MYOMO, INC.

Previous wording

The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q and in our other Securities and Exchange Commission filings. The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors”, “Cautionary Statement Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q and those described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. These risks could cause our actual results to differ materially from any future performance suggested below.

Current wording

The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q and in our other Securities and Exchange Commission filings. The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors”, “Cautionary Statement Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q and those described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ending December 31, 2024. These risks could cause our actual results to differ materially from any future performance suggested below.

Previous wording

We utilize digital ads on various platforms as well as television ads to reach patients who are potential candidates for our product. Once the prospective patient contacts us or is referred to us, either our trained clinical staff or a trained Orthotics and Prosthetics (“O&P”) provider will evaluate the patient for their suitability as a candidate. Initial evaluations by our trained clinical staff are often conducted using telehealth techniques, followed by an in-person clinical evaluation of the candidate. Prior to obtaining authorizations from commercial insurance companies, the patient’s medical records are collected and reviewed to make sure the device is appropriate for their condition and a prescription is always obtained from a physician. Once these documents are obtained, a pre-authorization request is submitted to the patient’s insurer. If we receive a pre-authorization, we proceed to measure the patient’s arm. If the patient is covered by Medicare Part B, no pre-authorization is required and we can move directly to taking measurements of the patient's arm. This is done either in person, or in some cases using a digital measurement kit supplied to the patient. We then use those measurements to 3D print orthotic parts, which are used to fabricate the MyoPro, and then deliver it to the patient. Since we are directly providing the device to the patient and then billing insurance ourselves, we refer to this process as direct billing. We also call on O&P practices in the United States, Europe and Australia that provide our products to their patients as well as generate indirect sales. The MyoPro product line has been approved by the Veterans Administration (“VA”) for impaired veterans, and over 100 VA facilities have ordered devices for their patients.

Current wording

We utilize digital ads on various platforms as well as television ads to reach patients who are potential candidates for our product. Once the prospective patient contacts us or is referred to us, either our trained clinical staff or a trained Orthotics and Prosthetics (“O&P”) provider will evaluate the patient for their suitability as a candidate. Initial evaluations by our trained clinical staff are often conducted using telehealth techniques, followed by an in-person clinical evaluation of the candidate. Prior to obtaining authorizations from commercial insurance companies, the patient’s medical records are collected and reviewed to make sure the device is appropriate for their condition and a prescription is always obtained from a physician. Once these documents are obtained, a pre-authorization request is submitted to the patient’s insurer. If we receive a pre-authorization, we proceed to measure the patient’s arm. If the patient is covered by Medicare Part B, no pre-authorization is required and we can move directly to taking measurements of the patient's arm. This is done either in person, or in some cases using a digital measurement kit supplied to the patient. We then use those measurements to 3D print orthotic parts, which are used to fabricate the MyoPro, and then deliver it to the patient. Since we are directly providing the device to the patient and then billing insurance ourselves, we refer to this process as direct billing. We also call on O&P practices in the United States, Europe and Australia that provide our products to their patients as well as generate indirect sales. The MyoPro product line has been approved by the Veterans Administration (“VA”) for impaired veterans, and over 130 VA facilities have ordered devices for their patients.

Previous wording

On November 1, 2023, CMS issued a final rule that resulted in a change in the benefit category associated with products billed under the HCPCS codes for our products from durable medical equipment rental to a brace, which would permit reimbursement of MyoPro sales on a lump sum basis. The rule became effective on January 1, 2024.

Current wording

On November 1, 2023, CMS issued a final rule that resulted in a change in the benefit category associated with the products billed under the HCPCS codes for our products from durable medical equipment rental to a brace, which would permit reimbursement of MyoPro sales on a lump sum basis. The rule became effective on January 1, 2024

Previous wording

We have been growing revenues while incurring net losses and negative cash flows from operations since inception and anticipate this to continue for most of 2025. Our plan for 2025 is to invest in increasing demand and adding capacity to support our direct billing channel, while making investments to increase revenues in the U.S. O&P channel.

Current wording

We have been growing revenues while incurring net losses and negative cash flows from operations since inception and anticipate this to continue for all of 2025. Our plan for 2025 is to invest in increasing demand and adding capacity to support our direct billing channel, while making investments to increase revenues in the U.S. O&P channel.

Previous wording

We derive revenue primarily from providing devices directly to patients and billing insurance companies directly. We also sell our products to O&P providers in the U.S, Europe and Australia, to the VA, and to rehabilitation hospitals. Though we increasingly provide devices directly to patients, we sometimes utilize the clinical services of O&P providers for which they are paid a fee.

Current wording

We derive revenue primarily from providing devices directly to patients and billing insurance companies or Medicare directly. We also sell our products to O&P providers in the U.S, Europe and Australia, to the VA, and to rehabilitation hospitals. Though we increasingly provide devices directly to patients, we sometimes utilize the clinical services of O&P providers for which they are paid a fee.

Previous wording

Research and development (“R&D”) expenses consist of costs for our R&D personnel, including salaries, benefits, bonuses and stock-based compensation, product development costs, clinical studies, and the cost of certain third-party contractors and travel expense. R&D costs are expensed as they are incurred. We intend to accelerate our R&D efforts in 2025 and expect R&D costs to increase on an annual basis.

Current wording

Research and development (“R&D”) expenses consist of costs for our R&D personnel, including salaries, benefits, bonuses and stock-based compensation, product development costs, clinical studies, and the cost of certain third-party contractors and travel expense. R&D costs are expensed as they are incurred. We intend to invest in enhancing our existing products in 2025 and expect R&D costs to increase on an annual basis.

Previous wording

R&D expenses increased by approximately $0.8 million, or 87%, during the three months ended March 31, 2025, as compared to the same period in 2024. The increase was primarily due to higher costs for payroll and outside engineering services as we are accelerating our sustaining engineering and product development efforts.

Current wording

R&D expenses increased by approximately $1.0 million and $1.8 million, or 99% and 93%, during the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The increases were primarily due to higher costs for payroll and outside engineering services as we are adding headcount in order to accelerate our sustaining engineering and product development efforts.

Previous wording

Selling, clinical, and marketing (“SC&M”) expenses consist of costs for our field clinical staff, clinical training organization, and marketing personnel, including salaries, benefits, bonuses, stock-based compensation and sales commissions, costs of advertising, marketing and promotional events, corporate communications, product marketing and travel expenses. Variable compensation for personnel engaged in sales and marketing activities is generally earned and recorded as expense in the period in which the measurable work is performed. We expect SC&M expenses to increase in 2025 as we increase our advertising spending and clinical capacity to grow revenues in our direct billing channel.

Current wording

Selling, clinical, and marketing (“SC&M”) expenses consist of costs for our field clinical staff, clinical training organization, and marketing personnel, including salaries, benefits, bonuses, stock-based compensation and other variable compensation, costs of advertising, marketing and promotional events, corporate communications, product marketing and travel expenses. Variable compensation for personnel engaged in sales and marketing activities is generally earned and recorded as expense in the period in which the measurable work is performed. We expect SC&M expenses to increase in 2025 as we increase our advertising spending and clinical capacity to grow revenues in our direct billing channel.

Previous wording

SC&M expenses increased by approximately $2.0 million or 86% during the three months ended March 31, 2025, as compared to the same period in 2024. The increase was primarily due to higher payroll costs due to increased headcount in our clinical functions to support higher expected sales volume in 2025 and higher advertising expense.

Current wording

SC&M expenses increased by approximately $2.5 million and $4.5 million or 88% and 87%, during the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The increases were primarily due to higher payroll costs due to increased headcount in our clinical functions to support higher expected sales volume in 2025, and increases in advertising expense in an effort to overcome challenges in lead generation during the first quarter of 2025 and to position us for revenue growth in the second half of the year and beyond.

Previous wording

G&A increased by approximately $1.1 million or 37%, during the three months ended March 31, 2025, as compared to the same period in 2024. The increase was primarily due to increased payroll costs due to increased headcount in our reimbursement and human resource functions as part of our plan to increase our reimbursement capacity in 2025 in order to serve Medicare Part B patients, as well as higher incentive compensation accrual due to the increased head count.

Current wording

G&A increased by approximately $751,000 and $1.8 million, or 28% and 33%, during the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The increases were primarily due to increased payroll costs due to increased headcount in our reimbursement functions as part of our plan to increase our reimbursement capacity in 2025 in order to serve Medicare Part B patients, as well as higher expense related to stock-based compensation.

Previous wording

Other (income) expense, net was income of approximately $192,000 for the three months ended March 31, 2025 compared to income of approximately $135,300 for the same period in 2024. The increase in other income was due primarily to higher interest income as a result of a higher average investment balance compared to the prior year period.

Current wording

Other (income), net was approximately $106,500 and $298,500 for the three and six months ended June 30, 2025, respectively, compared to approximately $107,200 and $242,500 for the same periods in 2024, respectively. Other (income), net for the three months ended June 30, 2025 was flat compared to the same period a year ago. The increase in other (income), net for the six months ended June 30, 2025 was due primarily to higher interest income as a result of a higher average investment balance compared to the prior year period.

Previous wording

Income tax expense recorded during the three months ended March 31, 2025 and 2024 represents the provision for income taxes for our wholly-owned subsidiary, Myomo Europe GmbH. Income tax expense increased in the three months ended March 31, 2025 as a result of higher taxable income compared to the same period in 2024.

Current wording

Income tax expense recorded during the three and six months ended June 30, 2025 and 2024 represents the provision for income taxes for our wholly-owned subsidiary, Myomo Europe GmbH. Income tax expense increased in the three and six months ended June 30, 2025 as a result of higher taxable income compared to the same periods in 2024.

Previous wording

Adjusted EBITDA does not include depreciation expense from fixed assets; and

Current wording

Adjusted EBITDA does not include depreciation expense from fixed assets;

Previous wording

As of March 31, 2025, we had working capital of approximately $19.5 million and stockholders’ equity of approximately $21.7 million. We used approximately $2.7 million in cash for operating activities during the three months ended March 31, 2025.

Current wording

As of June 30, 2025, we had working capital of approximately $16.2 million and stockholders’ equity of approximately $17.6 million. We used approximately $11.5 million in cash for operating activities during the six months ended June 30, 2025. Cash used in operations was impacted during the three months ended June 30, 2025 by a payment hold placed on us by one of the Durable Medical Equipment Medicare Administrative Contractors, known as the DME MACs, in order to process our address change to our new headquarters facility in Burlington, MA. This payment hold increased accounts receivable during the second quarter of 2025 by approximately $1.5 million. As of the issuance date of these financial statements, we have been paid for these held claims. Considering our current cash, cash equivalents, and short-term investment balances and our operating plans discussed below, we believe there is sufficient cash, cash equivalents, and short-term investments to fund our operations and capital expenditures for the next 12 months from the date of this report.

Previous wording

We have historically funded our operations through financing activities, including raising equity and debt capital. In December 2024, we completed a public equity offering, pursuant to which we sold 3,450,000 shares of common stock at $5.00 per share, generating net proceeds after fees and expenses of approximately $15.8 million. In January 2024, we completed a registered direct equity offering, pursuant to which we sold 1,354,218 shares of common stock and 224,730 pre-funded warrants at $3.80 per share, or $3.7999 per pre-funded warrant, generating net proceeds after fees and expenses of approximately2 $5.4 million. In July 2024, we entered into a Loan and Security Agreement with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, which provides us the ability to borrow up to $4.0 million against eligible accounts receivable. The line of credit remains undrawn as of the issuance date of these financial statements. Availability under the line of credit is approximately $216,600 based on eligible accounts receivable as of March 31, 2025. We amended the Loan and Security Agreement in February 2025 to provide for, among other changes, a $3.0 million term loan facility, which is available to be drawn at any time until February 28, 2026. Considering our cash balance and availability under our debt arrangements as of March 31, 2025 and our operating plans discussed below, we believe there will be sufficient cash to fund our operations and capital expenditures for the next 12 months from the date of this report.

Current wording

We have historically funded our operations through financing activities, including raising equity and debt capital. In December 2024, we completed a public equity offering, pursuant to which we sold 3,450,000 shares of common stock at $5.00 per share, generating net proceeds after fees and expenses of approximately $15.8 million. In January 2024, we completed a registered direct equity offering, pursuant to which we sold 1,354,218 shares of common stock and 224,730 pre-funded warrants at $3.80 per share, or $3.7999 per pre-funded warrant, generating net proceeds after fees and expenses of approximately $5.4 million. In July 2024, we entered into a Loan and Security Agreement with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, which provides us the ability to borrow up to $4.0 million against eligible accounts receivable. We amended the Loan and Security Agreement in February 2025 to provide for, among other changes, a $3.0 million term loan facility, which is available to be drawn at any time until February 28, 2026. During the three months ended June 30, 2025, we borrowed $2.5 million under the line of credit and $1.5 million under the term loan facility. Our ability to borrow under these facilities is subject to various covenants. We are in compliance with these covenants as of June 30, 2025.

Previous wording

The net cash used in operating activities for the three months ended March 31, 2024 was primarily used to fund a net loss of approximately $3.8 million, adjusted for non-cash expenses in the aggregate amount of approximately $0.4 million, offset by approximately $0.2 million of cash generated by net changes in the levels of operating assets and liabilities, primarily related to a decrease in accounts receivable and an increase in accounts payable and accrued expenses, offset by an increase in inventory.

Current wording

Operating Activities. The net cash used in operating activities for the six months ended June 30, 2025 was primarily used to fund a net loss of approximately $8.1 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.8 million and by approximately $5.3 million of cash used by net changes in the levels of operating assets and liabilities, primarily related to increases in accounts receivable due primarily to the payment hold discussed above, inventory and prepaid expenses and other current assets, and a decrease in accounts payable and accrued expenses, due primarily to the payment of incentive compensation during the three months ended June 30, 2025.

Previous wording

Operating Activities. The net cash used in operating activities for the three months ended March 31, 2025 was primarily used to fund a net loss of approximately $3.5 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.0 million and by approximately $0.2 million of cash used by net changes in the levels of operating assets and liabilities, primarily related to increases in accounts receivable, inventory and prepaid expenses and other current assets, offset by an increase in accounts payable and accrued expenses.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024 was primarily used to fund a net loss of approximately $5.0 million, adjusted for non-cash expenses in the aggregate amount of approximately $0.4 million and by approximately $0.6 million of cash used by net changes in the levels of operating assets and liabilities, primarily related to an increase in inventory and prepaid expenses and other current assets, offset by an increase in accounts payable and accrued expenses.

Previous wording

Investing Activities. During the three months ended March 31, 2025 and 2024, our cash used in investing activities of approximately $1.9 million and $3.5 million, respectively, was primarily related to our purchase of short-term investments and purchases of equipment.

Current wording

Investing Activities. During the six months ended June 30, 2025, and 2024, cash used in investing activities of $2.6 million and $1.2 million respectively. was primarily related to our purchase, net of maturities, of short-term investments and purchases of equipment. During the six months ended June 30, 2025, purchases of equipment included improvements to our new headquarters facility and MARK2 demo units provided to certain O&P providers to help them evaluate prospective patients.

Previous wording

Financing Activities. There was less than $0.1 million in cash used by financing activities and $5.4 million in cash generated from financing activities during the three months ended March 31, 2025 and 2024, respectively, 2024. Cash used during the three months ended March 31, 2025 was due to payment of issuance costs associated with the amendment to our line of credit agreement with Silicon Valley Bank. Cash generated by financing activities in the three months ended March 31, 2024 was due entirely to the net proceeds from our equity offering in January 2024.

Current wording

Financing Activities. There was $4.0 million and $5.4 million in cash generated from financing activities during the six months ended June 30, 2025 and 2024, respectively. Cash generated in the six months ended June 30, 2025 was due to borrowings under our line of credit and term loan facility. Cash generated in the six months ended June 30, 2024 was due entirely to the net proceeds from our equity offering in January 2024.