock unitsRestricted stock units143 89 Restricted stock units1,383 655 
Warrants for common stockWarrants for common stock1,325 1,178 Warrants for common stock1,240 920 
Total common stock equivalentsTotal common stock equivalents1,997 1,761 Total common stock equivalents2,893 2,066 

4. Human Motion and Control Acquisition

On December 5, 2022, the Company acquired the human motion and control (“HMC”) business from Parker Hannifin Corporation (“Parker”), an Ohio corporation (the "HMC Acquisition"). The assets acquired from the business unit include intellectual property rights for devices which are FDA-cleared lower-limb powered exoskeletons that enable task-specific, overground gait training to patients with weakness or paralysis in their lower extremities. Products include Ekso Indego Personal, a light-weight exoskeleton for safe use in most home and community environments, and Ekso Indego Therapy, an adjustable exoskeleton for patients with spinal cord injury and stroke complementing Ekso’s product offering in outpatient facilities.

The assets purchased by the Company include intellectual property related to the aforementioned Ekso Indego devices and future products in the orthotics and prosthetics space, inventories related to the Ekso Indego product line, fixed assets configured for the manufacture of the Ekso Indego products, and Ekso Indego devices maintained for service and sales demonstrations. The Company did not acquire any cash in connection with the acquisition of the business unit.

As consideration for the assets acquired, the Company (i) paid the Seller $5,000 in cash and (ii) delivered to the Seller a $5,000 unsecured, subordinated zero percent interest promissory note (the “Promissory Note”). Under the terms of the Promissory Note, the Company shall pay the Seller sixteen (16) equal quarterly installments of $313, with the first payment being due and payable December 31, 2023, and the last payment being due and payable September 30, 2027. For additional information see Note 10. Notes Payable, Net in the notes to our consolidated financial statements included elsewhere in the Annual Report on Form 10-K.

The Company accounted for the acquisition as a business combination in accordance with ASC 805, Business Combinations, by applying the acquisition method, and accordingly, the purchase price of $9,055, as calculated in the table below, was allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The fair values presented for fixed assets, intangible assets, and goodwill are preliminary figures pending final fair value analyses. In accordance with ASC 805, the acquirer has a year from the date of acquisition to recognize measurement period adjustments. The preliminary fair values presented below could be subject to change as result of the aforementioned adjustments. The excess of the purchase price over the preliminary net assets acquired of $431 was recorded as goodwill. The goodwill recognized is attributed primarily to expected synergies of HMC with the Company. From the acquisition date and as of December 31, 2022, there were no changes in the recognized amounts of goodwill resulting from the acquisition.

The following table summarizes the preliminary fair values of the assets acquired, liabilities assumed and consideration given as of the acquisition date. These estimates are preliminary, pending final evaluation of certain assets, and therefore, are subject to revisions that may result in adjustments to the values presented below:

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
4. Investment in Unconsolidated Affiliate
Inventories$1,935 
Fixed assets1,599 
Intangible assets5,240 
Goodwill431 
   Total assets$9,205 
Accrued royalties150 
   Total liabilities$150 
Net assets acquired$9,055 
Cash delivered at close$5,000 
Fair value of promissory note4,055 
   Total consideration$9,055 

In May 2020,The fair value of finished goods inventories acquired was estimated at retail selling price less estimated costs to sell and a reasonable profit allowance for the Company, Zhejiang Youchuang Venture Capital Investment Co., Ltd and another partner (collectively,selling effort. The fair value of raw materials acquired were estimated using current prices from suppliers. The fair value of fixed assets was estimated using a cost approach, adjusting historical gross asset values for inflation, reduced for the “JV Partners”) received notice from the Committee on Foreign Investment in the United States (“CFIUS”) in connection with its reviewremaining estimated economic life of the Company’sassets. The fair values of intangible assets were estimated using a relief from royalty method, the excess earnings method, and a distributor method, all income approaches, which required significant estimates from management regarding future sales expectations, long term operating margins, the JV Partners’ investment in Exoskeleton Intelligent Robotics Co. Limited (the “China JV”).weighted average cost of capital or other appropriate discount rates, and royalty rates. 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 terminationfair value of the Company’s agreements and role withpromissory note was estimated as the China JV. present value of scheduled principal payments discounted at the Company's estimated borrowing rate.

The Company intendsrecorded $5,240 to work cooperatively with the JV Partners and CFIUS to implement the termsintangible assets as of the NSA. On August 12, 2020,acquisition date and is amortizing the Companyvalue of the developed technology, customer relationships and the JV Partners agreed to terminate the agreements underlying the China JV. Asintellectual property over a weighted average estimated useful life of December 31, 2020, all agreements8 years. Amortization expense related to the China JV had been terminated.

In accordance with the above, duringacquired definite lived intangible assets was $23 for the year ended December 31, 2020, the Company recorded2022, and was included as a $66 loss on investment in unconsolidated affiliatecomponent of operating expenses and cost of revenue in the consolidated statementsstatement of operations and comprehensive loss. Of the $431 of goodwill, none was expected to be deductible for tax purposes.

Aggregate incremental revenues and net loss relatedattributable to the write-offacquired business included in the consolidated statement of previously recorded direct costs relatedoperations for the year ended December 31, 2022 were $103 and $289 respectively. The table below presents the pro forma revenue and earnings of the combined business as though the combination were enacted January 1, 2021:

Year Ended December 31,
(Unaudited)
20222021
Revenue$15,736 $14,675 
Net loss$(18,506)$(14,083)

Such pro forma results are based on historical results of the Company, and the historical results of HMC as they occurred under the ownership of Parker Hannifin Corporation, and certain pro forma adjustments relating to establishing the China JV.interest for debt discount amortization, depreciation of fixed assets and amortization of certain intangible assets.


5. Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
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 on a recurring basis are as follows:
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
December 31, 2020
December 31, 2022December 31, 2022
LiabilitiesLiabilitiesLiabilities
Warrant liabilitiesWarrant liabilities$6,037 $$$6,037 Warrant liabilities$233 $— $— $233 
December 31, 2019
December 31, 2021December 31, 2021
LiabilitiesLiabilitiesLiabilities
Warrant liabilitiesWarrant liabilities$4,307 $$$4,307 Warrant liabilities$1,550 $— $— $1,550 
Contingent success fee liability$$$$

During the years ended December 31, 20202022 and 2019,2021, there were no transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis and the valuation techniques used did not change compared to the Company’s established practice.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
The following table sets forth a summary of the changes in the fair value of Company’s Level 3 financial liabilities during the year ended December 31, 2020,2022, which were measured at fair value on a recurring basis:
Warrant
Liability
Contingent
Success Fee
Liability
Balance at December 31, 2019$4,307 $
Initial fair value of warrants in connection with June 2020 financing2,650 0
Loss on revaluation of warrants issued in June 2020, December 2019, May 2019 financing, and December 2015 equity financings3,056 0
Reclassification of warrant liability to equity upon exercise of warrants(3,976)
Gain on revaluation of contingent liability(6)
Balance at December 31, 2020$6,037 $
Warrant
Liability
Balance as of December 31, 2020$6,037 
Initial fair value of warrants issued in connection with 2021 financing1,936 
Gain on revaluation of warrants issued in 2021, June 2020, December 2019, and May 2019 equity financings(3,962)
Reclassification of warrant liability to equity upon exercise of warrants(2,461)
Balance as of December 31, 2021$1,550 
Gain on revaluation of warrants issued in 2021, June 2020, December 2019, and May 2019 equity financings(1,317)
Balance as of December 31, 2022$233 

See Note 1312 in the notes to consolidated financial statements under the caption Capitalization and Equity Structure – Warrants for a description of the warrants accounted for as a liability, including the method and inputs used to estimate their fair value.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
6. Revenue Recognition

The Company’s medical device segment (EksoHealth) revenue is primarily generated through the sale and subscription of the EksoNR, EksoUE, Ekso Indego Therapy, and Ekso Indego Personal devices, along with the sale of support and maintenance contracts. Revenue from medical device product sales is recognized upon transferat 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 promised products or servicesthe EksoNR, Ekso UE, Ekso Indego Therapy, and Ekso Indego Personal devices. Support and maintenance contracts extend coverage beyond the Company’s standard warranty agreements. The separately priced support and maintenance contracts range from 12 to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.48 months. 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 ontypically receives payment at the following five steps: (i) identificationinception of the contract withand recognizes revenue evenly over the customer; (ii) identificationterm of the performance obligations incontracts. Revenue from medical device subscriptions is recognized evenly over 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.contract term, typically over 12 months.

For multiple-element arrangements,The Company’s industrial device segment (EksoWorks) revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are determined based on observable pricesprimarily generated through the sale and subscription of the upper body exoskeleton EVO and associated accessories. Revenue from industrial device sales is recognized 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 functionalitypoint in time when control of the product and/or services,transfers to the geographycustomer. Transfer of control generally occurs upon shipment from the Company’s customers, type offacility. Revenue from industrial device subscriptions is recognized evenly over 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 term, typically 12 months.

Contract BalancesIn June of 2022, the Company ceased commercialization of the EksoZeroG support arm and related products and accessories. Refer to Note 16. Commitment and Contingencies for further information regarding commitments and obligations related to the EksoZeroG product line.

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

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:
December 31, 2022December 31, 2021
Deferred extended maintenance and support$2,124 $2,349 
Deferred royalties— 280 
Deferred device and advances29 66 
Total deferred revenues2,153 2,695 
Less current portion(1,121)(1,220)
Deferred revenues, non-current$1,032 $1,475 
Deferred revenue activity consisted of the following for the years ended December 31, 2021 and December 31, 2022:
Year Ended December 31, 2022Year Ended December 31, 2021
Beginning balance$2,695 $3,302 
Deferral of revenue1,397 1,189 
Recognition of deferred revenue(1,939)(1,796)
Ending balance$2,153 $2,695 
At December 31, 2022, the Company’s deferred revenue was $2,153. The Company expects to recognize approximately $1,121 of the deferred revenue during 2023, $579 in 2024, and $453 thereafter.

In addition to deferred revenue, the Company has a non-cancellable backlog of $2,288, expected to be recognized between 2023 and 2025, related to its contracts for subscription units with its customers. These subscription contracts typically have twelve to twenty-four month terms and subscription income is recognized on a straight-line basis over the lease term.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Deferred revenue consisted of the following:
December 31, 2020December 31, 2019
Deferred extended maintenance and support$2,902 $2,837 
Deferred royalties282 290 
Deferred device, rental revenues and advances118 154 
Total deferred revenues3,302 3,281 
Less current portion(1,496)(1,492)
Deferred revenues, non-current$1,806 $1,789 
Deferred revenue activity consisted of the following for the year ended December 31, 2020:
Beginning balance$3,281 
Deferral of revenue1,922 
Recognition of deferred revenue(1,901)
Ending balance$3,302 
At December 31, 2020, the Company’s deferred revenue was $3,302. The Company expects to recognize approximately $1,496 of the deferred revenue during 2021, $908 in 2022, and $898 thereafter.

In addition to deferred revenue, the Company has non-cancellable backlog of $515 related to its contracts for rental units with its customers. These rental contracts typically have 12-month lease terms and rental income is recognized on a straight-line basis over the lease term.
As of December 31, 2020 and 2019, accounts receivable, net of allowance for doubtful accounts, were $3,389 and $5,208, respectively, and are included in current assets on the Company’s 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 year ended December 31, 2020:2022:
EksoHealthEksoWorksTotal EksoHealthEksoWorksTotal
Device revenueDevice revenue$5,012 $689 $5,701 Device revenue$8,305 $588 $8,893 
Service and supportService and support1,723 1,723 Service and support1,923 — 1,923 
Rentals782 55 837 
SubscriptionsSubscriptions967 136 1,103 
Parts and otherParts and other294 72 366 Parts and other528 358 886 
Collaborative arrangementsCollaborative arrangements255 255 Collaborative arrangements107 — 107 
$8,066 $816 $8,882  $11,830 $1,082 $12,912 

The following table disaggregates the Company’s revenue by major source for the year ended December 31, 2021:
 EksoHealthEksoWorksTotal
Device revenue$6,428 $1,138 $7,566 
Service and support1,891 — 1,891 
Subscriptions723 254 977 
Parts and other578 104 682 
Collaborative arrangements130 — 130 
 $9,750 $1,496 $11,246 

7. Property and Equipment, net

Property and equipment, net consisted of the following:
EstimatedDecember 31,
Life (Years)20222021
Company-owned fleet2-5$3,468 $3,693 
Computer software3-5234 390 
Leasehold improvement5-10142 631 
Furniture, office and leased equipment3-7279 554 
Machinery and equipment3-7207 289 
Tools, molds, dies and jigs3-51,347 96 
Computers and peripherals3-5— 77 
5,677 5,730 
Accumulated depreciation and amortization(2,997)(4,739)
Property and equipment, net$2,680 $991 

Depreciation expense of property and equipment, net totaled $486 and $561 for the years ended December 31, 2022 and 2021, respectively.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
The following table disaggregates the Company’s revenue by major source for the year ended December 31, 2019:
 EksoHealthEksoWorksTotal
Device revenue$9,064 $1,726 $10,790 
Service and support1,647 1,647 
Rentals913 913 
Parts and other259 234 493 
Collaborative arrangements74 74 
 $11,957 $1,960 $13,917 

7. Property and Equipment, net

Property and equipment, net consisted of the following:
EstimatedDecember 31,
Life (Years)20202019
Company-owned fleet3-4$3,326 $3,385 
Computer software3-5851 851 
Leasehold improvement5-10631 631 
Furniture, office and leased equipment3-7557 554 
Machinery and equipment3-7291 289 
Tools, molds, dies and jigs596 96 
Computers and peripherals3-577 77 
5,829 5,883 
Accumulated depreciation and amortization(4,657)(4,226)
Property and equipment, net$1,172 $1,657 

Depreciation and amortization expense of property and equipment, net totaled $620 and $690 for the years ended December 31, 2020 and 2019, respectively.

8. Accrued Liabilities

Accrued liabilities consisted of the following:
December 31,December 31,
2020201920222021
Salaries, benefits and related expensesSalaries, benefits and related expenses$1,194 $1,098 Salaries, benefits and related expenses$1,843 $2,015 
Device warrantyDevice warranty188 285 Device warranty274 195 
OtherOther47 300 Other161 89 
TotalTotal$1,429 $1,683 Total$2,278 $2,299 

Warranty

Sales of devices generally include an initial warranty for parts and services for one year in the Americas, two years in Europe, the Middle East, Africa (EMEA), and one or two years in the Asia Pacific (APAC) region. A liability for the estimated cost of product warranty is established at the time revenue is recognized based on the historical experience of known product failure rates and expected material and labor costs to provide warranty services. Specific additional warranty accruals may be made if unforeseen technical problems arise. Alternatively, if estimates are determined to be greater than the actual amounts necessary, a portion of the liability may be reversed in future periods. Warranty costs are reflected in the consolidated statements of operations and comprehensive loss as a component of costs of revenue. The current portion of the warranty liability is classified as a
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
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 consolidated balance sheets.
WarrantyWarranty
2020201920222021
Balance at beginning of the periodBalance at beginning of the period$350 $319 Balance at beginning of the period$270 $226 
Additions for estimated future expenseAdditions for estimated future expense219 416 Additions for estimated future expense425 304 
Incurred costsIncurred costs(343)(385)Incurred costs(282)(260)
Balance at end of the periodBalance at end of the period$226 $350 Balance at end of the period$413 $270 
Current portionCurrent portion188 285 Current portion$274 $195 
Long-term portionLong-term portion38 65 Long-term portion139 75 
TotalTotal$226 $350 Total$413 $270 

9. Notes payable, netGoodwill and Intangible Assets

WAB and PWB Term LoansGoodwill

WAB Term Loan

In December 2016,The following table summarizes the Company entered into a loan agreement with Western Alliance Bank ("WAB loan") and received a loanchanges in the principalcarrying amount of $7,000 that bore interest on the outstanding daily balance at a floating per annum rate equal to the 30-day U.S. LIBOR plus 5.41%. The Company was required to pay accrued interest on the WAB loan on the first day of each month through and including January 1, 2018. Commencing on February 1, 2018, the Company was required to make equal monthly payments of principal, together with accrued and unpaid interest maturing on January 1, 2021. On April 29, 2020 the Company entered into a second amendment to the December 2016 WAB loan agreement to defer principal payments for three months beginning in May 2020, with adjustments when the principal payments resumed on August 1, 2020. During the three-month deferral period the Company was required to make interest only payments.goodwill (in thousands):
Amount
Balance as of December 31, 2021$— 
Acquisition activity431 
Balance as of December 31, 2022$431 

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 rateCompany determined no impairment existed for the WAB loan of 8.49%goodwill for the year ended December 31, 2020. 2022.

Intangible Assets

The final payment fee, initial fair valuefollowing table summarizes the components of the success fee,preliminary gross assets, accumulated amortization, and debt issuance costs were accreted/net carrying values for definite and indefinite lived intangible asset balances as of December 31, 2022:

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
December 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Developed technology$2,310 $(22)$2,288 
Trade name2,310 N/A2,310 
Intellectual property460 — 460 
Customer relationships140 (1)139 
Below market lease20 $— $20 
   Total intangible assets$5,240 $(23)$5,217 

Definite lived intangible assets are amortized to interest expenseover their estimated lives using the effective intereststraight line method, overwhich is estimated as 8 years for developed technology, 12 years for intellectual property, 8 years for customer relationships and 1 year for below market lease. The acquired trade name was estimated to have an indefinite life, and consequently, no amortization expense was recorded. The Company determined no impairment existed for intangible assets for the lifeyear ended December 31, 2022.

The estimated future amortization expenses related to definite lived intangible assets as of the loan.December 31, 2022 is as follows (in thousands):

Fiscal YearAmount
2023$325 
2024306 
2025345 
2026345 
2027345 
2028 and thereafter1,241 
  Total$2,907 

10. Notes payable, net

PWB Term Loan

In August 2020, the Company entered into a new loan agreement (the "PWB Loan Agreement") with a different lender, Pacific Western Bank, and received a loan in the principal amount of $2,000 (the "PWB Term Loan") that bears interest on the outstanding daily balance at a rate equal to the greater of: (a) 0.50% above the variable rate of interest announced by the lender as its “prime rate” then in effect; or (b) 4.50%. The PWB Loan Agreement created a first priority security interest with respect to substantially all assets of the Company, including proceeds of intellectual property, but expressly excluding intellectual property itself.

The proceeds of the PWB Term Loan were used to pay off the entire amount of the Company's indebtedness on the WABa previous term loan which amounted to $1,512. Pursuant to the PWB Loan Agreement, the remainder of the PWB Term Loan proceeds may be used for general corporate purposes which totaled $480, net of debt discounts and issuance costs.

The Company is required to pay accrued interest on the current loan on the 13th day of each month through and including August 13, 2023. The principal balance of the PWB Term Loan matures on August 13, 2023, at which time all unpaid principal and accrued and unpaid interest shall be due and payable in full. The interest rate of the PWB Term Loan is subject to increase in the event of late payments and after occurrence of and during the continuation of an event of default. Upon maturity, all unpaid principal and accrued and unpaid interest shall be due and payable in full. The Company may elect to prepay the PWB Term Loan at any time, in whole or in part, without penalty or premium.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
The PWB Loan Agreement contains a liquidity covenant, among others, which requires that the Company maintain unrestricted cash and cash equivalents in accounts of the lender or subject to control agreements in favor of the lender in an amount equal to at least the outstanding balance of the PWB Term Loan, which was $2,000 as of December 31, 2020.2022. On December 31, 2020,2022, with cash on hand of $12,862,$20,525, the Company was compliant with this liquiditycovenant. The PWB Loan Agreement also contains a primary depository covenant and all other covenants.which restricts the Company from having more than $800 held in subsidiary accounts outside of
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
the United States. As of December 31, 2022, the Company was in violation of this covenant; however, Pacific Western Bank granted the Company a waiver.

The debt issuance costs and debt discounts combined with the stated interest resulted in an effective interest rate of 4.64%5.93% for the year ended December 31, 2020.2022. The debt issuance costs will be amortized to interest expense using the effective interest method over the life of the loan.

Interest expense for the PWB Term Loan totaled $119 and $113 for the years ended December 31, 2022 and 2021, respectively.

The following table presents scheduled principal payments of the Company's note payable as of December 31, 2020:2022:
PeriodPeriodAmountPeriodAmount
2021 - 2022$
202320232,000 2023$2,000 
Total principal paymentsTotal principal payments2,000 Total principal payments2,000 
Less final payment fee, discount and issuance cost11 
Less debt discount and issuance costsLess debt discount and issuance costs(3)
Note payable, netNote payable, net$1,989 Note payable, net$1,997 
Current portionCurrent portion$Current portion$1,997 
Long-term portionLong-term portion1,989 Long-term portion— 
Note payable, netNote payable, net$1,989 Note payable, net$1,997 

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,(the "SBA"), pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), or the PPP loan. The PPP loan provides for anbore interest rate ofat 1.00% per year,annum, and maturesmatured two years after the date of initial disbursement. The terms of the PPP Loanloan 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. Based on management's interpretation of the the PPP Flexibility Act,

On June 28, 2021, the Company expects to begin making principal and interest payments onreceived notification from the SBA that the Company’s Forgiveness Application of the PPP loan beginningand accrued interest, totaling $1,099, was approved in 2022. The overall timing of payments with respectfull, and the Company had no further obligations related to the amounts of principal and interest due could change basedPPP loan. Accordingly, the Company recorded a gain on the ultimate determinationforgiveness of what may or may not be forgiven. Thethe PPP loan may be usedas gain on forgiveness of note payable on the consolidated statement of operations for payroll costs, costs relatedthe twelve months ended December 31, 2021.

Parker Hannifin Promissory Note

In connection with the HMC Acquisition, refer to certain group health care benefitsNote 4 Human Motion and insurance premiums, rent payments, utility payments, mortgageControl Acquisition, on December 5, 2022, the Company delivered a $5,000 unsecured, subordinated promissory note (the "Promissory Note") to Parker Hannifin Corporation. The Promissory Note, subordinate to the PWB Term Loan, bears no interest paymentswith principal payable in sixteen equal installments due on the last day of each quarter, commencing on December 31, 2023 and maturing on September 30, 2027.

The Promissory Note, upon the occurrence of an event of default, allows for the levying of interest paymentsequal to the lesser of (a) 5% per annum and (b) the maximum interest rate permitted under applicable law on any other debt obligation that were incurred before February 15, 2020.the then entire outstanding principal balance, and also for the acceleration of all outstanding liabilities and obligations, making them immediately payable. Under the terms of the CARES ActPromissory Note, the following occurrences constitute a default, and could, upon written notice or declaration by Parker Hannifin Corporation, allow for the PPP Flexibility Act,levying of interest and or the Company may apply foracceleration of principal outstanding: (i) failure to pay any amount of the principal when due and be granted forgiveness for all or a portion of loan granted underpayable, (ii) the PPP loan, with such forgiveness to be determined, subject to limitations (including where employeesdissolution of the Company have been terminated(including the declaration of bankruptcy), and not re-hired by a certain date), based on(iii) the useacquisition of the loan proceeds for paymentCompany by another entity or the sale of payroll costs and any paymentssubstantially all of mortgage interest, rent, and utilities. The terms of any forgiveness may also be subjectits assets 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. Terms of the loan may change subject to future enactments relating to the PPP.another entity.

The follow table presentsCompany recorded the scheduled principal paymentsPromissory Note of $4,055 in its consolidated balance sheets under the captions Notes Payable, Current and Notes Payable, Net, estimating an implicit discount rate of 7.5% via reference to the interest charged on the Company's PWB Term Loan and other relevant economic factors present at the execution date of the Company's PPP loan note payable asPromissory Note. The amortization of debt discounts resulted in an effective interest rate of 7.7% for the year ended December 31, 2020, shown if2022. The debt discount is amortized to interest expense using the loan is not forgiven:

effective interest method over the life of the loan. Interest expense on the Promissory Note was $25 for the year ended December 31, 2022.
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Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
PeriodAmount
2021$
20221,086 
Total principal payments$1,086 
Current portion$
Long-term portion1,086 
Note payable, net$1,086 
The following table presents scheduled principal payments of the Company's note payable as of December 31, 2022:
PeriodAmount
2023$313 
20241,250 
20251,250 
20261,250 
2027937 
Total principal payments5,000 
   Less debt discount(920)
Note payable, net$4,080 
Current portion313 
Long-term portion3,767 
Note payable, net$4,080 

10.11. Lease Obligations

The Company maintainsmaintained a five-year operating lease agreement for its headquarters and manufacturing facility in Richmond, California or(the "Richmond Lease") which expired at the Richmond Lease, which expires inend of May 2022. The Company continued to maintain its tenancy at this location until the end of August 2022 with no further optionsand continued to extend or terminate. Theincur monthly lease includes non-lease components (i.e. common area maintenance costs) that are paid separately from rent based on actual costs incurred. and related expenses pursuant to the terms of the original lease agreement through August 2022.

In June 2020,July 2022, the Company entered into an amendmentoperating lease agreement for its new headquarters and manufacturing facility in San Rafael, California (the "San Rafael Lease") expiring in October 2026 with the option to renew for an additional three-year period at the Richmond Leaseprevailing market rate at the time of extension. At the end of August 2022, the Company relocated to make a one-time payment of $300 to cover its remaining lease obligations for the remainder of 2020, resultingnew headquarters and manufacturing facility in a $48 abatement and a lease payment deferral of $79 to be paid in equal monthly installments in 2021.San Rafael.

The Company has determined that the new San Rafael Lease constitutes an operating lease under ASC 842 and estimates the lease term as July 2022 through October 2026. The option to extend for a three-year period lacks significant economic incentives and disincentives, which would make exercise reasonably certain. Fixed lease payments for identified lease components over the identified term have been discounted at the Company's estimated incremental borrowing rate as of the date of contract execution and are reflected in the consolidated balance sheets under the captions Lease liabilities, current and Lease liabilities, and the corresponding right of use asset is reflected in the consolidated balance sheets under the caption Right-of-use assets. Non-lease components, such as common area maintenance costs, are excluded from the lease liability calculation and expensed as incurred. The Company records a straight-line monthly rent expense for the San Rafael Lease equal to the sum of all fixed lease payments divided by the number of months in the lease term.

The Company previously maintained a five-year operating lease agreement for its European operations office in Hamburg, Germany, expireswhich was originally set to expire in July 2022. ItIn February 2022, the Company executed a new lease agreement with the same landlord for a replacement office in Hamburg, Germany commencing May 1, 2022 and expiring June 30, 2025 with an option to renew for one five-year period. Upon the early termination of the previous lease agreement, it was agreed between the landlord and the Company that access to the previously leased office space would be revoked and the Company would be relieved of its payment obligations for the final two months of the lease term. Consequently, the Company removed the right of use asset and lease liability, $15 and $16 respectively, recorded in its consolidated financial statements related to the original Hamburg tenancy.

The Company has andetermined that the new Hamburg lease agreement constitutes a lease under ASC 842 and estimates the lease term as May 2022 through June 2025. The option to extend for anothera five-year term.

Through April 2019, the Company had an unoccupied leased sales office in Freiburg, Germany,period lacks significant economic incentives and disincentives which had a lease term that expired in December 2020. In April 2019, the Company entered an agreement with the lessor of the Freiburg office releasing the Company from futurewould make exercise reasonably certain. Fixed lease payments after April 30, 2019.

The Company’s futurefor identified lease payments as of December 31, 2020components over the identified term have been discounted at the Company's estimated incremental borrowing rate and are as follows, which are presented as lease liabilities onreflected in the Company’s consolidated balance sheets:
PeriodOperating
Leases
2021$599 
2022237 
Total lease payments836 
Less: imputed interest(55)
Present value of lease liabilities$781 
Lease liabilities, current$548 
Lease liabilities, noncurrent233 
Total lease liabilities$781 
Weighted-average remaining term (in years)1.44
Weighted-average discount rate10.5 %

Lease expensesheets under the Company’s operating leases was $537captions Lease liabilities, current and $551, forLease liabilities, and the years ended December 31, 2020 and 2019, respectively.

Practical Expedients

Leases with an initial termcorresponding right of 12 months or lessuse asset is reflected in the consolidated balance sheets under the caption Right-of-use assets. Non-lease components, such as common area maintenance costs, are not recorded on the balance sheet. The Company recognizesexcluded from the lease expense for such leases on a straight-line basis over the lease term.

liability calculation and expensed as incurred. The Company
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Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
As partrecords a straight-line monthly rent expense for this lease equal to the sum of all fixed lease payments divided by the transition to ASC 842,number of months in the Company elected to use the modified retrospective transition method with the new standard being appliedlease term.

The Company’s future lease payments as of December 31, 2022 are as follows, which are presented as Lease liabilities, current and Lease liabilities on 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 leasesCompany’s consolidated balance sheets:
PeriodOperating
Leases
2023$408 
2024420 
2025401 
2026349 
Total lease payments1,578 
Less: imputed interest(150)
Present value of lease liabilities$1,428 
Lease liabilities, current$341 
Lease liabilities1,087 
Total lease liabilities$1,428 
Weighted-average remaining term (in years)3.7
Weighted-average discount rate5.4 %

Lease expense under the new definition of a lease;Company’s operating leases was $605 and $527, for the lease classification for expired or existing leases; or whether previously capitalized initial direct costs would qualify for capitalization under ASC 842.years ended December 31, 2022 and 2021, respectively.

11.12. Employee Benefit Plan

The Company administers a 401(k) retirement plan, or the 401(k) Plan, in which all employees are eligible to participate. Each eligible employee may elect to contribute to the 401(k) Plan. The Company has mademakes matching contributions in the form of shares of the Company's common stock to the 401(k) Plan in an amount equal to 50% of employee contributions (up to the statutory limit), subsequent to year-end. The expense related to the contribution was $169$186 and $142$171 for the years ended December 31, 20202022 and 2019,2021, respectively.

12. Related Party Transactions

One of the Company’s directors, Dr. Ted Wang, is the founder, general partner and Chief Investment Officer of Puissance Capital Management LP, or Puissance Capital, which is an affiliate of Puissance Cross-Border Opportunities II LLC, one of the Company’s largest stockholders until November 2020. Prior to Dr. Wang’s appointment to the Board in connection with the Rights Offering in September 2017, the Company entered into a one-year consulting agreement with Angel Pond Capital LLC, or Angel Pond, an entity solely owned and managed by Dr. Wang and affiliated with Puissance Capital. Angel Pond provides consulting services to the Company with respect to strategic positioning in the Asia Pacific region, including introduction to potential strategic partners and the development of strategic partnerships for the sale and manufacture of the Company’s products in that market. During the year ended December 31, 2019, Angel Pond provided consulting services amounting to $30 during, which was expensed in the consolidated statement of operations and comprehensive loss.

During the year ended December 31, 2020, the Company sold EksoVest raw material inventory and tooling to the China JV for
$45.

13. 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 (the "Reverse Stock Split"). 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.

As previously disclosed, on September 16, 2019, the Company received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) informing the Company that because the closing bid price for the Company’s common stock listed on the Nasdaq Capital Market was below $1.00 per share for 30 consecutive business days, the Company did not meet the minimum closing bid price requirement for continued listing on the Nasdaq Capital Market. The reverse stock split was effected in order to raise the per share trading price of its common stock above $1.00 and regain compliance with Nasdaq’s listing requirements. On April 7, 2020, the Company regained compliance with the minimum bid price requirement required by the Nasdaq listing rules.

Summary

The Company’s authorized capital stock at December 31, 20202022 consisted of 141,429 shares of common stock and 10,000 shares of preferred stock. The authorized capital was not reduced in connection with the Reverse Stock Split. AtAs of December 31, 2020,2022, there were 8,34913,203 shares of common stock issued and outstanding and 0no shares of preferred stock issued and outstanding.

Common Stock

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Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
The holders of outstanding shares of common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the Board of Directors may determine. Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. There is no cumulative voting for the election of directors. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding up of the Company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the common stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors. Each outstanding share of common stock is duly and validly issued, fully paid, and non-assessable.

June 2020 Common Stock and Warrants
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Notes to Purchase Common StockConsolidated Financial Statements
(In thousands, except per share amounts)
February 2021 Offering

In June 2020,February 2021, the Company entered into an amended and restated underwriting agreement (the "Underwriting Agreement") with H.C. Wainwright & Co., LLC ("Wainwright"), to sell 3,902 shares of the Company's common stock for a securities purchase agreement, orpublic price of $10.25 per share, for gross proceeds of $40,000 (the "February 2021 Offering"). The Company received net proceeds of $36,504 from the June 2020 Purchase Agreement, with certain purchasers.February 2021 Offering after deducting underwriting discounts, commissions and offering expenses. Pursuant to the June 2020 PurchaseUnderwriting Agreement, the Company sold in a registered direct offering, or the June 2020 Offering, an aggregateissued, to certain designees of 1,748 shares of its common stock. Pursuant to such agreement, the Company also sold, in a concurrent private placement offering,Wainwright, five year 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(the “2021 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 2020February 2021 Offering, or 122273 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 haveat an exercise price of $12.81 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 (expense), net in the accompanying consolidated statements of operations and comprehensive income (loss) and $479 was allocated to the common stock shares sold in the June 2020 Offering and recorded as a reduction to additional paid in capital. The direct financing cost of $309 associated with the June 2020 Placement Agent warrants was also allocated to the common stock shares sold in the June 2020 Offering and recorded as a reduction to additional paid in capital.share.

At the Market Offering

In October 2020, the Company entered into an At The Market Offering Agreement (the "ATM Agreement") with H.C. Wainwright & Co., LLC (the "Agent"), under which the Company may issue and sell shares of its common stock, from time to time, to or through the Agent. Offers and sales of shares of common stock by the Company through the Agent may be made by any method deemed to be an “at the market offering” as defined under SEC Rule 415 or in privately negotiated transactions, subject to certain conditions. Such shares may be offered pursuant to the registration statement on Form S-3 (File No. 333-239203) (the “Registration Statement”), which was declared effective by the SEC on June 26, 2020, and a related prospectus supplement filed with the SEC on October 9, 2020 (the “ATM Prospectus”). Pursuant to the Registration Statement and the ATM Prospectus, shares having an aggregate offering price of up to $7,500 may be offered and sold, subject to certain SEC rules limiting the amount of shares of the Company’s common stock that may be sold by the Company under the Registration Statement. Under the ATM Agreement, shares of the Company's common stock may not be sold for a price lower than $6.75 per share.

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Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
In August 2018, During the Company entered into a Controlled Equity OfferingSM Sales Agreement with Cantor Fitzgerald & Co. (the "Cantor Agreement"). Prior to entering intoyear ended December 31, 2022, the ATM Agreement, the Company terminated the Cantor Agreement in September 2020.

The Company did not sell any shares of common stock under the Cantor Agreement orATM Agreement. As of December 31, 2022, the Company has $6,668 available for future offerings under the prospectus filed with respect to the ATM Agreement during the year ended December 31, 2020.Agreement.

Preferred Stock

The Company may issue shares of preferred stock from time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by its Board of Directors and will have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Board of Directors.

Warrants

Warrant shares outstanding as of December 31, 20192022 and December 31, 20202021 were as follows:
SourceSourceExercise
Price
Term
(Years)
December 31, 2019IssuedExpiredExercisedDecember 31, 2020SourceExercise
Price
Term
(Years)
December 31, 2021IssuedExpiredExercisedDecember 31, 2022
2021 Warrants2021 Warrants$12.81 5273 — — — 273 
June 2020 Investor WarrantsJune 2020 Investor Warrants$5.18 5.5874 (477)397 June 2020 Investor Warrants$5.18 5.5127 — — — 127 
June 2020 Placement Agent WarrantsJune 2020 Placement Agent Warrants$5.64 5122 122 June 2020 Placement Agent Warrants$5.64 539 — — — 39 
December 2019 WarrantsDecember 2019 Warrants$8.10 5556 556 December 2019 Warrants$8.10 5556 — — — 556 
December 2019 Placement Agent WarrantsDecember 2019 Placement Agent Warrants$8.44 552 52 December 2019 Placement Agent Warrants$8.44 552 — — — 52 
May 2019 WarrantsMay 2019 Warrants$3.52 5444 (246)198 May 2019 Warrants$3.52 3193 — — — 193 
2017 Information Agent Warrants$22.50 313 (13)
2015 Warrants$41.25 5107 (107)
Pre-2014 warrants$144.90 9-10(6)
1,178 996 (126)(723)1,325  1,240 — — — 1,240 

During the years ended December 31, 2022 and 2021, the Company received net proceeds of $0 and $1,417 from the exercise of 0 and 358 warrants and issued 0 and 300 shares of common stock, respectively, as a result of those exercises. The weighted average exercise price of the warrants outstanding as of December 31, 2022 was $8.06.
2021 Warrants
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)

In February 2021, the Company issued the 2021 Warrants, exercisable for up to 273 shares of the Company’s common stock at an exercise price of $12.81 per share. The 2021 Warrants were issued as exercisable immediately, and will expire five years from the date of issuance, or on February 11, 2026.

In addition, the 2021 Warrants contain a cashless exercise provision, whereby, if, at the time a holder exercises its 2021 Warrants, a registration statement registering the issuance or the resale of the shares of common stock underlying the 2021 Warrants under the Securities Act is not then effective or available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate exercise price, the holder may elect to instead receive, upon such exercise (either in whole or in part), the net number of shares of the Company’s common stock determined according to a formula set forth in the 2021 Warrants. The 2021 Warrants will be automatically exercised on a cashless basis on their expiration date. The 2021 Warrants could also require payment of liquidated damages by the Company in the form of cash payments in the event of a failure by the Company to timely deliver shares of common stock upon exercise of such warrants. For the years ended December 31, 2021 and December 31, 2022, no shares of the 2021 Warrants were exercised.


The 2021 Warrants also contain a put option, under which, if the Company enters into a Fundamental Transaction, as defined in the 2021 Warrants, the Company or any successor entity will, at the option of a holder of a 2021 Warrant, exercisable concurrently with or at any time within 30 days after the consummation of such Fundamental Transaction, purchase such holder’s 2021 Warrant by paying to such holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such holder’s 2021 Warrant within five trading days after the notice of exercise by the holder of the put option. Because of this put option provision, the 2021 Warrants are classified as a liability and are marked to market at each reporting date.

The warrant liability related to the 2021 Warrants is measured at fair value upon issuance and at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the 2021 Warrants:
December 31, 2022December 31, 2021
Current share price$1.19 $2.65 
Conversion price$12.81 $12.81 
Risk-free interest rate4.21 %1.13 %
Expected term (years)3.114.11
Volatility of stock99.6 %98.3 %

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. DuringFor the yearyears ended December 31, 2020, 4772021 and December 31, 2022, 270 and no shares of the June 2020 Investor Warrants were exercised.exercised respectively.

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Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
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
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
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.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 upon issuance and at each reporting date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the June 2020 Investor Warrants:
December 31, 2020June 10, 2020December 31, 2022December 31, 2021
Current share priceCurrent share price$6.13 $3.81 Current share price$1.19 $2.65 
Conversion priceConversion price$5.18 $5.18 Conversion price$5.18 $5.18 
Risk-free interest rateRisk-free interest rate0.35 %0.39 %Risk-free interest rate4.23 %1.11 %
Expected term (years)Expected term (years)4.945.5Expected term (years)2.943.94
Volatility of stockVolatility of stock105.3 %96.4 %Volatility of stock99.6 %103.9 %

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. For the years ended December 31, 2021 and December 31, 2022, 83 and no shares of the June 2020 Investor Warrants were exercised respectively.

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

The warrant liability related to the June 2020 Placement Agent Warrants is measured at fair value at each reporting 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:

December 31, 2020June 10, 2020December 31, 2022December 31, 2021
Current share priceCurrent share price$6.13 $3.81 Current share price$1.19 $2.65 
Conversion priceConversion price$5.64 $5.64 Conversion price$5.64 $5.64 
Risk-free interest rateRisk-free interest rate0.31 %0.33 %Risk-free interest rate4.33 %1.03 %
Expected term (years)Expected term (years)4.445Expected term (years)2.443.44
Volatility of stockVolatility of stock106.8 %96.3 %Volatility of stock73.5 %100.0 %

December 2019 Warrants

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

The December 2019 Warrants also contain a 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
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Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
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-
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Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
ScholesBlack-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. For the years ended December 31, 2021 and December 31, 2022, zero shares of the December 2019 Warrants were exercised.


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:
December 31, 2020December 31, 2019December 31, 2022December 31, 2021
Current share priceCurrent share price$6.13 $5.86 Current share price$1.19 $2.65 
Conversion priceConversion price$8.10 $8.10 Conversion price$8.10 $8.10 
Risk-free interest rateRisk-free interest rate0.31 %1.73 %Risk-free interest rate4.32 %1.04 %
Expected term (years)Expected term (years)4.475.47Expected term (years)2.473.47
Volatility of stockVolatility of stock107.9 %95.7 %Volatility of stock73.3 %99.7 %

December 2019 Placement Agent Warrants
 
In December 2019, in connection with the December 2019 Offering, the Company issued warrants to purchase 52 shares of the Company’s common stock to the placement agent for such offering (the "December 2019 Placement Agent Warrants"). The 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. For the years ended December 31, 2021 and December 31, 2022, zero shares of the December 2019 Placement Agent Warrants were exercised.


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:
December 31, 2020December 31, 2019December 31, 2022December 31, 2021
Current share priceCurrent share price$6.13 $5.86 Current share price$1.19 $2.65 
Conversion priceConversion price$8.44 $8.44 Conversion price$8.44 $8.44 
Risk-free interest rateRisk-free interest rate0.26 %1.69 %Risk-free interest rate4.42 %0.96 %
Expected term (years)Expected term (years)3.974.97Expected term (years)1.972.97
Volatility of stockVolatility of stock109.4 %93.1 %Volatility of stock71.8 %102.9 %

Management has assessed that the likelihood of a Change of Control (as defined in the December 2019 Placement Agent Warrants), occurring during the term of the December 2019 Placement Agent Warrants is low, and that if such an event were to occur, the difference between the cashless exercise value and the warrants fair value is nominal.

May 2019 Warrants

In May 2019, pursuant to an underwriting agreement, (the "May 2019 Offering"), the Company issued warrants (the "May 2019 Warrants") to purchase 444 shares of common stock. The May 2019 Warrants are currently exercisable and have a current exercise price of $3.52 per share, and will expire five years from the date of their issuance, or on May 24, 2024. The May 2019 Warrants contain a price protection feature, pursuant to which, subject to certain exceptions, if shares of common stock are sold or issued in the future, or securities convertible or exercisable for shares of the Company’s common stock are sold or issued in the future, for consideration, or with an exercise price or conversion price, as applicable, per share less than the exercise price
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
per share then in effect for the May 2019 Warrants, the exercise price of the May 2019 Warrants is reduced to the consideration paid for, or the exercise price or conversion price of, as the case may be, the securities issued in such offering. Pursuant to this provision, in connection with the June 2020 Offering, the exercise price of the May 2019 Warrants was reduced to $3.52 per share, being the amount that is equal to the lower of (x) the consideration paid for the securities issued in the June 2020 Offering, or $4.51 per share, (y) the lowest exercise price of the June 2020 Warrants, or $5.18, and (z) the lowest one-day volume-weighted average price of the Company’s Common Stock on the Nasdaq Capital Market as measured each day during
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
the five trading day period starting on June 8, 2020, rounded to the nearest share, or $3.52. During the year ended December 31, 2020, 246 shares of the May 2019 warrants were exercised.

In addition, if the Company effects or enters into any issuance of common stock or options or convertible securities exercisable for or convertible into common stock at a price which varies or may vary with the market price of the shares of the Company's common stock, subject to certain exceptions, a May 2019 Warrant holder may, at the time of exercise of the holder’s warrant, elect to exercise the warrant at such variable price.

The May 2019 Warrants include a put option, whereby while the May 2019 Warrants are outstanding, if the Company enters into a Change of Control, as defined in the May 2019 Warrants, the Company or any successor entity will, at the option of a 2019 Warrant holder exercise within 90 days after the public disclosure of the Change of Control transaction, purchase such holder’s May 2019 Warrants by paying to such holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of such warrants on the later date of consummation of the Change of Control transaction or two trading days after the notice of such request. Because of this put option provision, the May 2019 Warrants are classified as a liability and are marked to market at each reporting date. For the years ended December 31, 2021 and December 31, 2022, 5 and no shares of the May 2019 Warrants were exercised respectively.

The warrant liability related to the May 2019 Warrants is measured at fair value at each reporting and exercise date using certain estimated inputs, which are classified within Level 3 of the fair value hierarchy. The following assumptions were usedBecause of the price protection feature contained in the May 2019 Warrants, the Company uses a combination of the Black-Scholes Model and the Lattice Model to estimate the fair value of the warrants at each reporting period. The following assumptions were used in the Black-Scholes Model in combination with the Lattice Model to measure the fair value of the May 2019 Warrants:
December 31, 2020December 31, 2019December 31, 2022December 31, 2021
Current share priceCurrent share price$6.13 $5.86 Current share price$1.19 $2.65 
Conversion priceConversion price$3.52 $5.70 Conversion price$3.52 $3.52 
Risk-free interest rateRisk-free interest rate0.21 %1.67 %Risk-free interest rate4.6 %0.83 %
Expected term (years)Expected term (years)3.404.40Expected term (years)1.402.40
Volatility of stockVolatility of stock107.2 %93.9 %Volatility of stock74.5 %109.1 %

Management has assessed that the likelihood of a Change of Control occurring during the term of the warrants is low, and that if such an event were to occur, the difference between the cashless exercise value and the May 2019 Warrants fair value is nominal.

2017 Information Agent Warrants

In September 2017, in connection with a rights offering in August 2017, the Company issued warrants (the "2017 Information Agents Warrants") to purchase 13 shares of the Company’s common stock to an information agent. The 2017 Information Agent Warrants had an exercise price of $22.50 per share and became exercisable immediately upon issuance and remained exercisable until September 13, 2020. These warrants were recorded in stockholders’ equity on the Company’s consolidated balance sheet. These warrants expired during the year ended December 31, 2020.

2015 Warrants

In December 2015, the Company issued warrants (the "2015 Warrants") to purchase 141 shares which are currently exercisable with a current exercise price of $41.25 per share. The 2015 Warrants contained a put-option provision. Under this provision, while the 2015 Warrants were outstanding, if the Company entered into a Fundamental Transaction, as defined in the 2015 Warrants, the Company or any successor entity shall, at the option of each warrant holder, exercisable at any time concurrently with or 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 Model 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 were classified as a liability and are marked to market at each reporting date. Through December 31, 2019, 35 shares of the 2015 Warrants were exercised. During the year ended December 31, 2020, NaN of the 2015 Warrants were exercised. In the year ended December 31, 2019, the Company recorded a $257 loss on the modification of these warrants related to an amendment which reduced the exercise price of the warrants. These warrants expired during the year ended December 31, 2020.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Pre-2014 Merger Warrants

Warrants to purchase preferred stock of Ekso Bionics Inc. outstanding prior to the Merger were converted into warrants to purchase 6 shares of common stock of the Company in connection with the Merger (the "Merger Warrants"). As a result of the May 2019 Offering, which was a firm commitment underwritten public offering, the Merger Warrants expired, in accordance with their terms.

14. Stock-based Compensation

2014 Equity Incentive Plan

In 2014, prior to the Merger, the Board of Directors and a majority of the stockholders adopted the 2014 Equity Incentive Plan, or the 2014 Plan, allowing for the issuance of 137 shares of common stock. The 2014 Plan has since been amended and restated with approval by the stockholders to increase the maximum number of shares issuable, as shown in the table below:
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Original share pool137 
2015 increase111 
June 2017 increase67 
December 2017 increase (ratified in June 2018)293 
2019 increase233 
March 2020 increase333 
December 2020 increase800 
June 2022 increase550 
Total share authorized for grant as of December 31, 202020221,9742,524 

As of December 31, 2020,2022, the total shares authorized for grant under the 2014 Plan was 1,974,2,524, of which 1,11350 were available for future grants.

Under the terms of the 2014 Plan, the Board of Directors may award stock options, restricted stock, restricted stock units, stock appreciation rights and dividend equivalent rights having either a fixed or variable price related to the fair market value of the shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions or any other security with the value derived from the value of the shares.

Shares available for future grant under the 2014 Plan was as follows:
Shares Available For Grant
Available as of December 31, 20192021119 
Granted(225)
Forfeited57 
Expired29587 
Share pool increase1,133550 
Granted(1,499)
Forfeited243 
Expired169 
Available as of December 31, 202020221,11350 

Stock Options

The Board of Directors may grant stock options under the 2014 Plan at a price of not less than 100% of the fair market value of the Company’s common stock on the date the option is granted. The maximum term of an incentive stock option granted to participants may not exceed ten years. Subject to the limitations discussed above, the Board of Directors determines the term and exercise or purchase price of other awards granted under the 2014 Plan. The Board of Directors also determines the terms and conditions of awards, including the vesting schedule and any forfeiture provisions. Options granted under the 2014 Plan vest upon the passage of time, generally four years, or upon the attainment of certain performance criteria established by the Board of Directors. The Company may grant options to purchase common stock to non-employees for advisory and consulting services. Upon exercise of a stock option, the Company issues new shares of common stock.

A summary of the stock option activity during the year ended December 31, 2022 is presented below:
Options
Outstanding
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at beginning of year491 $32.53 
Forfeited(51)$12.66 
Expired(170)$29.86 
Outstanding at end of year270 $37.96 5.26$— 
Vested and expected to vest270 $37.96 5.26$— 
Exercisable at year end261 $38.93 5.21$— 
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
A summary of the stock option activity during the year ended December 31, 2020 is presented below:
Options
Outstanding
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at beginning of year494 $36.64 
Granted90 $5.65 
Exercised$
Forfeited(26)$26.59 
Expired(29)$41.25 
Outstanding at end of year529 $31.62 7.35$42 
Vested and expected to vest529 $31.62 7.35$42 
Exercisable at year end342 $40.63 6.71$24 

In 2020, the Company received $0 in cash fromNo stock options were exercised stock options. The intrinsic value of the options exercised totaled $0 and $233, forduring the years ended December 31, 20202022 and 2019, respectively.2021.

The weighted-average grant date fair value ofAs no stock options were granted forduring the years ended December 31, 20202022 and 2019December 31, 2021, there was $4.42 and $10.20, respectively.no related weighted-average grant date fair value. The total grant date fair value of stock optionoptions vested during the years ended December 31, 20202022 and 20192021 was $1,900$428 and $2,602,$1,194, respectively.

As of December 31, 2020,2022, total unrecognized compensation cost related to unvested stock options was $2,203.$57. This amount is expected to be recognized as stock-based compensation expense in the Company’s consolidated statements of operations and comprehensive loss over the remaining weighted average vesting period of 2.00.83 years.

The following table summarizes information about stock options outstanding as of December 31, 2020:2022:
Options OutstandingOptions Exercisable
Range of
Exercise
Prices
Number of
Shares
Weighted-Average
Remaining
Contractual Life
(Years)
Weighted
Average
Price
Number of
Shares
Weighted
Average
Price
$5.55 - $9.15205 8.9$7.63 87 $6.94 
$16.95 - $26.85101 7.7$22.33 66 $22.48 
$27.30 - $56.70163 6.6$34.89 128 $35.64 
$60.00 - $229.9560 4.2$119.04 60 $119.04 
529 7.4$31.62 342 $40.63 
Options OutstandingOptions Exercisable
Range of
Exercise
Prices
Number of
Shares
Weighted-Average
Remaining
Contractual Life
(Years)
Weighted
Average
Price
Number of
Shares
Weighted
Average
Price
$5.55 - $9.1598 7$6.66 90 $6.51 
$16.95 - $27.9060 5.36$23.52 59 $23.52 
$30.75 - $85.5074 4.87$39.75 75 $39.75 
$101.85 - $229.9538 1.85$138.41 37 $138.41 
270 5.26$37.96 261 $38.93 

The Company recognizes compensation expense using the straight-line method over the requisite service period. The share fair value of each stock option was determined on the date of grant using the Black-Scholes Model under the following assumptions:
Years Ended December 31,
20202019
Dividend yield00
Risk-free interest rate1.44% - 1.65%1.67% - 2.5%
Expected term (in years)5.27 - 6.086.08
Volatility100%-102%100%-103%

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Restricted Stock Units

The Company issues time-based RSUs and PSUs to employees and non-employee service providers. Each RSU and PSU represents the right to receive 1one share of the Company’s common stock upon vesting and subsequent settlement. PSUs vest upon achievement of performance targets based on the Company's annual operating plan. The fair valuevalues of RSUs isand PSUs are determined based on the closing price of the Company’s common stock on the date of grant.

Combined RSU and PSU activity for the year ended December 31, 20202022 is summarized below:
Number of
Shares
 Weighted
Average Grant-
Date Fair Value
Number of
Shares
 Weighted
Average Grant-
Date Fair Value
Unvested as of January 1, 202089 $10.77 
Unvested as of January 1, 2022Unvested as of January 1, 2022655 $5.63 
GrantedGranted135 $4.45 Granted1,499 $1.76 
VestedVested(50)$6.24 Vested(579)$3.93 
ForfeitedForfeited(31)$10.96 Forfeited(192)$5.52 
Unvested as of December 31, 2020143 $6.31 
Unvested as of December 31, 2022Unvested as of December 31, 20221,383 $2.17 

The total grant-date fair value of RSUs and PSUs that vested during the year ended December 31, 20202022 was $251.$1,081. As of December 31, 2020, $7412022, $2,215 of total unrecognized compensation expense related to unvested RSUs and PSUs was expected to be recognized over a weighted average period of 2.201.41 years.

Compensation Expense

Stock-based compensation is included in the consolidated statements of operations and comprehensive loss in general and administrative, research and development, or sales and marketing expenses, depending upon the nature of services provided. Stock-based compensation expense related to stock options, RSUs and RSUs granted to employees and non-employeesPSUs was recorded as follows:

Years Ended December 31,
20202019
Sales and marketing$476 $653 
Research and development293 241 
General and administrative1,641 1,361 
$2,410 $2,255 
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Years Ended December 31,
20222021
Sales and marketing$263 $450 
Research and development339 270 
General and administrative1,944 1,609 
$2,546 $2,329 

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan, or ESPP. Under the ESPP, the Company has 500 shares of common stock reserved for issuance, subject to adjustment in the event of a stock split, stock dividend, combination or reclassification or similar event. The 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 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 December 31, 2020,2022, the Company had not initiated employee enrollment to the plan.

15. Income Taxes

The domestic and foreign components of pre-tax loss for the years ended December 31, 20202022 and 20192021 were as follows:
Years Ended December 31,
20202019
Domestic$(14,954)$(10,321)
Foreign(871)(1,811)
Loss before income taxes$(15,825)$(12,132)
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
Years Ended December 31,
20222021
Domestic$(13,749)$(9,069)
Foreign(1,331)(695)
Loss before income taxes$(15,080)$(9,764)

The Company had 0no current or deferred federal and state income tax expense or benefit for the years ended December 31, 20202022 and 20192021 because the Company generated net operating losses, and currently management does not believe it is more likely than not that the net operating losses will be realized. The Company’s non-U.S. tax obligation is primarily for business activities conducted through Germany and Singapore for which taxes were included in other expense, net for the years ended December 31, 20202022 and 20192021 and determined to be immaterial and accordingly, such amounts were excluded from the following tables.

Income tax expense (benefit) for the years ended December 31, 20202022 and 20192021 differed from the amounts computed by applying the statutory federal income tax rate of 21% to pretax loss as a result of the following:
Years Ended December 31,
20202019
Federal tax at statutory rate21.0 %21.0 %
State tax, net of federal tax effect
R&D credit1.0 
Change in valuation allowance(16.6)(27.2)
Unrealized gain on warrant(4.5)8.7 
Foreign exchange0.6 0.9 
Other(0.5)(4.4)
Total tax expense (benefit)%%

Years Ended December 31,
20222021
Federal tax at statutory rate21.0 %21.0 %
State tax, net of federal tax effect— — 
R&D credit0.7 0.4 
Change in valuation allowance(15.1)(31.3)
Unrealized gain on warrant1.8 8.5 
PPP Loan Forgiveness— 2.4 
Stock-based compensation(7.7)(2.8)
Other(1.8)0.9 
Foreign exchange1.1 0.9 
Total tax expense (benefit)— %— %

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
The tax effects of temporary differences and related deferred tax assets and liabilities as of December 31, 20202022 and 20192021 were as follows:
December 31,December 31,
2020201920222021
Deferred tax assets:Deferred tax assets:Deferred tax assets:
Depreciation and otherDepreciation and other$235 $263 Depreciation and other$249 $257 
Net operating loss carryforwardsNet operating loss carryforwards43,241 40,683 Net operating loss carryforwards48,829 47,579 
Research and development tax creditsResearch and development tax credits1,837 1,817 Research and development tax credits2,034 1,899 
Accruals and reservesAccruals and reserves380 289 Accruals and reserves356 395 
Capitalized research and development costsCapitalized research and development costs640 — 
Deferred revenueDeferred revenue401 220 Deferred revenue213 377 
Stock compensation expenseStock compensation expense2,547 2,197 Stock compensation expense1,670 2,763 
Lease assetsLease assets110 224 Lease assets236 30 
OtherOther37 45 Other22 20 
Deferred tax liabilities:Deferred tax liabilities:Deferred tax liabilities:
Lease liabilitiesLease liabilities(88)(214)Lease liabilities(208)(28)
Prepaid expensesPrepaid expenses(27)(43)Prepaid expenses(41)(32)
Less: Valuation allowanceLess: Valuation allowance(48,673)(45,481)Less: Valuation allowance(54,000)(53,260)
Net deferred tax asset (liability)Net deferred tax asset (liability)$$Net deferred tax asset (liability)$— $— 

The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company’s net deferred tax assets. The Company primarily considered such factors as the Company’s history of operating losses, the nature of the Company’s deferred tax assets, and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. The Company does not believe that it is more likely than not that the deferred tax assets will be realized; accordingly, a full valuation allowance was established and no deferred tax assets were shown in the accompanying consolidated balance sheets. The valuation allowance increased by $3,192$740 and $3,899$4,587 in the years ended December 31, 20202022 and December 31, 2019,2021, respectively.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
For tax years beginning after December 31, 2018, the Global Intangible Low-taxed Income ("GILTI") took effect. Due to the aggregated losses of the foreign subsidiaries, there was no GILTI inclusion for the years ended December 31, 20202022 and December 31, 2019.2021.

The Tax Cuts and Jobs Act of 2017 (TCJA) made a significant change to Section 174 that went into effect for taxable years beginning after December 31, 2021. The change eliminated the ability to currently deduct research and development costs. Instead, these costs must be capitalized and amortized. As a result, the Company capitalized research and development costs of $3.3 million for the years ended December 31, 2022.

On March 27, 2020 the U.S. enacted the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). On December 21, 2020, The U.S. Congress passed the Consolidation Appropriations Act, 2021 (the CAA Act). We haveThe Company evaluated the provisions of the CARES Act and CCA Act and determined that it did not result in a significant impact on ourits tax provision.

On June 29, 2020 California Assembly Bill 85 (AB 85) was signed into law, which suspendssuspended the use of California net operating losses and limits the use of California research tax credits for tax years beginning in 2020 and before 2023. The suspension ofHowever, on February 9, 2022 California Senate Bill 113 (SB 113) was signed into law and removed the limitation on the net operating losses and credits for the restriction of research tax credits2022 year and allows, after taxable years beginning on or after January 1, 2022, the ability to utilize net operating losses and credits. These changes did not result in a significant impact on the value of ourthe Company's deferred tax assets.

As of December 31, 20202022 the Company had federal net operating loss carryforwards of $164,296.$186,722. The federal net operating loss carryforwards of $120,792 generated before January 1, 2018 will begin to expire in 2027, and $43,503$65,930 will carryforward
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
indefinitely but are subject to the 80% taxable income limitation. The Company also had federal research and development tax credit carryforwards of $1,943$2,142 that will expire beginning in 2031, if not utilized.

As of December 31, 2020,2022, the Company had state net operating loss carryforwards of $106,955,$120,724, which will begin to expire in 2028. The Company also had state research and development tax credit carryforwards of $641,$723, which have no expiration.

As of December 31, 2020,2022, the Company had foreign net operating loss carryforwards of $9,655.$11,650. The foreign net operating loss carryforwards do not expire.

Utilization of the Company’s net operating losses and credit carryforwards may be subject to annual limitations in the event of a Section 382 ownership change. Such future limitations could result in the expiration of net operating losses and credit carryforwards before utilization as a result of such an ownership change.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2022 and 2021, were as follows:
Balance as of December 31, 2019637 
Increase of unrecognized tax benefits taken in prior years
Increase of unrecognized tax benefits related to current year
Balance as of December 31, 2020$645 
Years Ended December 31,
20222021
Beginning balances as of January 1, 2022 and 2021$668 $645 
Increase of unrecognized tax benefits taken in prior years— 
Increase of unrecognized tax benefits related to current year48 22 
Ending balances as of December 31, 2022 and 2021$716 $668 

If the Company is able to recognize these uncertain tax positions, the unrecognized tax benefits would not impact the effective tax rate if the Company applies a full valuation allowance against the deferred tax assets, as provided in the Company’s current policy.

The Company had not incurred any material tax interest or penalties as of December 31, 2020.2022. The Company does not anticipate any significant change within 12 months of this reporting date of its uncertain tax positions. The Company is subject to taxation in the United States and various state jurisdictions, Germany, and Singapore. There are no ongoing examinations by taxing authorities at this time. The Company’s tax years 2007 through 20202022 will remain open for examination by the federal and state authorities for three and four years, respectively, from the date of utilization of any net operating loss credits. The Company’s 20162017 to 20202022 tax years will remain open for examination by the German tax authority for four years from the end of the year in which the applicable return was filed. The Company’s 2018 to 20202022 tax years will remain open for examination by the Singapore tax authority for four years from the date of the applicable assessment.

16. Commitments and Contingencies

Commitments

Material Contracts

The Company has 2two license agreements with the Regents of the University of California to maintain exclusive rights to patents. The Company is required to pay 1% of net sales of licensed medical devices sold to entities other than the U.S. government. In addition, the Company is required to pay 21% of consideration collected from any sub-licensee for the grant of the sub-license.

The Company entered into a research and development collaboration agreement in December 2021 with a party that develops technologies having utility in robotic exoskeletons from research and development activities associated with a specific set of government funded research projects. Since January 2022, the Company has assisted with research and development activities in exchange for access to a worldwide, royalty free, transferable, sublicensable, exclusive license to design and market products that use or incorporate the jointly-developed technology within Ekso’s target market segments.

In connection with the HMC Acquisition, the Company assumed two license agreements with Vanderbilt University to maintain exclusive rights to patents on the Company's behalf. The Vanderbilt Exoskeleton License Agreement was entered into
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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
government. In addition, the Company is required to pay 21%as of consideration collected from any sub-licensee for the grant of the sub-license.

In connection with acquisition of Equipois, LLC ("Equipois"), the Company assumed the rightsOctober 15, 2012 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 licensewill continue until April 29, 2038, unless sooner terminated. Under this agreement, the Company is required to pay 6% of net sales of licensed patent products and 3% of net sales of licensed software products and the developer a single-digitminimum annual royalty for licensed products is $250,000 after July 31, 2018. The Vanderbilt Knee License Agreement was entered into as of March 1, 2022 and will continue until February 15, 2041, unless sooner terminated. Under this agreement, the Company is required to pay 3.75% of net sales for licensed patent products and the minimum annual royalty is $75,000 due on net receipts, subjector before July 31, 2028 and $100,000 after that. In addition to a $50 annual minimum royalty requirement.the assumption of the license agreements, the Company entered into transitional use agreements with Parker granting the Company access to certain information technology systems and manufacturing facilities in Macedonia, Ohio for twelve months following the date of the acquisition. As consideration for access to these resources, the Company will make monthly payments of $20.

Purchase Obligations

The Company purchases components from a variety of suppliers and uses contract manufacturers to provide manufacturing services for its products. Purchase obligations are defined as agreements that are enforceable and legally binding and that specify all significant terms, includingincluding: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Due to a variety of factors, including the COVID-19 pandemic, various materials the Company used to manufacture its products are currently experiencing shortages and supply chain disruptions. Electronic components in general, semiconductor chips, battery cells, metals and plastics, all of which are used in the Company's products, are also in shorter supply compared to prior periods, and the Company is also experiencing longer lead times for manufacturing services such as machining and tool making and increased pricing. Numerous factors, such as the ongoing pandemic or further trade tensions between the United States and China, may prolong or deepen these challenges.

The Company had purchase obligations primarily for purchases of inventory and manufacturing related service contracts totaling $396$3,480 as of December 31, 2020,2022, which isare expected to be paid within awithin one year. Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations. Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.

The Company has operating lease commitments totaling $1,578 payable over 45 months related to the San Rafael and Hamburg leases disclosed in Note 11. Lease Obligations.


Other Contractual Obligations

The following table summarizes the Company's outstanding contractual obligations, including interest payments, as of December 31, 20202022 and the effect those obligations are expected to have on its liquidity and cash flows in future periods:
Payments Due By Period
TotalLess than
one year
1-3 Years3-5 Years
Term loans$3,356 $90 $3,266 $
Facility operating lease836 599 237 
Total$4,192 $689 $3,503 $
Payments Due By Period
TotalLess than
one year
1-3 Years3-5 Years
Term loan$2,107 $2,107 $— $— 
Promissory Note5,000 313 2,500 2,187 
Facility operating leases1,578 408 821 349 
Total$8,685 $2,828 $3,321 $2,536 

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 consolidated financial statements.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
17. Segment Disclosures

The Company has 2two reportable segments: EksoHealth and EksoWorks. The EksoHealth segment designs, engineers, manufactures, sells and rentsmarkets exoskeletons for applications in the medical markets. The EksoWorks segment designs, engineers, manufactures, sells, and rentsmarkets exoskeleton devices to allow able-bodied users to perform difficult repetitive work for extended periods. The reportable segments are each managed separately because they serve distinct markets.

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Ekso Bionics Holdings, Inc.
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
The Company evaluates performance and allocates resources based on segment gross profit margin. The Company does not consider net assets as a segment measure and, accordingly, assets are not allocated.

Segment reporting information is as follows:
EksoHealthEksoWorksTotalEksoHealthEksoWorksTotal
Year ended December 31, 2020
Year ended December 31, 2022Year ended December 31, 2022
RevenueRevenue$8,066 $816 $8,882 Revenue$11,830 $1,082 $12,912 
Cost of revenueCost of revenue3,219 593 3,812 Cost of revenue5,949 749 6,698 
Gross profitGross profit$4,847 $223 $5,070 Gross profit$5,881 $333 $6,214 
Year ended December 31, 2019
Year ended December 31, 2021Year ended December 31, 2021
RevenueRevenue$11,957 $1,960 $13,917 Revenue$9,750 $1,496 $11,246 
Cost of revenueCost of revenue5,404 1,749 7,153 Cost of revenue3,746 751 4,497 
Gross profitGross profit$6,553 $211 $6,764 Gross profit$6,004 $745 $6,749 

Revenues
Geographically, the regions the Company operates in are the Americas, EMEA, and APAC. Individual countries with revenue greater than 10% of total revenue are disclosed separately from one customerthe regional totals. Geographic information for revenue based on location of customers is as follows:
 Year ended December 31,
 20222021
United States$6,557$6,451
Other252 127 
Americas6,809 6,578 
Germany1,002 1,327 
Other2,847 2,084 
EMEA3,849 3,411 
APAC2,254 1,257 
 $12,912 $11,246 


18. Related Party Transactions

On February 4, 2023, the Company entered into a mutual release and settlement agreement with an entity to settle and resolve any and all potential claims brought forth in connection with a consulting agreement executed between itself and the Company in July of 2017. Under the terms of the Company’s EksoHealth segment represented approximately $2,138consulting agreement, the Company was required to make milestone payments for the introduction of potential partners for, and the consummation of, a strategic joint venture. A member of the Company’s consolidated revenuesCompany's board of directors is affiliated with one of two entities under common control.

In connection with the settlement agreement, the Company recorded $205 in general and administrative operating expenses for the year ended December 31, 2019.2022 and has recorded a liability of $325 in its consolidated balance sheet as of December 31, 2022. There were no expenses or liabilities recorded related to the settlement agreement for the year ended December 31, 2021. The total settlement amount of $325 is expected to be paid in cash over the next fourteen months.

Geographic revenue information based on location of customer is as follows:
Years Ended December 31
20202019
United States$5,945 $9,071 
All Other2,937 4,846 
$8,882 $13,917 

18. Subsequent Events

In February 2021, the Company entered into an amended and restated underwriting agreement (the "Underwriting Agreement") with H.C. Wainwright & Co., LLC ("Wainwright"), to sell 3,902 shares of the Company's common stock for public price per share of $10.25 per share, for gross proceeds of $40,000 (the "February 2021 Offering"). The Company estimates that the net proceeds from the February 2021 Offering will be approximately $36,404 after deducting underwriting discounts and commissions and estimated offering expenses. Pursuant to the Underwriting Agreement, the Company issued to certain designees of Wainwright 5-year warrants (the “2021 Warrants”) to purchase shares of Common Stock in an amount equal to 7.0% of the aggregate number of shares sold in the February 2021 Offering at an exercise price of $12.8125 per share.

During the first quarter of 2021 through February 25, 2021, the Company received proceeds of $1,416 from the exercise of 275 warrants and sold 78 shares of the Company's common stock under the ATM Agreement at an average price per share of $10.72 for proceeds of $664, net of commission and issuance costs. As of February 25, 2021, the Company has $6,668 available for future offerings under the prospectus filed with respect to the ATM Agreement.
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Item 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.None.

Item 9A.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2020.2022. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

It should be noted that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment and makes assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Management believes that the financial statements included in this Annual Report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the U.S. Securities Exchange Act, Rules 13a-15(f) and 15d-15(f). Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 20202022 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Our management believes that based on this criteria, as of December 31, 2020,2022, our internal control over financial reporting is effective.

This Annual Report does not include an attestation report of our registered public accounting firm regarding our internal control over financial reporting. Our report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permits us to provide only management’s report in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting:

There were no other changes in our internal control over financial reporting identified in connection with the evaluation required by (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

None.



ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS



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PART III

Item 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20212023 Annual Meeting of Shareholders, under the heading “Corporate Governance,” to be filed with the SEC within 120 days of December 31, 2020.2022.

Item 11.    EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20212023 Annual Meeting of Shareholders, under the headings “Executive Compensation” and “Director Compensation,” to be filed with the SEC within 120 days of December 31, 2020.2022.

Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERSMANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20212023 Annual Meeting of Shareholders, under the heading “Common“Ownership of our Common Stock, Ownership of Certain Beneficial Owners and Management,” to be filed with the SEC within 120 days of December 31, 2020.2022.

Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20212023 Annual Meeting of Shareholders, under the heading “Certain Relationships and Related Party Transactions,” to be filed with the SEC within 120 days of December 31, 2020.2022.

Item 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20212023 Annual Meeting of Shareholders, under the headings “Audit Committee Report” and “Audit Fees and Services,” to be filed with the SEC within 120 days of December 31, 2020.2022.
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PART IV

Item 15.    EXHIBITS, FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

(a)Financial Statements and Schedules: The following financial statement documents are included as part of Item 8 to this Form 10-K:

ReportsReport of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 20202022 and 20192021

Consolidated Statements of Operations and Comprehensive loss for the years ended December 31, 20202022 and 20192021

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 20202022 and 20192021

Consolidated Statements of Cash Flows for the years ended December 31, 20202022 and 20192021

Notes to the Consolidated Financial Statements

All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

(b)Exhibits. The exhibits filed with this Annual Report are set forth in the Exhibit Index.
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Exhibit Index
Exhibit
Number
Description
2.12.1#
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
4.1
4.2
4.3
4.4
4.54.3
4.64.4
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4.74.5
4.84.6
4.94.7
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4.8
4.10*4.9*
4.114.10
5.110.1
10.110.2
10.2†10.3†
10.310.4†
10.4†10.5†
10.5†10.6†
10.6†10.7†
10.7†10.8†
10.8†
10.9†
10.10†
10.11†**
10.12†10.10†
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10.1310.11†*
10.12
10.1410.13
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10.15**10.14*
10.15*
10.16**
10.17**
10.18†10.17†
10.19†10.18†
10.20
10.21
10.2210.19
10.23
10.24
10.25
10.26
10.27
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10.28
10.29
10.30*
10.31
10.32
10.33
10.3410.22*
10.3510.23*
21.1*
23.1*
24.1Power of attorney (included on signature page of this report)
31.1*
31.2*
32.1*32.1§
32.2*32.2§

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101 §*Interactive Data Files of Financial Statements and Notes.
101.ins §*Instant Document
101.sch §*XBRL Taxonomy Schema Document
101.cal §*XBRL Taxonomy Calculation Linkbase Document
101.def §*XBRL Taxonomy Definition Linkbase Document
101.lab §*XBRL Taxonomy Label Linkbase Document
101.pre §*XBRL Taxonomy Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

#    Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item             
601(a)(5). The Company agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities
and Exchange Commission upon its request.
*    Filed herewith
**    Confidential Treatment portions of this exhibit have been omitted as permitted by applicable regulations.
§    The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
†    Management contract or compensatory plan or arrangement

Item 16.         FORM 10-K SUMMARY

The Company has elected not to include summary information.
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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

By:/S/ Jack PeurachScott G. Davis
February 25, 2021March 28, 2023Scott G. Davis
President and Chief Executive Officer
(Principal Executive Officer)

POWERS OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and Jack PeurachScott G. Davis and John F. Glenn,Jerome Wong, and each of them, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SignatureTitleDate
/S/ Jack PeurachScott G. DavisPresident and Chief Executive OfficerFebruary 25, 2021March 28, 2023
Jack PeurachScott G. Davis(Principal Executive Officer)
/S/ John F. GlennJerome WongChief Financial OfficerFebruary 25, 2021March 28, 2023
John F. GlennJerome Wong(Principal Accounting and Financial Officer)
/S/ Steven ShermanChairman of the BoardFebruary 25, 2021
Steven Sherman
/S/ Mary Ann CloydDirectorFebruary 25, 2021March 28, 2023
Mary Ann Cloyd
/S/ Corinna LathanDirectorMarch 28, 2023
Corinna Lathan, Ph.D.
/S/ Charles LiDirectorFebruary 25, 2021March 28, 2023
Charles Li, Ph.D.
/S/ Steven ShermanDirectorMarch 28, 2023
Steven Sherman
/S/ Stanley SternDirectorMarch 28, 2023
Stanley Stern
/S/ Rhonda A. WallenDirectorFebruary 25, 2021March 28, 2023
Rhonda A. Wallen
/S/ Stanley SternDirectorFebruary 25, 2021
Stanley Stern
/S/ Ted WangDirectorFebruary 25, 2021
Ted Wang
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