Quarterly report [Sections 13 or 15(d)]

Debt

v3.26.3
Debt
 3 Months Ended
Aug. 31, 2026
Debt Disclosure [Abstract]  
Debt Debt
B. Riley Promissory Note
In connection with the Business Combination, the Company assumed a Secured Promissory Note and Security Agreement (the “B. Riley Promissory Note”) by and between Legacy Ekso and B. Riley Commercial Capital, LLC (“B. Riley”) as lender. The B. Riley Promissory Note provides for a secured term loan in an aggregate principal amount of up to $2.0 million. On September 12, 2026, the parties amended the terms of the B. Riley Promissory Note to, among other things, extend the maturity date of the term loan from September 12, 2026 to November 12, 2026 and permit the sale of Ekso Bionics, Inc. as a "Permitted Disposition" thereunder. The Company received a waiver under the B. Riley Promissory Note such that the Business Combination pursuant to the Contribution and Exchange Agreement dated as of February 15, 2026 and certain related transactions, such as the proposed financing that occurred on May 5, 2026, did not constitute an Event of Default (as defined under the B. Riley Promissory Note). The proposed financing, or the May 2026 Applied Parent PIPE Investment, is described in Note 3. Business Combinations — May 2026 Applied Parent PIPE Investment.
In connection with the Business Combination, the B. Riley Promissory Note was recorded at its estimated acquisition-date fair value of $2.2 million, in accordance with ASC 805. As a result of this fair value measurement, all unamortized debt issuance costs and any debt discount previously recorded by Legacy Ekso were eliminated. The difference between the fair value and the related principal amount and other expected payments (as described below) of the B. Riley Promissory Note represents the new debt discount, which is accreted to interest expense over the remaining life of the B. Riley Promissory Note using the effective interest method. Refer to Note 14. Fair Value Measurements — Parker Hannifin and B. Riley Promissory Notes for additional information regarding the valuation of the B. Riley Promissory Note.
Borrowings under the B. Riley Promissory Note bear interest at the rate of 10% per annum, which shall be payable in full on the Maturity Date. On the Maturity Date, the Company shall pay to B. Riley an exit fee in the amount of 10% of the original principal amount of the loan, which shall in the aggregate be $0.2 million (the “Exit Fee”). The Company may prepay the obligations under the B. Riley Promissory Note at any time in whole or in part. In connection with such prepayment, the Company must pay all accrued but unpaid interest on such portion of the principal prepaid, all interest that would have accrued through the Maturity Date on such principal amount prepaid and the portion of the Exit Fee applicable to such principal amount prepaid. B. Riley may elect to convert the obligations under the B. Riley Promissory Note, including the principal, interest, and Exit Fee, into equity securities of the Company in connection with a Qualified Financing at the purchase price per share paid by the lead investor thereunder.
The B. Riley Promissory Note also contains customary affirmative and negative covenants, including negative covenants limiting the ability of the Company and the Subsidiary to, among other things, incur debt, grant liens, dispose of assets, and
make certain restricted payments, in each case, subject to limitations and exceptions set forth in the B. Riley Promissory Note. As of August 31, 2026, the Company was compliant with all covenants.
The following table presents the principal amount, Exit Fee and expected interest payment, debt discount, and carrying value of the Company's B. Riley Promissory Note as of August 31, 2026, which was classified as current (in thousands):
Three Months Ended
August 31, 2026
Principal amount $ 2,000 
Exit Fee and expected interest payment 400 
Total expected payments at maturity $ 2,400 
Debt discount (15)
Net carrying amount $ 2,385 
The effective interest rate for the three months ended August 31, 2026 was 18.8%. Since the Exit Fee is mandatory, it was included in the cash flows used to apply the effective interest method and will result in an additional liability of $0.2 million upon loan repayment. The following table sets forth the total interest expense recognized for the three months ended August 31, 2026 (in thousands):
Three Month Ended
August 31, 2026
Contractual interest expense $ 47 
Accretion of debt discount and Exit Fee 58 
Total interest expense $ 105 
As of August 31, 2026, the B. Riley Promissory Note had accrued interest of $0.1 million.
The Company evaluated the B. Riley Promissory Note and determined that certain redemption features met the definition of an embedded derivative liability that are required to be bifurcated from the host instrument. However, since the conversion option did not include a discount on the price per share or have a fixed conversion price, and the full interest and Exit Fee are guaranteed regardless of the timing of the event, the fair value of the compound embedded derivative was determined to have no value. Therefore, no derivative liability was recorded.
Parker Hannifin Promissory Note
In connection with the Business Combination, the Company assumed an unsecured, subordinated promissory note (the “Parker Hannifin Promissory Note”) issued to Parker Hannifin Corporation (“Parker”) by Legacy Ekso, which carried an outstanding principal of $1.9 million. The Parker Hannifin Promissory Note, which was subordinate to the B. Riley Promissory Note, bore no interest with principal payable in equal installments due on the last day of each calendar quarter, and would have matured on September 30, 2027. Subsequent to August 31, 2026, on September 30, 2026, in connection with the sale of the Legacy Ekso Business (as discussed in Note 19. Subsequent Events), the Company paid off all obligations under the Parker Hannifin Promissory Note. The outstanding principal amount of $1.6 million was paid in full, resulting in no outstanding liability owed by the Company to Parker as of September 30, 2026. The Parker Hannifin Promissory Note is deemed cancelled as of this date.
As part of the Business Combination, the Parker Hannifin Promissory Note was recorded at its estimated acquisition-date fair value of $1.6 million in accordance with ASC 805. As a result of this fair value measurement, all unamortized debt discount previously recorded by Legacy Ekso was eliminated. The fair value as part of the Business Combination was estimated using a discounted cash flow analysis, based on the scheduled principal payments and a discount rate reflecting the Parker Hannifin Promissory Note's subordinated status and the Company's credit risk. The difference between the fair value and the principal amount of the Parker Hannifin Promissory Note created a debt discount, which was accreted to interest expense over the remaining term of the Parker Hannifin Promissory Note using the effective interest method. The
accretion of the debt discount resulted in interest expense of $0.1 million and an effective interest rate of 23.9% for the three months ended August 31, 2026. Refer to Note 14. Fair Value Measurements — Parker Hannifin and B. Riley Promissory Notes for additional information regarding the valuation of the Parker Hannifin Promissory Note.
The Parker Hannifin Promissory Note, upon the occurrence of an event of default, allowed for the levying of interest equal to the lesser of (a) 5% per annum and (b) the maximum interest rate permitted under applicable law on the then entire outstanding principal balance, and also for the acceleration of all outstanding liabilities and obligations, making them immediately payable. Under the terms of the Parker Hannifin Promissory Note, the following occurrences would have constituted a default, and could have, upon written notice or declaration by Parker, allowed for the levying of interest and or the acceleration of principal outstanding: (i) failure to pay any amount of the principal when due and payable, (ii) the dissolution of the Company (including the declaration of bankruptcy), and (iii) the acquisition of the Company by another entity or the sale of substantially all of its assets to another entity.
The following table presents scheduled principal payments of the Company's Parker Hannifin Promissory Note as of August 31, 2026 (in thousands):
Period Amount
FY 2027 $ 938 
FY 2028 625 
Total principal payments 1,563 
Less debt discount (193)
Notes payable, net 1,370 
Current portion 1,250 
Long-term portion 120 
Notes payable, net $ 1,370 
Applied Parent Grid Note
On June 26, 2026, the Company, as the borrower, entered into a Demand Grid Promissory Note (the “Grid Note”) with Applied Parent, as the lender. Refer to Note 7. Related Party Transactions — Related Party Transactions and Balances for additional information regarding the Company's relationship with Applied Parent. The aggregate principal amount available under the Grid Note is up to $100.0 million, reduced by the value of any of the Company's liabilities guaranteed by the lender and a reserve amount determined by the lender. Advances on the Grid Note bear interest at the short-term Applicable Federal Rate, compounded semi-annually at the beginning of each semi-annual calendar period, which is based on the outstanding principal balance and accrues over time.
The outstanding principal and accrued interest of the Grid Note are payable on demand, with no fixed maturity date. On July 1, 2026, the Company drew $7.0 million under the Grid Note, resulting in total principal outstanding of $7.0 million as of August 31, 2026. Applied Parent has agreed not to exercise its demand right under the Grid Note prior to October 15, 2027.
The effective interest rate for the three months ended August 31, 2026 was 3.91%. The total interest expense recognized for the three months ended August 31, 2026 was de minimis. The interest expense is included as a component of interest expense, net, in the condensed consolidated statement of operations for the three months ended August 31, 2026. The outstanding principal and accrued interest are included as components of current portion of debt and accrued liabilities, respectively, in the condensed consolidated balance sheets as of August 31, 2026.