MYO 10-K & 10-Q changes, risk factors and insider trading

We have a history of losses since inception. For the years ended December 31, 20242025 and 20232024 we incurred net losses of $6.2$15.6 million and $8.1$6.2 million, respectively. At December 31, 2024,2025, we had an accumulated deficit of approximately $103.1$118.1 million. The extent and duration of future operating and net losses will depend on our ability to increase revenues, increase the number of patients entering our pipeline inat a manner that does not significantly increase ourlower advertising cost per pipeline addition, increase revenuesaddition to absorbour thepatient headcountpipeline, andor additionalCost Per Pipeline Add, our ability to manage fixed costs associated with clinical, reimbursement and manufacturing capacity we expect to add during 2025, the ability of our supply chain to meet our volume requirements without disruption and our ability to compensate for additionalan elevated level of research and development ("R&D") spending expected in 2025.spending. However, there can be no assurance that we can cost effectively grow our revenues without requiring additional capital.

Our cash, cash equivalents,equivalents and short-term investments and restricted cash at December 31, 20242025 were approximately $25.2$18.4 million. On DecemberNovember 6,4, 2024, we completed a public offering of our common stock, generating net proceeds of approximately $15.8 million. On July 11, 2024,2025, we entered into a Loan and Security Agreement (the "Loan and Security Agreement") with Avenue, which provided us with $17.5 million in committed funding under two tranches. The first tranche of $12.5 million was funded at closing on November 4, 2025. A portion of these funds were used to re-pay in full the debt outstanding with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (“Silicon Valley Bank”), 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 $1.0 million as of December 31, 2024. In February 2025, we entered into an amendment to the Loan and Security Agreement, which among other things, provided for a $3 million term loan facility which could be drawn at any time until February 28, 2026. On January 19, 2024, we completed a registered direct offering of our common stock and pre-funded warrants, generating net proceeds of approximately $5.4 million.Bank. We believe that our existing cash, cash equivalents,equivalents and short-term investments and restricted cash at December 31, 20242025 will be sufficient to fund our operations for the twelve months from the date of this report. If we encounter obstacles such as those that have been referred to above, we may not be able to return to operating cash flow breakeven on a quarterly basis, and additional capital may be required.

Revenues from providing the MyoPro directly to patients, a sales channel we refer to as direct billing, represented 78%74% and 71%78% of product revenues for the years ended December 31, 20242025 and 2023,2024, respectively. In 2024, we began providing the MyoPro to Medicare Part B patients. Revenues from patients with Medicare Part B represented 63%54% ofand direct billing revenues (49% of total revenues) for the yearyears ended December 31, 2024.2025 and 2024, respectively. Our historical focus on patients with commercial insurers who have previously reimbursed for the MyoPro also impacts our payer concentration. Beginning in September 2021, a large Medicare Advantage insurer that has historically reimbursed for the MyoPro began denying claims after having granted a pre-authorization and after we delivered the devices to patients, and these post-service denials currently continue. Revenues from patients insured by this payer represented 23%7% and 54% of direct billing revenues (18% and 35% of total revenue) during the years ended December 31, 20242025 and 2023,2024, respectively. With a small number of exceptions, appeals filed with the payer have been successful and these claims have ultimately been paid. However, this payer is now providing us with fewer pre-authorizations to serve new patients, requiring additional appeals efforts. This is common with other Medicare Advantage plans as well. If CMS were to change their coverage and reimbursement criteria for the MyoPro, or the aforementioned commercial payer and other Medicare Advantage payers further reduce the number of MyoPro’s that they will authorize for their insured patients, our revenues and cash flows would be negatively impacted, which would have an adverse effect on our business.

WeWhile it has not had a material impact on our business to date, we sell our products in countries throughout the world.world and import materials into the United States. Significant political, trade, or regulatory developments in the jurisdictions in which we may sell our products, such as those stemming from the change in U.S. federal administration,products are difficult to predict and may have a material adverse effect on us. These developments may include export controls, tariffs or changes in reimbursement policies for Medicaid and Medicare. For example, on February 1, 2025, the U.S. imposed a 25% tariff on imports from Canada and Mexico, which werewas subsequently suspended for a period of one month,month. andThe aU.S. 10%has additionalalso tariffimposed significant tariffs on imports from China.China and other countries, and these tariffs may continue to escalate, depending on the status of trade negotiations. Historically, tariffs have led to increased trade and political tensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. While we haveestimate notthat beentariffs affected by such developments as of the date of this annual reportassessed on Formour 10-K,imports are expected to have less than a 100 basis point (1%) impact on gross margin in 2026, we cannot provide any assurance that the final tariffs actually imposed, changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, will not have a material adverse effect on our financial condition or results of operations.

Sales of our device depend, in part, on the extent to which our products are covered by third-party payers, such as government health programs, commercial insurance and managed healthcare organizations. See section titled “Business Section – Government Regulation – Health Insurance Reimbursement”, in this Annual Report on Form 10-K. Third-party payers are increasingly challenging the prices charged, examining the medical necessity and creating additional restrictions on coverage, and reviewing the cost-effectiveness of medical products and services and imposing controls to manage costs. For example, revenue from patients with Medicare Advantage plans decreased by 2% in 2025 compared to 2024. Third-party payers may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the approved products for a particular indication. In addition, CMS may issue local or national coverage determinations which could result in more restrictive coverage for our products. The coverage determination process is often a time-consuming and costly process that requires us to provide scientific and clinical support for the use of our products to each payer separately, with no assurance that coverage and adequate reimbursement will be obtained. In addition, the absence of in-network contracts with Medicare Advantage plans or commercial insurers could result in utilization management for out-of-network patients. Currently, we are almost entirely dependent on third parties to cover the cost of our products to patients and rely on their reimbursement for the cost of our products. If CMS, the U.S. Department of Veterans Affairs (the “VA”) health insurance companies and other third-party payers do not provide adequate coverage or reimbursement for our products, then our sales will be limited to clinical facilities and individuals who can pay for our devices without reimbursement. To our knowledge, from inception through December 31, 2024, fewer than 50 units have been self-paid or funded by non-profit foundations. Some commercial health insurance plans have published statements that they will not cover the cost of the MyoPro for their members. In the event we are unsuccessful in obtaining additional coverage and adequate reimbursement for our products from third-party payers, our sales will be significantly constrained. Currently, reimbursement for the cost of our products is obtained primarily on a case-by-case basis until such time, if any, we obtain broad coverage policies with Medicare and third-party payers. There can be no assurance that we will be able to obtain these broad coverage policies or that Medicare or its local administrative billing contractors will not establish more restrictive coverage requirements for the MyPro in the future (for example, in the form of a local or national coverage determination). See section titled “Business Section – Government Regulation – Health Insurance Reimbursement”, in this Annual Report on Form 10-K.

In connection with Medicare reimbursement, in November 2023 CMS reclassified the MyoPro from the durable medical equipment benefit to the brace benefit category effective January 1, 2024, thereby allowing for lump sum reimbursement. Such lump sum reimbursements based on the fees posted by CMS,CMS are now being made. CMS published final payment determinations for the MyoPro Motion W (L8701) and the MyoPro Motion G (L8702), effective April 1, 2024. These fees are typically updated annually to account for inflation and were subsequentlyrecently updated to approximately $34,300$34,970 for the Motion W and approximately $67,500$68,800 for the Motion G, effective January 1, 2025. The fees are subject to annual inflationary adjustments.2026. Our claims can be reviewedreviewed, audited, or subject to recoupment on a case-by-case basis at any time by CMS.CMS, its contractors, or other government authorities.

There can be no assurance that the finalthese fees will be sufficient to permit us to generate gross margin required to allow us to operate on a profitable basis. Third-party payers may also may continue to deny or limit coverage, limit reimbursement or reduce their levels of payment, or our costs of production may increase faster than increases in reimbursement levels. In addition, we may not obtain coverage and reimbursement approvals in a timely manner. Our failure to operate profitably could negatively impact market acceptance of MyoPro.

Revenues from patients who are covered by Medicare and Medicare Advantage insurance plans have becomehistorically been a significant portion of our overall revenues. However, Medicare Advantage plans have been reducing the number of authorizations for the MyoPro since the second half of 2024, which is negatively impacting our revenues. Revenue from patients with Medicare Advantage insurance plans decreased 2% in 2025 compared to 2024. Approximately 25%20% and 57%25% of our product revenues were derived from patients with Medicare Advantage insurance plans for the years ended December 31, 20242025 and 2023,2024, respectively. Since CMS published reimbursement amounts for the MyoPro in AprilFebruary 2024, revenueswhich became effective in April 2024. Revenues from Medicare Part B patients represented 54% and 49% of total revenue for the yearyears ended December 31, 2024.2025 and 2024, respectively. If CMS amends, restricts, or retracts its November 2023 rule classifying MyoPro as a brace, amends or retracts any published fees, or establishes more restrictive inclusion criteria for coverage, our Medicare revenues could be negatively impacted and insurers offering Medicare Advantage insurance plans may no longer cover or adequately reimburse for the MyoPro. Further, continued utilization management efforts by Medicare Advantage plans could result in further decreases in authorizations. As a result,result of these factors, our overall revenues and cash flows would be negatively impacted, which could have an adverse effect on our business. See “Risks Related to our Reliance on Third Parties—We may not be able to obtain third-party payer reimbursement, including reimbursement by Medicare, for our products” for additional information about CMS coverage decisions.

While we are the manufacturer of record with the U.S. Food and Drug Administration, (the “FDA”) for the MyoPro device we sell, we have contracted with Cogmedix, Inc. (“Cogmedix”), a contract manufacturer with expertise in the medical device industry, for the contract manufacture of certain subassemblies and the sourcing of some of our components and raw materials. Pursuant to this contract, Cogmedix manufactures subassemblies for the MyoPro pursuant to our specifications at its facility in West Boylston, Massachusetts. As the manufacturer of the MyoPro, we ultimately remain responsible to the FDA for overseeing Cogmedix’s manufacturing activities to ensure that they conform with product specifications and applicable laws and regulations, including FDA’s good manufacturing practice requirements for medical devices. Any failure to effectively oversee the regulatory compliance of the product and contract manufacturing activities by Cogmedix can lead to potential enforcement actions, including civil or criminal liabilities, as well as recalls with the FDA. We may terminate our relationship with Cogmedix at any time upon sixty (60) days’ written notice. For our business strategy to be successful, Cogmedix must be able to manufacture our subassemblies in sufficient quantities, and to source raw materials and components, in compliance with regulatory requirements and quality control standards, in accordance with agreed upon specifications, at acceptable costs and on a timely basis. Increases in our product sales, whether forecasted or unanticipated, or supply chain constraints that may arise for any number of reasons, could strain the ability of Cogmedix to manufacture an increasingly large supply of our current or future subassemblies in a manner that meets these various requirements. In addition, although we are not restricted from engaging an alternative manufacturer, the process of moving our manufacturing activities would be time consumingtime-consuming and costly, and may limit our ability to meet our sales commitments, which could harm our reputation and could have a material adverse effect on our business. Further, any new contract manufacturer would need to be compliant with FDA regulations and the international management system standard for medical systems set by the International Organization for Standardization (“ISO”), ISO 13485:2016.

Our ability to grow our business is dependent on our ability to generate sufficient cash flows from operations or to raise additional capital to meet our obligations, if necessary. We believe that our existing cash andcash, cash equivalents and short-term investments will be sufficient to enable us to fund our operations for at least the next twelve months from the issuance date of thesethis financialAnnual statements.Report on Form 10-K. If additional capital is required to achieve operating cash flow breakeven, we may be unable to obtain additional funds on reasonable terms, or at all. Our ability to secure financing and the cost of raising such capital are dependent on numerous factors, including general economic and capital markets conditions, credit availability from lenders, investor confidence and the existence of regulatory and tax incentives that are conducive to raising capital. Uncertainty in the financial markets has caused banks and financial institutions to decrease the amount of capital available for lending and has significantly increased the risk premium of such borrowings. In addition, such turmoil and uncertainty has significantly limited the ability of companies to raise funds through the sale of equity or debt securities. If we are unable to raise additional funds, we may need to delay, modify or abandon some or all of our business plans or cease operations. If we raise funds through the issuance of debt, the amount of any indebtedness that we may raise in the future may be substantial, and we may be required to secure such indebtedness with our assets and may have substantial interest expenses. If we default on our existing or any future indebtedness, our lenders could declare all outstanding principal and interest to be due and payable and our secured lenders may foreclose on the facilities securing such indebtedness. UsageOur ofterm ourloan linefacility ofwith creditAvenue requires us to meet financial and operating covenants, which could place limits on our operations, decrease our liquidity and increase the amount of cash flow required to service our debt. If we raise funds through the issuance of equity securities, such issuance could result in dilution to our stockholders and the newly issued securities may have rights senior to those of the holders of our common stock.

The terms of our Loan and Security Agreement with Avenue require us to meet certain operating covenants and place restrictions on our operating and financial flexibility. Our level of indebtedness and debt service obligations could adversely affect our financial condition and may make it more difficult for us to fund our operations.

The industries in which we operate are highly competitive and subject to rapid technological change. The publishing of fees for the Healthcare Common Procedures Coding System (“HCPCS”) billing codes for our products may attract competition. If our competitors are better able to develop and market products that are safer, more effective, less costly, easier to use, or are otherwise more attractive, we may be unable to compete effectively with other companies.

Industrial and medical robotics is characterized by intense competition and rapid technological change, and we will face competition on the basis of product features, clinical outcomes, price, services and other factors. We are experiencing competition in the United States from companies such as Neurolutions,Neurolutions and MicroTransponder, Inc., and in Germany from companies such as Vincent Systems and HKK Bionics. Publication of fees by CMS under our HCPCS billing codes L8701 and L8702 is also expected to attract competition in the United States. Competitors may include large medical device and other companies, some of which have significantly greater financial and marketing resources than we do, and firms that are more specialized than we are with respect to particular markets. Our competition may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, and have greater financial, marketing and other resources than we do or may be more successful in attracting potential customers, employees and strategic partners.

If these independent O&P providers do not followcomply ourwith inclusion/exclusionapplicable criteriacoverage foror patientbilling selectionrequirements or do not provide adequate follow-on care, then our reputation may be harmed by patient dissatisfaction. This could also lead to product returns and adversely affect our financial condition. When issues with O&P providers have arisen in the past, we have supplied additional training and documentation and/or ended the business relationship.

The market for myoelectric braces, or orthotics, is relatively new and the rate of adoption is uncertain. Our estimates of market size are derived from statistics regarding the number of strokes and other afflictions,afflictions but not necessarily limited to those with upper extremity impairment. Accordingly, it is difficult to predict the future size and rate of growth of the market. We cannot be certain whether the market will continue to develop or if orthotics will achieve and sustain a level of market acceptance and demand sufficient for us to continue to generate revenue and achieve profitability.

Limited sources exist to obtain reliable market data with respect to the number of mobility-impaired individuals and the occurrence of upper extremity paralysis in our target markets. In addition, there are no third-party reports or studies regarding what percentage of those with upper extremity paralysis would be able to use orthotics in general, or our current or planned future products in particular. In order to use our current products marketed to those with upper extremity paralysis, users must meet a set of inclusion criteria and not have a medical condition which disqualifies them from being an appropriate candidate. Future products for those with upper extremity paralysis may have the same or other restrictions. Our business strategy is based, in part, on our estimates of the number of upper extremity impaired individuals and the incidence of upper extremity injuries in our target markets and the percentage of those groups that would be able to use our current and future products.products that also carry insurance that will reimburse for the device. Our assumptions and estimates may be inaccurate and may change.

In addition, because we operate in a relatively new market, the actions of our competitors could adversely affect our business. Adverse events such as product defects or legal claims with respect to competing or similar products could cause reputational harm to the market on the whole. Further, adverse regulatory findings or reimbursement-related decisions with respect to other products could negatively impact the entire market and, accordingly, our business.

While clinical data have established the safety of MyoPro products, our products undergo periodic updates for various reasons, including performance and reliability improvements and cost reductions. For example, in JanuaryApril 2022,2025, we announced the availability of MyoPro2+.MyoPro2x. Because MyoPro users generally do not have feeling in their upper extremities, they may not immediately notice adverse effects from updates to the MyoPro, which could exacerbate their impact. If MyoPro products are shown to present new risks or to be unsafe or cause such unforeseen effects in the future, our business and reputation could be harmed, including through field corrections, withdrawals, removals, mandatory product recalls, suspension or withdrawal of FDA registration, significant legal liability or harm to our business reputation.

In the ordinary course of our business, in the future we may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships to develop the MyoPro and to pursue new markets. We are selling the MyoPro in several European countries, as well as Australia. In January 2021, we announced that we had entered into a joint venture with Beijing Ryzur Medical Investment Co., Ltd. (“Ryzur Medical”), to manufacture and sell the products containing our technology in China, including Hong Kong, Taiwan and Macau. The company is named Jiangxi Myomo Medical Assistive Appliance Co., Ltd. (the “JV Company”). In December 2021, we entered into a technology license agreement and a trademark license agreement with the JV Company, under which we were entitled to receive a license fee of $2.7 millionmillion, which we received in 2023, and the JV Company will commitcommitted to purchase a minimum of $10.75 million of MyoPro control units over the next ten years. DuringIn 2023,November 2025, we receivedwere fullnotified paymentthat Ryzur Medical filed for bankruptcy in China and is in the process of being liquidated. As a result, the operations of the $2.7JV millionCompany initialare licensenow feeseverely limited. Chinaleaf Capital, a minority investor in the JV Company, is currently leading the process of restructuring the JV Company and haveraising receivedadditional paymentcapital forin MyoProorder controlto unitsre-start normal operations. According to the terms of $50,000.the JV Contract, the sale of shares in the JV Company will not dilute our ownership. We cannot provide any assurance that we will accept any terms and conditions that new investors, if any, will require and we may exercise our right to terminate the joint venture in the future. This and any other of these relationships may require us to incur legal fees,as well as non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. In addition, proposing, negotiating and implementing collaborations, licensing arrangements, joint ventures, strategic alliances or partnerships may be a lengthy and complex process. We may not identify, secure, or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement. In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenues and could be terminated prior to developing any products. Any delays in entering into new strategic partnership agreements related to our products could delay the development and commercialization of our products in certain geographies, which would harm our business prospects, financial condition and results of operations.

Moreover, there are significant costs and risks inherent in selling our products, particularly in international markets, including: (a) time and difficulty in building a widespread network of distribution partners; (b) increased shipping and distribution costs, which could increase our expenses and reduce our margins; (c) potentially lower margins in some regions; (d) longer collection cycles in some regions; (e) compliance with foreign laws and regulations; (f) compliance with anti-bribery, anti-corruption, and anti-money laundering laws, such as the Foreign Corrupt Practices Act and the Office of Foreign Assets Control regulations, by us, our employees, and our business partners; (g) currency exchange rate fluctuations and related effects on our results of operations; (h) economic weakness, including inflation, or political instability in foreign economies and markets; (i) compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; (j) workforce uncertainty in countries where labor unrest is more common than in the United States; (k) business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters, including earthquakes, typhoons, floods and fires; and (l) other costs and risks of doing business internationally, such as new tariffs which may be imposed. For example, we have entered into a joint venture with Ryzur Medical, to manufacture and sell the products containing the Company’s technology in China, including Hong Kong, Taiwan and Macau. In connection with this joint venture, we may encounter challenges in working with our joint venture partners, including with respect to compliance with local laws and domestic laws related to foreign operations.

We are subject to extensive governmental regulations relating to the design, development, manufacturing, labeling andlabeling, marketing, delivery and billing of our products, and a failure to comply with such regulations could lead to withdrawal or recall of our products from the market.

In 2012, we listed the MyoPro device as a Class I, 510(k)-exempt, limb orthosis with the FDA. From time to time, the FDA may disagree with the classification regulation under which a registrant lists their device. For example, the FDA may disagree with a registrant’s determination to classify their device as a Class I medical device. Instead, the FDA may determine the device to be a Class II or Class III device requiring the submission of a premarket notification, or 510(k), or a premarket approval application for premarket clearance or approval. As the FDA is now giving more attention to the differentiated performance of myoelectric controlled orthotics, we elected to change our device listing to be under a Class II classification regulation for biofeedback devices. Under the classification regulation, we believe our device remains 510(k)-exempt as a prescription battery powered external limb orthosis that is indicated for functional improvement, a device which is generally 510(k)-exempt under the classification regulation. In the event that the FDA determines that our devices, whether by functionality or marketing claims, exceed the limitations on 510(k)-exemption such that premarket clearance or approval is required (i.e., that our device is intended for a use different from the intended use of a legally marketed device in the generic type of device under the applicable classification regulation or that our modified device operates using a different fundamental scientific technology than such a legally marketed device), should be classified as Class II devices or Class III devices requiring premarket clearance or approval, or should FDA decide to reclassify our device as a Class II or Class III device requiring premarket clearance or approval, we could be precluded from marketing our devices for clinical use within the United States for months or longer depending on the requirements of the classification. Obtaining premarket clearance or approval could significantly increase our regulatory costs, including expenseexpenses associated with required preclinical (animal) and clinical (human) trials, more extensive mechanical and electrical testing and other costs.

We are registered with the FDA as a manufacturer for medical devices. We are also subject to regulation by foreign governmental agencies in connection with international sales. The agencies enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising, marketing and distribution, and market surveillance of our medical device products. Following the introduction of a product, the governmental agencies will periodically review our product development methodology, quality management systems, and product performance. We are under a continuing obligation to ensure that all applicable regulatory requirements, such as the FDA’s medical device good manufacturing practice / Quality Management System Regulation (“QSRQMSR”) requirements and the FDA’s medical device reporting requirements for certain device-related adverse events and malfunction, continue to be met. Our facilities are subject to periodic and unannounced inspection by U.S. and foreign regulatory agencies to audit compliance with the QSR,QMSR, and comparable foreign regulations.

The process of complying with the applicable QSR,QMSR, medical device reporting, and other requirements can be costly and time consuming, and could delay or prevent the production, manufacturing or sale of the MyoPro. If the FDA determines that we fail to comply with applicable regulatory requirements, they may issue an inquiry or an untitled or warning letter with one or more citations of non-compliance. These inquiries or letters, if not closed promptly, can result in fines, delays or suspensions of regulatory clearances, closure of manufacturing sites, seizures or recalls of products and damage to our reputation. Similarly, if we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. Recent changes in enforcement practice by the FDA and other agencies have resulted in increased enforcement activity, which increases the compliance risk that we and other companies in our industry are facing.

In addition, governmental agencies of the United States or other countries may impose new requirements regarding registration, labeling or prohibited materials that may require us to modify or re-register the MyoPro once it is already on the market or otherwise impact our ability to market the MyoPro in the United States or other countries. For example, on February 2, 2024, the FDA published a final rule to amend its QSR requirements to align more closely with the international consensus standards for medical devices by converging with quality management system (“QMS”) requirements used by other regulatory authorities from other countries. Specifically, the final rule does so primarily by incorporating by reference the 2016 edition of the ISO 13485 standard. The amended regulation is referred to as the Quality Management System Regulation (“QMSR”) and is effective February 2, 2026. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing authorization that we may have obtained, which could have a material adverse effect on our business, prospects, results of operations, financial condition and our ability to achieve or sustain profitability. The process of complying with these governmental regulations can be costly and time consuming, and could delay or prevent the production, manufacturing or sale of the MyoPro. For instance, the FDA may issue mandates, known as 522 orders, requiring us to conduct post-market surveillance studies of our devices. Failure to comply could result in enforcement of the FFDCA against us or our products including an agency request that we recall our MyoPro products.

Our relationships with healthcare providers and physicians and third-party payers will beare subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

We are subject to broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act, which may constrain the business or financial arrangements and relationships through which we sell, market and distribute our products. In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry (e.g., healthcare providers, physicians and third-party payers), are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. In August 2025, we launched our MyoConnect program, whereby we engage with and educate therapists and other healthcare professionals regarding the MyoPro with an objective of generating referrals. Such programs are subject to heightened scrutiny under federal and state healthcare fraud and abuse laws, and we must ensure that we operate this program in a compliant manner. Marketing and promotional programs may also be affected by the application of healthcare privacy laws relating to the use of information gathered by social media companies in advertising activities. We are also subject to patient information and privacy and security regulation by both the federal government and the states and foreign jurisdictions in which we conduct business. See section titled “Business – Government Regulation – Healthcare Privacy Laws and Regulations”, in this Annual Report on Form 10-K.

If we or our third-party manufacturers or key suppliers fail to comply with the applicable good manufacturing practice requirements, including FDA’s Quality Management System Regulation, our manufacturing operations could be interrupted.

We and our third-party manufacturers and key suppliers are also required to comply with the FDA’s QSRQMSR which covers the methods and documentation of the production, control, quality assurance, labeling, packaging, storage and shipping of our products. In February 2024, the FDA issued the QMSR Final Rule to amend the QSR, incorporating by reference, ISO 13485:2016. The rule will become effective on February 2, 2026. Until then, manufacturers are required by the FDA to comply with the QSR. We, Cogmedix, our electromechanical kit manufacturer, and other key suppliers are also subject to the regulations of foreign jurisdictions regarding the manufacturing process with respect to the market for our products abroad.

We continue to monitor our quality management, as well as that of our third-party manufacturers and suppliers to improve our overall level of compliance. Our facilities and those of our third-party manufacturers and key suppliers are subject to periodic and unannounced inspection by U.S. and foreign regulatory agencies to audit compliance with the QSRQMSR and comparable foreign regulations. If our facilities or the facilities of our third-party manufacturers and suppliers are found to be in violation of applicable laws and regulations, or if we or our third-party manufacturers and suppliers fail to take satisfactory corrective action in response to an adverse inspection, the regulatory authority could take enforcement action, including any of the following sanctions:

Our internal computer systems, or those of our customers, collaborators or other contractors, third-party service providers and vendors may be subject to cyber-attacks, compromises or security incidents, which could result in a material disruption of our product development programs.

Despite the implementation of security measures, our internal computer systems and infrastructures and those of our customers, collaborators, contractors, third-party service providers, vendors or other third parties are vulnerable to damage, compromise or interruption from computer viruses, unauthorized access, misuse, or other security compromises or breaches. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect.detect and may be enhanced or facilitated by AI. Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, wrongful conduct by employees, vendors, or other third parties, hostile foreign governments, industrial espionage, social engineering and business email compromises, and other means to affect service reliability and threaten or compromise the security, confidentiality, integrity and availability of systems and information. Cyber-attacks also could include phishing attempts or e-mail fraud to cause payments or information to be transmitted to an unintended recipient. WeFurther, attempts to disrupt or gain unauthorized access to our and our third-party vendors’ information systems from malicious third parties or insider threats may incorporate widely varying and frequently changing tactics, which may be enhanced or facilitated by AI. Like other companies in our industry, we, and our third-party vendors, have in the past experienced threats and security incidents related to our data and systems, and we may in the future experience other threats, compromises, breaches, or incidents. For example, in February 2026, a third-party service provider notified the Company of a ransomware attack affecting the service provider’s systems, which may have exposed data maintained on Company systems. At this time, the Company does not have sufficient information regarding the scope or impact of the incident to determine whether it is material to the Company. A cyber-attack or security compromise or incident could cause interruptions in our operations and could result in a material disruption of our business operations, damage to our reputation or a loss of revenues.

We could be required to expend significant amounts of money and other resources to detect, mitigate and respond to these threats, compromises, or breaches and to repair or replace information technology systems infrastructure or networks and could suffer financial loss or the loss of valuable confidential and/or proprietary information. In addition, we could be subject to regulatory actions, inquiries, investigations, orders, penalties, fines, and/or claims made by individuals and groups in private litigation, including those involving privacy and security issues related to data collection and use practices and other data privacy and security laws and regulations, including claims for misuse or inappropriate disclosure of data, as well as unfair or deceptive practices. Although we develop and maintain systems and controls designed to prevent these events from occurring, and we have a process designed to identify and mitigate threats, the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated. Moreover, despite our efforts, instances of unauthorized access to our computer systems have occurred in the past, though these events have not resulted in financial loss or disruption to our operations. The possibility of these events occurring in the future cannot be eliminated entirely. There can be no assurance that any measures we take will prevent or adequately address cyber-attacks or security compromises or incidents that could adversely affect our business. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our privacy and data security obligations. Further, although we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential liabilities related to any experienced cybersecurity incident or data breach.

The collection and use of personal data, including personal health data in the European Economic Area (“EEA”) and the UK is governed by the provisions of the EU General Data Protection Regulation (“EU GDPR”) (with regards to the EEA) and the UK General Data Protection Regulation (“UK GDPR”) (with regards to the UK), as well as applicable data protection laws in effect in the member states of the EEA and in the UK (including the UK Data Protection Act 2018). In this Annual Report on Form 10-K, “GDPR” refers to both the EU GDPR and the UK GDPR, unless specified otherwise. The GDPR applies to the processing of personal data by any company established in the EEA/UK and to companies established outside the EEA/UK to the extent they process personal data in connection with the offering of goods or services to data subjects in the EEA/UK or the monitoring of the behavior of data subjects in the EEA/UK. The GDPR imposes a broad range of strict requirements on companies subject to the GDPR, such as including requirements relating to having legal bases or conditions for processing personal data relating to identifiable individuals and transferring such information outside the EEA/UK ,UK, including to the United States., providing details to those individuals regarding the processing of their personal data, implementing safeguards to keep personal data secure, having data processing agreements with third parties who process personal data, providing information to individuals regarding data processing activities, responding to individuals’ requests to exercise their rights in respect of their personal data, where required obtaining consent of the individuals to whom the personal data relates, reporting security and privacy breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments, and record-keeping. In the event of any non-compliance with the GDPR and any supplemental EEA Member State or UK national data protection laws, we could be subject to warning letters, mandatory audits, orders to cease/change the use of data, and financial penalties, including fines of up to €20,000,000 (£17.5 million for the UK GDPR) or 4% of total annual global revenue, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.

The GDPR imposes strict rules on the transfer of personal data outside of the EEA or the UK to countries that do not ensure an adequate level of protection, like the United States in certain circumstances unless adequate safeguards (such as the European Commission approved standard contractual clauses (“SCCs”) or the UK International Data Transfer Agreement/Addendum, (“UK IDTA”) and transfer impact assessments carried out when relying on the SCCs and UK IDTA. The international transfer obligations under the EU data protection laws will require significant effort and cost and may result in us needing to make strategic considerations around where EEA and UK personal data is transferred and which service providers we can utilize for the processing of EEA and UK personal data. Any inability to transfer personal data from the EEA and UK to the United States in compliance with data protection laws may impede our ability to conduct trials and may adversely affect our business and financial position. Although the UK is regarded as a third country under the EU GDPR, the European Commission (“EC”) has now issued a decision recognizing the UK as providing adequate protection under the EU GDPR and, therefore, transfers of personal data originating in the EEA to the UK remain unrestricted. In December 2025, the European Commission adopted a decision to extend the validity of the UK adequacy decision for six years until December 2031, determining that the UK continues to offer a level of data protection that is “essentially equivalent” to the EU standards. This follows the UK’s adoption of the Data (Use and Access) Act 2025 (the “DUAA”) on June 19, 2025. Like the EU GDPR, the UK GDPR restricts personal data transfers outside the UK to countries not regarded by the UK as providing adequate protection. The UK government has confirmed that personal data transfers from the UK to the EEA remain free flowing.

The UK’s data protection regime is independent from but aligned to the EU’s data protection regime. However, following the UK’s exit (“Brexit”) from the European Union (“EU”), there will be increasing scope for divergence in application, interpretation and enforcement of the data protection laws between these territories. For example, the UK Government has announced plans to introduce a Digital Information and Smart Data Bill (“Data Reform Bill”) into the UK legislative process to reform the UK’s data protection regime following Brexit. If passed, the final version of the Digital Reform BillDUAA may have the effect of further altering the similarities between the UK and EEA data protection regimes and threaten the UK adequacy decision from the EU Commission,regimes, which may lead to additional compliance costs and could increase our overall risk. The respective provisions and enforcement of the EU GDPR and UK GDPR may further diverge in the future and create additional regulatory challenges and uncertainties. This lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, complexity and cost to our handling of European personal data and our privacy and data security compliance programs, and could require us to implement different compliance measures for the UK and the EEA.

Litigation to establish or challenge the validity of patents, or to defend against or assert against others infringement, unauthorized use, enforceability or invalidity claims, can be lengthy and expensive and may result in our patents being invalidated or interpreted narrowly and our not being granted new patents related to our pending patent applications. For example, the validity of one of our patents in Europe is currently being challenged. Even if we prevail, litigation may be time consumingtime-consuming and force us to incur significant costs, and any damages or other remedies awarded to us may not be valuable and management’s attention could be diverted from managing our business. In addition, U.S. patents and patent applications may be subject to interference proceedings, and U.S. patents may be subject to re-examination and review in the U.S. Patent and Trademark Office. Foreign patents may also be subject to opposition or comparable proceedings in the corresponding foreign patent offices. Any of these proceedings may be expensive and could result in the loss of a patent or denial of a patent application, or the loss or reduction in the scope of one or more of the claims of a patent or patent application.

In addition, we seek to protect our trade secrets, know-how and confidential information that is not patentable by entering into confidentiality and assignment agreements with our employees and certain of our contractors and confidentiality agreements with certain of our consultants, scientific advisors and other vendors and contractors. However, we may fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or otherwise fail to prevent disclosure, third-party infringement or misappropriation of our proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. Enforcing a claim that a third-party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. We have also have taken precautions to initiate reasonable safeguards to protect our information technology systems. However, these measures may not be adequate to safeguard our proprietary information, which could lead to the loss or impairment thereof or to expensive litigation to defend our rights against competitors who may be better funded and have superior resources. In addition, unauthorized parties may attempt to copy or reverse engineer certain aspects of our products that we consider proprietary or our proprietary information may otherwise become known or may be independently developed by our competitors or other third parties. If other parties are able to use our proprietary technology or information, our ability to compete in the market could be harmed. Further, unauthorized use of our intellectual property may have occurred, or may occur in the future, without our knowledge.

Infringement actions and other intellectual property claims brought against us, with or without merit, may cause us to incur substantial costs and could place a significant strain on our financial resources, divert the attention of management and harm our reputation. We cannot be certain that we will successfully defend against any allegations of infringement. If we are found to infringe another party’s patents, we could be required to pay damages. We could also be prevented from selling our products that infringe, unless we could obtain a license to use the technology covered by such patents or could redesign our products so that they do not infringe. A license may be available on commercially reasonable terms or none at all, and we may not be able to redesign our products to avoid infringement. Further, any modification to our products could require us to conduct clinical trials and revise our filings with the FDA and other regulatory bodies, which would be time consumingtime-consuming and expensive. In these circumstances, we may not be able to sell our products at competitive prices or at all, and our business and operating results could be harmed.

We rely on trademark protection to distinguish our products from the products of our competitors. We have registered the trademarks “MyoPro” (Registration No. 4,532,331), “MYOMO” (Registration No. 4,451,445), “MyoPal” (Registration No. 6,086,533) and, “MyoCare” (Registration No. 6,579,736) and MyoCoach (Registration No. 6,867,077) in the United States. The MyoPro mark is registered in Canada and in selected EU countries with pending registration.countries. In jurisdictions where we have not yet registered our trademark and are using it, and as permitted by applicable local law, we seek to rely on common law trademark protection where available. Third parties may oppose our trademark applications, or otherwise challenge our use of the trademarks, and may be able to use our trademarks in jurisdictions where they are not registered or otherwise protected by law. If our trademarks are successfully challenged or if a third-party is using confusingly similar or identical trademarks in particular jurisdictions before we do, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote additional resources to marketing new brands. If others are able to use our trademarks, our ability to distinguish our products may be impaired, which could adversely affect our business. Further, we cannot assure you that competitors will not infringe upon our trademarks, or that we will have adequate resources to enforce our trademarks.

Our stockholders will experience significant dilution upon the issuance of common stock if the shares of our common stock underlying our warrants are exercised or converted.converted or if Avenue elects to convert some principal payments into common stock.

We have a significant number of securities convertible into, or allowing the purchase of, our common stock. Investors could be subject to increased dilution upon the conversion or exercise of these securities. For example, in conjunction with equity offerings in January 2024, August 2023 and January 2023, we issued 224,730, 1,920,000 and 6,830,926 pre-funded warrants, respectively. Each pre-funded warrant is exercisable for one share of common stock at the nominal exercise price of $0.0001 per share. As of December 31, 2024,2025, we had 7,061,5193,763,258 shares issuable upon the exercise of pre-funded warrants with an exercise price of $0.0001 per share, 668,2501,367,187 shares issuable upon the exercise of otherwarrants warrants,issued to Avenue, with a weighted-averagean exercise price of $7.50$0.96 per share and(subject 1,218,792to adjustment in the event we complete an equity offering at a lower price per share before June 30, 2026). In addition, Avenue, at their sole discretion, can convert up to $3 million of principle ($4 million if the second tranche is borrowed) at a price per share of $1.15. We also have 1,752,473 unvested restricted stock units outstanding.outstanding Inand addition, we had 23,19421,494 shares issuable upon the exercise of stock options under our equity incentive plans, with a weighted-average exercise price of $42.98$45.00 per share.

We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business. In addition, pursuant to the terms of our Loan and Security Agreement, with Avenue, we are prohibited from paying cash dividends without the prior written consent of Silicon Valley Bank.dividends. Therefore, holders of our common stock will not receive any return on their investment unless we pay dividends in stock, or they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.

The following discussion should be read in conjunction with our financial statements and the related notes contained elsewhere in this Annual Report on Form 10-K and in our other Securities and Exchange CommissionSEC 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” and elsewhere in this Annual Report on Form 10-K. These risks could cause our actual results to differ materially from any future performance suggested below.

We are a wearable medical robotics company, specializing in myoelectric braces, or orthotics, for people with neuromuscular disorders. We develop and market the MyoPro product line, which is a myoelectric-controlled upper limb brace, or orthosis. The orthosis is a rigid brace used for the purpose of supporting a patient’s weak or deformed arm to enable and improve functional activities of daily living, or ADLs, in the home and community. It is custom constructed by a trained professional during a custom fabrication process for each individual user to meet their specific needs. Our products are designed to help regain functionmovement in individuals with neuromuscular conditions due to brachial plexus injury, stroke, traumatic brain injury, spinal cord injury and other neurological disorders.

We utilize digital adsadvertise on varioustelevision platformsand through social media. In addition, we perform in-services for therapists and physicians to generate referrals under a new program we refer to as wellMyoConnect, asand televisionwe adsdirectly toeducate reachand patientsinform those individuals who are potential candidates for our product.products. Once the prospective patient contacts us or is referred to us,us through our MyoConnect program, either our trained clinical staff or a trained O&P provider will evaluate the patient for their suitability as a candidate. Initial evaluations by our trained clinical staff are conducted using telehealth techniques, followed by an in-person clinical evaluation of the candidate. Prior to obtaining authorizations from commercial insurance companies or delivering to a patient with Medicare Part B, 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, if the patient has Medicare Advantage or other commercial insurance, 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 a process we call shape capture. In many cases, shape capture is done using a remote measurement kit supplied to the patient. 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. 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 hospitals and 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 VA system for impaired veterans, and over 130 VA facilities have ordered devices for their patients.

On July 31, 2017, we met the criteria to apply the CE mark for the MyoPro under the EU MDD. The EU MDR repealed and replaced the EU MDD and became applicable on May 26, 2021, and we therefore worked with our EU-Authorized Representative to ensure all EU MDR requirements were met, which enabled us to establish a new declaration of conformity under the EU MDR to allow continued to CE mark application. This has enabled us to sell the MyoPro to individuals in the EU.

On December 6, 2024, we completed a public offering, selling 3,450,000 shares at $5.00 per share, generating net proceeds after fees and expenses of approximately $15.8 million. Net proceeds from the offering are expected to be used to grow revenues in our direct billing channel through additional advertising spending and the addition of clinical, reimbursement and manufacturing headcount to support expected increasing demand, to increase R&D spending in order to accelerate the completion of sustaining and new product development activities, to fund systems and headcount to support growth in the O&P channel, to fund associated working capital requirements and general corporate purposes. On January 19, 2024 we completed a registered direct equity offering, selling 1,354,218 shares of common stock and 224,730 pre-funded warrants at $3.80 per share, or $3,7999$3.7999 per pre-funded warrant, generating net proceeds after fees and expenses of approximately $5.4 million. On August 29, 2023, we completed a public equity offering, selling 5,413,334 shares of common stock and 1,920,000 pre-funded warrants at $0.60 per share, or at $0.5999 per pre-funded warrant, generating net proceeds after fees and expenses of approximately $3.9 million. In January 2023, we completed a public equity offering, whereby we sold 13,169,074 shares of common stock and 6,830,926 pre-funded warrants at $0.325 per share, or $0.3249 per pre-funded warrant. Each pre-funded warrant in the above offerings entitles the holder to one share of common stock upon exercise at a nominal exercise price of $0.0001 per share. See section titled “Liquidity” for further discussion.

We have been growing revenues while incurring net losses and negative cash flows from operations since inception and anticipate this to continue forin most of 2025.2026. Our financial performance in 20242025 reflected our ability to be reimbursed by Medicare for providing the MyoPro to their beneficiaries.beneficiaries, as well as challenges around marketing efficiency and patient acquisition which increased Cost Per Pipeline Add. Our plan for 20252026 is to begin to pivot away from relying on direct to patient advertising to generate revenues and invest in increasinggenerating demandrevenues from recurring sources, including the MyoConnect referral program and addingfrom capacityO&P to support our direct billing channel, while making investments to increase revenuesproviders in the U.S. O&Pand channel.Germany, while implementing marketing initiatives to reduce Cost Per Pipeline Add in the direct billing channel and minimizing the growth of fixed expenses.

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 United States. Europe and Australia, to the VA and evaluation units 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.

We expect that our revenues will continue to grow,grow in 2026, primarily as a result of investments to grow revenues from recurring sources, including generating patient referrals under our directMyoConnect billingprogram, channelas andwell through expected higher revenueas from O&P practices bothin insidethe U.S. and outsideGermany, ofwhich thewe Unitedexpect States.to increase operating leverage and reduce our dependence on advertising-driven direct-to-patient revenues.

We expect our gross margin to improve in 2026 due to higher volume and cost reduction actions, however gross margin may vary depending on the mix of channel revenues and timing of reimbursements from certain third-party payers,revenues, which impacts revenueour recognition.average selling price.

R&D expenses consist of costs for our engineering and research personnel, including salaries, benefits, incentive 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 acceleratemanage R&D expenses in 2026, while maintaining the pace of our R&D efforts inas 2025cash andflows expectallow, R&Das costswell as to increasefund ona anrandomized annualcontrol basis.trial being conducted by the University of Utah.

R&D expenses increased by approximately $2.1$2.2 million or 81%46% in 20242025 compared to 2023.2024. The increase during 20242025 was driven primarily by higher payroll costs due to higher engineering headcount in 20242025 as a result of ainvesting largerin numberorder ofto newaccelerate our sustaining engineering and product development andefforts sustainingfor engineeringour projects.MyoPro 3.

SellingSelling, clinical and marketing expenses consist of costs for our business development, customer experience, field clinical staff,clinical, clinical training organization, and marketing personnel, including salaries, benefits, stock-based compensation and sales commissions, costs of digital 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 when the product is delivered. We expect salesthe growth rate in selling, clinical and marketing expenses to increasebe significantly lower in 2026. In additi9on to gaining leverage on our 2025 investments, we intend to make investments in our MyoConnect referral program, including clinical sales personnel, our international operations and support for the O&P channel, as we increaseexecute our advertising spending and clinical capacitystrategy to grow revenues inreduce our dependence on advertising-driven direct billing channel.revenues.

Selling, clinical, and marketing expenses increased by approximately $3.2$8.1 million or 35%67% in 20242025 compared to 2023.2024. The increase during 20242025 was driven primarily by higher advertising spending as well as an increases in clinical and customerfield serviceoperations headcount in support of our direct billing channel.

General and administrative expenses consist primarily of costs for administrative, reimbursement, and finance personnel, including salaries, benefits, incentive 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 and Medicare accreditation, as well as costs associated with accounting systems, insurance premiums and other corporate expenses. We expectintend thatto reduce the growth rate in general and administrative expenses will increase in 2025 as a result of increasing our reimbursement capacity in order to grow revenue in the direct billing channel.2026.

General and administrative expenses increased by approximately $2.6$1.6 million or 27%13% in 20242025 compared to 2023.2024. The increase was primarily due to an increaseincreases in headcount in the human resourcepayroll and reimbursementbenefits, functions,consulting and insurance costs, as well as alease highercosts bonus.and depreciation associated with the move to our new facility in Burlington, MA.

We define Adjusted EBITDA as earnings before interest and other incomeexpense (expenseincome), taxes, depreciation and amortization, adjusted for stock-based compensation and the loss on equity investment in the JV Company.compensation.

Adjusted EBITDA does not include interest income,expense (income), net;

Adjusted EBITDA does not include depreciation expense from fixed assets, or amortization of leasehold improvements; and Adjusted EBITDA does not include the impact of stock-based compensation.

We had working capital and stockholders’ equity of approximately $22.6$17.6 million and $24.7$11.4 million respectively, as of December 31, 2024.2025. We used $3.3$14.5 million in cash for operating activities during the year ended December 31, 2024. In the fourth quarter of 2024, the Company generated positive cash flow from operations of $3.4 million, as well as positive free cash flow of $2.5 million.2025.

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 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. InOn AugustNovember 2023,4, we completed a public equity offering pursuant to which we sold 5,413,334 shares of common stock and 1,920,000 pre-funded warrants at $0.60 per share or at $0.5999 per warrant, generating proceeds after fees and expenses of approximately $3.9 million. In January 2023, we completed an equity offering under which we sold 13,169,074 shares of common stock and 6,830,926 pre-funded warrants at $0.325 per share, generating proceeds after fees and expenses of approximately $5.7 million. In July 2024,2025, we entered into a Loan and Security Agreement with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company,Avenue, which provides us $17.5 million in committed funding under two tranches. The first tranche of $12.5 million was funded on the abilityClosing Date. The remaining $5.0 million becomes available at our discretion between 12 and 18 months from the Closing Date, subject to borrowmaintaining upcompliance with covenants. We are paying interest only on the term loan for a period of 18 months from the Closing Date, which could be extended to $4.024 millionmonths againstif eligiblewe accountsborrowed receivable.under Thethe linesecond oftranche. creditAfter remainsthe undrawn asexpiration of the issuanceinterest-only dateperiod, ofwe thesewill financialre-pay statements.the Availabilityprincipal balance in 24 equal monthly installments. The term loan matures on June 1, 2029. Proceeds from this loan were used to repay the outstanding borrowings under the line of credit isfacility approximatelywith $1.0Silicon millionValley basedBank onand eligibleto accountspay receivablefees asand ofexpenses, December 31, 2024. We amendedwith the Loanremainder andbeing Securityused Agreementfor ingeneral Februarycorporate 2025 to provide for, among other changes, a $3 million term loan facility, which is available to be drawn at any time until February 28, 2026.purposes. Considering our cash balance and availability underbalance, our debt arrangements as of December 31, 2024service 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.

Our business is dependent upon reimbursement of our products by insurance companies and government-controlled health care plans such as Medicare and Medicaid in the United States and by statutory health insurance plans in Germany, which could prevent our revenues from growing to the level necessary to return to ashcash flow breakeven on a sustaining basis. We believe that we have access to capital resources, if necessary, through potential public or private equity offerings, debt financings, or other means. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. We may also explore strategic alternatives for the purpose of maximizing stockholder value. There can be no assurance we will be successful in implementing our plans to sustain our operations and continue to conduct our business.

The net cash used in operating activities for the year ended December 31, 20232024 was primarily used to fund a net loss net approximately $8.1$6.2 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.7$1.6 million of which approximately $1.1$0.9 million is related to non-cash adjustments related to stock-based compensation, and approximately $0.3$1.3 million of cash generated from changes in operating assets and liabilities, primarily related to an increase in accounts payable and accrued expenses,expenses and receipt of a tenant improvement allowance for our new headquarters facility in Burlington, MA., partially offset by increases in inventory and accounts receivable.

Financing Activities. During the year ended December 31, 20242025 cash provided by financing activities of approximately $20.9$11.5 million was due to net proceeds received fromof our equityterm offeringsloan inwith JanuaryAvenue, net of debt issuance costs and Decemberrefinancing 2024.fees paid to the lender of our previous credit facility.

During the year ended December 31, 20232024 cash provided by financing activities of approximately $9.7$20.9 million was due to net proceeds received from theour saleequity ofofferings commonin stockJanuary and pre-fundedDecember warrants, net of offering costs.2024.

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. These estimates and assumptions are reviewed on an on-going basis and updated as appropriate. Materially different results can occur if circumstances change and additional information becomes known. Actual results may differ from these estimates. Refer to Note 2 - Summary of Significant Accounting Policies. Our most critical accounting estimates include The timing and amount of revenue recognition based on assertions andRevenue estimatesrecognition ofbased on transaction pricing estimated from payments from certain insurance payers TheValuation discountof ratederivative on leasesliabilities

The timing and amount of revenue recognized is determined based on certain estimates. For revenue derived from patients with Medicare Part B, we determined we had sufficient payment history in order to recognize revenue upon delivery of the device to the patient based on the published fees by CMS. With respect to patients with Medicare Advantage or other commercial insurance, except for a small number of payers, we do not have contracts to establish pricing or provide evidence of an arrangement.arrangement, As a result,however we are able to rely on a history of payments after receiving an insurance authorization, delivery of the device and submission of a claim as evidence of an arrangement. PaymentFor these payers, payment history is also used to estimate how much we expect to be paid upon delivery of our device and submission of an insurance claim, which determines how much revenue we recognize. The transaction pricing for these providers are based on the expected value method, based on previous history. For otherthe majority of Medicare Advantage and other commercial insurance payers, we have determined that we do not have sufficient collection history with the payer to assert evidence of an arrangement and collectibility.collectability. For these payers, revenue is recognized at payment, which is when we can determine how much we will be paid for the device.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements, Codification Amendments in Response to the SECsSEC'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 presentatioTnpresentation from its existing regulations by June 30, 2027. We currently comply 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 our financial position and results of operations.

Our unrestricted cash, cash equivalents, short-term investments and restricted cash, and cash equivalents, totaling approximately $24.7$14.7 million as of December 31, 2024,2025, was deposited in bank accounts. The cash in these accounts is held for working capital purposes and invested by theour bankbanks in overnight money market funds that invest in short-term government or government backed securities. AnyOur short-term investments totaling approximately $4.2 million as of December 31, 2025, are only invested in high-quality instruments with maturities of nine months or less. Our primary objective is to preserve our capital for purposes of funding our operations.

We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations and U.S. customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control and the U.S. Department of State. Export controls and trade sanctions laws and regulations may restrict or prohibit altogether the provision, sale, or supply of our products to certain governments, persons, entities, countries, and territories, including those that are the target of comprehensive sanctions or an embargo. While it has not had a material impact on our business to date, we sell our products in countries throughout the world and import materials into the United States. Significant political, trade, or regulatory developments in the jurisdictions in which we may sell our products are difficult to predict and may have a material adverse effect on us. These developments may include export controls, tariffs or changes in reimbursement policies for Medicaid and Medicare. For example, the U.S.United States has imposed tariffs on certain imports from China and other countries, and these tariffs may continue to escalate, depending on the status of trade negotiations. Historically, tariffs have led to increased trade and political tensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Though the United States has reached trade agreements with certain countries and the U.S. Supreme Court has struck down the legal basis for some of the implemented tariffs, significant uncertainty around future tariff policies remains. The United States is conducting investigations thatand renegotiating the U.S.-Mexico-Canada Agreement, which could result in higher or modified tariffs. While we estimate that tariffs assessed on our imports are expected to have less than a 100 basis point (1%) impact on gross margin in 2026, we cannot provide any assurance that the final tariffs actually imposed, changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, will not have a material adverse effect on our financial condition or results of operations.

Moreover, there are significant costs and risks inherent in selling our products, particularly in international markets, including: (a) time and difficulty in building a widespread network of distribution partners; (b) increased shipping and distribution costs, which could increase our expenses and reduce our margins; (c) potentially lower margins in some regions; (d) longer collection cycles in some regions; (e) compliance with foreign laws and regulations; (f) compliance with anti-bribery, anti-corruption, sanctions, export controls, import and customs, and anti-money laundering laws, such as the Foreign Corrupt Practices Act and the Office of Foreign Assets Control regulations, by us, our employees, and our business partners; (g) currency exchange rate fluctuations and related effects on our results of operations; (h) economic weakness, including inflation, or political instability in foreign economies and markets; (i) compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad; (j) workforce uncertainty in countries where labor unrest is more common than in the United States; (k) business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters, including earthquakes, typhoons, floods and fires; and (l) other costs and risks of doing business internationally, such as new tariffs which may be imposed.Theseimposed. These and other factors could harm our ability to implement planned growth in international operations and, consequently, harm our business, results of operations, and financial condition. Further, we may incur significant operating expenses as a result of our planned expansion activities, and they may not be successful. We have limited experience with regulatory environments and market practices internationally, and we may not be able to penetrate or successfully operate in new markets. We may also encounter difficulty growing the O&P channel while simultaneously being a direct provider to patients in the United States. and expanding into international markets because of limited brand recognition. These factors may lead to delayed or limited acceptance of our products by patients in these markets. Accordingly, if we are unable to expand O&P channel revenues in the United States, expand internationally or manage our international operations successfully, we may not achieve the expected benefits of this expansion and our financial condition and results of operations could be harmed.

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 endedending December 31, 2025. These risks could cause our actual results to differ materially from any future performance suggested below.

We are a wearable medical robotics platform company, specializing in myoelectric braces, or orthotics, for people with neuromuscular disorders. We develop and market the MyoPro product line, which is a myoelectric-controlled upper limb brace, or orthosis. The orthosis is a rigid brace used for the purpose of supporting a patient’s weak or deformed arm to enable and improve functional activities of daily living,living (“ADLs”), in the home and community. It is custom constructed by a trained professional during a custom fabrication process for each individual user to meet their specific needs. Our products are designed to help regain function in individuals with neuromuscular conditions due to brachial plexus injury, stroke, traumatic brain injury, spinal cord injury and other neurological disorders.

In November 2018, we announced that the Centers for Medicare and Medicaid ServicesServices, (“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 the unique L-Codes, if followed by appropriate payment terms, should have the effect of offering greater access to the MyoPro for Medicare beneficiaries.

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 On February 29, 2024, CMS published final payment determinations for the HCPCS codes describing our products which are L8701, for the MyoPro Motion W, and L8702, for the MyoPro Motion G, which became effective on April 1, 2024. These fees were subsequently updated to approximately $34,970 for the Motion W and approximately $68,800 for the Motion G, effective January 1, 2026. These fees are subject to annual inflationary adjustments.

On November 4, 2025 (“the Closing Date”), we entered into a Loan and Security Agreement with with Avenue Capital Management II, L.P., as administrative agent and collateral agent and Avenue Venture Opportunities Fund II, L.P., as a lender (together "Avenue"), which provides us $17.5 million in committed funding under two tranches. The first tranche of $12.5 million was funded on the Closing Date. The remaining $5.0 million becomes available at our discretion between 12 and 18 months from the Closing Date, subject to maintaining compliance with covenants. We are 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 we borrowed under the second tranche. After the expiration of the interest-only period, we will re-pay the principal balance in 24 equal monthly installments. The term loan matures on June 1, 2029. 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.

In November 2025, we were notified that Ryzur Medical filed for bankruptcy in China and is in the process of being liquidated. As a result, the operations of the JV Company are now severely limited. ChinaleafEfforts Capital,to find another lead investor have not materialized. As a minorityresult, investorwe innotified the JVparties Company,on isJuly currently24, leading2026 that we are terminating the processjoint venture. We do not expect to receive any proceeds from liquidation of restructuring the JV Company and raisingthere additionalis capitalno in orderimpact to re-startour normalfinancial operations.statements According tofrom the termstermination of the JV Contract, the sale of shares in the JV Company will not dilute our ownership. We cannot provide any assurance that we will accept any terms and conditions that new investors, if any, will require and we may exercise our right to terminate the joint venture infor the future.three and six months ended June 30, 2026.

We have been growing revenues while incurring net losses and negative cash flows from operations since inception and anticipate this to continue in 2026. Our financial performance in 2025 reflected our ability to be reimbursed by Medicare for providing the MyoPro to their beneficiaries, as well as challenges around marketing efficiency and patient acquisition which increased Costcost Perper Pipelinepipeline Add.add. Our plan for 2026 is to begin to pivot away from relying on direct to patient advertising to generate revenues and invest in generating revenues from recurring patient sources, including the MyoConnect referral program and from O&P providers in the U.S. and Germany, while implementing marketing initiatives to reduce Costcost Perper Pipelinepipeline Addadd in the direct billing channel and minimizing the growth of fixed expenses.

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,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.

We expect that our revenues will continue to grow in 2026, primarily as a result of investments to grow revenues from recurring patient sources, including generating patient referrals under our MyoConnect program, as well as from O&P practices in the U.S. and Germany, which we expect to increase operating leverage and reduce our dependence on advertising-driven direct-to-patient revenues.

Total revenue increased by approximately $0.3$2.1 million and $2.3 million, or 3%,21% and 12%, for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. TheHigher revenues in the three and six months ended June 30, 2026 were due to a higher number of revenue increaseunits was driven primarily byand a higher average sellingsales priceprice. (“ASP”) as CMS provided an annual inflationary increase on its allowable, as well as a higher international revenue. RevenueRevenues by channel infor the three and six months endingended MarchJune 31,30, 2026 and 2025 arewere as follows:

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

Gross margin was 68.2%72.1% and 70.3% for the three and six months ended MarchJune 31,30, 2026, respectively, compared to 67.2%62.7% and 65.0% for the three and six months ended MarchJune 31,30, 2025.2025, respectively. The increaseincreases in gross margin waswere primarily due to a higher ASPaverage selling price and lowermanufacturing materialcost costs,reductions, partially offset by higher clinical costs chargedallocated to cost of goods sold.sales.

Research and development (“R&D”) expenses consist of costs for our engineering and 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 manage R&D expenses in 2026, while maintaining the pace of our R&D efforts as cash flows allow, as well as to fund a randomized controlcontrolled trial being conducted by the University of Utah.

R&D expenses decreased by approximately $0.2$0.3 million and $0.4 million, or 9%,14% and 12%, during the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. The decreasedecreases waswere primarily due to lower labor expense in project management, engineering, and research.

SC&M expenses increased by approximatelyless $0.4than $0.1 million and $0.5 million or 10%1% and 5%, during the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the same periodperiods in 2025. The increaseincreases waswere primarily due to higher advertising expense and expenses associated with our new clinical sales personnel.personnel and higher incentive compensation, partially offset by higher clinical costs allocated to cost of revenues, and in the second quarter of 2026, lower advertising expense.

G&A decreasedincreased by approximately $0.3 millionmillion, or 8%,9% duringin the threesecond monthsquarter endedof March 31, 2026, as2026 compared to the same period in 2025.2025 The decrease wasdue primarily due to ahigher decreaselegal expenses. G&A expenses for the six months ended June 30, 2026 were flat compared with the same period in spending for outside consultants and professional fees.2025.

Other expense (income), net

The following table sets forth our interest and other income, net for each of the periods presented:

Other expense (income), net was income$1.7 ofmillion approximatelyand $334,400$1.4 million for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to income of approximately$0.1 $192,000million and $0.3 million for the same periodperiods in 2025.2025, respectively. The increase in other income, netexpense was due to the change in fair value of derivative liabilities related to our term loan with Avenue, driven primarily by aan decreaseincrease in our stock price and market volatility. This was offset higher interest expense due to our term loan with Avenue entered into in November 2025.

Income tax expense recorded during the three and six months ended MarchJune 31,30, 2026 and 2025 represents the provision for income taxes for our wholly-owned subsidiary, Myomo Europe GmbH. Income tax expense increaseddecreased by $0.1 million and $0.1 million in the three and six months ended MarchJune 31,30, 20262026, respectively, as acompared resultwith ofthe highersame periods in 2025 due to lower taxable income compared to the same period in 2025.each period.

We define Adjusted EBITDA as earnings before interest and other expense (income),interest, taxes, depreciation and amortization adjusted forfor, stock-based compensation.compensation and other unusual items.

Adjusted EBITDA does not include interest expense (income), net;

Adjusted EBITDA does not include depreciation expense from fixed assets or amortization of leasehold improvements and software costs;

Adjusted EBITDA does not include the impact of stock-based compensation; and Adjusted EBITDA does not include the impact of the change in fair value of derivative liabilities.

As of MarchJune 31,30, 2026, we had working capital of approximately $16.3$13.9 million and stockholders’ equity of approximately $9.0$5.8 million. We used approximately $2.2$4.4 million in cash for operating activities during the threesix months ended MarchJune 31,30, 2026.

We have historically funded our operations through financing activities, including raising equity and debt capital. On November 4, 2025, we entered into a Loan and Security Agreement with Avenue, which provides us $17.5 million in committed funding under two tranches. The first tranche of $12.5 million was funded on the Closing Date. The remaining $5.0 million becomes available at our discretion between 12 and 18 months from the Closing Date, subject to maintaining compliance with covenants. We are 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 we borrowed under the second tranche. After the expiration of the interest-only period, we will re-pay the principal balance in 24 equal monthly installments. The term loan matures on June 1, 2029. We have to meet certain debt covenants under the loan, including (i) a minimum cash balance of $2,500,000; (ii) minimum trailing three months revenue equal to 75% of budgeted revenues for such months, measured monthly; and (iii) maximum trailing six months cash burn equal to the greater of 150% of the budgeted cash burn for such months, or $2,000,000, measured quarterly. Non-compliance with covenants may impact access to liquidity. 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. Considering our cash balance, our debt service 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.

Operating Activities. The net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 was primarily used to fund a net loss of approximately $3.0$7.0 million, adjusted for non-cash expenses in the aggregate amount of approximately $0.5$3.6 million use of cash and a source ofby approximately $0.3$0.7 million of cash used by net changes in the levels of operating assets and liabilities, primarily related to decreaseincreases in prepaid expenses and otheraccounts currentreceivable, assetspartially andoffset by an increase in accounts payable and accrued expenses, offsetdue byprimarily to an increase in accountsincentive receivable.compensation during the six months ended June 30, 2026.

The netNet cash used in operating activities for the threesix months ended MarchJune 31,30, 2025 was primarily used to fund a net loss of approximately $3.5$8.1 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.0$1.8 million and by approximately $0.2$5.3 million of cash used by net changes in the levels of operating assets and liabilities, primarily related to increases in accounts receivable,receivable due primarily to a payment hold by CMS, increases in inventory and prepaid expenses and other current assets, offsetand bya an increasedecrease in accounts payable and accrued expenses.expenses, due primarily to the payment of incentive compensation during the three months ended June 30, 2025.

Investing Activities. During the threesix months ended MarchJune 31,30, 20262026, andcash provided by investing activities of $1.5 million was primarily related to maturities of our short-term investments partially offset by purchases of equipment. During the six months ended June 30, 2025, our cash used in investing activities of approximately $0.5$2.7 million and $1.9 million, respectively, was primarilyprimary related to ourpurchases purchaserelated ofto short-termsoftware investmentsdevelopment and purchases of equipment.short-term investments.

Critical Accounting Policies and Estimates

The timing and amount of revenue recognized is determined based on certain estimates. For revenue derived from patients with Medicare Part B, we determined we had sufficient payment history in order to determine transaction price and recognize revenue upon delivery of the device to the patient based on the published fees by CMS. With respect to patients with Medicare Advantage or other commercial insurance, except for a small number of payers, we do not have contracts to establish pricing or provide evidence of an arrangement, however we are able to rely on a history of payments after receiving an insurance authorization, delivery of the device and submission of a claim as evidence of an arrangement. For these payers, payment history is also used to estimate how much we expect to be paid upon delivery of our device and submission of an insurance claim, which determines how much revenue we recognize. The transaction pricing for these providers is based on the expected value method, based on previous history. For the majority of Medicare Advantage and other commercial insurance payers, we have determined that we do not have sufficient collection history with the payer to assert evidence of an arrangement and collectability. For these payers, revenue is recognized at payment, which is when we can determine how much we will be paid for the device.