MYOMO, INC.

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 provides the device to patients and bills their insurance companies directly, sometimes utilizing the clinical services of orthotics and prosthetics (“O&P”) providers for which they are paid a fee. The Company sells the product to O&P providers around the world and the Veterans Health Administration (“VA”). The Company was incorporated in the State of Delaware on September 1, 2004 and is headquartered in Burlington, Massachusetts.

Liquidity

The Company incurred net losses of approximately $15.6 million and $6.2 million during the years ended December 31, 2025 and 2024, respectively, and has an accumulated deficit of approximately $118.7 million and $103.1 million at December 31, 2025 and 2024, respectively. Cash used in operating activities was approximately$14.5 million and $3.3 million for the years ended December 31, 2025 and 2024, respectively.

The Company's balance of cash, cash equivalents and short-term investments was $18.4 million as of December 31, 2025. The Company has historically funded its operations through financing activities, including raising equity and debt capital. On December 6, 2024, the Company completed a public equity offering, pursuant to which it sold 3,450,000 shares at $5.00 per share, generating net proceeds after fees and expenses of approximately $15.8 million. On January 19, 2024, the Company completed a registered direct equity offering, pursuant to which it 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. (See Note 9 - Common Stock for further discussion regarding the equity offerings.)On November 4, 2025, the Company entered into a Loan and Security Agreement with Avenue Capital Management II, L.P. as administrative agent and collateral agent and Avenue Venture Opportunities Fund II, L.P., as a lender, which provided the Company $17.5 million of committed capital, of which $12.5 million was funded at closing on November 4, 2025 (the "Closing Date"). The remaining $5.0 million becomes available at the Company's discretion between 12 and 18 months from the Closing Date, subject to maintaining compliance with covenants. The Company is paying interest only on the term loan for a period of 18 months from the Closing Date, which could be extended to 24 months if the Company borrowed under the second tranche. Proceeds from this loan were used to repay the outstanding borrowings under the credit facility with Silicon Valley Bank and to pay fees and expenses, with the remainder being used for general corporate purposes. These financing activities have enabled the Company to sustain its operations.

Management's operating plans are primarily focused on growing revenues from recurring sources, including expanding its MyoConnect program to generate referrals in rehab clinicss and stroke centers around the country, continued growth in revenues in the O&P channel, as well as International operations, while reducing the cost of patient acquisition (measured as Cost per Pipeline Add) and minimizing the growth in fixed expenses. In addition, the Company believes that it has access to capital resources through possible public or private equity offerings, or other means.

Note 2 — Summary of Significant Accounting Policies

Basis of Consolidation

The 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 Loss

Comprehensive loss includes all changes in equity during a period, except those resulting from investments by stockholders and distributions to stockholders, if any. 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 year ending December 31, 2025. There were no reclassifications in the year ending December 31, 2024.

Use of Estimates

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission.

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 those estimates. The Company’s estimates include assertion of collectability with payers as it relates to timing of revenue recognition and transaction pricing and the valuation of derivative liabilities.

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 December 31, 2025 and 2024.

The Company considers all investments with an original maturity of greater than three months to be short-term investments. Short-term investments primarily consists of commercial paper and U.S. Treasury Bills and are carried on the consolidated balance sheets at fair value. Short-term investments, which are classified as available for sale, as of December 31, 2025 and 2024 consist of U.S. Treasury Bills, agency bonds and commercial paper totaling approximately $4,261,800 and $493,000 respectively. The Company determines the appropriate balance sheet classification of its investments at the time of purchase. Unrealized gains and losses on short-term investments are recorded to accumulated other comprehensive income (loss) on the consolidated balance sheets and other gain (loss) on the consolidated statements of comprehensive loss. Once instruments with unrealized gains and losses become realized, they are reclassified from other comprehensive gains and losses to other income/expense.

Our cash balances as of December 31, 2025 and 2024 consist of the following:

Accounts Receivable and Allowance for Credit Losses

The Company reports accounts receivable at invoiced amounts less an allowance for credit losses accounts. The Company evaluates its accounts receivable on a continuous basis, and if necessary, establishes an allowance for credit losses accounts 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 December 31, 2025 and 2024, the Company'sbalance for allowance for credit losses was approxima tely $102,700 and approximately $43,700, respectively.

Inventories

Inventories are recorded at the lower of average cost or net realizable value. Average cost approximates valuation on a first-in, first-out basis. The Company reduces the carrying value of inventory for those items that are potentially excess, obsolete or slow-moving based on changes in customer demand, technology developments or other economic factors. In addition, the carrying value of units used by patients on a trial basis only includes the value of motor units that can be re-used. Orthotic components on trial units are expensed to cost of goods sold once consumed.

Equipment

Equipment is stated at historical cost, net of accumulated depreciation and is depreciated using the straight-line method over the estimated useful lives of the related assets, generally three years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life. Expenditures for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures, which extend the economic life, are capitalized. When assets are retired, or otherwise disposed of, the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal is recognized.

Demonstration units are provided by the Company to certain O&P providers, certain VA hospitals and to its internal clinical and sales personnel for marketing and patient evaluation purposes. These units are manufactured by the Company, are capitalized as equipment on the Company’s consolidated balance sheet and depreciated in operating expenses within research and development and selling, clinical, and marketing.

Prototype and validation units are provided to research and development staff to use in their development process and to end users who are provided units to act as testers so that research and development staff can evaluate and understand their use by patients. A primary objective of these units is to determine when and under what conditions they fail, at which time they are analyzed for cause of failure and then scrapped. These units are expensed in the statements of operations as part of research and development expenses. During the year ended December 31, 2025 the Company charged to operations approximately $279,100 for these units.

Software Development

The Company accounts for costs incurred to develop internal-use software in accordance with ASC 350-40, Internal-Use Software. Costs incurred during the preliminary project stage and post-implementation stage are expensed as incurred. Once an application has reached the development stage and it is probable that the software will be completed and used for its intended purpose, internal and external direct costs incurred to develop the software are capitalized. Capitalized costs consist of third-party costs directly attributable to the development of the software. Capitalized Software Development Costs are amortized on a straight-line basis over the estimated useful life of the software. The Company evaluates capitalized internal-use software for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Costs related to internal-use software capitalized during the period were $1.6 million and $0 for the years ended December 31, 2025 and 2024, respectively.

Impairment of Long-Lived Assets

The Company assesses the recoverability of its long-lived assets, including equipment when there are indications that the assets might be impaired. When evaluating assets for potential impairment, the Company compares the carrying value of the asset to its estimated undiscounted future cash flows. The Company tests assets for recoverability by assessing whether the carrying amount of an asset group exceeds the estimated undiscounted cash flows expected to be generated by the group. If the carrying of amount is not recoverable, an impairment charge is recognized for the amount by which the carrying value exceeds the asset’s fair value. Based on its assessments, the Company didnot record any impairment charges for the years ended December 31, 2025 and 2024.

Leases

The Company accounts for leases under Accounting Standards Topic 842 (“ASC 842”). The Company elected the practical expedient not to separate lease and non-lease components and instead account for each lease and associated non-lease components as a single lease component. The Company assesses whether a contract is or contains a lease at inception of the contract and leases, recognizes right-of-use assets and corresponding lease liabilities at the lease commencement date, except for short-term leases, which are under one year, and leases of low value. For these leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Revenue Recognition

The Company accounts for revenue under ASC 606, “Revenue from Contracts with Customers” and all 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 its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

The Company derives the majority of its revenue from direct billing. The Company also derives revenue from the sale of its products to orthotics and prosthetics or "O&P" providers in the United States and internationally and the 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; 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.

The transaction price associated with the MyoPro for direct to patient revenue is generally determined by the insurance payer. For patients with Medicare Part B, the transaction price is based on the published fees for our billing codes L8701 and L8702. Medicare pays 80% of the published fees, less certain deductions. If a patient has insurance that supplements Medicare Part B with a payer for which sufficient payment history exists or is a non-employer-based plan, the Company estimates the transaction price based on receiving the remaining 20% of the Medicare allowable. For patients that do not carry Medicare Part B, the transaction price is based on either a contracted price or is estimated using the expected value method based on previous collection history with the payer. For U.S.and International O&P providers and the VA, the transaction price is an amount agreed in advance between the parties and evidenced by a purchase order or Myomo order form.

For revenue derived from patients under Medicare Part B, the Company recognizes revenue once it has obtained sufficient medical documentation to demonstrate medical necessity and when control of the device has passed to the patient. Patients with Medicare Part B insurance coverage represented 54% and 49%of revenue for the years ended December 31, 2025 and 2024, respectively. With respect to patients with some Medicare Advantage insurance, the Company will recognize revenue when it receives a pre-authorization from the insurance company and control passesto the patient upon delivery of the device in an amount that reflects the consideration the Company expects to receive in exchange for the device. These payers represented approximately 12% and 20% of revenue in 2025 and 2024, respectively.

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 on an ongoing basis. During the years ended December 31, 2025 and 2024, the Company recognized revenue of approximately $1,058,200 and $1,140,800, respectively, from third-party payers for which costs related to the completion of the Company’s performance obligations were recorded in a prior period.

For revenues derived from O&P providers in the United States and internationally 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, which 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.

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 $218,200 and $83,100 of deferred revenue as of December 31, 2025 and 2024, respectively.

Of the $218,200 of deferred revenue as of December 31, 2025, the Company is expected to recognize approximately half during the year ended December 31, 2026. Of the $83,100 of deferred revenue as of December 31, 2024, the Company recognized $48,900 of revenue as of December 31, 2025.

Disaggregated Revenue from Contracts with Customers

The following table presents revenue by major source:

Geographic Data

The Company generated 83% of its revenue from the United States,16% from Germany and 1% from other international locations for the year ended December 31, 2025. The Company generated 86% of its revenue from the United States,13% from Germany, and 1% from other international locations for the year ended December 31, 2024.

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, such as when the Company ships the MyoPro device to O&P providers, or provides the device directly to patients, pending reimbursement from certain third-party payers, which triggers revenue recognition. For the years ended December 31, 2025 and December 31, 2024, the Company recorded cost of goods sold of approximately $109,000 and $129,100, respectively, without corresponding revenue. The cost of clinical services by O&P providers for which they are paid a fee in conjunction with devices being sold directly to patients and billing their insurance companies directly are expensed as incurred as required by ASC 340-40-25, as a costof obtaining a contract. These costs are recorded as sales and marketing expense, with the remaining costs associated with the patient being expensed to cost of revenue.

Shipping and Handling Costs

Shipping and handling costs paid by customers are netted against the related shipping costs we incur. The net cost is recorded in cost of revenues. Historically, such costs have not been material.

Debt

The Company elects not to use the fair value option for recording debt arrangements and elects to record its debt at the stated value of the loan agreement on the date of issuance. Any other elements present are reviewed to determine if they are embedded derivatives requiring bifurcation and requiring valuation. Elements of the host contract which are not clearly and closely related to the debt are considered derivatives and are recorded at fair value. The carrying value assigned to the host instrument will be the difference between the amount of proceeds received, net of debt issuance costs, and the fair value of the derivatives. There is no immediate gain/loss from the initial recognition and measurement if the embedded derivative is accounted for separately from its host contract. There is an offsetting debt discount or premium as a result of the fair value assigned to the derivatives, as well as any debt issuance costs that are allocated to the debt, which are amortized under the effective interest method over the term of the loan.

Derivative Liabilities

The Company accounts for warrants determined to be derivative financial instruments and any embedded equity-linked component in debt instruments determined to be a derivative liability by recording them as a liability at fair value and then it marks-to-market each instrument to fair value as of each subsequent balance sheet date. Any change in fair value is recorded as a change in the fair value of derivative liabilities in other expense (income) for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The Company has recorded derivative liabilities for warrants it issued with certain equity offerings (see Note 9) as well as a compound derivative liability for provisions in its Term Loan (see Note 8). Debt issuance costs allocated to the derivative liabilities are expensed as incurred.

Income Taxes

The Company accounts for income taxes under Accounting Standards Codification ASC 740, “Income Taxes” (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

ASC 740 requires that the tax effects of changes in tax laws or rates be recognized in the financial statements in the period in which the law is enacted.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Tax benefits claimed or expected to be claimed on a tax return are recorded in the Company’s financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

The Company files income tax returns in federal, state and foreign jurisdictions and is no longer subject to examinations by tax authorities for years prior to 2022. Currently, there are no income tax audits in process. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, or state of foreign tax authorities to the extent utilized in a future period.

Stock-Based Compensation

The Company accounts for stock awards to employees by measuring the cost of services received in exchange for the award of equity instruments 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.

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)/income. The Company recorded comprehensive income from foreign currency translation of approximately $178,900 and a comprehensive loss of approximately $97,900 during the years ended December 31, 2025 and 2024, respectively, which are included in accumulated other comprehensive income (loss) in the consolidated balance sheets. Transactional foreign exchange gains and losses from a foreign currency to the functional currency are included in cost of sales, in the consolidated statement of operations. Such amounts were immaterial for the years ended December 31, 2025 and 2024. The balance sheet is translated using the spot date on the day of reporting and the income statement is translated monthly using the average rate for the month.

Net Loss per Share

Basic 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 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 years ended December 31, 2025 and 2024, respectively, and as a result, all potentially dilutive common shares are considered antidilutive for these periods.

Potentially common shares issuable at December 31, 2025 and 2024 consist of:

Due to their nominal exercise price of $0.0001 per share, a total of 3,763,258 and 7,061,519 outstanding pre-funded warrants as of December 31, 2025 and 2024, respectively are considered common stock equivalents and are included in weighted average shares outstanding in the accompanying consolidated statements of operations as of the closing dates of the Company's public equity offerings in January 2023 and August 2023, respectively.

Advertising

The Company charges the costs of advertising to operating expenses as incurred. Advertising expenses amounted to approximately $8,032,300 and $3,484,800 in 2025 and 2024, respectively.

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs primarily consist of salaries and benefits, prototyping materials, facility and overhead costs, and outsourced research activities.

Recent Accounting Standards

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 2024, the FASB issued ASU 2024-03 “Disaggregation of Income Statement Expenses (Subtopic 220-40) Disaggregation of Income Statement Expenses.” The update requires public business entities to provide enhanced disclosures in the note to the financial statements about the nature of expenses include in income statement captions. The new disclosures will require entities to disaggregate relevant expense captions and present these in a tabular format. At a minimum, the disaggregation must includes amounts for; purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted, which is not expected to have a material impact on our financial position and results of operations.

Subsequent Events

The Company evaluates whether there have been subsequent events through the date the financial statements were issued and determines whether subsequent events exist that would require recognition in the financial statements or disclosure in the notes to the consolidated financial statements.

Note 3 — Inventories

Inventories consist of the following at December 31:

Note 4 — Equipment, net

Equipment consists of the following at December 31:

Depreciation expense was approximately $859,400 and $205,900 for the years ended December 31, 2025 and 2024, respectively.

Note 5 — Software Development Cost

Software development consists of the following at December 31:

Note 6 — 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 Measurements” (“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 consists of a money market fund that limits its investments to only short-term U.S. Treasury securities and repurchase agreements related to these securities.

The Company considers all investments with an original maturity of greater than three months to be short-term investments. Short-term investments are carried on the consolidated balance sheets at fair value. Short-term investments as of December 31, 2025 and 2024 consisted of U.S. Treasury Bills, which are classified as held-maturity, agency bonds and commercial paper totaling approximately $4,261,800 and $493,000, respectively. The Company determines the appropriate balance sheet classification of its investments at the time of purchase and evaluates the classification at the date of purchase. Unrealized gains and losses on short-term investments are recorded to accumulated other comprehensive income (loss) on the consolidated balance sheets and other comprehensive income (loss) on the consolidated statements of comprehensive loss. Once unrealized gains and losses become realized, they are reclassified from other comprehensive gains and losses to other income/expense.

Cash equivalents, short-term investments and derivative liabilities, which are measured at fair value, were as follows At December 31, 2025:

Cash equivalents and short-term investments, which are measured at fair value, were as follows at December 31, 2024:

The following table presents the fair value reconciliation of Level 3 liabilities measured at fair value during the year ended December 31, 2025:

Valuation assumptions utilized in the valuation of Level 3 liability under the Monte Carlo model for warrants at inception and December 31, 2025 were as follows:

The expected stock price volatility for the Company’s warrant liability was based on the Company's historical volatility. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods. The expected term used is the contractual life of the instrument being valued. The company has historically not paid any dividends and does not have any intention to do so in the future.

The valuation assumptions for the compound derivative liability under the Monte Carlo modelare based on determining the fair value of the debt, excluding warrants with and without the derivative features, which include the conversion option for a portion of the debt, the default interest provision and acceleration of the debt upon an event of default. Key inputs for the valuation of the debt include a credit spread of 22.39% and an issuance date annualized risk-free rate of 3.72%.

Note 7 – Accounts Payable and Other Accrued Expenses

Accounts Payable and Other Accrued Expenses consists of the following at December 31:

Note 8 — Debt

On November 4, 2025 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”), with Avenue Capital Management II, L.P., as administrative agent and collateral agent (the “Agent”) and Avenue Venture Opportunities Fund II, L.P., as a lender ("Avenue", or the "Lender"). Also on November 4, 2025, the Company entered into a Supplement to the Loan and Security Agreement (the “Supplement” and together with the Loan and Security Agreement, the “Loan Agreement”) with the Agent and the Lender.

The Loan Agreement provides for committed term loans in an aggregate principal amount of up to $17.5 million with (a) $12.5 million funded on the Closing Date (“Tranche 1”) and (b) up to $5.0 million to be funded at any time at the discretion of the Company between November 4, 2026 and May 4, 2027, so long as no default or event of default has occurred and is continuing. Upon the mutual agreement of the Company and the Lender, the Lender may make additional term loans of up to an additional $10.0 million (the “Discretionary Tranche 3” and collectively with Tranche 1 and Tranche 2, the “Loans”), to be funded between January 1, 2027 and December 31, 2027, as the Company and the Lenders may mutually agree. The Loans bear interest at an annual rate equal to the sum of 4.75% and the prime rate as reported in The Wall Street Journal, subject to a prime floor equal to The Wall Street Journal prime rate on Closing Date. The maturity date of the Loans is June 1, 2029 (the “Maturity Date”).

The Company is making interest only payments on the Loans until the 18-month anniversary of the Closing Date, subject to a 6-month extension if the funding of Tranche 2 has occurred. The Loan principal is repayable in equal monthly installments from the end of interest only period to the Maturity Date.

The Company may, at its option at any time, prepay the Loans in their entirety by paying the then outstanding principal balance and all accrued and unpaid interest on the Loans, subject to a prepayment fee equal to (i) 3.0% of the principal amount outstanding if the prepayment occurs on or prior to the first anniversary following the Closing Date, (ii) 2.0% of the principal amount outstanding if the prepayment occurs after the first anniversary following the Closing Date, but on or prior to the second anniversary following the Closing Date, and (iii) 1.0% of the principal amount outstanding if the prepayment occurs after the second anniversary following the Closing Date. A final payment fee of 3.25% of the principal amount of the Loans (subject to certain reductions), is also due upon the Maturity Date or earlier date of prepayment of the Loans. The Loan is secured by a lien upon and security interest in all of the Company’s assets, including intellectual property, in which the Agent is granted senior secured lien.

Pursuant to the Loan Agreement, the Company is subject to certain financial covenants requiring the Company to (i) maintain at all times $2.5 million in unrestricted cash, (ii) achieve at least 75% of its trailing three-month projected revenue and (iii) achieve cash burn for the trailing six months of no more than the greater of 150% of its projected cash burn, or $2.0 million.

Pursuant to the Loan Agreement, the Lender also has the right to convert up to $3.0 million of the outstanding principal of Tranche 1 and up to $1.0 million of the outstanding principal of Tranche 2 into shares of Company common stock (the “Conversion Securities”) at a price per share equal to 120% of the exercise price of the warrant (See Note 10) at any time while the Loans are outstanding, subject to certain terms and conditions, including ownership limitations. The conversion feature and other terms in the Loan Agreement were bifurcated from the debt at inception, and are being recorded as a compound derivative liability which is being recorded at fair value. At inception, the Company recorded a derivative liability of approximately $1,514,400. At December 31, 2025, the derivative liability was determined to have a fair value of approximately $1,649,900. A lossof approximately $135,500 was recorded to change in fair value of derivative liability in other income (expense) for the year ended December 31, 2025.

The Company recorded approxima tely $821,100 in debt issuance costs during the year ended December 31, 2025 in conjunction with entering into the Loan Agreement, which includes a commitment feeas well as banking and legal fees. The Company capitalized the portion of debt issuance costs allocated to the debt and is amortizing them into interest expense using the interest rate method, which approximates straight-line amortization over the term of the Loan Agreement. The debt issuance costs that were allocated to the warrant (see Note 10) and the compound derivative liability of approximately $151,200 were charged to interest expense at inception of the Loan Agreement. As of December 31, 2025, the balance of debt issuance costs was approximately $638,000, which is included in debt discount on the consolidated balance sheet. The Company amortized $226,300 of debt issuance costs, including those amortized from the issuance of the credit facility, to interest expense during the year ended December 31, 2025.

Concurrent with the closing of the Loan Agreement, the Company repaid $4,000,000 to Silicon Valley Bank, representing all amounts outstanding under its credit facility. In addition, the Company paid pre-payment and other fees and wrote-off unamortized debt issuance costs associated with terminating the credit facility, which resulted in the recording of approximately $186,400 to interest expense during the year ended December 31, 2025.

Including the aforementioned amounts, the Company recorded interest expense of approximately $927,800 and $54,900 under the Loan Agreement and credit facility during the years ended December 31, 2025 and 2024, respectively.

Debt as of December 31, 2025 consists of;

Discount consists of discount for warrant and conversion option, as well as debt issuance costs.

Note 9 — Equity

Pursuant to an amended and restated certificate of incorporation, the Company is authorized to issue up to 75,000,000 shares of stock, consisting of 65,000,000 shares of common stock, par value $0.0001, and 10,000,000 shares of undesignated Preferred Stock, par value of $0.000

On December 6, 2024, the Company completed a public equity offering, selling 3,450,000 shares at $5.00 per share, generating net proceeds after fees and expenses of approximately $15.8 million.

On January 19, 2024, the Company completed a registered direct equity offering, pursuant to which it 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.

728 shares of common stock were issued through the exercise of stock options during the year ended December 31, 2025. No shares of common stock were issued through the exercise of stock options during the year ended December 31, 2024.

During the years ended December 31, 2025 and 2024, the Company issued 794,097 and 1,004,288 shares of common stock, respectively, upon the vesting of restricted stock units.

In conjunction with entering into the Loan Agreement (See Note 7), the Company issued to Avenue a warrant to purchase up to $1,312,500 worth of shares of the Company’s common stock (the “Warrant”). The warrant expires on November 4, 2030 and has an exercise price per share equal to the lesser of (i) $0.96 and (ii) the price per share of the Company’s next bona fide round of equity financing before June 30, 2026 for the purposes of raising capital.

Note 10 — Stock Award Plans and Stock-Based Compensation

Equity Incentive Plan

On June 19, 2018, the Company’s Shareholders and Board of Directors (the “Board of Directors”) approved the Myomo, Inc. 2018 Stock Options 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, 2025 and 2024, the number of shares reserved and available for issuance under the 2018 Plan increased by 1,375,130 and 1,085,401 shares, respectively. At December 31, 2025, there were 524,565 shares available for future grant under the 2018 Plan.

Under the terms of the 2018 Plan, incentive stock options (“ISOs”) may be granted to officers and employees and non-qualified stock options and awards may be granted to directors, consultants, officers and employees of the Company. The exercise price of ISOs cannot be less than the fair market value of the Company’s Common Stock on the date of grant. The options vest over a period determined by the Board of Directors, ranging from immediate tofour years, and expire not more thanten years from the date of grant.

Stock Option Awards

Stock option activity under the Stock Option Plans during the years ended December 31, 2025 and 2024 is as follows:

The Company uses the Black-Scholes option pricing model to estimate the grant date fair value of its stock options. There wasno incometax benefit recognized in the financial statements for share-based compensation arrangements forthe years ended December 31, 2025 and 2024, respectively. There were no stock options granted during the years ended December 31, 2025 and 2024, respectively.

Restricted Stock Units

Restricted stock unit “RSU” activity for the years ended December 31, 2025 and 2024 is summarized below:

In 2025 and 2024, the Company granted an aggregate of 1,431,357 and 780,390 RSUs to employees, members of the board of directors and consultants, respectively, of which 552,281 and 608,000 RSUs were granted to executive officers, respectively, each of which vest over a period ofthree years, respectively. In 2025 and 2024, the Company granted 118,880 and 60,170 RSUs respectively to independent members of the board of directors, which vest in four equal quarterly installments.

The Company determined the fair value of these grants based on the closing price of the Company’s common stock on the respective grant dates. The compensation expense is being amortized over the respective vesting periods.

Awards of RSUs 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. These payments of employee withholding taxes, if made, are presented in the statements of cash flows as a financing activity.

Share-Based Compensation Expense

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

As of December 31, 2025, there was an immaterial amount of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a weighted-average period of 0.1 years.

As of December 31, 2025, there was approximately $4,008,774 of unrecognized compensation cost related to unvested restricted stock unit awards which is expected to be recognized over a weighted-average period of 2.1 years.

Note 11 — Warrants

The following table presents the Company’s common stock warrant activity for the years ended December 31, 2025 and 2024:

In conjunction with entering into the Loan Agreement (See Note 8), the Company issued to Avenue a warrant to purchase up to $1,312,500 worth of shares of the Company’s common stock (the “Warrant”). The warrant expires on November 4, 2030 and has an exercise price per share equal to the lesser of (i) $0.96 and (ii) the price per share of the Company’s next bona fide round of equity financing before June 30, 2026 for the purposes of raising capital.

In addition, upon a change of control, Avenue is entitled to receive the shares of common stock underlying the Warrant without payment of the exercise price. Avenue may exercise the warrant at any time, or from time to time up to and including the Expiration Date, by making a cash payment equal to the exercise price multiplied by the quantity of shares. Avenue may also exercise the warrant on a cashless basis by receiving a net number of shares calculated pursuant to the formula set forth in the warrant. The warrant is subject to anti-dilution adjustments for stock dividends, stock splits, and reverse stock splits.

The Company is accounting for the warrant as a derivative liability, which is recorded at fair value. At inception, the Company recorded a derivative liability of approximately $918,000. At December 31, 2025, the derivative liability was determined to have a fair value of approximately $999,000, and the Company recorded a loss from the change in fair value of derivative liabilities in other income (expense) of approximately $81,000 for the year ended December 31, 2025. See Note 5 – Fair Value of Financial Instruments, for a description of the valuation assumptions used to value the derivative liability.

Due to their nominal exercise price of $0.0001 per share, a total of 3,763,258 and 7,061,519 outstanding pre-funded warrants as of December 31, 2025, and 2024, respectively are considered common stock equivalents and are included in weighted average shares outstanding in the accompanying consolidated statements of operations as of the closing dates of the Company's public equity offerings in January 2024, August 2023 and January 2023, respectively. A total of 3,298,261 and 1,434,730 pre-funded warrants were exercised during the years ended December 31, 2025 and 2024, respectively. The pre-funded warrants have no maturity date.

The weighted average remaining contractual life of warrants outstanding and exercisable, excluding pre-funded warrants at December 31, 2025 was 4.85 years.

Note 12 — Commitments and Contingencies

Litigation

The Company may be involved 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. There is no material litigation against the Company at this time.

Operating Leases

The Company had a lease agreement for its corporate headquarters in Boston, Massachusetts, which expired in January 2025 and has a lease agreement for office space in Fort Worth, TX. which expired December 2025. In August 2024, the Company entered into a lease agreement for a new corporate headquarters and manufacturing facility in Burlington, Massachusetts. The Company began relocating operations in December 2024 and completed the move in January 2025. The term of the lease is 88 months following the rent commencement date, which was May 11, 2025. 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. 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 consolidated balance sheets. We recognize rent expense on a straight-line basis over the lease term.

As of December 31, 2025, operating lease assets were approxima tely $6,679,300 and operating lease liabilities were approximately $8,160,300. The maturity of the Company's operating lease liabilities as of December 31, 2025, were as follows:

For the twelve months ended December 31, 2025, the total lease cost comprised of the following amounts:

The Company paid cash of approximately $691,200 and $582,700 for its operating leases for the years ended December 31, 2025, and 2024, respectively.

The following summarizes additional information related to operating leases:

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgment when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

Warranty Liability

The Company accrues an estimate of their exposure to warranty claims based on historical warranty costs incurred and the number units under warranty to estimate future warranty costs to be insured. Most of the Company’s current product sales include athree-year warranty. The Company assesses the adequacy of their recorded warranty liability annually and adjusts the amount as necessary.

Changes in warranty liability were as follows:

Credit Risk

Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable. The Company attempts to maintain its operating cash within federally insured limits. Its cash equivalents, including money market funds, are invested in instruments that are off the balance sheets of its operating banks. Its short term investments are held in high quality instruments issued by large companies, government agencies and U.S. Treasury Bills. Its cash equivalents and short-term investments, to the extent that there are balances in excess of federally insured limits, are with major financial institutions that management believes are financially sound and have minimum credit risk. The Company has not experienced any losses in such accounts and believes credit risks related to its cash, cash equivalents and short-term investments are limited based upon the creditworthiness of the financial institutions holding these funds.

Insurance Obligations

The Company finances its directors and officers insurance policies, which requires the Company to make a down payment, followed by equal payments over a defined term. During the year ended December 31, 2024, the Company completed payments under a financing arrangement for its 2023-2024 insurance policies, comprising of nine equal monthly payments of approximately $27,000, ending in March 2024. The Company then entered into a new financing arrangement covering the twelve-month period ending in June 2025. Under this financing arrangement, the Company made a down payment of approximately $39,000 during the three months ended June 30, 2024, and made nine equal monthly payments of approximately $39,000, endingin March 2025. The Company then entered into a new financing arrangement for its 2025-2026 insurance policies covering the twelve month period endingin June 2026. The Company made a down payment of $68,400 during the three months ended June 30, 2025 and is making 10 equal monthly payments of approximately $40,300, starting in July 2025.

The Company also finances its property and casualty insurance policies, which require the Company to make a down payment, followed by equal payments over a defined term. During the three months ended September 30, 2025, the Company entered in a new financing arrangement for its 2025-2026 policy covering the twelve months ended July 2025. The Company made a down payment of $55,400 and is making 8 equal payments of approximately $24,300, starting in August 2025.

Changes in the Company's supplier finance obligations were as follows and included in prepaid and accrued expenses on the consolidated balance sheet statement:

Note 13 — Income Taxes

Income (loss) before provision for income taxes was as follows:

The income tax provision for the years ended December 31, 2025 and 2024 consists of the following:

The reconciliation between the U.S statutory federal income tax rate and the Company’s effective rate for the years ended December 31, 2025 and 2024 is as follows:

The Company adopted ASU 2023-09 on a prospective basis.

The significant components of the Company’s deferred tax assets are as follows:

On July 4, 2025, the One Big Beautiful Bill Act ( “the Act”) was enacted into law in the United States, with certain provisions of the Act effective in 2025 and other provisions becoming effective in 2026 and beyond. The provisions of the Act effective in 2025 were not material and have been reflected in our results, as applicable.

As of December 31, 2025 and 2024, the Company had approximately $97,244,000 and $79,060,000 of Federal NOLs and $76,510,000 and $63,502,000 of state NOLs, respectively, available to offset future taxable income. The Federal NOLs incurred prior to 2018 of approximately $26,425,000, if not utilized, begin expiring in the year 2028. The Federal NOLs incurred after 2017 of approximately $70,819,000 have an indefinite carryforward period. The state NOLs if not utilized begin to expire in toexpire in 2026 through 2045.

Additionally, the Company has U.S. federal and state research and development tax credits of $881,000 and $342,000, respectively, which will begin to expire in the year 2026 and 2033, respectively.

NOL carryforwards may face limitations caused by changes in ownership under Section 382 of the Internal Revenue Code. During 2023, the Company experienced an ownership change within the meaning of Section 382 of the Internal Revenue Code of 1986. The ownership change has and will continue to subject the Company’s pre-ownership change net operating loss carryforwards to an annual limitation, which will significantly restrict its ability to use them to offset taxable income in periods following the ownership change. The annual use limitation equals the aggregate value of the Company’s stock at the time of the ownership change multiplied by a specified tax-exempt interest rate. As a result of these ownership changes, the Company is limited to an approximately $64,000 annual limitation on its ability to utilize pre-change NOLs during the carryforward period and has determined that approximately $20,000,000 and $48,000,000 of the Company’s pre-change Federal and State NOLs, respectively, will expire unutilized. As of the issuance date of these financials, the Company has not undertaken a study to determine if its equity offerings in August 2023, January 2024 and December 2024 constituted ownership changes under Section 382.

ASC 740 , “Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets and has, therefore, established a full valuation allowance as of December 31, 2025 and 2024. For the years ended December 31, 2025 and 2024, the change in valuation allowance was an increase of approximately $4,618,000 an increase of$2,540,000, respectively.

The Company recognizes interest and penalties relating to unrecognized tax benefits on the income tax expense line in the statement of operations. There areno tax penalties and interest on the consolidated statement of operations as of December 31, 2025 and 2024, respectively. The Company operates in multiple tax jurisdictions and, in the normal course of business, its tax returns are subject to examination by various taxing authorities. Such examinations may result in future assessments by these taxing authorities. The Company is subject to examination by U.S. tax authorities beginning with the year ended December 31, 2022. To the extent the Company has tax attribute carryforwards the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, or state of foreign tax authorities to the extent utilized in a future period.

The amount of cash income taxes paid by the Company were as follows:

There wereno accrued interest and penalties at December 31, 2025 and 2024, respectively.

Note 14 — Segment Reporting and Major Customers

Segment Reporting

ACS 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about products, business segments, and major customers in financial statements. The Company conducts its business in one operating segment, and sells products in one family, which are versions of the MyoPro. While the Company has several sales channels and operates in different geographies, the Chief Executive Officer, who is the Company's chief operating decision-maker, and is responsible for allocating resources and assessing the performance of the Company, manages the Company's business on a consolidated basis, focusing on revenue, gross margin, certain operating expenses, loss from operations, other expenses (income), Income Tax, and Net loss. The Chief Executive Officer reviews the consolidated balance sheet with relation to consolidated Assets. The Chief Executive Officer does not review any additional or more disaggregated level.

All other segment operating expenses: include Product Development, Software Expense, Travel and Entertainment, Outside Services, Consultants, and Legal Fees.

Major Customers

For the years ended December 31, 2025 and 2024, there were no customers which accounted for more than 10% of revenues. For the year ended December 31, 2025, patients with Medicare Part B insurance represented 54% of revenues. For the year ended December 31, 2024, patients with Medicare Part B insurance and a U.S insurance payer represented 49% and 18% respectively, of revenues.

For the year ended December 31, 2025, CMS, U.S. commercial insurer and its affiliates, and an O&P customer, accounted for approximately 25%,16%, and 12% of accounts receivable, respectively. For the year ended December 31, 2024, CMS and a U.S. commercial insurer and its affiliates, accounted for approximately 36% and 19%of accounts receivable.

For the year ended December 31, 2025 and 2024, approximately 20% and 25% of the Company's total revenues were derived from patients with Medicare Advantage insurance plans, respectively