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What changed in EKSO BIONICS HOLDINGS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of EKSO BIONICS HOLDINGS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+280 added−423 removedSource: 10-K (2024-03-04) vs 10-K (2023-03-28)

Top changes in EKSO BIONICS HOLDINGS, INC.'s 2023 10-K

280 paragraphs added · 423 removed · 164 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

47 edited+49 added−177 removed20 unchanged
Biggest changeThe 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.
Biggest changeOther U.S. and international regulations We are subject to broadly applicable fraud and abuse, privacy, and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute our products. • Federal Anti-Kickback Statute • Federal criminal and civil false claims laws • Health Insurance Portability and Accountability Act (“HIPAA”) • Physician Payments Sunshine Act • Similar state and foreign laws and regulations 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.
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.
European Union 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.
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.
On March 1, 2022, Parker 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.
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.
Subsequently, Parker 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.
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.
These include inpatient rehabilitation facilities ("IRF"), long term acute care hospitals ("LTACH"), skilled nursing facilities ("SNF"), and outpatient rehabilitation clinics, among others. The primary facility types we currently serve are IRFs. Among these facilities, ownership structures also vary from small independent rehabilitation centers to larger networks of providers.
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.
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, 2023, none of our products had yet been approved under EU MDR.
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.
On October 15, 2012, Parker 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.
Issuing Status License Status Issued Patents Pending Applications Licensed to the Company 9 3 Exclusively licensed to the Company 10 — Co-owned with a third party, exclusively licensed to the Company 5 — Co-owned with a third party 3 — Sole ownership by the Company 61 11 Total 88 14 Pending applications mean a complete application has been filed with the applicable patent authority and additional action is pending.
Issuing Status Issued Pending License Status Patents Applications Licensed to the Company 9 3 Exclusively licensed to the Company 10 — Co-owned with a third party, exclusively licensed to the Company 5 — Co-owned with a third party 3 — Sole ownership by the Company 61 9 Total 88 12 Pending applications mean a complete application has been filed with the applicable patent authority and additional action is pending.
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. 18 Table of Contents
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. 10 Table of Contents
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.
As this field develops, we believe that we will face increased competition on the basis of product features, critical outcomes, price, services and other factors.
Many of these applications have also been filed internationally as appropriate for their respective subject matter. As of December 31, 2022, 299 applications have issued or have been allowed as patents internationally. Our patent portfolio contains 334 cases that have issued or are in prosecution in 21 countries outside the U.S.
Many of these applications have also been filed internationally as appropriate for their respective subject matter. As of December 31, 2023, 299 applications have issued or have been allowed as patents internationally. Our patent portfolio contains 334 cases that have issued or are in prosecution in 22 countries outside the U.S.
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.
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 included intellectual property rights for devices which are U.S.
Item 1. BUSINESS Overview We design, develop, and market 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 persons with physical disabilities.
Item 1. BUSINESS Company Background We design, develop, and market 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 persons with physical disabilities or impairments.
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.
Commencing in January 2022, we 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 our target market segments.
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 3 rd party financing partner who then contracts with the end customer for payment terms.
Often these arrangements will be marketed as a subscription product to the end customer. Typically, in a subscription arrangement we will sell the device to the third party financing partner who then contracts with the end customer for payment terms.
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.
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, we are acquired and assumed certain intangible assets including license agreements with Vanderbilt University.
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.
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 2023, approximately 52% of our new unit shipments for EksoNR and Ekso Indego Therapy were to IDNs.
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.
In addition, we 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.
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.
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 requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
We currently support our domestic contract manufacturing partner in the procurement of 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 as of December 31, 2022.
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 as of December 31, 2023.
We purchase both custom and off-the-shelf components from a large number of suppliers and subject them to stringent quality specifications and processes. Whenever possible, we seek to secure dual source suppliers for our components.
In 2023, approximately 89% of our EVO production was outsourced. 8 Table of Contents As part of our manufacturing process, we purchase both custom and off-the-shelf components from a large number of suppliers and subject them to stringent quality specifications and processes. Whenever possible, we seek to secure dual source suppliers for our components.
Ekso Indego Therapy is cleared by the FDA for use with stroke and SCI patients. • Ekso Indego Personal is a lightweight powered lower limb orthosis that enables people with mobility impairments the opportunity to walk independently.
Ekso Indego Personal Ekso Indego Personal is a lightweight powered lower limb orthosis that enables people with mobility impairments the opportunity to walk independently. Ekso Indego Personal is cleared by the FDA for use with individuals with SCI levels from T3 to L5 in community or home settings.
A particular subset of the SCI population that we address with Ekso Indego Therapy are U.S. veterans treated by the U.S. Department of Veterans Affairs (the "VA"). According to VA data there are approximately 42,000 of such patients are veterans and are eligible for medical care and other benefits from the VA out of which 27,000 are receiving treatment annually.
The U.S. Department of Veterans Affairs (the "VA") has an active program to provide products like Ekso Indego Personal to U.S. veterans with SCI. According to VA data, approximately 42,000 of such patients are veterans and are eligible for medical care and other benefits from the VA out of which 27,000 are receiving treatment annually.
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 and the Ekso Indego Therapy devices.
Markets and Distribution EksoHealth Enterprise Health Market Our sales priority for Enterprise Health customers involves the education of clinical and executive stakeholders on the economic and clinical value of our robotic exoskeleton portfolio, including the EksoNR and the Ekso Indego Therapy devices.
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.
In the year ended December 31, 2023, there was one report of an adverse event made to the FDA under the Manufacturer and User Facility Device Experience Database relating to our EksoNR product. There were no adverse events reported relating to our Ekso Indego Therapy or Ekso Indego Personal products.
EVO is an upper body exoskeleton that elevates and supports a worker's arms to assist them with tasks from chest height to overhead. EVO is intended to reduce worker fatigue and reduce on-site injuries while boosting productivity.
Ekso EVO EVO is a wearable upper body exoskeleton that elevates and supports a worker's arms to assist them with tasks from chest height to overhead. EVO is intended to reduce worker fatigue and reduce on-site injuries while boosting productivity. EVO is intended primarily for use with able-bodied individuals and has not been registered with or evaluated by the FDA.
In tandem, we continue to leverage our EksoNR and Ekso Indego customer base to educate and mentor strategic target centers that specialize in stroke, ABI and SCI rehabilitation in specific geographies.
In tandem, we continue to leverage our EksoNR and Ekso Indego customer base to educate and mentor strategic target centers that specialize in stroke, ABI and SCI rehabilitation in specific geographies. 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.
The earliest priority date of the portfolio reaches back to 2003, and new applications may continue to be filed from time-to-time.
The earliest priority date of the portfolio reaches back to 2003, and new applications may continue to be filed from time-to-time. 9 Table of Contents Licensors include the Regents of the University of California, or UC Berkeley, and Vanderbilt University.
These agreements were terminated in 2022, resulting in the recognition of all deferred prepaid royalty revenue. 11 Table of Contents 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.
Intellectual Property Out-Licensing 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 the years ended December 31, 2023 and 2022.
The sales cycle for the EksoNR and Ekso Indego Therapy devices average approximately eight to 12 months for a first device and six to eight months for subsequent devices. The typical sale of our EksoNR and Ekso Indego Therapy is a complete package, which includes the device and all relevant components, batteries for continuous run-time, training and certification.
The typical sale of our EksoNR and Ekso Indego Therapy is a complete package, which includes the device and all relevant components, batteries for continuous run-time, training, and certification. Some customers also purchase EksoCare at the time of a new device purchase for up to four years of coverage.
Licensors include the Regents of the University of California, or UC Berkeley, and Vanderbilt University. 10 Table of 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.
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. 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.
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.
Human Capital Resources and Management As of March 1, 2024, we had 70 full-time employees and two-part time employees, including 60 employees in the United States, ten employees 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.
Some of the components necessary for the assembly 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 majority of our components and major assemblies through purchase orders rather than long-term supply agreements and generally do not maintain finished goods in excess of our anticipated demand.
We purchase the majority of our components and major assemblies through purchase orders rather than long-term supply agreements and do not generally plan to hold finished goods inventory in excess of our anticipated demand.
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 clearance and approval.
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. All of our EksoHealth products are registered with the FDA according to each device classification. The following table lists the FDA registration status for each product.
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.
Some of these outcomes include faster gait speed, increased gait endurance, improvements in cardiometabolic responses, enhanced quality of life, more typical gait kinematics, increased function, and therapy session duration.
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.
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 primary use case for Ekso Indego Personal is for users with certain spinal cord injuries. For this patient population, confinement to a wheelchair can cause severe physical and psychological deterioration.
Personal Health Market Within the Personal Health market, we serve individual users with the Ekso Indego Personal, which is intended to provide overground ambulation in community and home settings. The primary use case for Ekso Indego Personal is for users with SCI. For this user population, confinement to a wheelchair can cause severe physical and psychological deterioration.
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 sales cycle for the Ekso Indego Personal device averages eight to 12 months from the first interaction we have with the potential Ekso Indego Personal device 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.
As an exoskeleton FDA-cleared for acquired brain injury, stroke, multiple sclerosis (MS) and spinal cord injury, EksoNR offers what we believe is the industry’s most natural gait, re-teaching the brain and muscles 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 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 for use with individuals with stroke or SCI.
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 Ekso Indego) have been utilized in many of these protocols.
Clinical Evidence Numerous research studies have been conducted focusing on safety and feasibility of exoskeletons and robotics in rehabilitation. As of March 1, 2024 a search for “robotic exoskeleton” on PubMed, a search engine for biomedical literature and life science journal articles, garners approximately 289 unique publications.
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.
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. Throughout 2023 we integrated the HMC products and team into Ekso Bionics, Inc. and are currently operating as a combined business.
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.
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 2023, we completed the process of transferring sufficient technology and know-how to manufacture our EVO product line at a contract manufacturing partner located in Malaysia.
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.
Globally, multi-unit sales comprised approximately 70% of our unit shipments. The sales cycle for the EksoNR and Ekso Indego Therapy devices varies, but typically takes from approximately eight to 12 months for a first device and six to eight months for subsequent devices.
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 full portfolio of currently available and legacy Ekso exoskeletons (EksoNR and Ekso Indego) have been utilized in many of these protocols. The body of research examines a wide variety of diagnoses including ABI, SCI, stroke, MS, and others.
With 25 VA spinal cord injury centers, the VA has the largest single network of spinal cord injury care in the United States. The European Union includes a unique approach to market penetration and subsequent coverage, requiring separate claims for purchasing the device and for requests for reimbursement.
With 25 VA spinal cord injury centers, the VA has the largest single network of spinal cord injury care in the United States. Veterans who receive our products through the VA complete a screening, in-clinic training and a home trial prior to the VA purchasing a device for each eligible Veteran.
We 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 March 23, 2023, we had 73 employees, including 60 full time employees and one part-time employee in the United States.
We 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. Competition The medical technology and industrial robotics industries are characterized by intense competition and rapid technological change. Specifically, exoskeleton technology remains in its early stages.
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 the Europe, Middle East, and Africa region (“EMEA”), we sell through a combination of direct and indirect channels, with German speaking countries handled direct, and other countries and regions served through distributors. In the Asia Pacific region (“APAC”) we also use a combination of direct and indirect channels depending on the country.
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We have marketed devices that (i) enable individuals with neurological conditions affecting gait, including acquired brain injury (ABI) and spinal cord injury (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 (iv) allow industrial workers to perform difficult repetitive work for extended periods.
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Products EksoNR EksoNR is a wearable robotic exoskeleton specifically designed to be used in a rehabilitation setting to assist individuals recovering from both acute and chronic conditions. A trained clinician typically uses the EksoNR to provide adjustable levels of assistance to the wearer's legs to promote proper gait, active engagement, and higher dosage.
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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.
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EksoNR is FDA cleared for use in a clinical setting with individuals with a spinal cord injury ("SCI"), acquired brain injury ("ABI") - including stroke and traumatic brain injuries ("TBI"), and multiple sclerosis ("MS").
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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.
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Ekso Nomad Ekso Nomad is a power Knee Ankle Foot Orthosis, or KAFO. Nomad is a pre-revenue product that is currently under development. We expect that Nomad with be available in limited volumes for clinicals trials in 2024, with commercial launch currently planned for 2025.
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For medical applications we have three main products. • EksoNR is a robotic exoskeleton specifically designed to be used in a rehabilitation setting to progress neurorehab patients so they can walk out of the device and back into their communities.
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Services EksoPulse EksoNR includes cloud connectivity through EksoPulse, which gathers and transmits statistics and device information during EksoNR walking sessions. EksoCare For most of our Ekso Health products, we offer extended warranty and premium service options under our EksoCare program.
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Ekso Indego Personal is cleared by the FDA for use with SCI patients with injury levels from T3 to L5 in community or home settings. For able-bodied industrial workers, we have offered three products. • Ekso EVO, a wearable exoskeleton for overhead work.
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EksoCare includes a comprehensive warranty, loaner devices to minimize downtime, clinical support, access to our EksoPulse online portal, and other benefits to customers. Device servicing and repair For devices not covered under warranty, we offer fee-for-service repairs and maintenance.
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Based on extensive customer feedback, we have engineered EVO to be light weight, have a low profile, allow for minimal contact with the body, and offer a wide range of uninhibited arm motion.
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Customers may also rent loaner devices on a short-term basis if the time required to service their device will interrupt their ongoing business. Training We offer a range of training programs that are aimed at demonstrating to customers how to use our products safely and effectively.
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EVO is currently targeted at vertical markets including aerospace, automotive, manufacturing, and specific construction trades. • EksoVest is the predecessor product to EVO and has similar properties and applications.
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Training is delivered as an online service, in-person, or as a combination of the two. Training is often included with the purchase of a new device, but training can also be purchased separately. 4 Table of Contents Segments EksoHealth Our EksoHealth segment represents sales of our regulated medical devices regardless of the end customer.
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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.
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We separate our EksoHealth segment into two business lines. Enterprise Health and Personal Health. Enterprise Health Our Enterprise Health business line resides within our EksoHealth segment. Enterprise Health customers include inpatient rehabilitation hospitals and clinics as well as some outpatient rehabilitation clinics. The Enterprise Health product line includes EksoNR and Ekso Indego Therapy.
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EksoZeroG was discontinued in 2022. 4 Table of Contents EksoHealth - Rehabilitation Today, we focus our healthcare business on advanced technology in the rehabilitation market. We are leveraging our patented exoskeleton technology to develop and market products intended to rehabilitate patients earlier and with better outcomes than the current standard of care.
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Personal Health Our Personal Health business line also resides within our EksoHealth segment. Personal Health customers include the Veterans Administration, which provides our products to qualified veterans for individual use, individuals who are covered under worker’s compensation insurance, and private individuals who pay out of pocket.
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As of December 31, 2022, we had shipped approximately 6 20 EksoNR and EksoGT units combined to over 400 rehabilitation facilities or customers worldwide.
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As described in further detail below, we are pursuing Medicare reimbursement for products in this business line. EksoWorks Sales of products to able-bodied individuals for use in industrial or work-related use are represented by our EksoWorks segment. Our only active product within our EksoWorks segment is EVO.
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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.
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The purchase rate of EksoCare varies by country, with U.S. customers typically preferring to include it in their initial purchase. Other regions have lower rates of purchase. In the Enterprise Health market, we offer a range of purchase options.
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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.
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In certain circumstances, we may elect to maintain ownership of a product sold as a subscription in lieu of selling it to a third party financing partner.
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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 EksoNR is a wearable bionic exoskeleton that allows hospitals and other rehabilitation providers to deliver over ground gait therapy and ambulation assistance.
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Subscription arrangements typically last for 24 months to 36 months. 5 Table of Contents We distribute our products to the Enterprise Health market in all of our geographic regions through a combination of direct and indirect (distributor) channels. In the Americas geographic region, sales are primarily made through our direct salesforce.
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EksoNR incorporates hardware and software that can provide varying levels of support and assistance to the patient in real-time, 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.
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We provide products to the VA through distributors classified as Service-Disabled Veteran-Owned Small Businesses (SDVOSB). We are working toward obtaining Medicare reimbursement for the Ekso Indego Personal device. If we are successful, we expect access to this market will allow us to serve a larger portion of the SCI population in the U.S.
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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. Using built-in software, EksoNR's sensors can detect weight shift and initiate steps. Battery-powered motors drive the legs with software determining the appropriate level of assistance necessary for a user to complete the gait sequence.
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Specifically, according to the National Spinal Cord Injury Statistical Center an estimated 294,000 individuals are currently living with SCI and another 17,810 suffer from new SCI injuries each year. Approximately 56% of individuals with SCI are enrolled in Medicare or Medicaid within 5 years post-injury.
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EksoNR is used by customers in both in-patient and out-patient settings. Our customers believe that for patients with some preserved motor ability (for example, after a stroke, 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 mobilize earlier and ultimately to walk again.
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If Medicare reimbursement goes into effect, we plan to sell products to individuals in this market through Durable Medical Equipment suppliers (DMEs). DMEs typically resell products from DME manufacturers to individual users.
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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 with complete SCIs).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+33 added−46 removed212 unchanged
Biggest changeAs a general matter, compliance with laws, regulations, contractual obligations, and other actual and asserted obligations, 33 Table of Contents 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.
Biggest changeAs a general matter, compliance with laws, regulations, contractual obligations, and other actual and asserted obligations, 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. 25 Table of Contents 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.
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.
The EksoNR and Ekso Indego products 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.
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. 20 Table of Contents 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.
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. 12 Table of Contents 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.
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.
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.
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 flows. 27 Table of Contents 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 PMA application from the FDA, unless an exemption applies.
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 flows. 19 Table of Contents 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 PMA application from the FDA, unless an exemption applies.
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 or otherwise disclosed herein. 36 Table of Contents Trading of our common stock is limited, which may affect our stock price.
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 or divestments, investments or strategic alliances; and general market conditions and other factors, including factors unrelated to our operating performance or otherwise disclosed herein. 28 Table of Contents Trading of our common stock is limited, which may affect our stock price.
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. 32 Table of Contents 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.
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. 24 Table of Contents 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.
Continuation of these activities could have a material adverse effect on our results of operations, cash flows and liquidity. 35 Table of Contents 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.
Continuation of these activities could have a material adverse effect on our results of operations, cash flows and liquidity. 27 Table of Contents 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.
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. 28 Table of Contents We may introduce new products with enhanced features and extended capabilities from time to time.
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. 20 Table of Contents We may introduce new products with enhanced features and extended capabilities from time to time.
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.
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 or product lines, 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.
Sales of our EksoNR and Ekso Indego products generally include a one-year warranty for parts and services in the United States and a two-year warranty in EMEA. We also generally provide customers with an option to purchase an extended warranty for up to an additional three to four years.
Sales of our EksoNR and Ekso Indego products generally include a one-year warranty for parts and services in the United States and a two-year warranty in EMEA and APAC. We also generally provide customers with an option to purchase an extended warranty for up to an additional four years.
Any factors that negatively impact sales of these products would adversely affect our business, financial condition and operating results. 22 Table of Contents We rely on independent distributors for the sale and marketing of our products in certain geographies.
Any factors that negatively impact sales of these products would adversely affect our business, financial condition and operating results. 14 Table of Contents We rely on independent distributors for the sale and marketing of our products in certain geographies.
While we anticipate that we will have adequate cash resources to fund our operations and satisfy our debt obligations, o ur ability to generate sufficient cash depends on numerous factors beyond our control and our business may not generate sufficient cash flow from operating activities.
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.
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.
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, 2023, none of our products had yet been approved under the EU MDR.
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.
Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, or write-offs of goodwill and intangible assets, 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.
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.
However, unless we are able to generate significant revenues from sales, 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.
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.
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. 15 Table of Contents The acquisition and integration of other companies, businesses, or technologies could result in operating difficulties, dilution, and other harmful consequences.
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.
Any significant leadership change and accompanying senior management transition, such as the change in our chief executive officer in December 2022, 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.
Further, Congress and the current administration 31 Table of Contents 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.
Further, Congress and the current administration 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.
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.
We are currently in the process of obtaining CE Certificates of Conformity in order to affix the CE Mark to the products we acquired in the HMC Acquisition, including Ekso Indego Therapy and Ekso Indego Personal.
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.
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 and distribution arrangements.
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.
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.
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.
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, (iv) sale of product line or technology, and (v) the factoring of trade receivables.
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.
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 conflicts in Ukraine and the Middle East and any related political or economic responses and counter-responses.
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.
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. 13 Table of Contents We may not be able to enhance our product offerings through our research and development efforts.
The principal factors and uncertainties that make investing in our company risky include, among others: • 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.
The principal factors and uncertainties that make investing in our company risky include, among others: • 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, including Medicare or Medicaid, 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 with Pacific Western Bank 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, Ekso Indego Therapy, Ekso Indego Personal, 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.
Our EksoGT, EksoNR, EksoUE, and Ekso 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.
Our EksoNR, Ekso Indego, and Nomad 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.
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 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.
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.
For example, we have been informed of a limited number of events with respect to our EksoNR device that have been determined to be reportable pursuant to the MDR regulations. In each case, the required MDR report was filed with the FDA.
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.
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.
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.
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, 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, including from shipping delays.
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.
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.
During the period from our initial listing on Nasdaq on August 9, 2016 through December 31, 2022, the closing price of our common stock fluctuated from a high of $93.15 per share to a low of $1.04 per share (on a split-adjusted basis), and our stock price continues to fluctuate.
During the period from our initial listing on Nasdaq on August 9, 2016 through December 31, 2023, the closing price of our common stock fluctuated from a high of $93.15 per share to a low of $0.67 per share (on a split-adjusted basis), and our stock price continues to fluctuate.
The markets in which our products are sold are highly competitive and continue to develop. We face competition within the medical devices and industrial robotics markets on the basis of product features, clinical outcomes, price, services and other factors.
Business and Operational Risks 11 Table of Contents The markets in which our products are sold are highly competitive and continue to develop. We face competition within the medical devices and industrial robotics markets on the basis of product features, clinical outcomes, price, services and other factors.
We may decide to invest our business 21 Table of Contents 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 decide to invest our business development resources in partnerships, licensing agreements, business acquisition, distribution arrangements, and other ways that will provide us new product offerings without significant research and development activities.
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.
Any modification to a 510(k)-cleared device, including our EksoNR, Ekso Indego Therapy, and Ekso Indego Personal, 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.
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.
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 the products or treatments provided using our product from third-party payers, including government payors such as Medicare and Medicaid, managed care organizations and commercial payors, the coverage policies and reimbursement levels of these third-party payers may impact the decisions of healthcare providers, facilities, or end users to purchase our products or the prices they would be willing to pay for those products.
Any such event may adversely affect 34 Table of Contents our business, operating results, and financial condition.
Any such event may adversely affect our business, operating results, and financial condition.
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 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 March 2023, the European Commission extended the original compliance dates for the EU MDR.
In addition, certain provisions in our license agreement with UC Berkeley may be susceptible to multiple interpretations.
In addition, certain provisions in our license agreements with UC Berkeley and Vanderbilt University may be susceptible to multiple interpretations.
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.
Failure to receive the CE Mark as required under the EU MDR, prior to May 25, 2024, for the products acquired in the HMC Acquisition will prevent us from selling those products within the EU.
We may be subject to adverse medical device reporting obligations, voluntary corrective actions or agency enforcement actions. 29 Table of Contents 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.
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.
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.
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. 22 Table of Contents 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.
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.
Our operating results may be negatively impacted if global supply chains of semiconductors and other important commodities recur in the future. Coverage policies and reimbursement levels of third-party payers, including Medicare or Medicaid, may impact sales of our products.
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.
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.
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.
If our license agreements with UC Berkeley or Vanderbilt University are terminated, 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.
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.
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. 26 Table of Contents 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.
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.
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 $15.2 million and $15.1 million for the years ended December 31, 2023 and 2022, respectively.
We may also make equity grants under our Amended and Restated 2014 Incentive Plan (the “Incentive Plan”) and 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 our warrants.
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 our warrants.
We are also subject to extensive pre-payment and post-payment audits by governmental and private payors that could result in material delays, 23 Table of Contents refunds of monies received or denials of claims submitted for payment under such third-party payor programs and contracts.
Certain payors have filing deadlines and they will not pay claims submitted after such time. We may be subject to extensive pre-payment and post-payment audits by governmental and private payors that could result in material delays, refunds of monies received or denials of claims submitted for payment under such third-party payor programs and contracts.
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.
As of December 31, 2023 and 2022, we had an accumulated deficit of $239.2 million and $223.9 million, respectively. The operation of our business and our growth efforts will require significant cash outlays to support our operations.
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 expects that our historical reliance on external financing, from both equity and debt financings, like issuances under our At The Market Offering Agreement and our recently completed registered direct offering in January 2024, for example, will continue to provide the capital necessary to meet our material cash requirements in the long term.
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.
Our license agreements with UC Berkeley and Vanderbilt University impose various development, diligence, commercialization, and other obligations on us, and any future license agreements may impose similar or other obligations on us.
Intellectual Property Risks Protecting our intellectual proprietary rights can be costly, and our success in doing so is not certain. 25 Table of Contents Our long-term success largely depends on our ability to market technologically competitive products.
Our compliance with Section 404 may require that we incur substantial accounting expense and expend significant management efforts. 17 Table of Contents Intellectual Property Risks Protecting our intellectual proprietary rights can be costly, and our success in doing so is not certain. Our long-term success largely depends on our ability to market technologically competitive products.
Individual states in the United 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 some cases, designed to encourage importation from other countries and bulk purchasing.
Individual states in the United 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 some cases, designed to encourage importation from other countries and bulk purchasing. 23 Table of Contents Additional changes may affect our 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 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.
In particular, these instruments limit our ability to, among other things, hold cash outside Pacific Western Bank, 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.
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.
We are a party to two exclusive license agreements with UC Berkeley, covering ten patents exclusively licensed to us. In addition, as a result of the “HMC” acquisition, we are party to two license agreements with Vanderbilt University.
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.
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. 18 Table of Contents If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third-parties or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business.
Wainwright & Co., LLC ("Wainwright") or otherwise through our “shelf” registration statement on Form S-3 (File No. 333-239203). Through Fenruary 28, 2023, we have $6.7 million available for future offerings under our current prospectus for our “at the market offering”.
Wainwright & Co., LLC ("Wainwright") or otherwise through our “shelf” registration statement on Form S-3 (File No. 333-272607). Through March 4, 2024, we have $4.3 million available for future offerings under our current prospectus for our “at the market offering”. We may also make equity grants under one or more employee equity incentive plan or our Employee Stock Purchase Plan.
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.
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.
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 24 Table of Contents extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including rising interest rates.
To some extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including rising interest rates. 16 Table of Contents 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.
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).
Certain of our competitors have reported injuries caused by the malfunction of human exoskeleton devices (in at least one case to the FDA).
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.
In non-German-speaking countries in Europe, other countries in EMEA, and countries in APAC except Singapore, 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.
If imposed on us, any of these sanctions could have a material adverse effect on our reputation, business, results of operations and financial condition.
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 current and our future EksoHealth 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.
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.
Electronic components in general, battery cells, metals and plastics, all of which we use in our products, have, in the recent past, been in shorter supply compared to prior periods. Numerous factors, such as conflicts in the Middle East and Europe or further trade tensions between the United States and China, may prolong or deepen these challenges.
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. 30 Table of Contents 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.
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.
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.
Our obligations, which become due in August 2026, 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 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.
We believe we have sufficient resources to operate for the foreseeable future based upon our current cash resources, expected rate of cash to be used for operations assuming modest increases in current revenue and operating expenses remaining flat, and cash required to satisfy debt obligations.
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.
The reimbursement process 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 or our customers may be required to obtain certain payor-specific documentation from physicians and other healthcare providers before submitting claims for reimbursement.
In that event, our reputation could be damaged and adoption of the products would be impaired.
In that event, our reputation could be damaged and adoption of the products would be impaired. 21 Table of Contents We may be subject to adverse medical device reporting obligations, voluntary corrective actions or agency enforcement actions.
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.
Reimbursement rates could also affect the acceptance rates of new technologies. We have no control over these factors. In the United States, the principal decisions about reimbursement for new medical products are typically made by CMS.
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.
As a result, the MDR transitional period deadline of May 2024 to 2027 or 2028, based upon the risk class of the device.
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.
If we issue additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current stockholders may experience dilution.
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.
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.
Removed
Business and Operational Risks The ongoing COVID-19 pandemic has adversely affected our financial condition and there is little future certainty.
Added
CMS decides whether and to what extent a new product will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree.
Removed
The COVID-19 pandemic and related public health measures have materially affected how we and 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.
Added
Because there is no uniform policy of coverage and reimbursement in the United States, each payor generally determines for its own enrollees or insured patients whether to cover or otherwise establish a policy to reimburse our diagnostic tests, and seeking payor approvals is a time-consuming and costly process.
Removed
Although vaccine rollouts have improved the outlook of the global economy generally, renewed waves and new variants still pose concerns.
Added
Our business plan within our Personal Health business line depends in a large part on sales of our Ekso Indego Therapy product by individuals with SCI who are covered by Medicare or Medicaid.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe 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 3,000 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.
Biggest changeWe currently lease manufacturing facilities in Macedonia, Ohio from Parker Hannifin Corporation to support the production and service of the Ekso Indego product lines. Outside of the United States, we lease approximately 3,000 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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe quotation of our common stock on the OTC market began on or about January 16, 2014. The closing price of EKSO stock as of March 23, 2023 was $1.47. As of March 23, 2023, we had approximately 175 stockholders of record of our common stock.
Biggest changeThe quotation of our common stock on the OTC market began on or about January 16, 2014. The closing price of EKSO stock as of March 1, 2024 was $1.99. As of March 1, 2024, we had approximately 175 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

35 edited+34 added−36 removed19 unchanged
Biggest changeWhile 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. 40 Table of Contents Results of Operations Consolidated Results of Operations: December 31, 2022 compared to the year ended December 31, 2021 (dollars in thousands): Years ended December 31, 2022 2021 Change % Change Revenue $ 12,912 $ 11,246 $ 1,666 15 % Cost of revenue 6,698 4,497 2,201 49 % Gross profit 6,214 6,749 (535) (8) % Gross profit % 48 % 60 % Operating expenses: Sales and marketing 7,157 7,305 (148) (2) % Research and development 3,626 2,549 1,077 42 % General and administrative 10,987 10,723 264 2 % Total operating expenses 21,770 20,577 1,193 6 % Loss from operations (15,556) (13,828) (1,728) 12 % Other (expense) income, net: Interest expense (156) (113) (43) 38 % Gain on revaluation of warrant liabilities 1,317 3,962 (2,645) nm (1) Gain on forgiveness of note payable — 1,099 (1,099) nm (1) Unrealized loss on foreign exchange (655) (867) 212 (24) % Other expense, net (30) (17) (13) nm (1) Total other income, net 476 4,064 (3,588) (88) % Net loss $ (15,080) $ (9,764) $ (5,316) 54 % (1) Not meaningful Revenue Revenue increased $1.7 million, or 15%, for the year ended December 31, 2022, compared to the same period of 2021.
Biggest changeRisk Factors,” specifically the risk titled “Coverage policies and reimbursement levels of third-party payers, including Medicare or Medicaid, may impact sales of our products,” for more information. 31 Table of Contents Results of Operations Consolidated Results of Operations: December 31, 2023 compared to the year ended December 31, 2022 (dollars in thousands): Years ended December 31, 2023 2022 Change % Change Revenue $ 18,279 $ 12,912 $ 5,367 42 % Cost of revenue 9,200 6,698 2,502 37 % Gross profit 9,079 6,214 2,865 46 % Gross profit % 50 % 48 % Operating expenses: Sales and marketing 8,472 7,157 1,315 18 % Research and development 5,025 3,626 1,399 39 % General and administrative 10,694 10,987 (293 ) (3 )% Total operating expenses 24,191 21,770 2,421 11 % Loss from operations (15,112 ) (15,556 ) 444 (3 )% Other (expense) income, net: Interest expense, net (302 ) (156 ) (146 ) 94 % (Loss) gain on revaluation of warrant liabilities (133 ) 1,317 (1,450 ) (110 )% Unrealized gain (loss) on foreign exchange 412 (655 ) 1,067 (163 )% Other expense, net (63 ) (30 ) (33 ) 110 % Total other (expense) income, net (86 ) 476 (562 ) (118 )% Net loss $ (15,198 ) $ (15,080 ) $ (118 ) 1 % Revenue Revenue increased $5.4 million, or 42%, for the year ended December 31, 2023, compared to the same period of 2022.
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.
During the year ended December 31, 2023, 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.
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.
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 or other offerings of equity and/or equity-linked securities, (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.
Summary of Significant Accounting Policies and Estimates — Recent Accounting Pronouncements in the notes to our consolidated financial statements for a discussion of new accounting pronouncements. 46 Table of Contents
Summary of Significant Accounting Policies and Estimates — Recent Accounting Pronouncements in the notes to our consolidated financial statements for a discussion of new accounting pronouncements. 37 Table of Contents
Accounting Policies 45 Table of Contents An 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 time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements.
Accounting Policies An 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 time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements.
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. 44 Table of Contents 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.
Off-Balance Sheet Arrangements As of December 31, 2023, 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. 35 Table of Contents Critical Accounting 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.
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.
Pursuant to the Registration Statement and the ATM Prospectus, shares having an aggregate offering price of up to $5.0 million may be offered and sold, subject to certain SEC rules limiting the amount of shares of the Company’s common stock that we may sell under the Registration Statement.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Annual Report 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, 2022.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Annual Report on Form 10-K titled “Risk Factors.” For a discussion related to the results of operations for 2022 compared to 2021, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Annual Report on Form 10-K filed with the SEC on March 28, 2023.
Overview Our Business We design, develop, and market 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.
Overview Our Business We design, develop, and market exoskeleton products that augment human strength, endurance, and mobility. Our exoskeleton technology serves multiple end markets and can be utilized both by able-bodied persons and those with physical disabilities or impairments.
Offers and sales of 42 Table of Contents 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.
Offers and sales of shares of common stock by us 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.
Refer to Note 16. Commitments and Contingencies in our notes to the consolidated financial statements for additional information regarding our contractual obligations and commitments.
Commitments and Contingencies in our notes to the consolidated financial statements for additional information regarding our contractual obligations and commitments.
Unrealized loss on foreign exchange was $0.7 million for the year ended December 31, 2022, compared to unrealized loss on foreign exchange of $0.9 million for the same period of 2021, mostly due to foreign currency exchange rate fluctuations producing unrealized gains and losses on our inter-company monetary assets and liabilities.
Unrealized gain on foreign exchange was $0.4 million for the year ended December 31, 2023, compared to unrealized loss on foreign exchange of $0.7 million for the same period of 2022, primarily due to foreign currency exchange rate fluctuations producing unrealized gains and losses on our inter-company monetary assets and liabilities.
There were no comparable amounts of cash inflows generated in financing activities for the year ended December 31, 2022. 43 Table of Contents 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.
There were no comparable cash inflows generated in financing activities for the year ended December 31, 2022. 34 Table of Contents 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.
Difficult and challenging economic conditions, including growing supply chain issues amidst an increasingly inflationary environment, could lead to increased price-based competition.
Difficult and challenging economic conditions, including an increasingly inflationary environment, could lead to increased price-based competition.
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”).
Such shares may be offered pursuant to the registration statement on Form S-3 (File No. 333-272607) (the “Registration Statement”), which was declared effective by the SEC on June 20, 2023, and a related prospectus supplement filed with the SEC on July 28, 2028 (the “ATM Prospectus”).
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.
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 gain or loss; • the valuation of inventory, which impacts gross profit margins; • the estimates made regarding the recoverability of our net deferred tax asset, which impacts our financial condition; • assets acquired and liabilities assumed in business combinations; • future warranty costs; • accounting for leases; and • useful lives assigned to long-lived assets.
Notes Payable, Net in the notes to our consolidated financial statements, borrowings under our secured term loan agreement with Pacific Western Bank have a requirement of minimum cash on hand equivalent to the current outstanding principal balance, which is due in full in August 2023. As of December 31, 2022, $2.0 million of cash must remain as restricted.
As described in Note 10. Notes Payable, Net in the notes to our consolidated financial statements, borrowings under our secured term loan agreement with Pacific Western Bank have a requirement of minimum cash on hand equivalent to the current outstanding principal balance, which is due in full in August 2026.
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.
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. 36 Table of Contents Assets acquired and liabilities assumed in business combinations We allocate the fair value of the purchase price of an acquisition to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.
Net Cash Used in Investing Activities Net cash used in investing activities increased $5.1 million for the year ended December 31, 2022, compared to the same period of 2021 due to payment of $5.0 million for the HMC Acquisition and leasehold improvements for our new headquarters and manufacturing facility in San Rafael, California.
Net Cash Used in Investing Activities Net cash used in investing activities decreased $5.0 million for the year ended December 31, 2023, compared to the same period of 2022 due to the absence of the payment of $5.0 million for the HMC Acquisition in 2022.
Gross Profit and Gross Margin Gross profit decreased $0.5 million, or 8%, for the year ended December 31, 2022, compared to the same period of 2021, due to a $2.2 million increase in the cost of revenue as compared to the same period of 2021.
Gross Profit and Gross Margin Gross profit increased $2.9 million, or 46%, for the year ended December 31, 2023, compared to the same period of 2022, due to an increase in EksoHealth device sales.
In 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 time, to or through Wainwright.
Wainwright & Co., LLC (the "Agent"), under which we may issue and sell shares of our common stock, from time to time, to or through the Agent.
Cash and Restricted Cash The following table summarizes the sources and uses of cash for the periods stated (in thousands): Years ended December 31, 2022 2021 Cash and restricted cash, beginning of year $ 40,406 $ 12,862 Net cash used in operating activities (14,688) (11,156) Net cash used in investing activities (5,175) (59) Net cash provided by financing activities — 38,712 Effect of exchange rate changes on cash (18) 47 Cash and restricted cash, end of year $ 20,525 $ 40,406 Net Cash Used in Operating Activities Net cash used in operating activities increased $3.5 million for the year ended December 31, 2022, compared to the same period of 2021, primarily due to payment of business development expenses incurred in late 2021, employee compensation related to higher headcount, increased inventory purchases, and costs related to moving our new headquarters and manufacturing facility to San Rafael, California.
Cash and Restricted Cash The following table summarizes the sources and uses of cash for the periods stated (in thousands): Years ended December 31, 2023 2022 Cash and restricted cash, beginning of year $ 20,525 $ 40,406 Net cash used in operating activities (12,054 ) (14,688 ) Net cash used in investing activities (157 ) (5,175 ) Net cash provided by financing activities 348 — Effect of exchange rate changes on cash (24 ) (18 ) Cash and restricted cash, end of year $ 8,638 $ 20,525 Net Cash Used in Operating Activities Net cash used in operating activities decreased $2.6 million for the year ended December 31, 2023, compared to the same period of 2022, primarily due to an increase in sales and the absence of business development costs incurred in the comparable period, partially offset by payments of acquisition and integration costs associated with HMC.
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.
In June 2023, we entered into an amendment to the ATM Agreement that removed the requirement that shares of our common stock may not be sold for a price lower than $6.75 per share.
Other (Expense) Income, Net Gain on revaluation of warrant liabilities of $1.3 million for the year ended December 31, 2022, was associated with the revaluation of warrants issued in 2019, 2020 and 2021. Gain on revaluation of warrant liabilities of $4.0 million for the year ended December 31, 2021, was related to warrants issued in 2019, 2020 and 2021.
Loss on revaluation of warrant liabilities of $0.1 million and gain on revaluation of warrant liabilities of $1.3 million for the years ended December 31, 2023 and December 31, 2022, respectively, were associated with the revaluation of warrants issued in 2019, 2020 and 2021. Gains and losses on revaluation of warrants are primarily driven by changes in our stock price.
This increase was comprised of a $2.1 million increase in EksoHealth revenue, partially offset by a $0.4 million decrease in EksoWorks.
This increase was comprised of a $5.9 million increase in EksoHealth revenue, partially offset by a $0.5 million decrease in EksoWorks. The increase in EksoHealth revenue is primarily due to an increase in the volume of EksoNR and Indego device sales.
Contractual Obligations and Commitments The following table summarizes our outstanding contractual obligations, including interest payments, as of December 31, 2022 and the effect those obligations are expected to have on our liquidity and cash flows in future periods (in thousands): Payments Due By Period Total Less than one year 1-3 Years 3-5 Years After 5 Years Term loan $ 2,107 $ 2,107 $ — $ — $ — Promissory Note 5,000 313 2,500 2,187 Facility operating leases 1,578 408 821 349 — Purchase obligations 3,480 3,480 — — — 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.
Contractual Obligations and Commitments The following table summarizes our outstanding contractual obligations, including interest payments, as of December 31, 2023 and the effect those obligations are expected to have on our liquidity and cash flows in future periods (in thousands): Payments Due By Period Total Less than one year 1-3 Years 3-5 Years After 5 Years Term loan $ 2,468 $ 174 $ 2,294 $ — $ — Promissory Note 4,688 1,250 3,438 — Facility operating leases 1,216 436 780 — — Purchase obligations 2,783 2,783 — — — Total $ 11,155 $ 4,643 $ 6,512 $ — $ — Refer to Note 16.
Net Cash Provided by Financing Activities Net cash provided by financing activities of $38.7 million for the year ended December 31, 2021, was generated from the sale of common stock and warrants for net proceeds of $36.5 million in connection with the equity financing, net proceeds of $0.8 million from our “at the market offering” program, and proceeds of $1.4 million from the exercise of warrants.
Net Cash Provided by Financing Activities Net cash provided by financing activities of $0.3 million for the year ended December 31, 2023, was generated from the sale of common stock through our “at-the-market offering” program, which was offset by a principal payment related to our notes payable.
Furthermore, our business includes operations in the Americas, EMEA and APAC, so we are affected by demand for our 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.
Furthermore, we do business in the Americas, EMEA and APAC, which results in our business being impacted by demand changes in each of those regions, as well as changes in the strength of the local currencies relative to the U.S. Dollar.
As of December 31, 2022, we had working capital of $21.8 million, compared to working capital of $40.9 million as of December 31, 2021. The decrease in working capital is primarily due to cash outflows from operations of $14.7 million and cash outflows from investing activities of $5.2 million mostly related to the HMC Acquisition.
Cash consisted of bank deposits with third-party financial institutions. As of December 31, 2023, we had working capital of $12.1 million, compared to $21.8 million as of December 31, 2022. The decrease in working capital was primarily due to cash outflows from operations of $12.1 million.
Research and development expenses increased $1.1 million, or 42%, for the year ended December 31, 2022, compared to the same period of 2021, primarily due to an increase in product development activity for next generation products which drove an increase in compensation, outside services, and material usage expenses.
The increase was primarily due to additional headcount associated with the acquisition of HMC. Research and development expenses increased $1.4 million, or 39%, for the year ended December 31, 2023, compared to the same period of 2022, primarily due to additional headcount associated with the acquisition of HMC and costs associated with HMC-sponsored research agreements.
Gross margin declined to approximately 48% for the year ended December 31, 2022, compared to a gross margin of 60% for the same period in 2021.
Gross margin increased to approximately 50% for the year ended December 31, 2023, compared to a gross margin of 48% for the same period in 2022, due to lower device costs. 32 Table of Contents Operating Expenses Sales and marketing expenses increased $1.3 million, or 18%, for the year ended December 31, 2023, compared to the same period of 2022.
Our cash as of December 31, 2022 consisted of bank deposits with third party financial institutions. As of December 31, 2022, of our $20.5 million of cash, $19.6 million was held domestically and $0.9 million was held by our foreign subsidiaries.
Liquidity and Capital Resources As of December 31, 2023, we had $8.6 million of cash of which $8.0 million was held domestically and $0.6 million was held by our foreign subsidiaries.
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 2021, the Company entered into an amended and restated underwriting agreement (the "Underwriting Agreement") with H.C.
During the year ended December 31, 2023, we sold 451,321 shares of common stock under the ATM Agreement at an average price of $1.59, for aggregate proceeds of $0.7 million, net of commission and issuance costs. As of December 31, 2023, we had $4.3 million available for future offerings under the prospectus filed with respect to the ATM Agreement.
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.
Notes Payable, net 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). As described in Note 1.
General and administrative expenses increased $0.3 million, or 2%, for the year ended December 31, 2022, compared to the same period of 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.
General and administrative expenses decreased $0.3 million, or 3%, for the year ended December 31, 2023, compared to the same period of 2022, primarily due to the absence of legal expenses incurred in 2022 associated with the acquisition of HMC, partially offset by an increase in audit services incurred in 2023 in connection with the acquisition of HMC.
Removed
We have sold or leased devices that (i) enable individuals with neurological conditions affecting gait, including ABI, SCI and 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.
Added
The majority of our sales have and are expected to be generated in our EksoHealth Segment, which includes the sales of products and services related to neurorehabilitation in clinical settings. We believe that our Enterprise Health business line will be a source of stable and growing sales.
Removed
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.
Added
As a result of our acquisition of the Human Motion and Control (“HMC”) Business Unit from Parker Hannifin Corporation (“Parker”), in 2022, we also provide products and service to individual users, primarily driven by sales of our Ekso Indego Personal product in our Personal Health business line.
Removed
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.
Added
In addition to our current products and services, we continue to explore business development initiatives to fuel growth and long-term value in our existing segments. EksoHealth Our Enterprise Health business line focuses on sales of our EksoNR and Ekso Indego Therapy products to customers, including inpatient rehabilitation hospitals and clinics as well as some outpatient rehabilitation clinics.
Removed
EksoHealth EksoHealth is our business unit focused on developing and marketing 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.
Added
Our marketing to these customers involves the education of clinical and executive stakeholders on the economic and clinical value of our products and services. In tandem, we continue to leverage our EksoNR and Ekso Indego customer base to educate and mentor strategic target centers that specialize in stroke, ABI and SCI rehabilitation in specific geographies.
Removed
EksoNR 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 ABIs, such as stroke and traumatic brain injuries, as well as SCIs, MS, and others.
Added
Our Personal Health business line is focused on marketing and sales of our Ekso Indego Personal product to individual users. These individual users are currently served by the Veterans Administration, which provides our products to qualified veterans for individual use, individuals who are covered under worker’s compensation insurance, and private individuals who pay out of pocket.
Removed
The benefits of EksoNR rehabilitation can include earlier mobilization of patients, longer and more intense rehab sessions, and increased quality of sessions as compared to alternative therapies. EksoNR is typically used in clinical settings, most commonly at inpatient rehab facilities and stroke centers.
Added
We are pursuing Medicare reimbursement for products in this business line. EksoWorks Sales of products to able-bodied individuals for use in industrial or work-related use are represented by our EksoWorks segment. Our only active product within our EksoWorks segment is EVO.
Removed
EksoHealth 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 enable task-specific, overground gait training to patients with weakness or paralysis in their lower extremities.
Added
Our primary end market for our EksoWorks segment is comprised of commercial enterprises that are focused on solving ergonomic challenges for their workers. These challenges include injury prevention, fatigue reduction, and/or improved worker productivity. While EVO is a general-purpose product, we currently target specific vertical markets including aerospace, automotive, general manufacturing, and certain construction trades.
Removed
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, address market opportunities across the continuum of care, particularly within outpatient facilities, complementary to those most typically addressed by the EksoNR, expanding Ekso’s product offering to home and community use markets.
Added
Economic and Industry Trends Our revenue is highly dependent on market demand for our exoskeleton products.
Removed
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.
Added
If we are successful in obtaining CMS reimbursement for Indego Personal, we believe we will see increased demand for this device as we are able to more economically serve the larger U.S. patient population suffering from SCI.
Removed
The benefits of fatigue reduction can include reduced rates of injuries, higher productivity, higher worker morale, and lower turnover.
Added
Specifically, according to the National Spinal Cord Injury Statistical Center, an estimated 294,000 individuals are currently living with SCI and another 17,810 suffer from new SCI injuries each year. Approximately 56% of individuals with SCI are enrolled in Medicare or Medicaid within 5 years post-injury.
Removed
Currently, we primarily sell these products directly to companies that deploy them for use in their operations. 39 Table of Contents EVO, our wearable upper body exoskeleton, supersedes the EksoVest as 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.
Added
If Medicare reimbursement goes into effect, we plan to sell products to individuals in this market through Durable Medical Equipment suppliers (DMEs). DMEs typically resell products from DME manufacturers to individual users.
Removed
In 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.
Added
DMEs are responsible for the Medicare reimbursement process, which requires a physician’s prescription and evidence of medical necessity to be submitted to and approved by Medicare before reimbursement is provided. See “Part I—Item 1A.
Removed
We believe EVO has industrial applications across a broad range of market verticals, and the unit is currently targeting end markets in aerospace, automotive, manufacturing, commercial construction, and renewable energy.
Added
The decrease in EksoWorks revenue was primarily driven by a reduction in the volume of EVO sales and the absence of the recognition of royalty revenue in the comparable period of 2022 related to an expired license and distribution agreement. Revenue from our EVO product line was affected by delays from our transition to our contract manufacturer.
Removed
Prior to ceasing commercialization of the EksoZeroG support arm and related products and accessories, at the end of the second quarter of 2022, we manufactured and sold our EksoZeroG tool holder, which could mount on an aerial lift platform or scaffolding. 2022 Operational and Financial Highlights • Completed the HMC Acquisition including the Indego product line • Booked a total of 100 EksoHealth devices units in 2022 • Generated 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 exoskeleton products.
Added
Other (Expense) Income, Net Interest expense, net increased $0.1 million, or 94%, for the year ended December 31, 2023, compared to the same period of 2022, due to the interest related to the promissory note in connection with the HMC acquisition.
Removed
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.
Added
On January 16, 2024, we sold an aggregate of 3.0 m illion shares of common stock in a registered direct offering at a price of $1.55 per share, which generated net proceeds of approximately $3.9 million after deducting placement agent fees and our estimated offering expenses. We intend to use such net proceeds for general corporate purposes.
Removed
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.
Added
We have financed our operations primarily through the issuance and sale of equity securities for cash consideration and through bank debt. 33 Table of Contents In October 2020, we entered into an At The Market Offering Agreement (the "ATM Agreement") with H.C.
Removed
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.
Added
As of December 31, 2023, $2.0 million of cash must remain as restricted. After considering cash restrictions, effective unrestricted cash as of December 31, 2023 is estimated to be $6.6 million.
Removed
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.
Added
Organization: Liquidity and Going Concern of the notes to our consolidated financial statements, management believes that substantial doubt exists about our ability to meet cash requirements twelve months from the issuance of such financial statements, and such substantial doubt is not alleviated by our plans.
Removed
We continue to engage with our 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.
Added
Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
Removed
The increase in EksoHealth revenue is primarily due to an increase in the volume of device sales in the Americas 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.
Added
Significant estimates in valuing certain intangible assets include, but are not limited to, the amount and timing of projected future cash flows based on expected future growth rates and margins, discount rate used to determine the present value of these cash flows, future changes in technology and royalty for similar brand licenses, and asset lives.
Removed
EksoWorks revenue decreased due to a lower volume of device sales as the 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 EksoHealth revenue in 2022.
Added
Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates.
Removed
Gross margins declined across both reporting segments, EksoHealth and EksoWorks, with the decline primarily driven by inflationary pressures throughout the supply chain, elevated labor costs, and lower average selling prices of device sales for both segments.
Added
Allocation of purchase consideration to identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized.
Removed
Based on management's assessment of revenue per device, service selling prices and associated cost of sales for products and revenue streams in the recently added Indego product line, we do not expect our gross margin to deviate meaningfully from historical results as a result of the HMC Acquisition. 41 Table of Contents Operating Expenses Sales and marketing expenses decreased $0.1 million, or 2%, for the year ended December 31, 2022, compared to the same period of 2021, as a result of lower 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 marketing activities, which we expect will result in an increase in our sales and marketing expenses for periods following the acquisition.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed1 unchanged
Biggest changeWe 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.
Biggest changeCurrently, we sell our products mainly in U.S. dollars, Euros, and Singapore dollars in our company entities in the Americas, EMEA, and APAC regions, respectively. We generate a portion of our revenue and collect receivables in foreign currencies other than the functional currencies of our company entities and, as such, we have foreign currency exposure.
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.
Future fluctuations in the foreign exchange rates of these currencies can result in foreign exchange gains and losses that 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.
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%.
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 the variable rate of interest announced by the lender as its “prime rate” then in effect or 4.50%.
A hypothetical 10% change in the lender's prime rate would have an immaterial impact on our annualized interest expense. 47 Table of Contents
A hypothetical 10% change in the lender's prime rate would have an immaterial impact on our annualized interest expense. 38 Table of Contents
For the year ended December 31, 2022, sales denominated in foreign currencies were approximately 44% of total revenue. A hypothetical 10% increase in the United States dollar exchange rate used would have resulted in a $0.6 million decrease to revenues for 2022.
For the year ended December 31, 2023, sales denominated in foreign currencies were approximately 29% of total revenue. A hypothetical 10% increase in the United States dollar exchange rate used would have resulted in a $0.5 million decrease to revenues for 2023.
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency Risk We report our financial results in United States dollars; however, we conduct business in foreign countries.

Other EKSO 10-K year-over-year comparisons