MYOMO INC

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Note 1 — Description of Business

Myomo Inc. (“Myomo” or the Company”) is a wearable medical robotics company that develops, designs, and produces myoelectric orthotics for people with neuromuscular disorders. The MyoPro ® myoelectric upper limb orthosis product is registered with the U.S. Food and Drug Administration as a Class II medical device. The Company sells its products directly to patients, to Orthotics and Prosthetics ("O&P") providers around the world, the Veterans Health Administration, and distributors in Europe and Australia. The Company was incorporated in the State of Delaware on September 1, 2004 and is headquartered in Boston, Massachusetts.

Note 2 — Liquidity

The Company incurred net losses of approximately $5,923,600 and$5,687,500 during the nine months ended September 30, 2024 and 2023, respectively, and has an accumulated deficit of approximately$102,850,000 at September 30, 2024. Cash used in operating activities was approximately$6,660,000 and $3,817,000 for the nine months ended September 30, 2024 and 2023, respectively. The Company's historical losses and cash used in operations are indicators of substantial doubt regarding the Company's ability to continue as a going concern.

Based upon its current cash and cash equivalents, as well as the availability under its credit line (see below) and the future expected cash flows, the Company believes that its available cash and cash equivalents will fund its operations for at least the next twelve months from the issuance date of these financial statements.

The Company has historically funded its operations through financing activities, including raising equity and debt. On July 11, 2024, the Company entered into a Loan and Security Agreement with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, which provides the Company the ability to borrow up to $4.0 million against eligible accounts receivable. Availability under the credit line, which is undrawn as of the issuance date of these financial statements, is approximately $0.9 million. See Note 7 - Line of Credit for further discussion. On January 19, 2024, the Company completed a registered direct equity offering, selling 1,354,218 shares of common stock and 224,730 pre-funded warrants to purchase common stock at $3.80 per share, or $3.7999 per pre-funded warrant, generating net proceeds after fees and expenses of approximately $5.4 million. On August 29, 2023, the Company completed a public equity offering, generating proceeds after fees and expenses of approximately $3.9 million, selling 5,413,334 shares of common stock and 1,920,000 pre-funded warrants to purchase common stock at $0.60 per share or at $0.5999 per pre-funded warrant. On January 17, 2023, the Company completed a public equity offering, generating proceeds after fees and expenses of approximately $5.7 million, selling 13,169,074 shares of common stock and 6,830,926 to pre-funded warrants to purchase common stock at $0.325 per share or at $0.3249 per pre-funded warrant. See Note 8 - Common Stock and Warrants for further discussion. Financing activities, such as the line of credit and the recently completed registered direct equity offering, are enabling the Company to sustain its operations.

Management's operating plans are primarily focused on growing revenues in its direct billing channel by serving an increasing number of Medicare patients and training O&P providers in the United States, which will enable them to provide the MyoPro to their patients, which is expected to result in further revenue growth in 2025 and beyond. Based on the final fees published by the Centers for Medicare and Medicaid Services (“CMS”) for the Company’s products, which became effective on April 1, 2024, if its supply chain is able to meet its volume requirements without disruption, the Company is able to compensate for additional advertising spending in the second half of 2024 above its original plan, expected payments are received and there is no increase in days sales outstanding in the fourth quarter, the Company believes it can achieve operating cash flow breakeven on a quarterly basis in the fourth quarter of 2024. In addition, the Company believes that it has access to capital resources through the use of its line of credit, possible public or private equity offerings, exercises of outstanding warrants, or other means. Based on the Company’s latitude as to the timing and amount of certain expenses, its current cash position, availability under its line of credit and operating plans, the Company believes that the substantial doubt is alleviated as of the issuance date of these financial statements. However, there can be no assurance that the Company will be successful in implementing its operating plans.

Note 3 — Summary of Significant Accounting Policies

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information pursuant to Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) that are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results for the fiscal year ending December 31, 2024, or any other period. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and related disclosures of the Company as of December 31, 2023 and 2022 and for the years then ended, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Basis of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Myomo Europe GmbH. All significant intercompany balances and transactions are eliminated.

Comprehensive Income (Loss)

Comprehensive loss includes all changes in equity during a period, except those resulting from investments by stockholders and distributions to stockholders. The Company's comprehensive loss includes changes in foreign currency translation adjustments and unrealized gains and losses on short term investments. There was a reclassification, which management does not consider to be material, out of accumulated other comprehensive income (loss) to other (income) expense related to realized gains or losses on short-term investments in the three andnine months ended September 30, 2024. There were no reclassifications in the three and nine months ended September 30, 2023.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates and assumptions are reviewed on an on-going basis and updated as appropriate. Actual results could differ from these estimates. The Company’s significant estimates include deferred tax valuation allowances, valuation of stock-based compensation, warranty obligations and reserves for slow-moving inventory.

Cash, Cash Equivalents and Short-Term Investments

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist principally of deposit accounts and money market accounts at September 30, 2024 and December 31, 2023.

The Company considers all investments with an original maturity of greater than three months but less than one year to be short-term investments. There wereno instruments classified as short-term investments as of September 30, 2024. Short-term investments as of December 31, 2023 consists of commercial paper, U.S. Treasury Bills and short-term corporate debt securities, which were classified as held-to-maturity, and certificates of deposit totaling approximately $1,994,700 as of December 31, 2023. The Company determines the appropriate balance sheet classification of its investments at the time of purchases and evaluates the classification at each balance sheet date.

Under the new lease, the Company's provided a security deposit to the landlord in the form of a letter of credit for $375,000. The Company has collateralized the letter of credit with cash in a separate bank account, which is accounted for as a long-term restricted cash on the condensed consolidated balance sheet as of September 30, 2024.

Accounts Receivable and Allowance for Credit Losses

The Company reports accounts receivable at invoiced amounts less an allowance for credit losses. The Company evaluates its accounts receivable on a continuous basis and, if necessary, establishes an allowance for credit losses based on a number of factors, including current credit conditions and customer payment history. The Company does not require collateral or accrue interest on accounts receivable and credit terms are generally 30 days. At September 30, 2024, and December 31, 2023, the Company recorded an allowance for credit losses accounts which was immaterial to the condensed consolidated financial statements.

Joint Venture

On March 28, 2022, the Company invested cash consideration of $199,000 for a 19.9% ownership stake in Jiangxi Myomo Medical Assistive Appliance Co. Ltd. (the “JV Company”), a company headquartered in China that is majority-owned by Beijing Ryzur Medical Investment Co., Ltd. (“Ryzur Medical”). The JV Company will manufacture and sell the Company’s current and future products in greater China, including Hong Kong, Macau and Taiwan. The Company accounts for its investment in the JV Company under the equity method because the Company exerts significant influence over its management. The investment was fully written off as of December 31, 2023, due to the recording of the Company's share of the losses of the JV Company in prior periods, which were recorded to other expense (income) in the condensed consolidated statement of operations, the Company has no obligation to fund any losses incurred by the JV Company.

Revenue Recognition

The Company accounts for revenue under ASC 606, “Revenue from Contracts with Customers” and all of the related amendments (Topic 606). Revenues under Topic 606 are required to be recognized either at a “point in time” or “over time,” depending on the facts and circumstances of the arrangement and are evaluated using a five-step model. Generally, the Company recognizes revenue at a point in time.

The Company recognizes revenue after applying the following five steps:

Identification of the contract, or contracts, with a customer,

Identification of the performance obligations in the contract, including whether they are distinct within the context of the contract,

Determination of the transaction price, including the constraint on variable consideration,

Allocation of the transaction price to the performance obligations in the contract, and

Recognition of revenue when, or as, performance obligations are satisfied.

Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

Product Revenue

Increasingly, the Company derives its revenue from direct billing. The Company also derives revenue from the sale of its products to O&P providers in the United States and internationally and the Veterans Administration (“VA”). Under direct billing, the Company recognizes revenue when all of the following criteria are met:

(i)

The product has been delivered to the patient, including completion of initial instruction on its use,

(ii)

Collection is deemed probable and it has been determined that a significant reversal of the revenue to be recognized is not deemed probable when the uncertainty associated with the variable consideration is resolved. As an example, the Company will record revenue if it is notified that insurance intends to pay and a payment amount is provided, and

(iii)

The amount to be collected is estimable using the “expected value” estimation techniques, or the “most likely amount” as defined in ASC 606.

For revenue derived from certain payers, including CMS, where the Company has demonstrated sufficient payment history, the Company recognizes revenue when it receives either a pre-authorization from the payer, or, in the case of Medicare patients, when the Company has gathered appropriate medical documentation from the patient that demonstrates compliance with the Company's inclusion criteria, control passes to the patient upon delivery of the device in an amount that reflects the consideration the Company expects to receive in exchange for the device and the claim has been submitted to the payer. These payers represented 93% and 69% of direct billing channel revenue during the three months ended September 30, 2024 and 2023, respectively. These payers represented 88% and 61% of direct billing channel revenue during the nine months ended September 30, 2024 and September 30, 2023, respectively. During the three months ended September 30, 2024, revenues from patients covered by Medicare Part B were recorded at the time the device was delivered and the claim submitted to CMS for an amount that was expected to be received from CMS and supplemental insurance payers, as applicable.

Depending on the timing of product deliveries to customers, which is when cost of revenue must be recorded, and when the Company meets the criteria to record revenue, there may be fluctuations in gross margin. During the three months ended September 30, 2024 and 2023, the Company recognized revenue of approximately $2,440,900 and $1,324,300, respectively, and during the nine months ended September 30, 2024 and 2023, the Company recognized revenue of approximately $2,185,300 and $2,305,500, respectively, from third-party payers for which costs related to the completion of the Company’s performance obligations were not recorded in the current period.

For revenues derived from O&P providers and the VA, the Company recognizes revenue when control passes to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those services. Revenues may be recognized upon shipment or upon delivery, depending on the terms of the arrangement, provided that persuasive evidence of an arrangement exists, there are no uncertainties regarding customer acceptance and collectability is deemed probable.

The Company has elected to record taxes collected from customers on a net basis and does not include tax amounts in revenue or cost of revenue.

License Revenue

If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when the license is transferred to the customer, the customer is able to use and benefit from the license, and collectability is deemed probable.

On January 21, 2021, the Company entered into a definitive agreement with Ryzur Medical to form the JV Company to manufacture and sell the Company's current and future products in greater China, including Hong Kong, Macau and Taiwan (the “JV Agreement”). Under the JV Agreement, the Company is entitled to receive an upfront license fee of $2.7 million. As of September 30, 2023, the final portion of the initial license fee has been paid in full and recognized as license revenue. In addition, the Company is entitled to receive a guaranteed minimum payment for purchase of MyoPro Control Units for a period of ten years from the effective date of the JV Agreement. The Company will recognize revenue on these amounts upon invoicing of the JV Company as long as the collectability is deemed to be assured.

Contract Balances

The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had approximately $32,000 of deferred revenue as of September 30, 2024, and approximately $8,500 of deferred revenue as of December 31, 2023, the outstanding deferred revenue is expected to be recognized by the end of the fourth quarter of 2024.

Disaggregated Revenue from Contracts with Customers

The following table presents revenue by major source:

Geographic Data

The Company generated 88% of its total revenue from the United States and 12% from Germanyfor the three months ended September 30, 2024. The Company generated 78% of its total revenue from the United States,19% from China and 3% from Germanyfor the three months ended September 30, 2023.

During the nine months ended September 30, 2024, the Company generated 85% of its total revenues from the United States,14% from Germany and 1% from other international locations. During the nine months ended September 30, 2023, the Company generated 72% of its total revenues from the United States,14% from Germany,13% from China, and 1% from other international locations. Excluding license revenue during the nine months ended September 30, 2023, the Company generated 82% of its product revenues from the United States,16% from Germany and 2% from other international locations.

Cost of Revenue

In conjunction with the adoption of ASC 606, there are certain cases in which the Company will expense costs when incurred as required by ASC 340-40-25. In certain cases, the Company ships the MyoPro device to O&P providers, or provides the device directly to patients, pending reimbursement from third-party payers, after which revenue is recognized. For the three and nine months ended September 30, 2024, the Company recorded cost of goods sold of approximately $107,200 and $140,800, respectively, without corresponding revenue. For the three and nine months ended September 30, 2023, the Company recorded cost of goods sold of $32,800 and $76,900, respectively, without corresponding revenue. Direct billing fees paid to O&P providers for services they provide in conjunction with patient evaluations are expensed as incurred as required by ASC 340-40-25, as a cost of obtaining a contract. These costs are recorded as sales and marketing expense. Internal costs incurred and fees paid to O&P providers to measure, fit and deliver the device to patients are expensed to cost of revenue.

Advertising

The Company charges the costs of advertising to operating expenses as incurred. Advertising expense amounted to approximately $1,043,700 and $822,500 for the three months ended September 30, 2024 and 2023, respectively, and approximately $2,680,600 and $2,360,400 during the nine months ended September 30, 2024 and 2023, respectively.

Foreign Currency Translation

The functional currency of the Company’s foreign subsidiary, Myomo Europe GmbH, is the Euro. Foreign exchange translation gains and losses from the Euro to U.S. dollars are included in other comprehensive (loss) gain. The Company recorded a gain of approximately $256,400 and a loss of approximately $47,100 during the three months ended September 30, 2024 and 2023, respectively, and a gain of approximately $312,000 and a loss of approximately $50,500 during the nine months ended September 30, 2024 and 2023, respectively, which are included in accumulated other comprehensive income in the condensed consolidated balance sheet. Transaction and translation foreign exchange gains and losses from a foreign currency to the functional currency are included in cost of goods sold in the consolidated statements of operations. Such amounts were immaterial for the three and nine months ended September 30, 2024 and 2023, respectively. The balance sheet is translated using the spot rate on the day of reporting and the statement of operations is translated monthly using the average rate for the month.

Net Loss per Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Restricted stock, restricted stock units, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported a net loss for the three months ended September 30, 2024 and 2023, and as a result, all potentially dilutive common shares are considered antidilutive for these periods.

Potential dilutive common shares issuable consist of the following at:

Due to their nominal exercise price of $0.0001 per share, a totalof 7,721,519 and 8,750,926 outs tanding pre-funded warrants as of September 30, 2024 and 2023, respectively are considered common stock equivalents and are included in basic weighted average shares outstanding in the accompanying condensed consolidated statements of operations as of the closing dates of the Company's public equity offerings in January 2023, August 2023, and January 2024, respectively.

Income Taxes

The Company reported a net loss for the three and nine months ended September 30, 2024 and 2023, however records a tax expense. The nature of this tax expense is the difference between the effective tax rate and statutory rate due to tax provision for a its wholly-owned foreign Myomo Europe, GmhH.

Recently Adopted Accounting Standards

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”, that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The new standard’s requirements to disclose the key terms of the programs and information about obligations outstanding are effective for fiscal years, including interim periods, beginning after December 15, 2022, except for the requirement to disclose a rollforward of obligations outstanding will be effective for fiscal years beginning after December 15, 2023. The Company adopted this new standard on January 1, 2024, which did not have a material impact on its financial position and results of operations.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements, Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative”, that adds 14 of the 27 identified disclosure or presentation requirements to the Codification, each amendment in the ASU will only become effective if the SEC removes the related disclosure or presentation from its existing regulations by June 30, 2027. The Company currently complies with these disclosure requirements as applicable under Regulation S-X or Regulation S-K and will adopt these new standards depending on timing of when they become effective, which is not expected to have a material impact on its financial position and results of operations.

In November 2023, the FASB issued ASU 2023-07 “Segmented Reporting - Improvements to Reportable Segment Disclosures”. ASU 2023-07 focuses on the requirements to disclose its significant segment expense categories and amounts for each reportable segment. ASU 2023-07 will becoming effective in the calendar year 2024 year-end financial statements. The Company will adopt these new standards when they become effective, which is not expected to have a material impact on its financial position and results of the operation.

In December 2023, the FASB issued ASU 2023-09, “Accounting Standards Update, Income Taxes (Topic 740: Improvements to Income Tax Disclosures”. ASU 2023-09 focuses on income tax disclosures around effective tax rates and cash income taxes paid. This amendment in the ASU will become effective for public companies as of December 15, 2024 and effective to all other companies as of December 15, 2025. The Company will adopt these new standards when they become effective, which is not expected to have a material impact on its financial position and results of operations.

Note 4 — Inventories

Inventories consist of the following at:

Note 5 — Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820, “Fair Value Measurement” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and establishes disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

•

Level 1 — Quoted prices available in active markets for identical assets or liabilities.

•

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quotable prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar valuation techniques that use significant unobservable inputs.

The carrying amounts of the Company’s financial instruments such as cash and cash equivalents, accounts receivable and accounts payable, approximate fair value due to the short-term nature of these instruments. Cash equivalents consist of money market funds that limit their investments to only short-term U.S. Treasury Securities and repurchase agreements related to these securities. Short-term investments primarily consists of commercial paper and U.S. Treasury Bills and are carried on the condensed consolidated balance sheets at amortized cost which approximates fair value.

Cash equivalents measured at fair value on a recurring basis at September 30, 2024 were as follows:

Cash equivalents and short-term investments measured at fair value on a recurring basis at December 31, 2023 were as follows:

Note 6— Accounts Payable and Other Accrued Expenses

Accounts Payable and Other Accrued Expenses consists of the following at:

Note 7 — Line of Credit

On July 11, 2024 (the “Effective Date”), the Company, entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Bank”).

The Loan Agreement provides for a revolving line of credit whereby the Company may borrow up to $4,000,000 (the “Revolving Line”), which Revolving Line may be increased to $5,500,000 at the Bank’s sole discretion upon the occurrence of certain events. Amounts advanced by the Bank are based on 80% of “eligible accounts”, which includes all receivables in the United States, reduced by aged amounts and customers and insurance payers with concentrations in excess of defined limits, among other deductions. The outstanding principal amount of any advance shall accrue interest at a floating rate per annum equal to the greater of (i)8.50% and (ii) the “prime rate” as published in The Wall Street Journal for the relevant period plus one-half percent (0.50%). The Revolving Line is secured on a first priority basis by all of Company’s assets other than intellectual property and certain customary exceptions. Any newly formed or acquired subsidiary of the Company or any guarantor under the Loan Agreement, will either join the Loan Agreement as a co-borrower or become a guarantor under the Loan Agreement, asdetermined by the Bank in its sole discretion. The Company intends to use the Revolving Line for working capital and general business purposes.

The Revolving Line terminates, and any outstanding principal amount of all advances made thereunder, and any accrued and unpaid interest thereon, become immediately due and payable on the two year anniversary of the Effective Date. The Company must also pay Bank (i) a commitment fee of $20,000, (ii) an “Anniversary Fee” of 0.50% of the Revolving Line and (iii) an “Unused Revolving Line Facility Fee” of 0.50% per annum of the average unused portion of the Revolving Line. In addition, upon termination of the Loan Agreement or the Revolving Line prior to the two year anniversary of the Effective Date, the Company must pay a termination fee of 1.00% of the Revolving Line, subject to certain exceptions.

The Company recorded approxima tely $199,500 in debt issuance costs during the nine months ended September 30, 2024 in conjunction with entering into the Loan Agreement, which includes the commitment fee and the Anniversary Fee. The Company capitalized the debt issuance costs and is amortizing them on a straight-line basis into interest expense over the term of the Loan Agreement. Debt issuance costs to be amortized over the term of the loan are included in other long-term assets.

Approximately $0.9 million was available to be drawn under the Loan Agreement as of September 30, 2024. No amounts were drawn under the Loan Agreement as of September 30, 2024.

Note 8 — Common Stock and Warrants

On January 17, 2023, the Company completed a public equity offering, selling 13,169,074 shares of common stock and 6,830,926 pre-funded warrants at $0.325 per share or at $0.3249 per warrant, generating proceeds after fees and expenses of approximately $5.7 million. As of September 30, 2024,5,801,519 pre-funded warrants remain exercisable. Each pre-funded warrant is exercisable for one share of the Company’s common stock at a nominal exercise price of $0.0001 per share.

On August 29, 2023, the Company completed a public equity offering, selling 5,413,334 shares of common stock and 1,920,000 pre-funded warrants at $0.60 per share, or at $0.5999 per warrant, generating proceeds after fees and expenses of approximately $3.9 million. Each pre-funded warrant is exercisable for one share of the Company’s common stock at a nominal exercise price of $0.0001 per share. All of these pre-funded warrants remain exercisable at September 30, 2024.

On January 19, 2024, the Company completed a registered direct equity offering, selling 1,354,218 shares of common stock and 224,730 pre-funded warrants at $3.80 per share, or at $3.7999 per pre-funded warrant, generating proceeds after fees and expenses of approximately $5.4 million. Each pre-funded warrant is exercisable for one share of the Company’s common stock at a nominal exercise price of $0.0001 per share. All of these pre-funded warrants were exercised during the nine months ended September 30, 2024.

As of September 30, 2024 there were 7,721,519 pre-funded warrants outstanding.

On August 2, 2022, the Company entered into an ATM Facility with Alliance Global Partners on (“AGP”). Under the ATM Facility, the Company may sell up to an aggregate of $15 million of the Company’s common stock from time to time and shall pay to AGP cash commissions of 3.0% of the gross proceeds of sales of common stock under the ATM Facility. There wereno sales under the ATM Facility during the three and nine months ended September 30, 2024 and 2023, respectively. In conjunction with the public equity offering in August 2023, the Company reduced the amount available to sell under the ATM Facility to $1,000. In May 2024, the ATM Facility expired and has not been renewed.

No shares of common stock were issued through the exercise of stock options during the three and nine months ended September 30, 2024 and September 30, 2023, respectively.

During the three and nine months ended September 30, 2024,42,828 and 980,173 restricted stock units vested, respectively. During the three and nine months ended September 30, 2023,10,099 and 199,163 restricted stock units vested, respectively.

Note 9 — Stock Award Plans and Stock-Based Compensation

As of September 30, 2024, there were 491,770 shares available for issuance under the Myomo, Inc. 2018 Stock Option and Incentive Plan (the “2018 Plan”). On January 1 of each year, the number of shares of common stock reserved and available for issuance under the 2018 Plan will cumulatively increase by 4% of the number shares of common stock outstanding on the immediately preceding December 31 or such lesser number of shares of common stock determined by management in consultation with members of the Board of Directors, including the compensation committee of the Board of Directors. On January 1, 2024,1,085,401 shares were added to the share reserve under the 2018 Plan.

Recipientsof awards of restricted stock units typically sell shares in the open market to cover their individual tax liabilities and remit the proceeds to the Company, which offsets withholding taxes paid by the Company. In certain circumstances, stock awards may be net share settled upon vesting to cover the required employee statutory withholding taxes and the remaining amount is converted into shares based upon their share-value on the date the award vests. In such instances, these payments of employee withholding taxes are presented in the statements of cash flows as a financing activity. There wereno stock awards that were net share settled during the three and nine months ended September 30, 2024. There wereno restricted stock units that were withheld as part of net share settlement transactions during the three months ended September 30, 2023 and 16,744 restricted stock units were withheld during the nine months ended September 30, 2023.

Share-Based Compensation Expense

The Company accounts for stock awards to employees and non-employees based upon the fair value of the award on the date of grant. The fair value of that award is then ratably recognized as expense over the period during which the recipient is required to provide services in exchange for that award.

The Company attributes the value of stock-based compensation to operations on the straight-line method such that the expense associated with awards is evenly recognized over the vesting period.

The Company recognized stock-based compensation expense related to the issuance of stock option awards and restricted stock units to employees, non-employees and directors in the statements of operations as follows:

As of September 30, 2024, there was approximately $9,200 of unrecognized compensation cost related to unvested stock options that is expected to be recognized over a weighted-average period of 0.79 years.

As of September 30, 2024, there was approximately $2,511,100 of unrecognized compensation expense related to unvested restricted stock units that is expected to be recognized over a weighted-average period of 2.50 years.

Note 10 — Commitments and Contingencies

Litigation

The Company may be involved from time to time in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. During 2022, a former employee who was terminated in 2021 brought an age discrimination claim against the Company. During the fourth quarter of 2023, the Company settled the claim with the former employee. The Company deemed it probable that its insurance company would pay its share of the claim. As a result of this assumed gain contingency, the Company reduced its accrual to an amount that is not expected to be covered by insurance, and recorded a liability of approximately $55,000 for severance and legal expenses as of December 31, 2023. The settlement was paid and all insurance proceeds were received during the three months ended March 31, 2024. There is no other material litigation against the Company at this time.

Operating Leases

The Company has a non-cancelable sublease agreement for its corporate headquarters in Boston, Massachusetts, which expires in January 2025 and a lease agreement for office space in Fort Worth, TX. which expires in December 2025. In August 2024, the Company entered into a new lease agreement for its new corporate headquarters and manufacturing facility in Burlington, Massachusetts, which the Company expects to begin occupying by the end of 2024, with a term of approximately 88 months following the rent commencement date. The Company has the option to extend the new lease for an additional five years, subject to certain conditions being satisfied. Under the new lease, the Company provided a security deposit to the landlord in the form of a letter of credit for $375,000. The Company has collateralized the letter of credit with cash in a separate bank account, which is accounted for as long-term restricted cash on the condensed consolidated balance sheet. Termination options are either not included, or have expired, for the Company’s other existing operating leases. Certain arrangements have discounted rent periods or escalating rent payment provisions. Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheets. We recognize rent expense on a straight-line basis over the lease term.

As of September 30, 2024, operating lease assets were approximately $467,000. The amount and the maturity of the Company’s operating lease liabilities as of September 30, 2024, are as follows:

For the three and nine months ended September 30, 2024 and 2023, the total lease cost is comprised of the following amounts:

The following summarizes additional information related to operating leases:

Major Customers

For the three and nine months ended September 30, 2024 and 2023, there wereno customers which accounted for more than 10% of product revenues. For the three andnine months ended September 30, 2024 and 2023, a U.S. insurance payer represented 19% and 22% and 36% and 40% of product revenues, respectively. For the three and nine months ended September 30, 2024, patients with Medicare Part B coverage represented 55% and 44% of product revenues, respectively.

For the three and nine months ended September 30, 2024, approximately 24% and 27% of the Company's product revenues, respectively, were derived from patients with Medicare Advantage insurance plans. For the three and nine months ended September 30, 2023, approximately 59% and 59% of the Company's product revenues were derived from patients with Medicare advantage plans, respectively.

At September 30, 2024 and December 31, 2023, one insurance payer and its affiliates accounted for approximately 25% and 56% of accounts receivable, respectively.

Supplier Finance Program Obligations

The Company finances its Directors and Officers Insurance policy, which requires the Company to make a down payment, followed by equal payments over a defined term. During the year ended December 31, 2023, the Company completed its payment obligation associated with its 2022-2023 policy and entered into a new policy covering the twelve-month period ending June 2024. Under this financing arrangement, the Company made a down payment of approximately $29,000 during the three months ended June 30, 2023 and made nine equal monthly payments of approximately $27,000, starting in July 2023. During the nine months ended September 30, 2024, the Company completed its payment obligation associated with its 2023-2024 policy and entered into a new policy covering the twelve-month period ending June 2025. Under this new financing arrangement, the Company made a down payment of approximately $39,000 duringthe three months ended June 30,

2024, and is making nine equal monthly payments of approximately $39,000, starting in July 2024. Changes in the Company's supplier finance obligations were as follows:

No assets are pledged as security under this arrangement.