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What changed in MYOMO, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MYOMO, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+357 added−367 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-08)

Top changes in MYOMO, INC.'s 2024 10-K

357 paragraphs added · 367 removed · 276 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

65 edited+18 added−9 removed111 unchanged
Biggest changeThe aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of the EU member states plus Norway, Liechtenstein and Iceland. We, together with Cogmedix, our primary contract manufacturer, actively maintain FDA 21 CFR Part 820 QSR and ISO 13485 Quality Management Systems for product design and development, manufacturing, distribution, and customer feedback processes.
Biggest changeWe, together with Cogmedix, our primary contract manufacturer, actively maintain a quality management system for product design and development, manufacturing, distribution, and customer feedback processes in accordance with FDA’s QSR and ISO 13485:2016. In February 2024, the FDA issued the Quality Management System Regulation Final Rule to amend the QSR, incorporating by reference ISO 13485:2016.
The EU MDR, among other things: • strengthens the rules on placing devices on the market (e.g., reclassification of certain devices and wider scope than the EU MDD) and reinforces surveillance once they are available; • establishes explicit provisions on manufacturers’ responsibilities for the follow up of the quality, performance and safety of devices placed on the market; 9 Table of Contents • establishes explicit provisions on importers’ and distributors’ obligations and responsibilities; • imposes an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation; • improves the traceability of medical devices throughout the supply chain to the end user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk; and • sets up a central database (EUDAMED) to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU.
The EU MDR, among other things: • strengthens the rules on placing devices on the market (e.g., reclassification of certain devices and wider scope than the EU MDD) and reinforces surveillance once they are available; • establishes explicit provisions on manufacturers’ responsibilities for the follow up of the quality, performance and safety of devices placed on the market; • establishes explicit provisions on importers’ and distributors’ obligations and responsibilities; • imposes an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation; 9 Table of Contents • improves the traceability of medical devices throughout the supply chain to the end user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk; and • sets up a central database (EUDAMED) to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU.
HITECH also created tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • the federal Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which require manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to HHS, under the Open Payments Program, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state and local laws that require the licensure of sales representatives; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; data privacy and security laws and regulations in foreign jurisdictions that may be more stringent than those in the United States (such as the European Union, which adopted the General Data Protection Regulation, which became effective in May 2018); state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and state laws related to insurance fraud in the case of claims involving private insurers.
HITECH also created tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • the federal Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which require manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to HHS, under the Open Payments Program, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state and local laws that require the licensure of sales representatives; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; data privacy 12 Table of Contents and security laws and regulations in foreign jurisdictions that may be more stringent than those in the United States (such as the European Union, which adopted the General Data Protection Regulation, which became effective in May 2018); state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and state laws related to insurance fraud in the case of claims involving private insurers.
In addition, approximately 250,000 new patients are added to the prevalence population each year in the United States as a result of strokes, brachial plexus injuries and other afflictions. Though not all these new chronic patients are suitable for a 3 Table of Contents MyoPro, we believe that between 25,000-50,000 of these patients per year could be.
In addition, we 3 Table of Contents estimate that approximately 250,000 new patients are added to the prevalence population each year in the United States as a result of strokes, brachial plexus injuries and other afflictions. Though not all these new chronic patients are suitable for a MyoPro, we believe that between 25,000-50,000 of these patients per year could be.
When an entity is determined to have violated the FCA, the government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; 11 Table of Contents • the federal civil monetary penalties laws, which impose civil fines for, among other things, the offering or transfer or remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program, unless an exception applies; • the Health Insurance Portability and Accountability Act, or HIPAA, which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
When an entity is determined to have violated the FCA, the government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal civil monetary penalties laws, which impose civil fines for, among other things, the offering or transfer or remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program, unless an exception applies; • the Health Insurance Portability and Accountability Act, or HIPAA, which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
Progressive Conditions The MyoPro has been prescribed in a few cases for individuals with progressive conditions such as multiple sclerosis and ALS. For individuals with these conditions, the MyoPro is used for functional improvement that may help provide strength conservation and help to extend the time they can maintain independence.
Progressive Conditions The MyoPro has been prescribed in a few cases for individuals with progressive conditions such as multiple sclerosis. For individuals with these conditions, the MyoPro is used for functional improvement that may help provide strength conservation and help to extend the time they can maintain independence.
To assess whether an individual is a medically-qualified candidate for a MyoPro, we and our distribution partners utilize a variety of techniques to evaluate patients, including tele-health video conference sessions, in-person evaluations, screening days at various locations, and evaluations at clinical facilities where therapists and physicians refer patients for a MyoPro, which requires a physician’s prescription to be reimbursed by insurance.
To assess whether an individual is a medically-qualified candidate for a MyoPro, we and our channel partners utilize a variety of techniques to evaluate patients, including tele-health video conference sessions, in-person evaluations, screening days at various locations, and evaluations at clinical facilities where therapists and physicians refer patients for a MyoPro, which requires a physician’s prescription to be reimbursed by insurance.
Based on the final published fees, our O&P partners, as well as others whom we do not work with today, may find the fees sufficient to cover the cost of the MyoPro device, the clinical services to evaluate and fit patients, and the other support services associated with provisioning of products to patients, which may result in higher sales volume from that channel.
Based on the final published fees, our O&P partners, as well as others whom we do not work with today, may find the fees sufficient to cover the cost of the MyoPro device, the clinical services to evaluate and fit patients, and the other support services associated with provisioning of products to patients, which may result in higher sales volume from that channel in 2025 and beyond.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a 12 Table of Contents significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, exclusion from participation in Medicare, Medicaid and other federal healthcare programs, integrity and oversight agreements to resolve allegations of non-compliance, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, exclusion from participation in Medicare, Medicaid and other federal healthcare programs, integrity and oversight agreements to resolve allegations of non-compliance, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
We use various media to educate individuals about the MyoPro solution for their impaired limbs, and we receive referrals from O&P providers and healthcare facilities such as VA Medical Centers. In most cases, private health insurance companies reimburse providers for the MyoPro device. If we are serving the patient directly, then we bill the payer as the provider.
We use various media to educate individuals about the MyoPro solution for their impaired limbs, and we receive referrals from O&P providers and healthcare facilities such as VA Medical Centers. In many cases, private health insurance companies reimburse providers for the MyoPro device. If we are serving the patient directly, then we bill the payer as the provider.
The EU Medical Devices Regulation (EU) No. 2017/745, or the EU MDR, repealed and replaced the EU MDD on May 26, 2021 and we therefore worked with our EU-Authorized Representative to ensure all EU MDR requirements were met, which enables us to establish a new declaration of conformity under the EU MDR to allow continued CE mark application.
The EU Medical Devices Regulation (EU) No. 2017/745, or the EU MDR, repealed and replaced the EU MDD 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 CE mark application.
There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution; • the federal civil and criminal false claims laws, including the FCA, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false, fictitious or fraudulent; knowingly making, using or causing to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government.
There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution; 11 Table of Contents • the federal civil and criminal false claims laws, including the FCA, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false, fictitious or fraudulent; knowingly making, using or causing to be made or used, a false statement or record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government.
In November 2013 and January 2015, Myomo’s two U.S. patents issued entitled Powered Orthotic Device and Method of Using Same (U.S. Pat. Nos. 8,585,620 and 8,926,534, respectively). On July 26, 2016, Myomo’s third U.S. patent was issued (U.S. Pat. No. 9,398,994).
In November 2013 and January 2015, Myomo’s first two U.S. patents were issued entitled Powered Orthotic Device and Method of Using Same (U.S. Pat. Nos. 8,585,620 and 8,926,534, respectively). On July 26, 2016, Myomo’s third U.S. patent was issued (U.S. Pat. No. 9,398,994).
We are headquartered in Boston, Massachusetts. Market Opportunity: Common Causes of Arm Paralysis Stroke According to the Centers for Disease Control and Prevention, or the CDC, stroke is one of the leading causes of disability in the United States affecting approximately 800,000 people per year.
We are headquartered in Burlington, Massachusetts. Market Opportunity: Common Causes of Arm Paralysis Stroke According to the Centers for Disease Control and Prevention, or the CDC, stroke is one of the leading causes of disability in the United States affecting approximately 800,000 people per year.
Many individuals recover from their related trauma with the exception of the ability to control their elbow and/or hand. Nerve transfer surgery is often a solution; however, these procedures are not always restorative. In some cases, patients undergo amputation and receive myoelectric prosthetics rather than deal with a paralyzed arm.
Many individuals recover from their related trauma with the exception of 4 Table of Contents the ability to control their elbow and/or hand. Nerve transfer surgery is often a solution; however, these procedures are not always restorative. In some cases, patients undergo amputation and receive myoelectric prosthetics rather than deal with a paralyzed arm.
In October 2017, we obtained our medical device license for Canada, enabling us to provide the MyoPro to patients in that country. We have entered into distribution agreements with O&P providers in the United Kingdom, Denmark, Germany, Italy and Australia, and have received a number of MyoPro orders from providers outside the United States in 2023, primarily from Germany.
In October 2017, we obtained our medical device license for Canada, enabling us to provide the MyoPro to patients in that country. We have entered into agreements with O&P providers in the United Kingdom, Denmark, Germany, Italy and Australia, and have received a number of MyoPro orders from providers outside the United States in 2024, primarily from Germany.
These regulatory controls, as well as any changes in the policies of the FDA or comparable 10 Table of Contents foreign agencies, can affect the time and cost associated with the development, introduction and continued availability of new products. We work to anticipate these factors in our product development processes.
These regulatory controls, as well as any changes in the policies of the FDA or comparable foreign agencies, can affect the time and cost associated with the development, introduction and continued availability of new products. We work to anticipate these factors in our product development processes.
If an O&P provider is responsible for working with and delivering the MyoPro to the patient, then we sell the custom-fabricated MyoPro device to the O&P provider at a wholesale price, to which they add their clinical services. In November 2018, the Centers for Medicare and Medicaid Services, or CMS, issued two billing codes for the MyoPro, L8701 and L8702.
If an O&P provider is responsible for working with and delivering the MyoPro to the patient, then we sell the custom-fabricated MyoPro device to the O&P provider at a wholesale price, to which they add their clinical services. In November 2018, CMS issued two billing codes for the MyoPro, L8701 and L8702.
As of December 31, 2023, 230 MyoPro units were in backlog, which we define as patients for whom we received insurance authorization, or in the case of Medicare Part B patients, those who have been qualified for delivery through receipt of required medical documentation, but revenue has not been recognized.
As of December 31, 2024, 272 MyoPro units were in backlog, which we define as patients for whom we received insurance authorization, or in the case of Medicare Part B patients, those who have been qualified for delivery through receipt of required medical documentation, but revenue has not been recognized.
With approximately 70 million baby boomers now in or headed into their retirement years, we believe that it is vital to keep beneficiaries in the lowest cost of care setting — the home.
With more than 70 million baby boomers now in, or headed into their retirement years, we believe that it is vital to keep beneficiaries in the lowest cost of care setting — the home.
We hold 24 patents in the United States and various countries, which expire at various times from 2027 through 2039, and we have 14 pending patent applications in the United States and international markets. Our intellectual property also consists of trade secrets related to myoelectric control software and mechanical designs from over ten years of R&D and product development activity.
We hold 35 patents in the United States and various countries, which expire at various times from 2027 through 2042, and we have 12 pending patent applications in the United States and international markets. Our intellectual property also consists of trade secrets related to myoelectric control software and mechanical designs from over ten years of R&D and product development activity.
In addition, under our MyoCare program, a coach is assigned to each patient and follows and guides the patient for the first year of the patient’s journey with the MyoPro in order to maximize each patient’s outcomes with the device.
In addition, under our MyoCare program, a coach is assigned to each patient that is provided a device by us, and follows and guides the patient for the first year of the patient’s journey with the MyoPro in order to maximize each patient’s outcomes with the device.
Current and Future Legislation 13 Table of Contents The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could affect our ability to profitably sell MyoPro.
Current and Future Legislation The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could affect our ability to profitably sell MyoPro.
The R&D team seeks to combine innovative research conducted over the last 50 years with cutting edge innovations in robotics, machine learning, and material science to continue to enhance our products and product offerings.
The R&D team seeks to combine innovative research conducted over the last 50 years with cutting edge innovations in robotics, machine learning, material science and artificial intelligence to 6 Table of Contents continue to enhance our products and product offerings.
We have been testing our planned pediatric device on children who have suffered this nerve damage to assess its ability to improve function in upper limbs, and this new version of the MyoPro, which we refer to as MyoPal, is expected to be available to these patients during calendar year 2025.
We have been testing our planned pediatric device on children who have suffered this nerve damage to assess its ability to improve function in upper limbs, and this new version of the MyoPro, which we refer to as MyoPal, is expected to be available to these patients in the next one to two years.
In July 2017 we met the criteria to apply the CE mark under the European Union (EU) Medical Devices Directive (93/42/EEC), or EU MDD, which is a manufacturer’s declaration that the product complies with the essential requirements of such legislation, so that the MyoPro can be marketed in the EU.
To bring the MyoPro to what we believe is the large number of potential patients outside of the United States, in July 2017 we met the criteria to apply the CE mark under the European Union (EU) Medical Devices Directive (93/42/EEC), or EU MDD, which is a manufacturer’s declaration that the product complies with the essential requirements of such legislation, so that the MyoPro can be marketed in the EU.
Many elements of health care reform such as comparative effectiveness research, payment system reforms including shared savings pilots and other provisions could meaningfully change the way healthcare is developed and delivered, and may materially adversely impact numerous aspects of our business, results of operations and financial condition. Manufacturing Myomo’s custom fabricated orthosis is comprised of two elements.
Many elements of health care reform such as comparative effectiveness research, payment system reforms including shared savings pilots and other provisions could meaningfully change the way healthcare is developed and 14 Table of Contents delivered, and may materially adversely impact numerous aspects of our business, results of operations and financial condition.
We also sell our products through various other sales channels, including through O&P providers, the Veterans Administration, or VA, and to our distributors in certain accounts and geographic markets outside the United States. We operate as one business segment.
We also sell our products through various other sales channels, including through O&P providers, which we expect to be a larger contributor to revenue in the future, the Veterans Administration, or VA, and to certain accounts and geographic markets outside the United States. We operate as one business segment.
The European Commission has adopted various standards applicable to medical devices and there are additionally harmonized standards relating to the design and manufacture of medical devices (such as the ISO13485 standard) which are not mandatory however, if complied with, indicate that the device satisfies the applicable element of the general safety and performance requirements.
The European Commission has adopted various standards applicable to medical devices and there are additionally harmonized standards relating to the design and manufacture of medical devices (such as the international management system standard for medical systems set by the International Organization for Standardization or ISO, ISO13485:2016) which are not mandatory however, if complied with, indicate that the device satisfies the applicable element of the general safety and performance requirements.
In conjunction with our reclassification into the brace benefit category, on February 29, 2024, CMS published final average payment determinations for the MyoPro Motion W (L8701) of approximately $33,500 and for the MyoPro Motion G (L8702) of approximately $65,900, effective April 1, 2024.
In conjunction with our reclassification into the brace benefit category, on February 29, 2024, CMS published final payment determinations for the MyoPro Motion W (L8701) and for the MyoPro Motion G (L8702) which became effective April 1, 2024.
An additional study has been completed and accepted for publication that used a validated outcome measure called Disabilities of the Arm, Shoulder and Hand, or DASH, to study improvements in the arms of patients that wear a MyoPro. The results showed statistically significant and clinically meaningful improvement in DASH scores.
An additional study has been completed and published that used a validated outcome measure called Disabilities of the Arm, Shoulder and Hand, or DASH, to study improvements in the arms of patients that wear a MyoPro. The results showed statistically significant and clinically meaningful improvement in DASH scores. In addition to this research, several institutions have active funded research programs.
In January 2022, we introduced the MyoPro2+, which is a lighter and more advanced version of the device, which includes 3D printed orthotics capability, software enhancements and a new design that facilitates easier donning and doffing of the device.
In January 2022, we introduced the MyoPro2+, which is a lighter and more advanced version of the device, which includes 3D printed orthotics capability, software enhancements and a new design that facilitates easier donning and doffing of the device. An update to the MyoPro 2+ is scheduled to be released in the second half of 2025.
In addition to this research, several institutions have active funded research programs. In February 2022, researchers with the Cleveland VA published a study showing clinically significant gains in motor function in individuals with chronic moderate-to-sever arm weakness.
In February 2022, researchers with the Cleveland VA published a study showing clinically significant gains in motor function in individuals with chronic moderate-to-sever arm weakness.
National and regional commercial plans, worker’s compensation programs, auto insurance carriers, Medicare Advantage plans, and some state Medicaid plans have paid for the MyoPro orthosis on a lump sum basis. CMS has reimbursed a number of Medicare Part B beneficiaries for a MyoPro on a rental basis.
National and regional commercial plans, worker’s compensation programs, auto insurance carriers, Medicare Advantage plans, and some state Medicaid plans have paid for the MyoPro orthosis on a lump sum basis. Beginning January 1, 2024, CMS reimburses for the MyoPro on a lump sum basis.
A third-party, AB Corp, creates the orthotic parts from these measurements and the fabrication of the device is done in our facility in Boston, Massachusetts. 14 Table of Contents Coverage for the MyoPro from CMS is expected to increase sales volumes for the MyoPro.
The second element is the custom fabrication of the orthosis itself from measurements obtained either in person or remotely. A third-party, AB Corp, creates the orthotic parts from these measurements and the fabrication of the device is done in our facility in Burlington, Massachusetts. Coverage for the MyoPro from CMS is expected to increase sales volumes for the MyoPro.
Some new products have been introduced that compete with the MyoPro from companies such as Vincent Systems and HKK in Germany. Intellectual Property Our intellectual property efforts have focused on improvements to the patents that we licensed from MIT, which expired in 2023. Myomo has 24 of its own issued patents. These additional patents cover our MyoPro Motion G product.
Some new products have 8 Table of Contents been introduced that compete with the MyoPro from companies such as Neurolutions in the United States and Vincent Systems and HKK in Germany. Intellectual Property Our intellectual property efforts have focused on improvements to the patents that we licensed from MIT, which expired in 2023.
In January 2013, Myomo’s patent entitled Powered Orthotic Device was granted in Europe (European Patent No. 2079361), which is validated (currently in force) in six European countries. In June 2014, a substantially similar patent was granted in Japan (Japanese Patent No. 5557529).
The Motion G generated 98% of our product revenue for the year ended December 31, 2024. In January 2013, Myomo’s patent entitled Powered Orthotic Device was granted in Europe (European Patent No. 2079361), which is validated (currently in force) in six European countries. In June 2014, a substantially similar patent was granted in Japan (Japanese Patent No. 5557529).
The first is the electromechanical kit. The kit consists of the motor units, processor, sensors, and battery. Manufacturing for the electromechanical kit is provided by our supplier Cogmedix, a wholly owned subsidiary of Coughlin Companies in Worcester, MA. The second element is the custom fabrication of the orthosis itself from measurements obtained either in person or remotely.
Manufacturing Myomo’s custom fabricated orthosis is comprised of two elements. The first is the electromechanical kit. The kit consists of the motor units, processor, sensors, and battery. Manufacturing for the electromechanical kit is provided by our supplier Cogmedix, a wholly owned subsidiary of Coughlin Companies in Worcester, MA.
Our trademarks were initially registered in 2013 and 2014, and we have been making the required filings to maintain our trademarks. Government Regulation The MyoPro device and our operations including our supply chain and distribution channels are subject to regulation by the FDA and various other U.S. federal and state agencies.
Government Regulation The MyoPro device and our operations including our supply chain and distribution channels are subject to regulation by the FDA and various other U.S. federal and state agencies.
On June 9, 2017, we executed our initial public offering, and our common stock trades under the symbol “MYO.” Our principal executive offices are located at 137 Portland St., 4 th Floor, Boston, Massachusetts 02114, and our telephone number is (617) 996-9058.
On June 9, 2017, we executed our initial public offering, and our common stock trades under the symbol “MYO.” Our principal executive offices are located at 45 Blue Sky Drive, Suite 101, Burlington, MA 01803, and our telephone number is (617) 996-9058.
Once the patient’s arm measurements are captured, the orthotic parts are 3D printed based on these measurements. The fabrication of the brace is completed in-house. • Fabrication typically takes approximately 2 weeks. Once the brace is fabricated, it is delivered to the patient either by us or by an O&P practice, who will fit the device on the patient.
Once the patient’s arm measurements are captured, the orthotic parts are 3D printed by a subcontractor based on these measurements. The fabrication of the brace is completed in-house. • Fabrication typically takes approximately 2 weeks.
The Motion G product, which allows for the movement of multiple joints as compared to a single joint, which is the technology that underlies the patents previously licensed from MIT. The Motion G generated 96% of our product revenue for the year ended December 31, 2023.
Myomo has 35 of its own issued patents. These additional patents cover our MyoPro Motion G product. The Motion G product, which allows for the movement of multiple joints as compared to a single joint, which is the technology that underlies the patents previously licensed from MIT.
Information on our investor relations page and on our website is not part of this Annual Report on Form 10-K or any of our other securities filings unless specifically incorporated herein or therein by reference. In addition, our filings with the SEC may be accessed through the SEC's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system at www.sec.gov.
Information on our investor relations page and on our website is not part of this Annual Report on Form 10-K or any of our other securities filings unless specifically incorporated herein or therein by reference.
The MyoPro product line has been approved by the VA system for impaired veterans, and nearly 100 VA facilities have already ordered devices for their patients. 7 Table of Contents Since we began marketing our products directly to patients in 2019, our business development efforts have focused on developing a pipeline of patients in our reimbursement process and expanding the number of payers reimbursing for our products.
Since we began marketing our products directly to patients in 2019, our business development efforts have focused on developing a pipeline of patients in our reimbursement process and expanding the number of payers reimbursing for our products.
Our regulatory, clinical, and customer service personnel work closely with our suppliers and providers to promote compliance with quality standards and good manufacturing processes, which we believe result in a high-quality product and limited customer issues. 6 Table of Contents We have continually enhanced our product offerings by increasing functionality for users by the addition of a multi-articulated wrist and introducing a powered grasp for the hand.
Our regulatory, clinical, and customer service personnel work closely with our suppliers and providers to promote compliance with quality standards and good manufacturing processes, which we believe result in a high-quality product and limited customer issues.
Following the introduction of a product, the FDA and comparable foreign agencies may engage in periodic audits of our quality management system, the product performance, and our advertising and promotional materials.
The rule will become effective on February 2, 2026. Until then, manufacturers are required by the FDA to comply with the QSR. Following the introduction of a product, the FDA and comparable foreign agencies may engage in periodic audits of our quality management system, the product performance, and our advertising and promotional materials.
We also have 3 pending U.S. patent applications and 8 foreign applications under examination. We plan to continue to file additional patent applications over time. The longest term of our patents extends intellectual property rights until 2039. In terms of trademarks, the terms Myomo, MyoPro, MyoPal and MyoCare are registered as trademarks with the U.S. Patent & Trademark Office.
The longest term of our patents extends intellectual property rights until 2042. In terms of trademarks, the terms Myomo, MyoPro, MyoPal and MyoCare are registered as trademarks with the U.S. Patent & Trademark Office. Our trademarks were initially registered in 2013 and 2014, and we have been making the required filings to maintain our trademarks.
Exoskeleton Suits During the last few years, a number of companies have emerged to provide exoskeleton suits that enable those with lower extremity paralysis to stand and walk again. Companies in this space include ReWalk, Ekso Bionics, and Cyberdyne. It is possible that companies may begin to compete with solutions such as ours for the upper extremity.
Companies in this space include Lifeward, Ekso Bionics, and Cyberdyne. It is possible that companies may begin to compete with solutions such as ours for the upper extremity.
The addressable market in the United States for products directed at all individuals with upper extremity paralysis, such as our MyoPro, is based on an estimated prevalence population of 3 million existing cases of upper extremity paralysis and our estimate that up to 20% of such individuals may be medically qualified candidates for a MyoPro whose insurance may reimburse for the device, which now includes Medicare Part B beneficiaries.
The addressable market in the United States for products directed at all individuals with upper extremity paralysis, such as our MyoPro, is based on an estimated prevalence of 1% of the population, which is the prevalence of people who have suffered a stroke in the U.S., or an estimated 3 million existing cases of upper extremity paralysis.
We also call on hospitals and O&P practices that provide our products to their patients as well as indirect sales through distributors in Europe and Australia.
We also call on hospitals and O&P practices that provide our products to their patients as well as indirect sales through O&P providers in Europe and Australia. The MyoPro product line has been approved by the VA system for impaired veterans, and more than 130 VA facilities have ordered devices for their patients.
According to the National Institutes of Health, it is estimated that nearly 75% of all strokes occur in people aged 65 and over. With Medicare Part B poised to begin reimbursing on a lump sum basis for the MyoPro and Medicare Advantage plans obligated to follow suit, assuming medical necessity is demonstrated, we believe our market opportunity is substantial.
With the Centers for Medicare and Medicaid Services, or CMS, reimbursing on a lump sum basis for the MyoPro and Medicare Advantage plans obligated to follow suit, assuming medical necessity is demonstrated, we believe our market opportunity is substantial.
In September 2020, Myomo’s fourth U.S. patent was issued entitled Powered Orthotic Device and Method of Using the Same (U.S. Pat No. 10758394B2). Similar patents have been issued in China, Hong Kong, and Japan and is validated (currently in force) in six European countries (European Patent No. 3307225).
In September 2020, Myomo’s fourth U.S. patent was issued entitled Powered Orthotic Device and Method of Using the Same (U.S. Pat No. 10758394B2). In 2023, Myomo was issued two additional U.S. patents, Self Donning Powered Orthotic Device (U.S. Pat No. 11712360) and Powered Orthotic Device and Method of Using Same (U.S. Pat No. 11826275).
All employees are subject to contractual agreements that specify requirements for confidentiality, ownership of newly developed intellectual property and restrictions on working for competitors as well as other matters. None of our employees are represented by labor unions or covered by collective bargaining agreements, and we have experienced no work stoppages.
Employees and Human Capital As of December 31, 2024, we employed a total of 184 full time employees and 1 part time employee. All employees are subject to contractual agreements that specify requirements for confidentiality, ownership of newly developed intellectual property and restrictions on working for competitors as well as other matters.
If the volume and geographic reach of our sales expand further, we may seek additional sources for manufacturing and custom fabrication of the devices as our needs may require, or expand our manufacturing space and capacity. Employees and Human Capital As of December 31, 2023, we employed a total of 101 full time employees and 5 part time employees.
Our current capacity is 120 units per month, and we have the ability to expand manufacturing capacity in this facility, as demand increases. If the volume and geographic reach of our sales expand further, we may seek additional sources for manufacturing and custom fabrication of the devices as our needs may require, or expand our manufacturing space and capacity.
Finally, on February 29, 2024, CMS published final payment determinations for the MyoPro Motion W (L8701) of approximately $33,500 and for the MyoPro Motion G (L8702) of approximately $65,900, effective April 1, 2024.
On February 29, 2024, CMS published final payment determinations for the MyoPro Motion W (L8701) and for the MyoPro Motion G (L8702), which became effective April 1, 2024. These fees were subsequently updated to approximately $34,300 for the Motion W and approximately $67,500 for the Motion G, effective January 1, 2025. The fees are subject to an annual inflationary adjustment.
Prior to obtaining authorizations from commercial insurance companies, the patient’s medical records are collected and reviewed to make sure the device is appropriate for their condition and a prescription is typically obtained from the patient’s physician. Once these documents are obtained, our patient advocacy team submits a pre-authorization request to the patient’s insurer.
Next, the patient’s medical records are collected and reviewed to make sure the device is appropriate for their condition and a prescription is typically obtained from the patient’s physician in conjunction with a face-to-face visit.
If we receive a pre-authorization, we will proceed to measure the patient’s arm, create the orthotic parts, then fabricate the MyoPro and deliver it to the patient. This process is what we refer to as direct billing.
If we receive a pre-authorization, we will proceed to complete the aforementioned activities resulting in the delivery of a 7 Table of Contents MyoPro to the patient. This process is what we refer to as direct billing.
Ekso Bionics has recently announced a product to be used only for rehab therapy at a hospital, and we can provide no assurance that these or other companies are not currently developing competing products for the home market. 8 Table of Contents Potential New Products from O&P Manufacturers If our business grows, interest may develop among new or existing manufacturers of other O&P devices that compete with the MyoPro, which may or may not challenge the validity of our intellectual property.
Potential New Products from O&P Manufacturers If our business grows, interest may develop among new or existing manufacturers of other O&P devices that compete with the MyoPro, which may or may not challenge the validity of our intellectual property.
This represents a 40% increase over 164 patients in backlog at December 31, 2022. The estimated maximum potential revenue value of the backlog is approximately $9.9 million. To bring the MyoPro to what we believe is the large number of potential patients outside of the United States.
This represents an 18% increase over 230 patients in backlog at December 31, 2023. The estimated maximum potential revenue value of the backlog is approximately $13.6 million.
Our human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
Our plan to increase clinical, reimbursement and manufacturing capacity in 2025 involves the hiring more than 100 additional employees by the end of 2025. Our human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants.
According to the CDC, 7% of adults aged 65 and over in the United States require daily help with ADLs, with such long term support services consuming more than 13% of all healthcare spending.
According to the CDC, 7% of adults aged 65 and over in the United States require daily help with ADLs. For patients without caregivers, such long term, full-time support services cost approximately $62,400 annually according to The KFF. This approximates the cost to a payer for a MyoPro, which is paid once.
We consider our relationship with our employees to be good. We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees and personnel. Our plan to increase clinical, reimbursement and manufacturing capacity in 2024 involves the hiring of more than 50 employees by the end of the second quarter of 2024.
None of our employees are represented by labor unions or covered by collective bargaining agreements, and we have experienced no work stoppages. We consider our relationship with our employees to be good. We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees and personnel.
In addition to our recent geographic expansion to serve more areas in the United States, we are entering international markets via local partnerships and distribution arrangements to meet the large global need that we believe exists for individuals with upper limb paralysis.
With a first-mover advantage in the U.S. and a presence in international markets such as Germany and the United Kingdom, we believe we are well-positioned to meet the large global need that we believe exists for individuals with upper limb paralysis.
Beginning in 2023, our business development efforts focused only on those payers that have previously reimbursed for the MyoPro. As of December 31, 2023, 1,042 patients were in our reimbursement pipeline, an 18% increase compared to 883 patients in the pipeline at December 31, 2022.
As of December 31, 2024, 1,389 patients were in our reimbursement pipeline, a 33% increase compared to 1,042 patients in the pipeline at December 31, 2023.
Medical professionals who evaluate patients for myoelectric orthotics screen out individuals who could accomplish their goals with a simpler, less costly intervention such as these braces. Experimental Surgery: Battelle and Thomas Jefferson University — Brain Implants An array of experimental interventions currently is being researched at universities and non-profit research facilities around the world.
Medical professionals who evaluate patients for myoelectric orthotics screen out individuals who could accomplish their goals with a simpler, less costly intervention such as these braces. Exoskeleton Suits During the last few years, a number of companies have emerged to provide exoskeleton suits that enable those with lower extremity paralysis to stand and walk again.
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One of the leading medical facilities in the United States for treating brachial plexus injuries is 4 Table of Contents the Mayo Clinic. We have been working with surgeons at the Mayo Clinic who have incorporated the MyoPro into their surgical post-operative treatment protocol to help improve function in upper limbs.
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Of that population, we estimate that up to 20% of such individuals may be medically qualified candidates for a MyoPro whose insurance may reimburse for the device, which now includes Medicare Part B beneficiaries.
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In non-clinical based research, the University of Utah has been awarded grant funding to study and improve the control systems that communicate muscle intention for better control of the motors on the MyoPro brace. This could lead to future collaboration between Myomo and the University of Utah if new intellectual property is developed.
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According to the National Institutes of Health, it is estimated that nearly 75% of all strokes occur in people aged 65 and over.
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One such innovation recently announced by Battelle Memorial Institute in Ohio and Thomas Jefferson University in Philadelphia involves a craniotomy, which is a surgical opening into the skull performed to implant a sensor chip in the brain.
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Once the brace is fabricated, it is delivered to the patient either by us, an O&P practice, or a trained professional at a VA hospital, who will fit the device on the patient.
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An electrical cable is connected to the top of the head connecting to a system that sends pulses of electrical stimulation to activate muscles in the forearm or to control the MyoPro brace. The procedure is experimental, invasive, and costly, but may be offered as an alternative to a myoelectric orthosis.
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We have continually enhanced our product offerings by increasing functionality for users by the addition of a multi-articulated wrist and introducing a powered grasp for the hand.
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Beginning January 1, 2024, CMS is able to reimburse for the MyoPro on a lump sum basis.
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Researchers at the University of Utah published a paper reporting that stroke survivors can achieve proportional EMG control, regardless of their age, time since their stroke, clinical spasticity rate, and history of botulism toxin injections. This work constitutes an important step toward the advancement of more intuitive and dexterous myoelectric upper extremity orthosis which may improve the quality of life.
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We have submitted, and been paid for, a number of claims on both a rental basis and now on a lump sum basis, since we first started submitting claims in the first quarter of 2023. These claims are being reviewed by CMS’s administrative contractors referred to as the DME MACs, on the basis of individual consideration.
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Once these documents are obtained and reviewed to ensure our inclusion criteria are met, we will proceed to measure the patient’s arm, manufacture and provide the device to a qualifying Medicare patient. For patients with Medicare Advantage or other commercial insurance, our patient advocacy team submits a pre-authorization request to the patient’s insurer.
Removed
This means claims are being individually reviewed for medical necessity as a condition for reimbursement. We expect that claims will continue be reviewed in this manner for the near term. At some point in the future, the DME MACs will reimburse claims upon submission and conduct post-reimbursement audits to determine if the patient met CMS' reimbursement criteria.
Added
Similar patents have been issued in China, Hong Kong, and Japan and is validated (currently in force) in six European countries (European Patent No. 3307225). We also have 8 pending U.S. patent applications and 4 foreign applications under examination. We plan to continue to file additional patent applications over time.
Removed
Once the final fees are effective, Medicare Advantage insurance plans are obligated to reimburse for the MyoPro, so long as the device is deemed to be medically necessary for their beneficiaries, which will continue to be determined on a case-by-case basis.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese factors include, among other things: • our ability to achieve reimbursement from third-party payers for our products; • our dependence upon external sources for the financing of our operations; • our ability to obtain and maintain our strategic collaborations and to realize the intended of such collaborations; • our ability to effectively execute our business plan; • our ability to maintain and grow our reputation and to achieve and maintain the market acceptance of our products; • our expectations as to our clinical research program and clinical results; • our ability to improve our products and develop new products; • our ability to manage the growth of our operations over time; • our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others; • our ability to gain and maintain regulatory approvals; • our ability to maintain relationships with existing customers and develop relationships with new customers; • our ability to compete and succeed in a highly competitive and evolving industry; and • other risks and uncertainties, including those listed under the captain “Risk Factors” in this Annual Report on Form 10-K.
Biggest changeThese factors include, among other things: • our ability to obtain sufficient reimbursement from third-party payers for our products; • our ability to scale the business to return to positive cash flow from operations on a quarterly basis by the fourth quarter 2025; • our revenue concentration with Medicare and with a particular insurance payer as a result of focusing our efforts on patients with insurers who have previously reimbursed for the MyoPro; • our ability to continue normal operations and patient interactions without supply chain disruption in order to deliver and fit our custom-fabricated devices; • our marketing and commercialization efforts; • our dependence upon external sources for the financing of our operations, to the extent that we do not achieve or maintain cash flow breakeven; • our ability to obtain and maintain our strategic collaborations and to realize the intended results of such collaborations; • our ability to effectively execute our business plan and scale up our operations; • our ability to remediate the material weakness in our internal control over financial reporting; • our expectations as to our product development programs, including improving our existing products and developing new products; • our ability to maintain and grow our reputation and to achieve and maintain the market acceptance of our products; • our expectations as to our clinical research program and clinical results; • our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others; • our ability to gain and maintain regulatory approvals; • our ability to compete and succeed in a highly competitive and evolving industry; and • general market, economic, environmental and social factors that may affect the evaluation, fitting, delivery and sale of our products to patients; and • other risks and uncertainties, including those listed under the captain “Risk Factors” in this Annual Report on Form 10-K.
There can be no assurance that the final fees will be sufficient to permit us to generate gross margin required to allow us to operate on a profitable basis. Third-party payers also may continue to deny coverage, limit reimbursement or reduce their levels of payment, or our costs of production may increase faster than increases in reimbursement levels.
There can be no assurance that the final fees will be sufficient to permit us to generate gross margin required to allow us to operate on a profitable basis. Third-party payers 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 January 2021, we announced that we had entered into a joint venture (the “JV") with Beijing Ryzur Medical Investment Co., Ltd. (“Ryzur Medical”), to manufacture and sell the products containing our technology in China, Hong Kong, Taiwan and Macau. The company is named Jiangxi Myomo Medical Assistive Appliance Co., Ltd. (the “JV Company”).
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”).
Moreover, there are significant costs and risks inherent in selling our products 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 24 Table of Contents 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.
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 25 Table of Contents 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.
The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the U.S. Internal Revenue Service, or IRS and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect our stockholders or us.
The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the U.S. Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect our stockholders or us.
If these independent O&P providers or distributors do not follow our inclusion/exclusion criteria for patient selection 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.
If these independent O&P providers do not follow our inclusion/exclusion criteria for patient selection 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.
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. These and other factors could harm our ability to implement planned international operations and, consequently, harm our business, results of operations, and financial condition.
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. 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.
The CCPA went into effect on January 1, 2020 and the California State Attorney General became empowered to commence enforcement actions against violators as of July 1, 2020. Further, as of January 1, 2023, the California Privacy Rights Act (CPRA), created additional obligations with respect to processing and storing personal information.
The CCPA went into effect on January 1, 2020 and the California State Attorney General became empowered to commence enforcement actions against violators as of July 1, 2020. Further, as of January 1, 2023, the California Privacy Rights Act, created additional obligations with respect to processing and storing personal information.
Our amended and restated certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue preferred stock, without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; 36 Table of Contents • establish that our board of directors is divided into three classes, with directors in each class serving three-year staggered terms; • require the approval of holders of two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or amend or repeal the provisions of our certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting; • prohibit cumulative voting in the election of directors; and • provide that vacancies on our board of directors may be filled only by the vote of a majority of directors then in office, even though less than a quorum or by the holders of at least sixty-six and two-thirds percent (66 2/3%) of the issued and outstanding shares of common stock.
Our amended and restated certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue preferred stock, without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; • establish that our board of directors is divided into three classes, with directors in each class serving three-year staggered terms; • require the approval of holders of two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or amend or repeal the provisions of our certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting; • prohibit cumulative voting in the election of directors; and • provide that vacancies on our board of directors may be filled only by the vote of a majority of directors then in office, even though less than a quorum or by the holders of at least sixty-six and two-thirds percent (66 2/3%) of the issued and outstanding shares of common stock.
Under current law, U.S. federal NOL carryforwards generated in taxable years beginning after December 31, 2017 will not be subject to expiration, but the amount of such NOL carryforwards that we are permitted to deduct in a taxable year beginning after December 31, 2020 will be limited to 80% of our taxable income in each such year to which the NOL carryforwards are applied. 39 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Some of the statements under “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this Annual Report on Form 10-K constitute forward-looking statements.
Under current law, U.S. federal NOL carryforwards generated in taxable years beginning after December 31, 2017 will not be subject to expiration, but the amount of such NOL carryforwards that we are permitted to deduct in a taxable year beginning after December 31, 2020 will be limited to 80% of our taxable income in each such year to which the NOL carryforwards are applied. 40 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Some of the statements under “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this Annual Report on Form 10-K constitute forward-looking statements.
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. 23 Table of Contents Risks Related to Collaborations and Licensing Agreements We may enter into collaborations, licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or the generation of significant future revenues.
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. 24 Table of Contents Risks Related to Collaborations and Licensing Agreements We may enter into collaborations, licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or the generation of significant future revenues.
Although the UK is regarded as a third country under the EU’s 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.
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.
For so long as we remain a “smaller reporting company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “smaller reporting companies.” We are a “smaller reporting company.” For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “smaller reporting companies,” including exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act (so long as we remain a non-accelerated filer) and reduced disclosure obligations regarding executive compensation in the Annual Report on Form 10-K and our periodic reports and proxy statements.
We are a “smaller reporting company,” for as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “smaller reporting companies,” including exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act (so long as we remain a non-accelerated filer) and reduced disclosure obligations regarding executive compensation in the Annual Report on Form 10-K and our periodic reports and proxy statements.
Obtaining premarket clearance or approval could significantly increase our regulatory costs, including expense associated with required pre-clinical (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.
Obtaining premarket clearance or approval could significantly increase our regulatory costs, including expense 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.
Fluctuations in our quarterly and annual financial results have resulted and will continue to result from numerous factors, including: • timing, number and dollar value of reimbursements of our products by insurance payers; • changes in the mix of products we sell; • strategic actions by us, such as acquisitions of businesses, products, or technologies; • effects of domestic and foreign economic conditions and exchange rates on our industry and/or customers; • the divestiture or discontinuation of a product line or other revenue generating activity; • the relocation and integration of manufacturing operations and other strategic restructuring; 16 Table of Contents • regulatory actions which may necessitate recalls of our products or warning letters that negatively affect the markets for our products; • costs incurred by us in connection with the termination of contractual and other relationships, including distributorships; • our ability to collect outstanding accounts receivable; • the expiration or exhaustion of deferred tax assets such as net operating loss carryforwards; • increased product and price competition, due to the regulatory landscape, market conditions or other factors; • technology changes to enhance individual data privacy that could negatively impact our ability to market our products to prospective candidates and could result in increased advertising costs; • market reception of our new or improved product offerings; and • the loss of any significant customer.
Fluctuations in our quarterly and annual financial results have resulted and will continue to result from numerous factors, including: • timing, number and dollar value of reimbursements of our products by insurance payers; • changes in the mix of products we sell; • strategic actions by us, such as acquisitions of businesses, products, or technologies; • effects of domestic and foreign economic conditions and exchange rates on our industry and/or customers; • the divestiture or discontinuation of a product line or other revenue generating activity; • the relocation and integration of manufacturing operations and other strategic restructuring; • regulatory actions which may necessitate recalls of our products or warning letters that negatively affect the markets for our products; • costs incurred by us in connection with the termination of contractual and other relationships, including distributorships; • our ability to collect outstanding accounts receivable; • the expiration or exhaustion of deferred tax assets such as net operating loss carryforwards; • increased product and price competition, due to reimbursement of our products by Medicare, the regulatory landscape, market conditions or other factors; • technology changes to enhance individual data privacy that could negatively impact our ability to market our products to prospective candidates and could result in increased advertising costs; • market reception of our new or improved product offerings; and • the loss of any significant customer.
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, or PMA, application for premarket clearance or approval.
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.
The market for myoelectric braces is new and the rate of adoption is uncertain, and important assumptions about the potential market for our products may be inaccurate. The market for myoelectric braces, or orthotics, is new and the rate of adoption is uncertain.
The market for myoelectric braces is relatively new and the rate of adoption is uncertain, and important assumptions about the potential market for our products may be inaccurate. The market for myoelectric braces, or orthotics, is relatively new and the rate of adoption is uncertain.
Depending on the circumstances, failure to meet applicable regulatory requirements can result in civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in federal and state funded healthcare programs, contractual damages, reputational harm and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.
Depending on the circumstances, failure to meet applicable regulatory requirements can result in civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in federal and state funded healthcare programs, contractual damages, reputational harm and the curtailment or restricting of our operations, as well as additional reporting 28 Table of Contents obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.
Adverse events such as product defects or legal claims with respect to competing or similar products could cause 22 Table of Contents 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.
Adverse events such as product defects or legal claims with respect to competing or similar products could cause 23 Table of Contents 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.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
The international transfer obligations under the European 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.
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.
MyoPro products are relatively new products, and market acceptance and adoption depend on educating people with limited upper extremity mobility and healthcare providers as to the distinct features, ease-of-use, improved quality of life and other benefits of MyoPro systems compared to alternative technologies and treatments.
MyoPro products are relatively new products, and continuing market acceptance and adoption will depend on educating people with limited upper extremity mobility and healthcare providers as to the distinct features, ease-of-use, improved quality of life and other benefits of MyoPro systems compared to alternative technologies and treatments.
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 products in a manner that meets these various requirements.
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.
If passed, the final version of the Digital Information Bill 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, which may lead to additional compliance costs and could increase our overall risk.
If passed, the final version of the Digital Reform Bill 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, which may lead to additional compliance costs and could increase our overall risk.
Department of Veterans Affairs, or 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.
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.
For our business strategy to be successful, Cogmedix must be able to manufacture our products 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.
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.
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 , or SCCs, or the UK International Data Transfer Agreement/Addendum or IDTA and transfer impact assessments carried out when relying on the SCCs and UK IDTA.
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.
For example, the California Consumer Privacy Act, or CCPA, is a comprehensive law that creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.
For example, the California Consumer Privacy Act (“CCPA”) is a comprehensive privacy law that creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households in California.
Item 1A. Risk Factors The following important factors, among others, could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Form 10-K or presented elsewhere by management from time to time. Investors should carefully consider the risks described below before making an investment decision.
Item 1A. Risk Factors The following important factors, among others, could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Annual Report on Form 10-K or presented elsewhere by management from time to time. Investors should carefully consider the risks described below before making an investment decision.
Our future success depends, among other things, upon our ability to compete effectively against current technology, as well as to respond effectively to technological advances, and upon our ability to successfully implement our marketing strategies and execute our research and development plans. 21 Table of Contents We sell to O&P providers and distributors who are free to market products that compete with the MyoPro, and we rely on these parties to market and promote our products in accordance with their FDA listings, select appropriate patients and provide adequate follow-on care.
Our future success depends, among other things, upon our ability to compete effectively against current technology, as well as to respond effectively to technological advances, and upon our ability to successfully implement our marketing strategies and execute our research and development plans. 22 Table of Contents We sell to O&P providers who are free to market products that compete with the MyoPro, and we rely on these providers to market and promote our products in accordance with their FDA listings, select appropriate patients and provide adequate follow-on care.
Cogmedix also may have difficulty obtaining similar components from other suppliers that are acceptable to the FDA or other regulatory agencies, and the failure of Cogmedix’s suppliers to comply with strictly enforced regulatory requirements could expose us to regulatory action including warning letters, product recalls, termination of distribution, product seizures or civil penalties.
Cogmedix also may have difficulty obtaining similar components from other suppliers that are acceptable to the FDA or other regulatory agencies, and the failure of Cogmedix’s suppliers to comply with strictly enforced regulatory requirements could expose us to regulatory action including warning letters, 20 Table of Contents product recalls, termination of distribution, product seizures or civil penalties.
Any action for violation of these laws, even if successfully defended, could cause us to incur significant legal expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect 27 Table of Contents business in an adverse way.
Any action for violation of these laws, even if successfully defended, could cause us to incur significant legal expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.
In the United States, several layers of federal and state data protection laws and regulations may apply to our business, including HIPAA, the Federal Trade Commission (FTC) Act and state consumer privacy and health data privacy laws.
In the United States, several layers of federal and state data protection laws and regulations may apply to our business, including HIPAA, the Federal Trade Commission (“FTC”) Act and state consumer privacy and health data privacy laws.
Further, these transactions and arrangements are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements. Risks Related to Our Business Operations and Management If we fail to properly manage our anticipated growth, including in international markets, our business could suffer.
Further, these transactions and arrangements are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements. Risks Related to Our Business Operations and Management If we fail to properly manage our anticipated growth, including in O&P channel and international markets, our business could suffer.
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.
This lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, complexity 32 Table of Contents 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.
Any cyber-attack or security compromise or breach that leads to unauthorized access, use, disclosure, loss, corruption or other compromise of confidential and/or proprietary information or other sensitive information could harm our reputation, cause us not to comply with federal and/or state breach notification laws and foreign law equivalents and otherwise subject us to liability under laws and regulations, including those that protect the privacy and security of personal information.
Any cyber-attack or security compromise or incident that 30 Table of Contents leads to unauthorized access, use, disclosure, loss, corruption or other compromise of confidential and/or proprietary information or other sensitive information could harm our reputation, cause us not to comply with federal and/or state breach notification laws and foreign law equivalents and otherwise subject us to liability under laws and regulations, including those that protect the privacy and security of personal information.
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, or QMS, requirements used by other regulatory authorities from 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.
We are under a continuing obligation to ensure that all applicable regulatory requirements, such as the FDA’s medical device good manufacturing practice / Quality System Regulation, or QSR, requirements and the FDA’s medical device reporting requirements for certain device-related adverse events and malfunction, continue to be met.
We are under a continuing obligation to ensure that all applicable regulatory requirements, such as the FDA’s medical device good manufacturing practice / Quality System Regulation (“QSR”) requirements and the FDA’s medical device reporting requirements for certain device-related adverse events and malfunction, continue to be met.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the annual and quarterly reports we file with the SEC.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”) to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the annual and quarterly reports we file with the SEC.
Our competitive position will depend on multiple complex factors, including our ability to achieve market acceptance for our products, develop new products, implement production and marketing plans, secure regulatory clearances or approvals, if necessary, for products under development and protect our intellectual property.
Our competitive position will depend on multiple complex factors, including our ability to maintain and grow market acceptance for our products, develop new products, implement production and marketing plans, secure regulatory clearances or approvals, if necessary, for products under development and protect our intellectual property.
We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may harm investor confidence in our company and, as a result, the value of our common stock.
We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal 38 Table of Contents controls may not be determined to be effective, which may harm investor confidence in our company and, as a result, the value of our common stock.
The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently believe are not material may also significantly impair our business operations. Our business 15 Table of Contents could be harmed by any of these risks.
The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently believe are not material may also significantly impair our business operations. Our business could be harmed by any of these risks.
For example, Washington’s My Health My Data Act, which comes into force in March 2024, requires regulated entities to obtain consent to collect health information, grants consumers certain rights, including to request deletion, and provides for robust enforcement mechanisms, including enforcement by the Washington state attorney-general and a private right of action for consumer claims.
For example, Washington’s My Health My Data Act, which went into effect in March 2024, requires regulated entities to obtain consent to collect health information, grants consumers certain rights, including to request deletion, and provides for robust enforcement mechanisms, including enforcement by the Washington state attorney-general and a private right of action for consumer claims.
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.
Similarly, if we fail to comply with applicable foreign regulatory requirements, 27 Table of Contents 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.
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.
If other parties are able to use our proprietary technology or information, our ability 33 Table of Contents 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.
Our success depends in part on our ability to obtain and maintain protection for the intellectual property relating to or incorporated into our products.
Risks Related to Our Intellectual Property Our success depends in part on our ability to obtain and maintain protection for the intellectual property relating to or incorporated into our products. Our success depends in part on our ability to obtain and maintain protection for the intellectual property relating to or incorporated into our products.
Achieving and maintaining market acceptance of MyoPro products could be negatively impacted by many other factors, including, but not limited to: • lack of sufficient evidence supporting the benefits of MyoPro over competitive products or other available treatment, or lifestyle management to accommodate the disability; • patient resistance to wearing an external device or making required insurance co-payments; • limitations on the ability of patients to complete evaluations and fittings, including adverse changes in their health, or other environmental, social and economic barriers to patient access; • results of clinical studies relating to MyoPro or similar products; • claims that MyoPro, or any component thereof, infringes on patent or other intellectual property rights of third parties; • perceived risks associated with the use of MyoPro or similar products or technologies; • the introduction of new competitive products or greater acceptance of competitive products; • adverse regulatory or legal actions relating to MyoPro or similar products or technologies; and • problems arising from the insourcing of our manufacturing capabilities, or our existing manufacturing and supply relationships with third parties.
Expanding market acceptance of MyoPro products could be negatively impacted by many other factors, including, but not limited to: • patient outcomes not meeting expectations; • lack of sufficient evidence supporting the benefits of MyoPro over competitive products or other available treatment, or lifestyle management to accommodate the disability; • patient resistance to wearing an external device or making required insurance co-payments; • limitations on the ability of patients to complete evaluations and fittings, including adverse changes in their health, or other environmental, social and economic barriers to patient access; • results of clinical studies relating to MyoPro or similar products; • claims that MyoPro, or any component thereof, infringes on patent or other intellectual property rights of third parties; 19 Table of Contents • perceived risks associated with the use of MyoPro or similar products or technologies; 2 • the introduction of new competitive products or greater acceptance of competitive products; • adverse regulatory or legal actions relating to MyoPro or similar products or technologies; and • problems arising from the insourcing of our manufacturing capabilities, or our existing manufacturing and supply relationships with third parties.
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, or QMSR, and is effective February 2, 2026.
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.
At the federal level, the FTC has used its authority over “unfair or deceptive acts or practices” to impose stringent requirements on the collection and disclosure of sensitive categories of personal information, including health information.
At the federal level, the FTC has used its authority over “unfair or deceptive acts or practices” to impose stringent requirements on the collection and disclosure of sensitive categories of personal information, including health 31 Table of Contents information.
As of December 31, 2023, we received full payment of the $2.7 million license fee and have received payment for MyoPro control units of $50,000. This and any other of these relationships may require us to incur 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.
During 2023, we received full payment of the $2.7 million initial license fee and have received payment for MyoPro control units of $50,000. This and any other of these relationships may require us to incur 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.
Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. Risks Related to Tax Laws We may be subject to adverse legislative or regulatory changes in tax laws that could negatively impact our financial condition.
Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. 39 Table of Contents Risks Related to Tax Laws We may be subject to adverse legislative or regulatory changes in tax laws that could negatively impact our financial condition.
Without an active market, the liquidity of such warrants will be limited. 34 Table of Contents Holders of our warrants and pre-funded warrants have no rights as a common stockholder until such holders exercise their warrants and acquire our common stock.
Without an active market, the liquidity of such warrants will be limited. Holders of our warrants and pre-funded warrants have no rights as a common stockholder until such holders exercise their warrants and acquire our common stock.
The GDPR imposes a broad range of strict requirements on companies subject to the GDPR, such as including requirements relating to having legal bases for processing personal data relating to identifiable individuals and transferring such information outside the EEA/UK , including to the U.S., 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, 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.
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 , 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.
While we currently believe we have sufficient inventory in our supply chain in the near term, if we, or any third parties in our supply chain for materials which are used in either the manufacture of our products are adversely impacted by infections or restrictions from public heath crises, such as the Covid-19 pandemic, or other factors, our supply chain may be disrupted and our ability to manufacture and ship our products may be limited.
While we currently believe we have sufficient inventory in our supply chain in the near term, if we, or any third parties in our supply chain for materials which are used in either the manufacture of our products are adversely impacted by infections or restrictions from public heath crises, or other factors, our supply chain may be disrupted and our ability to manufacture and ship our products may be limited.
Therefore, holders of our common stock will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.
Therefore, 36 Table of Contents holders of our common stock will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.
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.
If we are found to infringe another party’s patents, we could be required to pay damages. We could also 34 Table of Contents 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.
Failure to manage our growth effectively could cause us to misallocate management or financial resources and result in losses or weaknesses in our infrastructure, systems, processes and controls, which could materially adversely affect our business.
Failure to manage our growth effectively could cause us to mis-allocate management or financial resources and result in losses or weaknesses in our infrastructure, systems, processes and controls, which could materially adversely affect our business.
Further, we may incur significant operating expenses as a result of our planned international expansion, and it 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.
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.
In addition, 29 Table of Contents outside parties may attempt to penetrate our systems and infrastructure or those of our vendors or fraudulently induce our personnel or the personnel of our vendors to disclose sensitive information in order to gain access to our data and/or systems.
In addition, outside parties may attempt to penetrate our systems and infrastructure or those of our vendors or fraudulently induce our personnel or the personnel of our vendors to disclose sensitive information in order to gain access to our data and/or systems.
As a result, the coverage determination process is often a time-consuming and costly process that will require 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.
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.
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) in the United States. The MyoPro mark is 33 Table of Contents registered in Canada and in selected EU, countries with pending registration.
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) in the United States. The MyoPro mark is registered in Canada and in selected EU countries with pending registration.
We also rely on a limited number of suppliers for the batteries used by the MyoPro and do not maintain any long-term supply agreement with respect to batteries. If we fail to obtain sufficient quantities of batteries in a timely manner, our reputation may be harmed and our business could suffer.
We also rely on a limited number of suppliers for certain materials and components used by the MyoPro and do not maintain any long-term supply agreement with respect to these materials and components. If we fail to obtain sufficient quantities of these materials and components in a timely manner, our reputation may be harmed and our business could suffer.
If we do proceed with acquisitions, we do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired products or technologies.
If we do proceed with acquisitions, we do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully 26 Table of Contents integrate any acquired products or technologies.
If a key independent O&P provider were to cease to distribute our products, our sales could be adversely affected. In such a situation, we may need to seek alternative independent providers or increase our reliance on our other independent providers or our direct field representatives, which may not prevent our sales from being adversely affected.
If a key independent O&P provider were to cease to distribute our products, our sales could be adversely affected. In such a situation, we may need to seek alternative independent providers or increase our reliance on our direct billing channel, which may not prevent our sales from being adversely affected.
Additionally, because the MyoPro is a prescription 17 Table of Contents device, patients require the prescription of a healthcare provider to access our products and to have the device reimbursed by insurance.
Additionally, because the MyoPro is a prescription device, patients require the prescription of a healthcare provider to access our products and to have the device reimbursed by insurance.
No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse.
No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be 41 Table of Contents material and adverse.
To our knowledge, through the year ended December 31, 2023, 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.
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.
Recent changes in enforcement practice by the 26 Table of Contents 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.
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.
We have determined that such ownership changes have occurred in prior years and as recently as January 2023. The result of these ownership changes is that we have a $64,000 annual limitation on our ability to utilize pre-ownership change NOL’s and that approximately $20.0 million of our federal NOL's and $48.0 million of our state NOL's will expire unutilized.
We have determined that such ownership changes have occurred in prior years. The result of these ownership changes is that we have a $64,000 annual limitation on our ability to utilize pre-ownership change NOLs and approximately $20.0 million of our federal NOLs and $48.0 million of our state NOLs will expire unutilized.
Additionally, we had U.S. federal and state research and development tax credits, or tax credits, of $0.4 million and $0.2 million, respectively, which begin to expire in the year 2026 and 2033, respectively. These NOL and tax credit carryforwards could expire unused and be unavailable to offset future taxable income or tax liabilities, respectively.
Additionally, the Company has U.S. federal and state research and development tax credits of $0.7 million and $0.4 million, respectively, which begin to expire in the year 2026 and 2033, respectively. These NOL and tax credit carryforwards could expire unused and be unavailable to offset future taxable income or tax liabilities, respectively.
If a breach or compromise of our information technology systems or infrastructure or those of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
If an incident or compromise of our information technology systems or infrastructure or those of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.
Classification of a device is important because the class to which a device is assigned determines, among other things, the necessity and type of FDA pre-market review. This determination is required prior to marketing the device. See section titled “Business — Government Regulation.” In 2012, we listed the MyoPro device as a Class I, 510(k)-exempt, limb orthosis with the FDA.
Classification of a device is important because the class to which a device is assigned determines, among other things, the necessity and type of FDA pre-market review. This determination is required prior to marketing the device. In 2012, we listed the MyoPro device as a Class I, 510(k)-exempt, limb orthosis with the FDA.
In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOL carry-forwards or tax credits, or NOLs or credits, to offset future taxable 38 Table of Contents income.
In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOL carryforwards or tax credits, to offset future taxable income.
Similar consumer privacy laws have passed or come into force in more than a dozen U.S. states. Like the CPRA, these laws grant consumers rights in relation to their personal information and impose new obligations on regulated businesses, including, in some instances, broader data security requirements.
Similar consumer privacy laws have passed or come into force in numerous U.S. states. Like the CCPA, these laws grant consumers rights in relation to their personal information and impose new obligations on regulated businesses, including, in some instances, broader data security requirements.
Suppliers may encounter problems that limit their ability to manufacture components for our products, including financial difficulties or damage to their 19 Table of Contents manufacturing equipment or facilities.
Suppliers may encounter problems that limit their ability to manufacture components for our products, including financial difficulties or damage to their manufacturing equipment or facilities.
Filing, prosecuting, maintaining and defending patents on each of our products in all countries throughout the world would be prohibitively expensive, and thus our intellectual property rights outside the United States are currently 32 Table of Contents limited to selected countries in the European Union, or EU, China, Hong Kong, and Japan.
Filing, prosecuting, maintaining and defending patents on each of our products in all countries throughout the world would be prohibitively expensive, and thus our intellectual property rights outside the United States are currently limited to selected countries in the EU, including China, including Hong Kong, and Japan.
For example, we have entered into a joint venture with Beijing Ryzur Medical Investment Co., Ltd., to manufacture and sell the products containing the Company’s technology in China, Hong Kong, Taiwan and Macau.
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.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business, financial condition and results of operations. 28 Table of Contents We face risks in connection with the Affordable Care Act or its possible replacement or modifications and other ongoing healthcare legislative and regulatory reform measures.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with 29 Table of Contents these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business, financial condition and results of operations.
When issues with distributors have arisen in the past, we have supplied additional training and documentation and/or ended the distributor relationship. The sales and marketing of medical devices is under increased scrutiny by the FDA and other enforcement bodies.
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 sales and marketing of medical devices is under increased scrutiny by the FDA and other enforcement bodies.
Accordingly, if we are unable to 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. We depend on the knowledge and skills of our senior management.
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. We depend on the knowledge and skills of our senior management.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cybersecurity We utilize a third-party managed security service provider to support our information technology services, which include ongoing support for the management of cyber risks and protection of our information technology infrastructure.
Biggest changeItem 1C. Cybersecurity Cyber Risk Management and Strategy Our manager of information technology works in conjunction with our third-party managed security service provider to establish and maintain our cybersecurity risk management processes, which are informed by and incorporate elements of recognized industry standards, such as the National Institute of Standards and Technology Cybersecurity Framework.
Our efforts to address cybersecurity risks and also include training employees, both from programs provided by our third-party managed security service provider and internal policies and training, which are designed to increase awareness of cybersecurity threats.
Our efforts to address cybersecurity risks also include training employees, both from programs provided by our third-party managed security service provider and internal policies and training, which are designed to increase awareness of cybersecurity threats.
Although risks from cybersecurity threats have to date not materially affected, and we do not believe they are reasonably likely to materially affect, us, our business strategy, results of operations or financial condition, we could, from time to time, experience threats and communicate security incidents relating to our and our third-party vendors' information systems.
Although risks from cybersecurity threats have to date not materially affected , and we do not believe they are reasonably likely to materially affect, us, our business strategy, results of operations or financial condition, we do, from time to time, experience threats and communicate security incidents relating to our and our third-party vendors' information systems.
The Chief Financial Officer is responsible for identifying, evaluation, and implementing risk management control and methodologies to address any identified risks, including risks from cybersecurity threats, with advice from our third-party managed security service provider as appropriate.
The Chief Financial Officer is responsible for identifying, evaluating, and implementing risk management control and methodologies to address any identified risks, including risks from cybersecurity threats, with advice from our third-party managed security service provider as appropriate.
The Chief Financial Officer periodically provides reports to the audit committee of the board of directors regarding information technology and cybersecurity matters and associated risks. The audit committee is responsible for reviewing and overseeing the Company's risk management process and strategy, including risks from cybersecurity threats.
The Chief Financial Officer periodically provides reports to the technology, quality and regulatory committee of the board of directors regarding information technology and cybersecurity matters and associated risks. The technology, quality and regulatory committee is responsible for reviewing and overseeing the Company's risk management process and strategy, including risks from cybersecurity threats.
Governance Related to Cybersecurity Risks Our cyber risk management program and related operations and processes are directed by our Chief Financial Officer, in consultation with other members of senior management and our third-party security managed service provider.
Governance Related to Cybersecurity Risks Our cyber risk management program and related operations and processes are directed by our Chief Financial Officer, in consultation with internal information technology resources, other members of senior management and our third-party security managed service provider.
We also leverage our managed security services provider and other third-party consultants, providers, and technologies to support our efforts to monitor, identify, and address cybersecurity risks, including managing our monitoring and alerting tools and conducting periodic assessments of certain system applications.
We also leverage our managed security services provider and other third-party consultants , providers, and technologies to support our internal information technology resources to monitor, identify, and address cybersecurity risks, including managing our monitoring and alerting tools and conducting periodic assessments of certain system applications.
The audit committee periodically reports on cybersecurity risk management to the full board of directors. 41 Table of Contents
The technology, quality and regulatory committee periodically reports on cybersecurity risk management to the full board of directors. 42 Table of Contents
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Our critical business applications are provided and managed by third party cloud software providers. 40 Table of Contents Our cybersecurity risk management strategy is informed by a recent cyber risk assessment conducted in consultation with our third party managed security service provider. The assessment was informed by industry standards and included an evaluation of our cybersecurity controls.
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Further, as part of our cybersecurity risk management, we have adopted an incident response plan that has been designed to identify and manage significant events that may impact our information technology infrastructure, including those arising from or related to cybersecurity threats.
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We maintain an incident response and a disaster recovery plan, which includes plans around managing cybersecurity incidents, and is intended to serve as a guide for management of such events and to set forth communication procedures regarding potential impacts to our board, investors, and other stakeholders, as appropriate.
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We conduct periodic risk assessments of our information technology systems as part of our cybersecurity risk management processes and to evaluate the effectiveness of applicable security controls.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our primary offices are located at 137 Portland St. in Boston, Massachusetts, where we have a lease consisting of 9,094 square feet of office and laboratory space, which has been extended as a result of a lease in the same building for 3,859 square feet of space to be used for manufacturing which expires in January 2025.
Biggest changeItem 2. Properties Our primary offices are located at 45 Blue Sky Drive in Burlington, Massachusetts, where we have a lease expiring in October 2032 consisting of approximately 28,700 square feet of office, manufacturing and laboratory space, with an additional 7,500 square feet of manufacturing space committed to be leased in June 2025.
A number of our employees work remotely from home across the United States.
A number of our employees work remotely from home across the United States and Germany.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 4. Mine Safety Disclosures Not applicable. 42 Table of Contents PART II
Biggest changeItem 4. Mine Safety Disclosures Not applicable. 43 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 42 PART II 40 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 43 Item 6. Reserved 43 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44
Biggest changeItem 4. Mine Safety Disclosures 43 PART II 42 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 44 Item 6. Reserved 44 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 45

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividend Policy We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. In addition, the terms of any future indebtedness that we may incur could preclude us from paying dividends.
Biggest changeDividend Policy We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. In addition, the terms of our existing debt agreement precludes us from paying dividends.
Holders of Record On March 1, 2024, the closing price per share of our common stock was $4.01 as reported on The NYSE American, and we had approximately 124 stockholders of record (not including beneficial owners whose shares are held in street name).
Holders of Record On March 1, 2025, the closing price per share of our common stock was $5.07 as reported on The NYSE American, and we had approximately 121 stockholders of record (not including beneficial owners whose shares are held in street name).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCMS Status 45 Table of Contents On November 1, 2023, CMS issued a final rule that results in a change in the benefit category associated with products billed under the HCPCS codes for our products from durable medical equipment rental to a brace, which would permit reimbursement of MyoPro sales on a lump sum basis.
Biggest change(the "JV Company"), which is obligated to purchase $10.75 million of MyoPro control system units over the next 10 years, subject to receipt of regulatory approvals necessary to permit sales of the product in the greater China territory. • In July 2021, we announced that we became accredited as a Medicare provider. • In January 2022, we introduced the MyoPro 2+ and began in-house fabrication of the device. • On November 1, 2023, CMS issued a final rule that resulted in a change in the benefit category associated with products billed under the HCPCS codes for our products from durable medical equipment rental to a brace, which would permit reimbursement of MyoPro sales on a lump sum basis.
Equity Offerings 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.
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.
The MyoPro Motion G model allows users with severely weakened or clenched hands, such as seen in certain stroke survivors, to open and close their hands and perform a large number of ADLs. • On June 9, 2017, we completed our initial public offering, or IPO, and a private offering concurrent with the IPO, generating net proceeds of $6.9 million in the aggregate. 44 Table of Contents • On July 31, 2017, we met the criteria to apply the CE mark for the MyoPro under the EU MDD.
The MyoPro Motion G model allows users with severely weakened or clenched hands, such as seen in certain stroke survivors, to open and close their hands and perform a large number of ADLs. 45 Table of Contents • On June 9, 2017, we completed our initial public offering, or IPO, and a private offering concurrent with the IPO, generating net proceeds of $6.9 million in the aggregate. • On July 31, 2017, we met the criteria to apply the CE mark for the MyoPro under the EU MDD.
The net cash used in operating activities for the year ended December 31, 2023 was primarily used to fund a net loss net approximately $8.1 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.7 million of which approximately $1.1 million is related to non-cash adjustments related to stock-based compensation, and approximately $0.34 million of cash generated from changes in operating assets and liabilities, primarily related to an increase in accounts payable and accrued expenses, offset by increases in inventory and accounts receivable.
The net cash used in operating activities for the year ended December 31, 2023 was primarily used to fund a net loss net approximately $8.1 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.7 million of which approximately $1.1 million is related to non-cash adjustments related to stock-based compensation, and approximately $0.3 million of cash generated from changes in operating assets and liabilities, primarily related to an increase in accounts payable and accrued expenses, offset by increases in inventory and accounts receivable.
General and administrative expenses consist primarily of costs for administrative, reimbursement, and finance personnel, including salaries, benefits, bonuses and stock-based compensation, professional fees associated with legal matters, consulting expenses, costs for pursuing insurance reimbursements for our products and costs required to comply with the regulatory requirements of the SEC and Medicare accreditation, as well as costs associated with accounting systems, insurance premiums and other corporate expenses.
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.
In particular: • Adjusted EBITDA does not include interest income, net; • Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision; • Adjusted EBITDA does not include depreciation expense from fixed assets, or amortization of leased assets; • Adjusted EBITDA does not include the impact of stock-based compensation; and • Adjusted EBITDA does not include the loss on equity investment in the JV Company.
In particular: • Adjusted EBITDA does not include interest income, net; • Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision; • Adjusted EBITDA does not include depreciation expense from fixed assets, or amortization of leasehold improvements; • Adjusted EBITDA does not include the impact of stock-based compensation; and • Adjusted EBITDA does not include the loss on equity investment in the JV Company.
In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements, Codification Amendments in Response to the SECs 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.
Recent Accounting Standards In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements, Codification Amendments in Response to the SECs 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 presentatioTn from its existing regulations by June 30, 2027.
Our short-term investments are only 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. Item 7A. Quantitative and Qualitat ive Disclosures about Market Risk This item is not applicable to us as a smaller reporting company. Item 8.
Any short-term investments are only 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. 52 Table of Contents Item 7A. Quantitative and Qualitat ive Disclosures about Market Risk This item is not applicable to us as a smaller reporting company. Item 8.
Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 The following table sets forth our revenue, gross profit and gross margin for each of the years presented.
Comparison of the year ended December 31, 2024 to the year ended December 31, 2023 The following table sets forth our revenue, gross profit and gross margin for each of the years presented.
The MyoPro product line has been approved by the VA system for impaired veterans, and over 70 VA facilities have ordered devices for their patients.
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.
We believe that we have access to capital resources, if necessary, through potential public or private equity offerings, exercises of outstanding warrants, 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 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.
Selling, general and administrative Selling expenses consist of costs for our field clinical staff, clinical training organization, and marketing personnel, including salaries, benefits, bonuses, stock-based compensation and sales commissions, costs of digital advertising, marketing and promotional events, corporate communications, product marketing and travel expenses.
Selling, clinical and marketing Selling expenses consist of costs for our field clinical staff, 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.
We may also explore strategic alternatives for the purpose of maximizing 49 Table of Contents 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.
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.
This amendment in the ASU will become effective for public companies as of December, 15 2024 and effective to all other companies one year later. We will adopt these new standards when they become effective, which is not expected to have a material impact on its financial position and results of operations.
This amendment in the ASU will become effective for public companies as of December, 15 2024 and effective to all other companies one year later. We will adopt these standards when they become effective, which did not have a material impact on our financial position and results of operations.
Quantitative and Qualitative Disclosure about Market Risk Our unrestricted cash and cash equivalents, totaling approximately $6.9 million as of December 31, 2023, was deposited in bank accounts. The cash in these accounts is held for working capital purposes and invested by the bank in overnight money market funds that invest in short-term government or government backed securities.
Quantitative and Qualitative Disclosure about Market Risk Our unrestricted cash, restricted cash, and cash equivalents, totaling approximately $24.7 million as of December 31, 2024, was deposited in bank accounts. The cash in these accounts is held for working capital purposes and invested by the bank in overnight money market funds that invest in short-term government or government backed securities.
The rule became effective on January 1, 2024. On February 29, 2024, CMS published final average payment determinations for the HCPCS codes describing our products of approximately $33,500 for L8701, the MyoPro Motion W, and approximately $65,900 for L8702, the MyoPro Motion G, which are effective April 1, 2024.
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.
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 achieve cash flow breakeven.
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 ash flow breakeven on a 50 Table of Contents sustaining basis.
R&D costs are expensed as they are incurred. We intend to enhance our existing products in 2024 and expect R&D costs to increase on an annual basis. R&D expenses increased by approximately $0.2 million or 6% in 2023 compared to 2022.
R&D costs are expensed as they are incurred. We intend to accelerate our R&D efforts in 2025 and expect R&D costs to increase on an annual basis. R&D expenses increased by approximately $2.1 million or 81% in 2024 compared to 2023.
Variable compensation for personnel engaged in sales and marketing activities is generally earned and recorded as expense when the product is delivered. We expect sales and marketing expenses to increase in 2024 as we increase our clinical capacity to serve Medicare Part B beneficiaries.
Variable compensation for personnel engaged in sales and marketing activities is generally earned and recorded as expense when the product is delivered. We expect sales and marketing expenses to increase in 2025 as we increase our advertising spending and clinical capacity to grow revenues in our direct billing channel.
Prior to obtaining authorizations from commercial insurance companies, the patient’s medical records are collected and reviewed to make sure the device is appropriate for their condition and a prescription is always obtained from a physician. Once these documents are obtained, a pre-authorization request is submitted to the patient’s insurer.
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.
We expect that our revenues will continue to grow, primarily as a result of our expected ability to serve Medicare Part B beneficiaries and through expected higher revenue from O&P practices outside of the United States. Product revenue in 2023 increased by approximately $2.9 million, or 20%, compared to 2022.
We expect that our revenues will continue to grow, primarily as a result of investments to grow our direct billing channel and through expected higher revenue from O&P practices both inside and outside of the United States. Product revenue in 2024 increased by approximately $15.1 million, or 86%, compared to 2023.
Net cash used in operating activities for the year ended December 31, 2022 was primarily used to fund a net loss net approximately $10.7 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.9 million of which approximately $1.2 million of non-cash adjustments related to stock-based compensation, and approximately $1.4 million of cash used from changes in operating assets and liabilities, primarily related to a decrease in accounts payable and accrued expenses and an increase in inventory.
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 non-cash adjustments 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.
GAAP. 48 Table of Contents The following table provides a reconciliation of net loss to Adjusted EBITDA for each of the years indicated: 2023 2022 GAAP net loss $ (8,147,565 ) $ (10,721,022 ) Adjustments to reconcile to Adjusted EBITDA: Interest income, net (410,274 ) (88,731 ) Loss on equity investment 169,503 66,511 Income taxes 156,002 69,937 Depreciation and amortization expense 164,306 192,799 Stock-based compensation 1,115,602 1,190,494 Adjusted EBITDA $ (6,952,426 ) $ (9,290,012 ) Liquidity and Capital Resources Liquidity We measure our liquidity in a number of ways, including the following: December 31, 2023 2022 Cash and cash equivalents $ 6,871,306 $ 5,345,967 Short-term investments $ 1,994,662 - Working capital 8,173,925 5,613,521 We had working capital and stockholders’ equity of approximately $8.2 million and $9.0 million respectively, as of December 31, 2023.
GAAP. 49 Table of Contents The following table provides a reconciliation of net loss to Adjusted EBITDA for each of the years indicated: 2024 2023 GAAP net loss $ (6,183,729 ) $ (8,147,565 ) Adjustments to reconcile to Adjusted EBITDA: Interest income, net (388,586 ) (410,274 ) Loss on equity investment — 169,503 Income taxes 365,617 156,002 Depreciation and amortization expense 205,910 164,306 Stock-based compensation 874,438 1,115,602 Adjusted EBITDA $ (5,126,350 ) $ (6,952,426 ) Liquidity and Capital Resources Liquidity We measure our liquidity in a number of ways, including the following: December 31, 2024 2023 Cash and cash equivalents $ 24,372,373 $ 6,871,306 Short-term investments $ 492,990 $ 1,994,662 Working capital 22,618,158 8,173,925 We had working capital and stockholders’ equity of approximately $22.6 million and $24.7 million respectively, as of December 31, 2024.
We used $6.2 million in cash for operating activities during the year ended December 31, 2023. We have historically funded our operations through financing activities, including raising equity and debt capital.
We used $3.3 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. We have historically funded our operations through financing activities, including raising equity and debt capital.
In December 2023, the FASB issued ASU 2023-09, “Accounting standards update, Income Taxes (Topic 740: Improvements to Income Tax Disclosures”. ASU 2023-09 focuses on income tax disclosures around effective tax rates and cash income taxes paid.
We have adopted these new standards, which did not have a material impact on our financial position and results of operations. In December 2023, the FASB issued ASU 2023-09, “Accounting standards update, Income Taxes (Topic 740: Improvements to Income Tax Disclosures”. ASU 2023-09 focuses on income tax disclosures around effective tax rates and cash income taxes paid.
We expect that general and administrative expenses will increase in 2024 as a result of increasing our reimbursement capacity in order to serve Medicare Part B beneficiaries. Selling, general and administrative expenses increased by approximately $0.3 million or 2% in 2023 compared to 2022.
We expect that 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. General and administrative expenses increased by approximately $2.6 million or 27% in 2024 compared to 2023.
Cash Flows Year Ended December 31, 2023 2022 Net cash used in operating activities $ (6,172,764 ) $ (10,233,542 ) Net cash used in investing activities (2,029,565 ) (310,793 ) Net cash provided by financing activities 9,713,457 376,858 Effect of foreign exchange rate changes on cash 14,211 (10,934 ) Net increase (decrease) in cash and cash equivalents $ 1,525,339 $ (10,178,411 ) Operating Activities .
Cash Flows Year Ended December 31, 2024 2023 Net cash used in operating activities $ (3,289,904 ) $ (6,172,764 ) Net cash provided by (used in) investing activities 259,981 (2,029,565 ) Net cash provided by financing activities 20,932,429 9,713,457 Effect of foreign exchange rate changes on cash (26,439 ) 14,211 Net increase in cash and cash equivalents $ 17,876,067 $ 1,525,339 Operating Activities .
The increase in income tax expense relates to increased income from Myomo Europe GmbH in 2023 compared to 2022. 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 We believe that the presentation of Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional information about our financial results.
Recent Developments China Joint Venture On January 21, 2021, we entered into a definitive agreement with Beijing Ryzur Medical Investment Co., Ltd. (“Ryzur Medical”), a medical device manufacturer based in Beijing, to form a joint venture (the “JV”) to manufacture and sell our current and future products in greater China, including Hong Kong, Macau and Taiwan (the “JV Agreement”).
(“Ryzur Medical”), a medical device manufacturer based in Beijing, China to manufacture and sell our current and future products in greater China, including Hong Kong, Macau and Taiwan. Under the agreement with Ryzur Medical, we own 19.9% of the joint venture company, Jiangxi Myomo Medical Assistive Appliance Co. Ltd.
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 royalties associated with licensed technologies. 46 Table of Contents Gross margin increased to 68.5% for the year ended December 31, 2023, as compared to 65.9% in the comparable period of 2022.
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 increased to 71.2% in 2024 compared to 68.5% in 2023.
Years Ended December 31, Year-to-year change 2023 2022 $ % Product revenue $ 17,476,238 $ 14,555,229 $ 2,921,009 20 % License revenue 1,764,920 1,000,000 764,920 NM Total revenue 19,241,158 15,555,229 3,685,929 24 Cost of revenue 6,058,775 5,302,133 756,642 14 Gross profit $ 13,182,383 $ 10,253,096 $ 2,929,287 29 Gross margin 68.5 % 65.9 % 2.6 % Revenues We derive revenue primarily from providing devices directly to patients and billing insurance companies directly.
Years Ended December 31, Year-to-year change 2024 2023 $ % Product revenue $ 32,551,199 $ 17,476,238 $ 15,074,961 86 % License revenue - 1,764,920 (1,764,920 ) NM Total revenue 32,551,199 19,241,158 13,310,041 69 Cost of revenue 9,365,856 6,058,775 3,307,081 55 Gross profit $ 23,185,343 $ 13,182,383 $ 10,002,960 76 Gross margin 71.2 % 68.5 % 2.7 % Revenues We derive revenue primarily from providing devices directly to patients and billing insurance companies directly.
Loss on equity investment represents our share of the losses incurred by the JV Company, which began limited operations in 2023. Income tax expense Income tax expense recorded during the years ended December 31, 2023 and 2022 represents the provision for income taxes for our wholly-owned subsidiary, Myomo Europe GmbH.
Loss on equity investment represents our share of the losses incurred by the JV Company, which began limited operations in 2023. Our investment in the JV Company was written off during the year ended December 31, 2023.
Investing Activities . During the year ended December 31, 2023 our cash used in investing activities of $2.0 million was primarily due to our investment in short-term investments and purchases of equipment. Cash used in investing activities in 2022 was primarily for our investment in a joint venture with Ryzur Medical and purchases of equipment. Financing Activities .
Cash used in investing activities in 2023 was primarily for our purchases of short-term investments and purchases of equipment. Financing Activities . 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.
Revenues generated through the direct billing channel were approximately $12.3 million, or 71% of product revenue in 2023, compared to approximately $10.7 million, or 74%, of product revenue in 2022.
Including the license revenue received from our joint venture partner in China in 2023, total revenue increased 69%. Revenues generated through the direct billing channel were approximately $25.3 million, or 78% of product revenue in 2024, compared to approximately $12.3 million, or 71%, of product revenue in 2023.
The increase was primarily due stock compensation expense, and professional fees, partially offset by a decrease in wages as well as lower advertising costs in 2023. 47 Table of Contents Other expense (income) The following table sets forth our interest and other expense (income) for each of the years presented.
The increase was primarily due to an increase in headcount in the human resource and reimbursement functions, as well as a higher bonus. 48 Table of Contents Other expense (income) The following table sets forth our interest and other expense (income) for each of the years presented.
Considering our cash balance as of December 31, 2023, the net proceeds from the equity offering in January 2024 and managements plans to grow our clinical, reimbursement and manufacturing capacity to serve Medicare Part B beneficiaries in 2024, management believes there will be sufficient cash to fund our operations and capital expenditures for the next 12 months from the date of this report.
Considering our cash balance and availability under our debt arrangements as of December 31, 2024 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.
The increase in gross margin on product sales, was driven by a higher average selling price, as well as higher revenues in 2023. We expect our gross margin to vary depending on the mix of channel revenues and timing of reimbursements from certain third-party payers, which impacts revenue recognition.
We expect our gross margin to vary depending on the mix of channel revenues and timing of reimbursements from certain third-party payers, which impacts revenue recognition. 47 Table of Contents Operating expenses The following table sets forth our operating expenses for each of the years presented.
Our operating plans are primarily focused on increasing our clinical, reimbursement and manufacturing capacity in order to serve a higher volume of Medicare Part B patients in 2024.
Our operating plans are primarily focused on growing revenues in our direct billing channel in 2025, while we work concurrently on growing revenues in the O&P channel. This involves increasing our advertising spending and adding headcount to increase our clinical, reimbursement and manufacturing capacity in order to serve a higher volume of patients in 2025.
If we receive a pre-authorization, we proceed to measure the patient’s arm. Beginning in 2022, this is being done in some cases using a remote measurement kit supplied to the patient. We then use those measurements to 3D print orthotic parts, which are used to fabricate the MyoPro, and then deliver it to the patient.
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.
Years Ended December 31, Year-to-year change 2023 2022 $ % Research and development $ 2,636,487 $ 2,482,489 $ 153,998 6 % Selling, general and administrative 18,777,445 18,442,811 334,634 2 Total operating expenses $ 21,413,932 $ 20,925,300 $ 488,632 2 % Research and development Research and development (“R&D”) expenses consist of costs for our R&D personnel, including salaries, benefits, bonuses and stock-based compensation, product development costs, clinical studies and the cost of certain third-party contractors and travel expense.
Years Ended December 31, Year-to-year change 2024 2023 $ % Research and development $ 4,772,013 $ 2,636,487 $ 2,135,526 81 % Selling, clinical, and marketing 12,236,910 9,042,698 3,194,212 35 % General and administrative 12,383,118 9,734,747 2,648,371 27 % Total operating expenses $ 29,392,041 $ 21,413,932 $ 7,978,109 37 % 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.
Years Ended December 31, Year-to-year change 2023 2022 $ % Interest income, net $ (410,274 ) $ (88,731 ) $ (321,543 ) 362 % Other expense, net 785 1,101 (316 ) (29 ) Loss on equity investment 169,503 66,511 102,992 155 Total other income $ (239,986 ) $ (21,119 ) $ (218,867 ) 1036 % Interest income increased due to higher interest rates and a higher average investment balances in 2023.
Years Ended December 31, Year-to-year change 2024 2023 $ % Interest income, net $ (388,586 ) $ (410,274 ) $ 21,688 (5 )% Other expense, net - 785 (785 ) (100 ) Loss on equity investment - 169,503 (169,503 ) (100 ) Total other income $ (388,586 ) $ (239,986 ) $ (148,600 ) 62 % Interest income decreased primarily due to lower average investment balances in 2024.
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 at least through the third quarter of 2024.
See section titled “Liquidity” for further discussion. 46 Table of Contents 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 for most of 2025. Our financial performance in 2024 reflected our ability to be reimbursed by Medicare for providing the MyoPro to their beneficiaries.
The increase in gross margin was driven primarily by the increase in license revenue as well as a higher average selling price. Excluding the license fees, gross margin was 65.3% and 63.6% for the years ended December 31, 2023 and 2022, respectively.
The increase in gross margin was driven primarily by the increase in ASP discussed above and greater absorption of fixed costs into inventory. Excluding the license fees in 2023, gross margin on product sales was 65.3% for the year ended December 31, 2023. The increase in gross margin on product sales, was driven by the aforementioned factors.
The increase during 2023 was driven primarily by outside engineering costs incurred in the second half of 2023 in order to accelerate completion of certain product development projects.
The increase during 2024 was driven primarily by higher payroll costs due to higher engineering headcount in 2024 as a result of a larger number of new product development and sustaining engineering projects.
The revenue increase was driven primarily by a higher average selling price, as well as a higher number of revenue units. Including the license revenue received from our joint venture partner in China, total revenue increased 24% compared to 2022.
The product revenue increase was driven primarily by higher direct billing revenues due to a higher average selling price, or ASP, as well as a higher number of revenue units as we were able to serve Medicare Part B beneficiaries in volume in 2024.
Removed
The assignment of unique L-Codes, if followed by appropriate payment terms (which are still pending), may offer greater access to the MyoPro for Medicare beneficiaries. • In 2019 we transitioned our business to become a direct provider of the MyoPro to patients and bill insurance companies directly. • In July 2021, we announced that we became accredited as a Medicare provider. • In January 2022, we introduced the MyoPro 2+ and began in-house fabrication of the device.
Added
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.
Removed
Majority ownership in the JV, named Jiangxi Myomo Medical Assistive Appliance Co., Ltd. (the “JV Company”), is held by Ryzur Medical and Wuxi Chinaleaf Medical Investment and Management Fund, a private fund that invests in growth opportunities in new technologies. We own a minimum 19.9% stake in the JV.
Added
At that time, our products were classified as durable medical equipment rental at that time. • In 2019 we transitioned our business to become a direct provider of the MyoPro to patients and bill insurance companies directly. • In January 2021, we entered into a joint venture with Beijing Ryzur Medical Investment Co., Ltd.
Removed
Ryzur Medical and its partners have committed to invest a minimum of $8 million and up to $20 million in the JV over five years. The JV Company was established on August 12, 2021.
Added
These fees were subsequently updated to approximately $34,300 for the Motion W and approximately $67,500 for the Motion G, effective January 1, 2025. These fees are subject to annual inflationary adjustments.
Removed
On December 29, 2021, we entered into an amendment to the JV Agreement, as well as a Technology License Agreement and a Trademark License Agreement (collectively, the “Agreements”).
Added
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.
Removed
Under the Agreements, we and the JV Company have entered into a ten-year agreement to license our intellectual property, including recently issued patents in China and Hong Kong, and purchase MyoPro Control System units from us. Under the Agreements, we were entitled to receive an upfront license fee of $2.7 million, which has been paid as of December 31, 2023.
Added
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.
Removed
Pursuant to the Agreements, the JV Company has agreed to an escalating purchase commitment for a minimum of $10.75 million in MyoPro Control System Units during the next ten years, subject to receipt of regulatory approvals necessary to permit sales of the product in the greater China territory.
Added
Our plan for 2025 is to invest in increasing demand and adding capacity to support our direct billing channel, while making investments to increase revenues in the U.S. O&P channel.
Removed
Net proceeds from the offering are expected to be used to hire more than 50 people through the second quarter of 2024 in order to increase our clinical, reimbursement and manufacturing capacity to serve Medicare Part B beneficiaries.
Added
Selling, clinical, and marketing expenses increased by approximately $3.2 million or 35% in 2024 compared to 2023. The increase during 2024 was driven primarily by higher advertising spending as well as an increases in clinical and customer service headcount in support of our direct billing channel.
Removed
Beginning March 2023, we began submitting claims to the Medicare program via CMS' - durable medical equipment administrative contractors, referred to as the DME MACs.
Added
Income tax expense Income tax expense recorded during the years ended December 31, 2024 and 2023 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 2024 compared to 2023.
Removed
A total of 40 claims have been submitted, and 21 claims have been paid, either as a rental fee or a purchase across all of the DME MACs as of the filing date of this Annual Report on Form 10-K. The remaining patients' claims are under review as part of the process of individual consideration.
Added
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.
Removed
We cannot provide any assurance as to whether additional claims for reimbursement for our products will be approved and paid by CMS or by a DME MAC nor can we provide any assurance as to the timing of any such future payments.
Added
In July 2024, we entered into a Loan and Security Agreement with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, which provides us the ability to borrow up to $4.0 million against eligible accounts receivable. The line of credit remains undrawn as of the issuance date of these financial statements.
Removed
We believe it is achievable to be cash flow breakeven on a quarterly basis by the fourth quarter of 2024 assuming the final fees published by CMS are not significantly different than the preliminary fees published, that we are able to hire 50 additional employees by the end of the second quarter of 2024 in order to increase our clinical, reimbursement and manufacturing capacity to serve an expected increase in volume from Medicare Part B beneficiaries and there are no unexpected supply chain disruptions.
Added
Availability under the line of credit is approximately $1.0 million based on eligible accounts receivable as of December 31, 2024. We amended the Loan and Security Agreement in February 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.
Removed
Operating expenses The following table sets forth our operating expenses for each of the years presented.
Added
These investments are expected to result in negative cash flows for at least the first three quarters of 2025.
Removed
During the fourth quarter of 2022, we sold 692,914 shares of common stock under a Common Stock Purchase Agreement with Keystone Capital Partners, LLC at a weighted average sales price of $0.683 per share, generating proceeds after fees and expenses of approximately $0.4 million.
Added
During the year ended December 31, 2024 our cash provided by investing activities of $0.3 million 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 and demo units for O&P practices as we look to increase revenue from this channel in 2025.
Removed
Based on the final fees published for our products by CMS, we believe that if we are able to hire at least 50 to 60 additional employees during the first half of 2024 as we have planned to increase our clinical, reimbursement and manufacturing capacity, and our supply chain is able to meet our volume requirements without disruption, we believe we can achieve cash flow breakeven on a quarterly basis by the fourth quarter of 2024.
Added
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.
Removed
During the year ended December 31, 2022 cash provided by financing activities of approximately $0.4 million was due to net proceeds received from stock issued under our equity line of credit. Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements in the years ended December 31, 2023 and December 31, 2022.
Added
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 51 Table of Contents additional information becomes known. Actual results may differ from these estimates.
Removed
Critical Accounting Policies and Estimates Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates and assumptions are reviewed on an on-going basis and updated as appropriate.
Added
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 and estimates of payments from certain insurance payers • The discount rate on leases Timing and Amount of Revenue Recognition The timing and amount of revenue recognized is determined based on certain estimates.
Removed
Our significant estimates include the valuation of our deferred tax valuation allowances, valuation of stock-based compensation, warranty obligations, the discount rate on leases and inventory reserves. 50 Table of Contents Cash Equivalents and Short-Term Investments We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Added
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.
Removed
Cash and cash equivalents consist principally of deposit accounts and money market accounts at December 31, 2023 and 2022. The Company considers all investments with an original maturity of greater than three months to be short-term investments. Short-term investments primarily consists of commercial paper and U.S. Treasury Bills and are carried on the consolidated balance sheets at fair value.

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