MYOMO, INC.

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 130 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 under our MyoConnect program, 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

In November 2018, we announced that the Centers for Medicare and Medicaid Services, (“CMS”), had published two new codes (L8701, L8702) pursuant to our application for Healthcare Common Procedure Coding System (“HCPCS”) codes which become effective in early 2019.

Current wording

In November 2018, we announced that the Centers for Medicare and Medicaid Services (“CMS”) had published two new codes (L8701, L8702) pursuant to our application for Healthcare Common Procedure Coding System (“HCPCS”) codes which become effective in early 2019. The assignment of unique L-Codes, if followed by appropriate payment terms, offers greater access to the MyoPro for Medicare beneficiaries.

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 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.

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 the remainder of 2025 is to invest in increasing demand through paid advertising, the U.S. O&P channel and referral sources, while minimizing expenditures in order to reduce the cash burn.

Previous 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.

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 United States, 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

Revenue increased by approximately $2.1 million and $8.2 million, or 28% and 73%, for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. Higher revenues in the three and six months ended June 30, 2025 were due to a higher number of revenue units and a higher average sales price, as revenues in the three and six months ended June 30, 2024 were recognized based on reimbursement amounts prior to the effective date of the fees published by CMS. Revenues generated through the direct bill channel were approximately $7.4 million and $15.2 million, or 77% and 78% in the three and six months ended June 30, 2025, respectively, compared to approximately $3.3 million and $8.1 million or 55% and 71%, of revenues in the three and six months ended June 30, 2024, respectively.

Current wording

Revenue increased by approximately $0.9 million and $9.1 million, or 10% and 44%, for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024. Revenue increased due to a higher number of revenue units, driven by deliveries to Medicare Part B patients and O&P practices in the U.S. and Germany, and for the year-to-date period, a higher average selling price. Revenues generated through the direct billing channel were approximately $7.4 million and $22.6 million, or 73% and 76% of revenues in the three and nine months ended September 30, 2025, respectively, compared to approximately $7.4 million and $15.5 million or 81% and 76%, of revenues in the three and nine months ended September 30, 2024, respectively.

Previous wording

Cost of revenue consists of direct costs for the manufacturing, printing of orthotic parts, fabrication and fitting of our products, changes in inventory and warranty reserves, and overhead costs allocated to cost of revenue.

Current wording

Cost of revenue consists of direct costs for the manufacturing, printing of orthotic parts, fabrication and fitting of our products, changes in inventory and warranty reserves, and costs for our quality and fulfillment organizations.

Previous wording

Gross margin was 62.7% and 65.0% for the three and six months ended June 30, 2025 respectively, compared to 70.8% and 67.6% for the three and six months ended June 30, 2024, respectively. The decreases in gross margin were primarily due to higher material costs and increased manufacturing overhead spending, including payroll and lease cost for our new headquarters and manufacturing facility, offset by a higher average selling price.

Current wording

Gross margin was 63.8% and 64.6% for the three and nine months ended September 30, 2025 respectively, compared to 75.4% and 71.1% for the three and nine months ended September 30, 2024, respectively. The decreases in gross margin during the three and nine months ended September 30, 2025 were due primarily due to higher material costs, increased manufacturing overhead spending, including payroll and lease costs for our new headquarters and manufacturing facility, unfavorable changes in the amount of capitalized overhead to inventory in the periods and higher average selling price in the prior year due to timing of supplemental insurance payments.

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 invest in enhancing our existing products 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, but at a lower rate of growth in the second half of the year as we focus on limiting the growth in operating expenses in general, while funding a randomized control trial to add to the existing body of research demonstrating the efficacy of the MyoPro for patients suffering from upper extremity impairment.

Previous 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.

Current wording

R&D expenses increased by approximately $0.3 million and $2.1 million, or 22% and 66%, during the three and nine months ended September 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 investing 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 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.

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 our revenues.

Previous 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.

Current wording

SC&M expenses increased by approximately $1.9 million and $6.3 million or 54% and 74%, during the three and nine months ended September 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 and lead quality during the first half of 2025 and to support future revenue growth. Going forward, we intend to implement alternative sources for lead generation, such as referrals under our MyoConnect program.

Previous wording

General and administrative (“G&A”) expenses consist primarily of costs for administrative, reimbursement, and finance personnel, including salaries, benefits, bonuses and stock-based compensation, professional fees associated with legal matters, consulting expenses, costs for pursuing insurance reimbursements for our products and costs required to comply with the regulatory requirements of the SEC, as well as costs associated with accounting systems, insurance premiums and other corporate expenses. We expect that G&A expenses will increase in 2025 as a result of increasing our reimbursement capacity in order to grow revenue in the direct billing channel.

Current wording

General and administrative (“G&A”) expenses consist primarily of costs for administrative, reimbursement, and finance personnel, including salaries, benefits, bonuses and stock-based compensation, professional fees associated with legal matters, consulting expenses, costs for pursuing insurance reimbursements for our products and costs required to comply with the regulatory requirements of the SEC, as well as costs associated with accounting systems, insurance premiums and other corporate expenses. We expect that G&A expenses will increase in 2025 as a result of increasing our reimbursement capacity in order to grow revenue in the direct billing channel, however the rate of growth in G&A expenses is expected to be lower in the second half of the year as we focus on limiting the growth of operating expenses in general.

Previous 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.

Current wording

G&A decreased by approximately $0.1 and increased by approximately $1.8 million, representing a decrease of 2% and an increase of 20%, during the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024. The decrease in the three months ended September 30, 2025 was due primarily to a reduction in the incentive compensation accrual, and the increase in the nine months ended September 30, 2025 was primarily due to increased payroll costs for additional headcount, as well as higher expense related to stock-based compensation.

Previous 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.

Current wording

Income tax expense recorded during the three and nine months ended September 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 nine months ended September 30, 2025 as a result of higher taxable income compared to the same periods in 2024.

Previous 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.

Current wording

As of September 30, 2025, we had working capital of approximately $13.7 million and stockholders’ equity of approximately $14.6 million. We used approximately $13.4 million in cash for operating activities during the nine months ended September 30, 2025. Considering our current cash, and cash equivalents, 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 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.

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. As of September 30, 2025, we had outstanding borrowings under the revolving credit line and term loan facilities of $1.0 million and $3.0 million, respectively. Our ability to borrow under these facilities is subject to various covenants. We are in compliance with these covenants as of September 30, 2025.

Previous 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.

Current wording

Operating Activities. The net cash used in operating activities for the nine months ended September 30, 2025 was primarily used to fund a net loss of approximately $11.8 million, adjusted for non-cash expenses in the aggregate amount of approximately $3.1 million and by approximately $4.7 million of cash used by net changes in the levels of operating assets and liabilities, primarily related to increases in accounts receivable, inventory, prepaid expenses and other current assets and a decrease in accounts payable and accrued expenses.

Previous 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.

Current wording

The net cash used in operating activities for the nine months ended September 30, 2024 was primarily used to fund a net loss of approximately $5.9 million, adjusted for non-cash expenses in the aggregate amount of approximately $0.8 million and by approximately $1.6 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.

Previous 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.

Current wording

Financing Activities. There was $3.9 million and $5.2 million in cash generated from financing activities during the nine months ended September 30, 2025 and 2024, respectively. In the nine months ended September 30, 2025, this primarily represents borrowings under our credit facilities. In the nine months ended September 30, 2024, this represents the net proceeds from our equity offering in January 2024.