Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

Management's Discussion and Analysis ofFinancial Condition and Results of Operations

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 SEC 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.

Overview

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 movement in individuals with neuromuscular conditions due to brachial plexus injury, stroke, traumatic brain injury, spinal cord injury and other neurological disorders.

We advertise on television and through social media. In addition, we perform in-services for therapists and physicians to generate referrals under a new program we refer to as MyoConnect, and we directly educate and inform those individuals who are potential candidates for our products. Once the prospective patient contacts us or is referred to 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.

Our myoelectric orthoses have been clinically shown in peer reviewed published research studies to help regain the ability to complete functional tasks by supporting the affected joint and enabling individuals to self-initiate and control movement of their partially paralyzed limbs by using their own muscle signals.

Our technology was originally developed at MIT in collaboration with medical experts affiliated with Harvard Medical School. Myomo was incorporated in 2004.

Other milestones in our history include:

Recent Developments

Equity Offerings

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. 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 per pre-funded warrant, generating net proceeds after fees and expenses of approximately $5.4 million. 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.

Term Loan Facility

On November 4, 2025 ("the Closing Date"), 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. 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

China Joint Venture

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. Chinaleaf Capital, a minority investor in the JV Company, is currently leading the process of restructuring the JV Company and raising additional capital in order to re-start normal operations. According to the terms 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 in the future.

All assets associated with our investment in the JV Company were either reserved or written off in prior periods. As a result, these events had no impact on our financial statements for the year ended December 31, 2025.

Results of Operations

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 Cost Per Pipeline 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 sources, including the MyoConnect referral program and from O&P providers in the U.S. and Germany, while implementing marketing initiatives to reduce Cost Per Pipeline Add in the direct billing channel and minimizing the growth of fixed expenses.

Comparison of the year ended December 31, 2025 to the year ended December 31, 2024

The following table sets forth our revenue, gross profit and gross margin for each of the years presented.

Revenues

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 in 2026, primarily as a result of investments to grow revenues from recurring 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 in 2025 increased by approximately $8.4 million, or 26%, compared with 2024. The total revenue increase was driven by a higher number of revenue units and a higher average selling price, or ASP. Revenues by sales channel were as follows for the years ended December 31, 2025 and 2024:

Revenues generated through the direct billing channel represented 74% of revenue, increasing by 20% to $30.4 million in 2025 compared with $25.3 million in 2024. Revenue growth in the direct billing channel was negatively impacted by lead generation and patient acquisition issues during 2025. Revenues generated through the International channel represented 17% of revenue and increased by 48% to approximately $6.8 million, compared with $4.6 million in 2024. Revenues generated through the U.S. O&P channel represented 7% of revenues and doubled to approximately $2.9, compared with $1.5 million in 2024. Revenues generated through the VA channel represented 2% of revenue and decreased 31% to approximately $0.8 million, compared with approximately $1.2 million in 2024.

Cost of Revenue and Gross margin

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

Gross margin decreased to 65.7% in 2025compared with 71.2% in 2024. The decrease in gross margin was driven primarily by an unfavorable change in the amount of overhead capitalized in inventory compared to the prior year and higher warranty expense.

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, which impacts our average selling price.

Operating expenses

The following table sets forth our operating expenses for each of the years presented.

Research and development

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 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 control trial being conducted by the University of Utah.

R&D expenses increased by approximately $2.2 million or 46% in 2025 compared to 2024. The increase during 2025 was driven primarily by higher payroll costs due to higher engineering headcount in 2025 as a result of investing in order to accelerate our sustaining engineering and product development efforts for our MyoPro 3.

Selling, clinical and marketing

Selling, clinical and marketing expenses consist of costs for our business development, customer experience, field clinical, clinical training 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 the growth rate in selling, clinical and marketing expenses to be 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 execute our strategy to reduce our dependence on advertising-driven direct billing revenues.

Selling, clinical, and marketing expenses increased by approximately $8.1 million or 67% in 2025 compared to 2024. The increase during 2025 was driven primarily by higher advertising spending as well as increases in clinical and field operations headcount in support of our direct billing channel.

General and administrative

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 intend to reduce the growth rate in general and administrative expenses in 2026.

General and administrative expenses increased by approximately $1.6 million or 13% in 2025 compared to 2024. The increase was primarily due to increases in payroll and benefits, consulting and insurance costs, as well as lease costs and depreciation associated with the move to our new facility in Burlington, MA.

Other expense (income)

The following table sets forth our interest and other expense (income) for each of the years presented.

We generated other expense, net in 2025 compared with other income, net in 2024. The higher other expense, net was driven primarily by interest expense on borrowings under our revolving credit line and term loan facilities with Silicon Valley Bank, interest expense under our new term loan with Avenue, and the write off of debt issuance costs and commitment fees to Avenue as a result of the refinancing of our debt facility in November 2025. In addition, derivative liabilities for a warrant issued to Avenue and the conversion option in the term loan were bifurcated from the debt and recorded as liabilities required to be recorded at fair value. We marked-to-market the derivative liabilities as of December 31, 2025, recording a loss on change in fair value of the derivative liabilities of $0.2 million.

Income tax expense

Income tax expense recorded during the years ended December 31, 2025 and 2024 represents the provision for income taxes for our wholly-owned subsidiary, Myomo Europe GmbH. The increase in income tax expense relates to increased income from Myomo Europe GmbH in 2025 compared to 2024.

Adjusted EBITDA

We believe that the presentation of Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional information about our financial results. Adjusted EBITDA is an important supplemental measure used by our board of directors and management to evaluate our operating performance from period-to-period on a consistent

basis and as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations.

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

Adjusted EBITDA is not in accordance with, or an alternative to, measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. As a non-GAAP measure, Adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. In particular:

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures including net income (loss) and our financial results presented in accordance with U.S. GAAP.

The following table provides a reconciliation of net loss to Adjusted EBITDA for each of the years indicated:

Liquidity and Capital Resources

Liquidity

We measure our liquidity in a number of ways, including the following:

We had working capital and stockholders' equity of approximately $17.6 million and $11.4 million respectively, as of December 31, 2025. We used $14.5 million in cash for operating activities during the year ended December 31, 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. 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. 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.

Our operating plans are primarily focused on growing revenues from recurring sources, including expanding our MyoConnect program to generate referrals in rehab clinics and stroke centers around the country, continued growth in revenues in the U.S. O&P channel, as well as International operations, while reducing the cost of patient acquisition (measured as Cost Per Pipeline Add) in the direct billing channel and minimizing the growth in fixed expenses.

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 cash 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.

Cash Flows

Operating Activities.The net cash used in operating activities for the year ended December 31, 2025 was primarily used to fund a net loss net approximately $15.6 million, adjusted for non-cash expenses in the aggregate amount of approximately $4.9 million of which approximately $2.1 million is related to non-cash adjustments related to stock-based compensation, and approximately $3.0 million of cash generated from changes in operating assets and liabilities, primarily related to an increase in accounts payable and accrued 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.

The net cash used in operating activities for the year ended December 31, 2024 was primarily used to fund a net loss net approximately $6.2 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.6 million of which approximately $0.9 million is related to stock-based compensation, and approximately $1.3 million of cash generated from changes in operating assets and liabilities, primarily related to an increase in accounts payable and accrued 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.

Investing Activities.During the year ended December 31, 2025 our cash used by investing activities of $7.1 million was primarily due to a greater amount of purchases compared to maturities of short-term investments of approximately $3.7 million, capital expenditures of approximately $1.7 million for purchases of furniture and fixtures related to the move to our new headquarters facility expansion within the facility and demo units for O&P practices and approximately $1.6 million used for capitalized software development costs. Cash provided in investing activities in 2024 was primarily due to a greater amount of maturities compared to purchases of short-term investments, offset by purchases of furniture and fixtures related to the move to our new headquarters facility in December 2024.

Financing Activities.During the year ended December 31, 2025 cash provided by financing activities of approximately $11.5 million was due to net proceeds of our term loan with Avenue, net of debt issuance costs and refinancing fees paid to the lender of our previous credit facility.

During the year ended December 31, 2024 cash provided by financing activities of approximately $20.9 million was due to net proceeds received from our equity offerings in January and December 2024.

Critical Accounting Estimates

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

Timing and Amount of Revenue Recognition

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, 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 are 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.

Valuation of Derivative Liabilities

Our derivative liabilities are recorded at fair value on the basis of both observable and unobservable inputs. With respect to the derivative liability for the warrant issued to Avenue, these inputs include our stock price, expected volatility of our stock price, remaining term of the warrant and assumptions around the probability of an equity financing resulting in an adjustment to the warrant exercise price. Our derivative liability for the compound derivative feature in the term loan with Avenue is based on similar assumptions, but also including the credit spread and remaining term of the debt.

Recent Accounting Standards

In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements, Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative", that adds 14 of the 27 identified disclosure or presentation requirements to the Codification, each amendment in the ASU will only become effective if the SEC removes the related disclosure or presentation from its existing regulations by June 30, 2027. 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.

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

Quantitative and Qualitative Disclosure about Market Risk

Our unrestricted cash, cash equivalents, short-term investments and restricted cash, totaling approximately $14.7 million as of December 31, 2025, was deposited in bank accounts. The cash in these accounts is held for working capital purposes and invested by our banks in overnight money market funds that invest in short-term government or government backed securities. Our 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.