Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements and the related notes contained elsewhere in this Annual Report on Form 10-K and in our other Securities and Exchange Commission filings. The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors” and elsewhere in this Annual Report on Form 10-K. These risks could cause our actual results to differ materially from any future performance suggested below.

Overview

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

We utilize digital ads on various platforms as well as television ads to reach patients who are potential candidates for our product. Once the prospective patient contacts us or is referred to us, either our trained clinical staff or a trained O&P provider will evaluate the patient for their suitability as a candidate. Initial evaluations by our trained clinical staff are conducted using telehealth techniques, followed by an in-person clinical evaluation of the candidate. Prior to obtaining authorizations from commercial insurance companies, the patient’s medical records are collected and reviewed to make sure the device is appropriate for their condition and a prescription is always obtained from a physician. Once these documents are obtained, a pre-authorization request is submitted to the patient’s insurer. If we receive a pre-authorization, we proceed to measure the patient’s arm. 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. Since we are directly providing the device to the patient and then billing insurance ourselves, we refer to this process as direct billing. We also call on hospitals and O&P practices in the U.S., Europe and Australia that provide our products to their patients as well as generate indirect sales. The MyoPro product line has been approved by the VA system for impaired veterans, and over 70 VA facilities have ordered devices for their patients

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

Our technology was originally developed at MIT in collaboration with medical experts affiliated with Harvard Medical School. Myomo was incorporated in 2004 and completed licensing of its technology from MIT in 2006.

Other milestones our history include:

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In 2012, we introduced the MyoPro, the primary business focus shifted during this time period, from devices which were designed for rehabilitation therapy and sold to hospitals, to providing an assistive device through O&P providers to patients who are otherwise impaired for use at home, work, and in the community that facilitates ADLs.

•

During 2015, we extended our basic MyoPro for the elbow with the introduction of the MyoPro Motion W, a multi-articulated non-powered wrist and the MyoPro Motion G, which includes a powered grasp. The MyoPro Motion W allows the user to use their sound arm to adjust the device and then, for instance, open a refrigerator door, carry a shopping bag, hold a cell phone, or stabilize themselves to avoid a fall and potential injury. 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.

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On June 9, 2017, we completed our initial public offering (“IPO”) and a private offering concurrent with the IPO, generating net proceeds of $6.9 million in the aggregate.

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On July 31, 2017, we met the criteria to apply the CE Mark for the MyoPro. This has enabled us to sell the MyoPro to individuals in the European Union (the “EU”).

•

In November 2018, we announced that the CMS had published two new codes (L8701, L8702) pursuant to our application for HCPCS codes which become effective in early 2019. The assignment of unique L-Codes, if followed by appropriate payment terms (which are still pending), would 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.

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In July 2021, we announced that we became accredited as a Medicare provider.

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In January 2022, we introduced the MyoPro 2+ and began in-house fabrication of the device.

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”).

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. 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. 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”). 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 are entitled to receive an upfront license fee of $2.7 million, of which $1.0 million has been paid concurrent with the beginning of limited operations as of December 31, 2022. The JV Company has advised us that effects of COVID-19 in China are delaying the banking and government approvals necessary to pay the remainder of the license fee. We cannot be certain as to if or when the remaining license fee will be paid. If uncured, failure to pay us the required fees contemplated by the Agreements may entitle us to terminate such Agreements and withdraw from the joint venture. 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.

Equity Line of Credit

On August 2, 2022, the Company entered into a Common Stock Purchase Agreement ("Purchase Agreement") with Keystone Capital Partners ("Keystone"), establishing an equity line facility. On October 28, 2022, we filed a Definitive Proxy Statement for notice of a special Shareholders Meeting to be held on December 7, 2022 to vote on a proposal to permit us to sell additional shares of common stock under the Purchase Agreement, in excess of an exchange cap contained therein. We were unable to achieve a quorum for the meeting, and as a result, withdrew the proposal. See "Liquidity" for further discussion.

Equity Offering

In January 2023, we completed a public offering of our common stock, whereby we sold 13,169,074 shares of common stock and 6,830,926 pre-funded warrants at $0.325 per share. Each pre-funded warrant entitles the holder to one share of common stock upon exercise at a nominal exercise price of $0.0001 per share. Net proceeds from the transaction were approximately $5.7 million, and will be used to fund operations while we continue to work with CMS to obtain coverage and reimbursement for our products. See "Liquidity" for further discussion.

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Results of Operations

We have been growing revenues while incurring net losses and negative cash flows from operations since inception and anticipate this to continue in 2023 as we focus our efforts on patients with insurance payers who have reimbursed for the MyoPro in the past, grow our operations in Germany and invest in the enhancement of our MyoPro products.

Comparison of the year ended December 31, 2022 to the year ended December 31, 2021

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

Years Ended December 31, Year-to-year change

Revenues

We derive revenue primarily from providing devices directly to patients and billing insurance companies directly. We also sell our products to O&P providers in the U.S. Europe and Australia, to the VA and to rehabilitation hospitals. Though we increasingly provide devices directly to patients, we sometimes utilize the clinical services of O&P providers for which they are paid a fee.

We expect that our revenues will continue to grow, primarily as a result of our increased patient pipeline entering 2023 and through higher revenue from O&P practices outside of the United States.

Product revenue in 2022 increased by approximately $0.7 million, or 5% compared to 2021. The revenue increase was driven primarily by a higher average selling price, offset by a lower number of revenue units . Including the license revenue received from our joint venture partner in China, total revenue increased 12% compared to 2021. Revenues generated through the direct billing channel were approximately $10.7 million, or 74% of product revenue in 2022, compared to approximately $10.7 million, or 77% of product revenue in 2021.

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, royalties associated with licensed technologies and instruction.

Gross margin decreased to 65.9% for the year ended December 31, 2022, as compared to 74.4% in the comparable period of 2021.The decrease in gross margin was driven primarily by higher component costs and other costs in the current inflationary environment, unabsorbed fixed costs and an increase in the warranty reserve.

We expect our gross margins to vary depending on the mix of channel revenues and timing of reimbursements from certain third-party payers, which impacts revenue recognition.

Operating expenses

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

Years Ended December 31, Year-to-year change

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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. R&D costs are expensed as they are incurred. We intend to enhance our existing products in 2023 and expect R&D costs to increase on an annual basis.

R&D expenses decreased by approximately $0.1 million or 3% in 2022 compared to 2021. The decrease during 2022 was driven primarily by lower prototype and other product development expenses related to the introduction of the MyoPro2+ in January 2022.

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. 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 be roughly flat or decrease slightly in 2023 as a result of a reduction in force in January 2023 and efforts to reduce advertising spend while maintaining our existing lead generating capability.

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. We expect that general and administrative expenses will increase slightly in 2023 as a result of increased incentive compensation expense, offset by the effect of the reduction in force in January 2023.

Selling, general and administrative expenses increased by approximately $0.4 million or 2% in 2022 compared to 2021. The increase was primarily due to higher advertising and insurance costs, offset by lower payroll costs related to lower bonus compensation in 2022.

Other expense (income)

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

Years Ended December 31, Year-to-year change

Interest income increased due to higher interest rates in 2022. Loss on equity investment represents our share of the losses incurred by the JV Company, which began limited operations in 2022.

Income tax expense

Income tax expense recorded during the years ended December 31, 2022 and 2021 represents the provision for income taxes for our wholly-owned subsidiary, Myomo Europe GmbH. The decrease in income tax expense relates to decreased income from Myomo Europe GmbH in 2022 compared to 2021.

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Adjusted EBITDA

We believe that the presentation of Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional information about our financial results. Adjusted EBITDA is an important supplemental measure used by our board of directors and management to evaluate our operating performance from period-to-period on a consistent basis and as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations.

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

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

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Adjusted EBITDA does not include interest income;

•

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.

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

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

Adjustments to reconcile to Adjusted EBITDA:

Loss on equity investment 66,511 -

Liquidity and Capital Resources

Liquidity

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

December 31,

We had working capital and stockholders’ equity of approximately $5.6 million and $6.4 million respectively, as of December 31, 2022. We used $10.2 million in cash for operating activities during the year ended December 31, 2022.

We have historically funded our operations through financing activities, including raising equity and debt capital. In January 2023, we completed an equity offering under which we sold 13,169,074 shares of common stock and 6,830,926 pre-funded warrants at $0.325 per share, generating proceeds after fees and expenses of approximately $5.7 million. During the fourth quarter of 2022, we sold 692,914 shares of common stock under the Purchase Agreement with Keystone at a weighted average sales price of $0.683 per share, generating proceeds after fees and expenses of approximately $0.4 million. During 2021, $12.1 million was received from the exercise of warrants, including $4.8 million in net proceeds in October 2021 from a transaction to induce the exercise of warrants issued in conjunction with our equity offering in February 2020 at a reduced exercise price of $5.00 per share. These financing activities, in addition to funding of $1.1 million received from sales of common stock under our ATM Facility, with Alliance Global Partners during the year ended December 31, 2021 are helping us to sustain our operations. Considering our cash balance as of December 31, 2022 and net proceeds from the equity offering in January 2023 as well as our cash used from operations during the year ended December 31, 2022, management believes there is substantial doubt regarding our ability to continue as a going concern for the next 12 months from the date of this report.

Our operating plans are primarily focused on growing our revenues and limiting operating expenses through focusing our clinical and reimbursement efforts on patients with insurers that have previously reimbursed for the MyoPro. We believe the growth in our patient pipeline during 2022 provides us an opportunity to achieve increased revenue in 2023 compared to 2022. We intend to stop activities directed at increasing the number of payers that will reimburse for our products until CMS either begins to reimburse for the MyoPro or states its intention to do so. As a result, we have undertaken cost reduction activities, including the reduction of approximately 12% of our workforce in January 2023. This and other cost reduction efforts are expected to reduce our operating expenses by approximately $2.0 million in 2023. With respect to CMS, we expect to meet with the medical directors of the DME MAC's during the first quarter of 2023 to discuss coverage and reimbursement, and begin submitting claims on behalf of Medicare Part B beneficiaries as soon as practical thereafter.

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. If public health restrictions on travel and patient interaction are broadly reinstated in 2023 due to new variants of COVID-19 and increasing infections in the U.S., that will have an adverse effect on our business. We believe that we have access to capital resources through payment of the technology license fee associated with our JV in China, potential public or private equity offerings, exercises of outstanding warrants, additional debt financings, or other

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means; however, we may be unable to raise sufficient additional capital when we need it or raise capital on favorable terms. As part of our equity offering in January 2023, we agreed to not sell any shares of our common stock to Keystone under the Purchase Agreement or under our ATM facility for a period of one year from the closing of the offering. We have remaining capacity under our Purchase Agreement with Keystone of approximately 1.0 million shares and approximately $0.3 million under our ATM facility. However, we are subject to the limitations imposed by General Instruction I.B.6 of Form S-3, which limits the amount of securities that we may issue under our registration statement on Form S-3 to one-third of our public float in any 12-month period. Further, the amount of stock that we may sell to Keystone under the Purchase Agreement is limited to a total of 1,349,334 shares of common stock, pursuant to an exchange cap imposed by the rules of the NYSE American, unless we obtain approval from our stockholders to lift such cap. As of December 31, 2022 1,008,458 million shares remain available under the exchange cap. Should we consider debt financing, such a transaction may require us to pledge certain assets and enter into covenants that could restrict certain business activities or our ability to incur further indebtedness and may contain other terms that are not favorable to our stockholders or us.

If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. We may also explore strategic alternatives for the purpose of maximizing stockholder value. There can be no assurance we will be successful in implementing our plans to sustain our operations and continue to conduct our business.

Cash Flows

Year Ended December 31,

Effect of foreign exchange rate changes on cash (10,934 ) (10,392 )

Net increase (decrease) in cash and cash equivalents $ (10,178,411 ) $ 3,283,117

Operating Activities. The 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 $1.1 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 an increase in inventory and decreases in accounts payable and accrued expenses and operating lease liabilities.

The net cash used in operating activities for the year ended December 31, 2021 was primarily used to fund a net loss net approximately $10.4 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.4 million of which approximately $1.1 million of non-cash adjustments related to stock-based compensation, and approximately $0.6 million of cash used 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.

Investing Activities. During the year ended December 31, 2022 our cash used in investing activities of $0.3 million was primarily due to our investment in a joint venture with Ryzur Medical and purchases of equipment. Cash used in investing activities in 2021 was primarily for leasehold improvements to our new headquarters facility in Boston.

Financing Activities. 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.

During the year ended December 31, 2021 cash provided by financing activities of approximately $13.2 million was primarily due to approximately $12.1 million of net proceeds received from the exercise of warrants and net proceeds of approximately $1.1 million from the issuance of shares through our ATM facility.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements in the years ended December 31, 2022 and December 31, 2021.

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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. Actual results could differ from those estimates. 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.

Accounts Receivable

We carry accounts receivable at invoiced amounts less an allowance for doubtful accounts. We evaluate our accounts receivable on a continuous basis, and if necessary, establish an allowance for doubtful accounts based on a number of factors, including current credit conditions and customer payment history. We do not require collateral or accrue interest on accounts receivable and credit terms are generally 30 days.

Joint Venture

On March 28, 2022, we invested cash consideration of $199,000 for a 19.9% ownership stake in the JV Company. The JV Company, once fully operational will manufacture and sell our current and future products in greater China, including Hong Kong, Macau and Taiwan. We account for our investment in the JV Company under the equity method because we exert significant influence over its management. The investment is included in total assets on the consolidated balance sheet. There was no impairment charge for the year ended December 31, 2022 associated with this equity investment. We record our share of the JV Company’s earnings in our consolidated statement of operations in other expense (income).

Inventories

Inventories are recorded at the lower of average cost or net realizable value. Cost is determined using average cost, which approximates the first-in, first out (FIFO) method. We reduce the carrying value of inventory for those items that are potentially excess, obsolete or slow-moving based on changes in customer demand, technology developments or other economic factors.

Research and Development Costs

We expense research and development costs as incurred. Research and development costs primarily consist of salaries and benefits, facility and overhead costs, and outsourced research activities.

Revenue Recognition

Accounting for revenues under ASC 606 and all the related amendments (Topic 606) requires revenue be recognized either at a “point in time” or “over time,” depending on the facts and circumstances of the arrangement and are evaluated using a five-step model. Generally, we recognize revenue at a point in time.

We recognize revenue after applying the following five steps:

Identification of the contract, or contracts, with a customer,

Identification of the performance obligations in the contract, including whether they are distinct within the context of the contract

Determination of the transaction price, including the constraint on variable consideration

Allocation of the transaction price to the performance obligations in the contract

Recognition of revenue when, or as, performance obligations are satisfied

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Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

Product Revenue

Increasingly, we derive our revenue from direct billing. We also derive revenue from the sale of our products to O&P providers in the United States and internationally and the VA. Under direct billing, we recognize revenue when all of the following criteria are met:

(i)

Our product has been delivered to the patient, including completion of initial instruction on its use.

(ii)

Collection is deemed probable and it has been determined that a significant reversal of the revenue to be recognized is not deemed probable when the uncertainty associated with the variable consideration is resolved.

(iii)

The amount to be collected is estimable using the “expected value” estimation techniques, or the “most likely amount” as defined in ASC 606.

For revenue derived from certain insurance companies where we have demonstrated sufficient payment history, we recognize revenue when we receive a pre-authorization from the insurance company and control passes to the patient upon delivery of the device in an amount that reflects the consideration we expect to receive in exchange for the device. These insurers represented approximately 44% and 39% of the direct billing channel revenue in 2022 and 2021, respectively. Depending on the timing of product deliveries to customers, which is when cost of revenue must be recorded, and when we meet the criteria to record revenue, there may be fluctuations in gross margin.

For revenues derived from O&P providers, the VA and rehabilitation hospitals, we recognize revenue when control passes to the customer in an amount that reflects the consideration we expect to receive in exchange for those services. Revenues may be recognized upon shipment or upon delivery, depending on the terms of the arrangement, provided that persuasive evidence of an arrangement exists, there are no uncertainties regarding customer acceptance and collectability is deemed probable. In certain cases, we ship its products to O&P providers pending reimbursement from non-government, third-party payers. As a result of this arrangement, elements of the revenue recognition criteria have not been met upon shipment. In this instance, we recognize revenue when the amount is estimable and we determine it is probable that payment will be received. In many cases, we are not able to recognize revenue in these situations until payment is received, as then all of the revenue recognition criteria have been met.

We have elected to record taxes collected from customers on a net basis and do not include tax amounts in revenue or cost of revenue.

License Revenue

If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenue allocated to the license when the license is transferred to the customer, the customer is able to use and benefit from the license, and collectability is deemed probable.

Under the JV Agreements, we are entitled to receive an upfront license fee of $2.7 million, of which $1.0 million has been paid and recognized during the year ended December 31, 2022. We will recognize revenue on the remaining amount due upon payment as the fee has not been paid according the to the contractual terms.

Leases

We account for leases under Accounting Standards Codification (“ASC”) Topic 842, leases. We assess whether a contract is or contains a lease at inception of the contract and recognize right-of-use assets and corresponding lease liabilities at the lease commencement date, except for short-term leases, which are under one year, and leases of low value. For these leases, we recognize the lease payments as an operating expense on a straight-line basis over the term of the lease.

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Income Taxes

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

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

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

Tax benefits claimed or expected to be claimed on a tax return are recorded in our financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. We believe there are no uncertain tax positions that could have a material impact on our financial condition, results of operations or cash flows.

Stock-Based Compensation

We account for stock awards to employees and non-employees by measuring the cost of services received in exchange for the award of equity instruments based upon the fair value of the award on the date of grant. The fair value of that award is then ratably recognized as expense over the period during which the recipient is required to provide services in exchange for that award.

Net Loss per Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Convertible debt, preferred stock, restricted stock units, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. We reported a net loss for the years ended December 31, 2022 and 2021, and as a result, all potentially dilutive common shares are considered antidilutive for these years.

Recent Accounting Standards

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The new standard’s requirements to disclose the key terms of the programs and information about obligations outstanding are effective for fiscal years, including interim periods, beginning after December 15, 2022, except for the requirement to disclose a rollforward of obligations outstanding will be effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. We are currently evaluating the effect of this new standard, which is not expected to have a material impact on our financial position and results of operations.

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In May 2021, the FASB issued ASU 2021-04 Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early application is permitted, including in an interim period as of the beginning of the fiscal year that includes that interim period. We adopted the provisions of ASU 2021-04 in the fourth quarter of 2021. The implementation resulted in a deemed dividend of approximately $640,000 on the discounting and repricing of certain warrants.

Quantitative and Qualitative Disclosure about Market Risk

Our unrestricted cash and cash equivalents, totaling approximately $5.3 million as of December 31, 2022, 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. Our primary objective is to preserve our capital for purposes of funding our operations.

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

This item is not applicable to us as a smaller reporting company.

Item 8.Financial Statements and Supplementary Data

See the financial statements filed as part of this Annual Report on Form 10-K as listed under Item 15 below.

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable.

Item 9A.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

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Our management, with the participation of our Chief Executive Officer, our principal executive officer, and our Chief Financial Officer, our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022, the end of the period covered by this Annual Report on Form 10-K. Based upon such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of such date, such that the information required to be disclosed by us in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on our assessment we believe that as of December 31, 2022, our internal control over financial reporting is effective based on those criteria.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during the fiscal quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Item 9B.Other Information

None.

Item 9C.Disclosure Regarding Foreign Jurisdiction That Prevent Inspections

Not Applicable

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PART III

Item 10.Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to our Proxy Statement relating to our 2022 Annual Meeting of Shareholders. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after our fiscal year ended December 31, 2022.

Our Board of Directors has adopted a Code of Business Conduct and Ethics, that applies to all directors, officers, and employees, which is available on our website at www.myomo.com . We intend to satisfy the disclosure requirements of Item 5.05 of Form 8-K by disclosing substantive amendments to or waivers (including implicit waivers) of any provision of the Code of Business Conduct and Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions, by posting such information on our website available at www.myomo.com.

Item 11.Executive Compensation

The information required by this item is incorporated herein by reference to our Proxy Statement relating to our 2022 Annual Meeting of Shareholders. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after our fiscal year ended December 31, 2022.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.Certain Relationships and Related Transactions, and Director Independence

Item 14.Principal Accounting Fees and Services

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PART IV

Item 15. Exhibits and Financial Statement Schedules

The following documents are filed as part of this Annual Report on Form 10-K

(1)

Financial Statements

See Index to Financial Statements on page F-1 of this Annual Report on Form 10-K

(2)

Financial Statement Schedules

Schedules not listed above have been omitted because they are not required, not applicable, or the required information is otherwise included elsewhere in Annual Report on Form 10-K.

(3)

Exhibits

Exhibit No. Exhibit Description

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21.1* List of Subsidiaries

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23.1* Consent of Marcum LLP

+ Management contract or compensatory arrangement.

* Filed herewith

** Portions of this exhibit filed herewith containing confidential information have been omitted pursuant to a confidential treatment order granted by the SEC pursuant to Rule 406 under the Securities Act. Confidential information has been omitted from the exhibit in places marked “[*]” and has been filed separately with the SEC.

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Item 16.Form 10-K Summary

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 13, 2023.

Myomo, Inc.,

By: /s/ Paul R. Gudonis

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Amy KnappAmy Knapp Director March 13, 2023

/s/ Thomas A. Crowley, Jr.Thomas A. Crowley, Jr. Director March 13, 2023

/s/ Thomas F. KirkThomas F. Kirk Director March 13, 2023

/s/ Milton M. MorrisMilton M. Morris Director March 13, 2023

/s/ Yitzchak Jacobovitz Director March 13, 2023

Yitzchak Jacobovitz

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INDEX TO FINANCIAL STATEMENTS

Myomo, Inc.

Report of Independent Registered Public Accounting Firm F-1

Consolidated Balance Sheets as of December 31, 2022 and 2021 F-3

Notes to Consolidated Financial Statements F-8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Myomo, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Myomo, Inc. (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Marcum llp

Marcum llp

We have served as the Company’s auditor since 2016.

New York, NY

March 13, 2023

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MYOMO, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS

Current Assets:

Investment in Jiangxi Myomo Medical Assistive Appliance Co. Ltd. 132,489 -

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Commitments and Contingencies — —

Stockholders’ Equity:

Accumulated other comprehensive income (loss) 43,227 (60,677 )

Treasury stock, at cost; 27 shares of common stock (6,464 ) (6,464 )

The accompanying notes are an integral part of the consolidated financial statements.

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MYOMO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Revenue

Operating expenses:

Other expense (income)

Loss on equity investment 66,511 -

Deemed dividend on discounting and repricing of warrants - (639,953 )

Weighted average number of common shares outstanding:

Net loss per share available to common stockholders:

Basic and diluted $ (1.52 ) $ (1.89 )

The accompanying notes are an integral part of the consolidated financial statements.

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MYOMO, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Other comprehensive gain (loss), net of tax:

Foreign currency translation gain (loss) 103,904 (47,987 )

The accompanying notes are an integral part of the consolidated financial statements.

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MYOMO, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the years ended December 31, 2022 and 2021

Additional Total

Common stock paid-in Comprehensive Accumulated Treasury stock Stockholders'

Shares Amount capital (loss) income deficit Shares Amount Equity

Restricted stock vested 30 — — — — —

Exercise of stock options 439 — — — — — — —

Unrealized loss on foreign currency — — — (47,987 ) — — — (47,987 )

Exercise of warrants 666 — — — — — — —

Unrealized gain on foreign currency — — — 103,904 — — — 103,904

The accompanying notes are an integral part of the consolidated financial statements.

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MYOMO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash used in operations:

Loss on disposal of asset - 202

Loss on equity investment 66,511 —

Changes in operating assets and liabilities:

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in China Joint Venture (199,000 ) -

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuances under equity line of credit net of costs 376,858 —

Proceeds from exercise of warrants — 12,067,865

Proceeds from at the market offering, net of offering costs — 1,099,801

Effect of foreign exchange rate changes on cash (10,934 ) (10,392 )

Net (decrease) increase in cash and cash equivalents (10,178,411 ) 3,283,117

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for income taxes $ 4,889 $ —

Non-cash financing and investing activities

The accompanying notes are an integral part of the consolidated financial statements.

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MYOMO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Description of Business

Myomo Inc. (“Myomo” or the Company”) is a wearable medical robotics company that develops, designs, and produces myoelectric orthotics for people with neuromuscular disorders. The MyoPro ® myoelectric upper limb orthosis product is registered with the Food and Drug Administration as a Class II medical device. The Company provides the device to patients and bills their insurance companies directly, sometimes utilizing the clinical services of orthotics and prosthetics (“O&P”) providers for which they are paid a fee. The Company sells the product to O&P providers around the world and the Veterans Health Administration ("VA"). The Company was incorporated in the State of Delaware on September 1, 2004 and is headquartered in Boston, Massachusetts.

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

Going Concern and Management Plans

The Company incurred net losses of approximately $10,721,000 and $10,372,000 during the years ended December 31, 2022 and 2021, respectively, and has an accumulated deficit of approximately $88,783,000 and $78,062,000at December 31, 2022 and 2021, respectively. Cash used in operating activities was approximately $10,234,000and $9,548,000for the years ended December 31, 2022 and 2021, respectively.

The Company has historically funded its operations through financing activities, including raising equity and debt capital. In January 2023, the Company completed an equity offering under which it sold 13,169,074 shares of common stock and 6,830,926 pre-funded warrants at $0.325 per share, generating proceeds after fees and expenses of approximately $5.7 million. (See Note 13 - Subsequent Events for further discussion.) During the fourth quarter of 2022, the Company sold 692,914 shares of common stock under a Common Stock Purchase Agreement (the "Purchase Agreement") with Keystone Capital Partners ("Keystone"), generating proceeds after fees and expenses of approximately $0.4 million. (See Note 7 - Common Stock for further discussion.) During 2021, $12.1 million was received from the exercise of warrants, including $4.8 million in net proceeds in October 2021 from a transaction to induce the exercise of warrants issued in conjunction with its equity offering in February 2020 at a reduced exercise price of $5.00 per share. These financing activities, in addition to funding of $1.1 million received from sales of common stock under an At Market Sales Facility, or ATM facility, with Alliance Global Partners ("AGP") during the year ended December 31, 2021 is enabling the Company to sustain its operations. Considering the Company's cash balance as of December 31, 2022 and net proceeds from the equity offering in January 2023 and its cash used from operations during the year ended December 31, 2022, management believes there is substantial doubt regarding its ability to continue as a going concern.

Management's operating plans are primarily focused on growing its revenues and limiting operating expenses through focusing its clinical and reimbursement efforts on patients with insurers that have previously reimbursed for the MyoPro. The Company believes the growth in its patient pipeline during 2022 provides an opportunity to accelerate its revenue growth in 2023. The Company has stopped activities geared toward increasing the number of payers that will reimburse for its products until the Company receives reimbursement for its products provided to Medicare Part B beneficiaries from the Centers for Medicare and Medicaid Services ("CMS"), or CMS states in intention to reimburse for its products. As a result, the Company has undertaken cost reduction activities, including the reduction of approximately 12% of its workforce in January 2023. This and other cost reduction efforts are expected to reduce its operating expense run-rate by approximately $2.0 million in 2023. With respect to CMS, the Company expects to meet with the medical directors of CMS's administrative billing contractors, referred to as the DME MAC's, before the end of the first quarter of 2023 to discuss coverage and reimbursement, and begin submitting claims on behalf of Medicare Part B beneficiaries as soon as practical thereafter. The Company's success is dependent upon reimbursement of its products by insurance companies and government-controlled health care plans such as Medicare and Medicaid in the United States and Statutory Health Insurance plans in Germany, which could prevent our revenues from growing to the level necessary to achieve cash flow breakeven. If public health restrictions on travel and patient interaction are broadly reinstated in 2023 due to new variants of COVID-19 and

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increasing infections in the U.S., that will have an adverse effect on the Company's business, and it is possible that the Company will need to raise additional capital to sustain its operations through 2023.

The Company believes that it has access to capital resources through payment of the technology license fee associated with its joint venture in China, possible public or private equity offerings, exercises of outstanding warrants, additional debt financings, or other means; however, the Company may be unable to raise sufficient additional capital when it needs it or raise capital on favorable terms. As part of the Company's equity offering in January 2023, the Company agreed to not sell any shares of its common stock to Keystone under the Purchase Agreement or under its ATM Facility for a period of one year from the closing of the offering. The Company has remaining capacity under its Purchase Agreement with Keystone of approximately 1.0 million shares and approximately $0.3 million under its ATM Facility. However, due to its public float, the amount of securities the Company may sell from time to time under the registration statement which registered the ATM Facility may be subject to the limitations imposed by General Instruction I.B.6 of Form S-3. Further, selling the full $5 million to Keystone under the Purchase Agreement requires approval from shareholders to sell shares in excess of the exchange cap under the rules of the NYSE American. Should the Company consider debt financing, such a transaction may require the Company to pledge certain assets and enter into covenants that could restrict certain business activities or its ability to incur further indebtedness and may contain other terms that are not favorable to its stockholders or the Company.

If the Company is unable to obtain adequate funds on reasonable terms, the Company may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. There can be no assurance that the Company will be successful in implementing its plans.

Note 2 — Summary of Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Myomo Europe GmbH. All significant intercompany balances and transactions are eliminated.

Reclassifications

Certain prior year amounts have been reclassified to conform to current year's presentation, which management does not consider to be material.

Comprehensive Loss

Comprehensive loss includes all changes in equity during a period, except those resulting from investments by stockholders and distributions to stockholders. The Company's comprehensive loss includes changes in foreign currency translation adjustments. There were no reclassifications out of accumulated other comprehensive loss in the years ended December 31, 2022 and 2021.

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. Actual results could differ from those estimates. The Company’s estimates include deferred tax valuation allowances, valuation of stock-based compensation, warranty obligations and reserves for slow-moving inventory.

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Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist principally of deposit accounts and money market accounts at December 31, 2022 and 2021.

Accounts Receivable and Allowance for Doubtful Accounts

The Company reports accounts receivable at invoiced amounts less an allowance for doubtful accounts. The Company evaluates its accounts receivable on a continuous basis, and if necessary, establishes an allowance fordoubtful accounts based on a number of factors, including current credit conditions and customer payment history. The Company does not require collateral or accrue interest on accounts receivable and credit terms are generally 30 days.At December 31, 2022 and 2021, the Company recorded an allowance for doubtful accounts which was immaterial to the financial statements.

Inventories

Inventories are recorded at the lower of average cost or net realizable value. Average cost approximates valuation on a first-in, first-out basis. The Company reduces the carrying value of inventory for those items that are potentially excess, obsolete or slow-moving based on changes in customer demand, technology developments or other economic factors. In addition, the carrying value of consigned inventories is reduced by the value of MyoPro devices that will not be sold based on historical experience.

Equipment

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

Demonstration units are sometimes provided by the Company to its indirect sales channel for marketing and patient evaluation purposes. These units are manufactured by the Company and are expensed in the statements of operations to selling, general, and administrative expense. During the years ended December 31, 2022 and 2021, the Company charged to operations approximately $19,700 and $22,200, respectively, for these units. Demonstrations units provided to its own sales force are capitalized as equipment on the Company’s balance sheet.

Test units are provided to research and development staff to use in their development process and to end users who are given free units to act as testers so that research and development staff can evaluate and understand their use by patients. A primary objective of these units is to determine when and under what conditions they fail, at which time they are analyzed for cause of failure and then scrapped. These units are expensed in the statements of operations as part of research and development expense. During the year ended December 31, 2022 and 2021 the Company charged to operations approximately $11,200 and $17,400, respectively, for these units.

Impairment of Long-Lived Assets

The Company assesses the recoverability of its long-lived assets, including equipment when there are indications that the assets might be impaired. When evaluating assets for potential impairment, the Company compares the carrying value of the asset to its estimated undiscounted future cash flows. If an asset’s carrying value exceeds such estimated undiscounted cash flows, the Company records an impairment charge for the difference. Based on its assessments, the Company did not record any impairment charges for the years ended December 31, 2022 and 2021.

Leases

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The Company accounts for leases under Accounting Standards Topic 842 (“ASC 842”). The Company assesses whether a contract is or contains a lease at inception of the contract and recognizes right-of-use assets and corresponding lease liabilities at the lease commencement date, except for short-term leases, which are under one year, and leases of low value. For these leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Joint Venture

On March 28, 2022, the Company invested cash consideration of $199,000 for a 19.9% ownership stake in Jiangxi Myomo Medical Assistive Appliance Co., Ltd. (the “JV Company”), a company headquartered in China that is majority-owned by Beijing Ryzur Medical Investment Co., Ltd. (“Ryzur Medical”). 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. The JV Company will manufacture and sell the Company’s current and future products in greater China, including Hong Kong, Macau and Taiwan, and has begun limited operations. The Company accounts for its investment in the JV Company under the equity method because the Company exerts significant influence over its management. The investment is included in total assets on the consolidated balance sheet. There was no impairment charge for the year ended December 31, 2022, associated with this equity investment. The Company records its share of the JV Company’s earnings in its consolidated statement of operations in other expense (income). The Company recorded a loss on equity investment of approximately $66,500 for the year ended of December 31, 2022.

Revenue Recognition

The Company accounts for revenue under ASC 606, “Revenue from Contracts with Customers” and all the related amendments (Topic 606). Revenues under Topic 606 are required to be recognized either at a “point in time” or “over time,” depending on the facts and circumstances of the arrangement and are evaluated using a five-step model. Generally, the Company recognizes revenue at a point in time.

The Company recognizes revenue after applying the following five steps:

Identification of the contract, or contracts, with a customer,

Identification of the performance obligations in the contract, including whether they are distinct within the context of the contract

Determination of the transaction price, including the constraint on variable consideration

Allocation of the transaction price to the performance obligations in the contract

Recognition of revenue when, or as, performance obligations are satisfied

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Revenue is recognized when control of these services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

Product Revenue

The Company derives the majority of its revenue from direct billing. The Company also derives revenue from the sale of its products to O&P providers in the U.S. and internationally and the VA. Under direct billing, the Company recognizes revenue when all of the following criteria are met:

(i)

The product has been delivered to the patient, including completion of initial instruction on its use.

(ii)

(iii)

The amount to be collected is estimable using the “expected value” estimation techniques, or the “most likely amount” as defined in ASC 606.

For revenue derived from certain insurance companies where the Company has demonstrated sufficient payment history, the Company recognizes revenue when it receives a pre-authorization from the insurance company and control passes to the patient upon delivery of the device in an amount that reflects the consideration the Company expect to receive in exchange for the device. During 2022 and 2021, the Company made such a determination for certain insurers. These insurers represented approximately 44% and 39% of direct billing channel revenue in 2022 and 2021, respectively.

Depending on the timing of product deliveries to customers, which is when cost of revenue must be recorded, and when the Company meets the criteria to record revenue, there may be fluctuations in gross margin on an ongoing basis. During the years ended December 31, 2022 and 2021, the Company recognized revenue of approximately $2,044,000 and $2,050,300, respectively, from O&P providers or third-party payers for which costs related to the completion of the Company’s performance obligations were recorded in a prior period.

For revenues derived from O&P providers, the VA, and distributors, the Company recognizes revenue when control passes to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those services, which may be recognized upon shipment or upon delivery, depending on the terms of the arrangement, provided that persuasive evidence of an arrangement exists, there are no uncertainties regarding customer acceptance and collectability is deemed probable. In certain cases, the Company ships its products to O&P providers pending reimbursement from non-government, third-party payers. As a result of this arrangement, elements of the revenue recognition criteria have not been met upon shipment. In this instance, the Company recognizes revenue when payment has been received, as then all of the revenue recognition criteria has been met.

The Company has elected to record taxes collected from customers on a net basis and does not include tax amounts in revenue or cost of revenue.

License Revenue

If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when the license is transferred to the customer, the customer is able to use and benefit from the license, and collectability is deemed probable.

On January 21, 2021, the Company entered into a Technology License Agreement (the “Agreement”) with the JV Company. Under the Agreement, the Company is entitled to receive an upfront license fee of $2.7 million, of which $1.0 million has been paid and recognized as licensee revenue during the year ended December 31, 2022. The Company will recognize revenue on the remaining amount due upon payment as the fee has not been paid according the to the contractual terms and as a result collectability is not assured.

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Contract Balances

The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had approximately $21,200 and $1,500 of deferred revenue as of December 31, 2022 and 2021, respectively. The Company expects the current portion of deferred revenue as of December 31, 2022 to be recognized in 2023.

Disaggregated Revenue from Contracts with Customers

The following table presents revenue by major source:

Geographic Data

The Company generated 81% of its revenue from the United States, 12% from Germany, 6% from China and 1% from other international locations for the year ended December 31, 2022. The Company generated 89% of its revenue from the United States, 10% from Germany and 1% from other international locations for the year ended December 31, 2021.

Cost of Revenue

In conjunction with the adoption of ASC 606, there are certain cases in which the Company will expense costs when incurred as required by ASC 340-40-25, such as when the Company ships the MyoPro device to O&P providers, or provides the device directly to patients, pending reimbursement from certain third-party payers, which triggers revenue recognition. For the years ended December 31, 2022 and December 31, 2021, the Company recorded cost of goods sold of approximately $441,600 and $21,400, respectively without corresponding revenue. The cost of clinical services by O&P providers for which they are paid a fee in conjunction with devices being sold directly to patients and billing their insurance companies directly are expensed as incurred as required by ASC 340-40-25, as a cost of obtaining a contract. These costs are recorded as sales and marketing expense, with the remaining costs associated with the patient being expensed to cost of revenue.

Shipping and Handling Costs

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

Income Taxes

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

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

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

The Company files income tax returns in federal, state and foreign jurisdictions and is no longer subject to examinations by tax authorities for years prior to 2019. Currently, there are no income tax audits in process.

Stock-Based Compensation

The Company accounts for stock awards to employees by measuring the cost of services received in exchange for the award of equity instruments based upon the fair value of the award on the date of grant. The fair value of that award is then ratably recognized as expense over the period during which the recipient is required to provide services in exchange for that award.

Foreign Currency Translation

The functional currency of the Company’s foreign subsidiary, Myomo Europe GmbH, is the Euro. Foreign exchange translation gains and losses from the Euro to U.S. dollars are included in other comprehensive gain (loss). The Company recorded a gain of approximately $103,900 and a loss of approximately $48,000 during the years ended December 31, 2022 and 2021, respectively, which are included in accumulated other comprehensive income (loss) in the consolidated balance sheets. Transaction and translation foreign exchange gains and losses from a foreign currency to the functional currency are included in selling, general and administrative expenses in the consolidated statement of operations. Such amounts were immaterial for the years ended December 31, 2022 and 2021. The balance sheet is translated using the spot date on the day of reporting and the income statement is translated monthly using the average rate for the month.

Net Loss per Share

Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Restricted stock units, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported a net loss for the years ended December 31, 2022 and 2021, respectively, and as a result, all potentially dilutive common shares are considered antidilutive for these periods.

Potentially common shares issuable at December 31, 2022 and 2021 consist of:

Advertising

The Company charges the costs of advertising to operating expenses as incurred. Advertising expense amounted to approximately $4,069,300 and $3,587,300 in 2022 and 2021, respectively.

Research and Development Costs

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

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Recent Accounting Standards

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The new standard’s requirements to disclose the key terms of the programs and information about obligations outstanding are effective for fiscal years, including interim periods, beginning after December 15, 2022, except for the requirement to disclose a rollforward of obligations outstanding will be effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the effect of this new standard, which is not expected to have a material impact on its financial position and results of operations.

In May 2021, the FASB issued ASU 2021-04 Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early application is permitted, including in an interim period as of the beginning of the fiscal year that includes that interim period. The Company adopted the provisions of ASU 2021-04 in the fourth quarter of 2021. The implementation resulted in a deemed dividend of approximately $640,000 on the discounting of certain warrants.

Subsequent Events

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

Note 3 — Inventories

Inventories consist of the following at December 31:

Less: Reserve for rental and trial units (86,409 ) (38,462 )

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Note 4 — Equipment, net

Equipment consists of the following at December 31:

Depreciation expense was approximately $192,800 and $146,000 for the years ended December 31, 2022 and 2021, respectively.

Note 5 — Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and establishes disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

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Level 1 — Quoted prices available in active markets for identical assets or liabilities.

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Level 2 — Observable inputs other than quoted prices included in Level 1, such as quotable prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

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Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar valuation techniques that use significant unobservable inputs.

The carrying amounts of the Company’s financial instruments such as cash and cash equivalents, accounts receivable and accounts payable, approximate fair value due to the short-term nature of these instruments. Cash equivalents are a money market fund that limits its investments to only short-term U.S. Treasury securities and repurchase agreements related to these securities.

Cash equivalents, which are measured at fair value, were as follows At December 31, 2022:

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Cash equivalents, which are measured at fair value, were as follows at December 31, 2021:

Note 6 – Accounts Payable and other Accrued Expenses

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

Deferred payroll taxes under CARES Act - 113,423

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Note 7 — Common Stock

On August 2, 2022, ("the "Agreement Date"") the Company entered into a Purchase Agreement with Keystone, establishing an equity line facility under which the Company, at its sole discretion, can direct Keystone to purchase the Company's common stock from time to time through delivery of a purchase notice ("Notice"). The purchase price is at the lesser of prevailing market prices of the Company’s common stock as defined in the Purchase Agreement, at a 10% discount. The Company can sell shares of common stock to Keystone up to the Maximum Amount, provided that the Company has agreed to issue no more than 1,399,334 shares of common stock at a discount (the "Minimum Shares"), representing 19.99% of the Company's outstanding shares on the Agreement Date (the "Exchange Cap"), of which 50,000 shares were issued to Keystone as a commitment fee after closing of the transaction. During the fourth quarter of 2022, the Company sold 692,914 shares to Keystone at a weighted average sales price of $0.683 per share, generating proceeds after fees and expenses of approximately $376,900. In order to sell more than the Minimum Shares the Company's shareholders must vote in favor of permitting the Company to sell shares in excess of the Exchange Cap. Of the shares sold to Keystone, sales of 352,038 shares were made above market according to the rules of the NYSE American, thus were not subject to the Exchange Cap. As a result, 1,008,458 shares remain to be sold under the Exchange Cap as of December 31, 2022. Keystone's obligation to purchase shares of the Company's common stock is subject to the Company's ability to maintain an effective registration statement, continued listing on the NYSE American or other trading market and a minimum price per share of $0.50, among other conditions. Keystone's beneficial ownership of the common stock is limited to 4.99% of the Company's outstanding common stock during the Term.

In addition to the commitment fee, on the Agreement Date the Company paid Keystone $20,000 for its expenses incurred in conjunction with the transaction. The commitment fee was recorded to common stock and Keystone's expenses reimbursed by the Company were recorded to additional paid-in capital as of December 31, 2022.

In June 2021, the Company entered into an ATM Facility with AGP. Under the ATM Facility, the Company may sell up to an aggregate of $15 million of the Company’s common stock from time to time and shall pay to AGP cash commissions of 3.0% of the gross proceeds of sales of common stock under the ATM Facility. There were no sales under the ATM Facility during the year ended December 31, 2022. The Company sold 107,500 shares under the ATM Facility during the year ended December 31, 2021, at an average selling price $12.02 per share, generating net proceeds after sales commissions and offering expenses of approximately $1,099,800. In conjunction with entering into the Purchase Agreement with Keystone, the Company reduced the amount available to sell under the ATM Facility to $0.3 million. This amount remains available for sale at December 31, 2022.

In conjunction with the Company's equity offering in January 2023 (See Note 13 - Subsequent Events), the Company agreed to not sell any shares of its common stock under the Purchase Agreement or its ATM facility for a period of one year from the closing date.

No shares of common stock were issued through the exercise of stock options during the year ended December 31, 2022. The Company issued 439 shares of common stock through the exercise of stock options in the year ended December 31, 2021.

During the years ended December 31, 2022 and 2021, the Company issued 137,302 and 153,357 shares of common stock respectively, upon the vesting of restricted stock units.

During the year ended December 31, 2021, the Company issued 30 shares of common stock upon the vesting of restricted stock awards.

Note 8 — Stock Award Plans and Stock-Based Compensation

Equity Incentive Plan

On June 19, 2018, the Company’s Shareholders and the Board of Directors approved the Myomo, Inc. 2018 Stock Options and Incentive Plan (the “2018 Plan”). On January 1 of each year, the number of shares of common stock reserved and available for issuance under the 2018 Plan will cumulatively increase by 4% of the number shares of common stock outstanding on the immediately preceding December 31 or such lesser number of shares of common

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stock determined by management in consultation with members of the Board of Directors, including the compensation committee.

On January 1, 2022 and 2021, the number of shares reserved and available for issuance under the 2018 Plan increased by 274,789 and 183,726 shares, respectively. At December 31, 2022, there were 74,120 shares available for future grant under the 2018 Plan.

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

Stock Option Awards

Stock option activity under the Stock Option Plans during the years ended December 31, 2022 and 2021 is as follows:

The Company uses the Black-Scholes option pricing model to estimate the grant date fair value of its stock options. There was no income tax benefit recognized in the financial statements for share-based compensation arrangements for the years ended December 31, 2022 and 2021. The weighted-average grant date fair value per share was $6.92 and $8.32 for the years ended December 31, 2022 and 2021, respectively. The following weighted average assumptions underlying the calculation of grant date fair value are as follows:

Risk-free interest rate 1.68% 1.15%

Weighted-average expected option term (in years) 6.25 6.25

Dividend yield 0% 0%

The stock price volatility for the Company’s options was determined using the Company’s historical volatility since its initial public offering in June 2017. The risk-free interest rate was derived from U.S. Treasury rates existing on the date of grant for the applicable expected option term. The expected term represents the period of time that options are expected to be outstanding. Because the Company has only very limited historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period. The expected dividend yield assumption is based on the fact that the Company has never paid, nor has any intention to pay, cash dividends.

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Restricted Stock Awards

There were no restricted stock awards outstanding as of December 31, 2022 and 2021. Restricted stock activity for the year ended December 31, 2021 is summarized below:

Awarded - -

Canceled - -

Outstanding as December 31, 2021 - $ — -

Restricted Stock Units

Restricted stock unit “RSU” activity for the years ended December 31, 2022 and 2021 is summarized below:

In 2022 and 2021, the Company granted an aggregate of 340,923 and 194,295 RSUs to employees, respectively, of which 172,500 and 79,600 RSU’s were granted to executive officers, respectively, which vest over a period of two years and three years, respectively. In 2021, the Company granted 11,780 RSU’s to independent members of the board of directors, which vest in four equal quarterly installments. No RSU's were granted to independent members of the board of directors in 2022.

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

During the year ended December 31, 2021, the Company’s compensation committee granted certain executives a performance-based stock grant with a target of 52,900 RSU’s, a maximum of 105,800, and a minimum of 0. The number of RSU’s earned is dependent on the total shareholder return of the Company’s common stock compared to a set of peer companies from the grant date through March 9, 2024. Any RSU’s earned will vest in their entirety on June 9, 2024. As these grants are subject to market-based vesting criteria, the Company is recognizing compensation expense for these awards subject to market-based vesting conditions regardless of whether it becomes probable that these conditions will be achieved or not, and compensation expense for share-settled awards is not reversed if vesting does not actually occur. The Company recognizes compensation expense based on the fair value on the date of grant as determined by a Monte Carlo valuation model over the expected vesting period.

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Awards of RSU’s may be net share settled upon vesting to cover the required employee statutory withholding taxes and the remaining amount is converted into shares based upon their share-value on the date the award vests. These payments of employee withholding taxes, if made, are presented in the statements of cash flows as a financing activity.

Share-Based Compensation Expense

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

As of December 31, 2022, there was approximately $59,500 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a weighted-average period of 2.3 years.

As of December 31, 2022, there was approximately $1,389,900 of unrecognized compensation cost related to unvested restricted stock unit awards which is expected to be recognized over a weighted-average period of 1.4 years.

Note 9 — Warrants

The following table presents the Company’s common stock warrant activity for the years ended December 31, 2022 and 2021:

Warrants Weighted AverageExercise Price

Outstanding Exercisable Outstanding Exercisable

The weighted average remaining contractual life of warrants outstanding and exercisable at December 31, 2022 was 2.1 years.

Note 10 — Related Party Transactions

The Company sells its products to an orthotics and prosthetics practice whose ownership includes an individual who was both a shareholder and executive officer of the Company. The executive resigned his position with the Company effective March 31, 2021. As a result, the orthotics and prosthetics practice is no longer a related party effective April 1, 2021. Sales to this related party were sold at standard list prices. During the year ended December 31, 2021 (the portion of the year the party was related to the Company) revenue recognized on sales to this orthotics and prosthetics practice amounted to approximately $25,900.

The Company also obtains consulting and fabrication services, reported in cost of goods sold, from the same previously related party. Charges for these services amounted to approximately $112,900 during the year ended December 31, 2021 (the portion of the year the party was related to the Company).

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Note 11 — Commitments and Contingencies

Litigation

The Company may be involved in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. During 2022, a former employee that was terminated in 2021 brought an age discrimination claim against the Company. While the Company disputes this claim, it believes that it is probable that a loss will be incurred for this matter and has recorded a loss contingency of $135,000 to accounts payable and accrued expenses as of December 31, 2022. The Company expects its insurance to cover the majority of the loss that may be incurred. There is no other material litigation against the Company at this time.

Operating Leases

The Company has a non-cancelable sublease agreement for its corporate headquarters in Boston, MA expiring in August 2023, consisting of 9,094 square feet of office and laboratory space. In conjunction with entering into a lease in the same building for 3,859 square feet of space to be used for manufacturing, the Company agreed to lease its corporate headquarters space from the landlord after expiration of the sublease. Both leases expire in January 2025. In addition, it has a non-cancelable lease agreement for its office space in Fort Worth, TX expiring in 2025 with early termination available at the company’s discretion in 2023. Certain of the arrangements have discounted rent periods or escalating rent payment provisions. Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheets. We recognize rent expense on a straight-line basis over the lease term.

As of December 31, 2022, operating lease assets were approximately $508,700 and operating lease liabilities were approximately $553,900. The maturity of the Company’s operating lease liabilities as of December 31, 2022, are as follows:

Thereafter —

Total future minimum lease payments 638,995

Less imputed interest 85,087

Total operating lease liabilities $ 553,908

Included in the consolidated balance sheet:

Current operating lease liabilities $ 353,701

Non-current operating lease liabilities 200,207

Total operating lease liabilities $ 553,908

For the twelve months ended December 31, 2022, the total lease cost is comprised of the following amounts:

Years ended December 31,

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The Company paid cash of approximately $557,500 and $275,300 for its operating leases for the years ended December 31, 2022 and 2021, respectively.

The following summarizes additional information related to operating leases:

As of December 31

Weighted-average remaining lease term 1.8 2.5

Weighted-average discount rate 20 % 20 %

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

Licensing Agreement

During 2006, the Company entered into an exclusive licensing agreement (the “MIT License”) with Massachusetts Institute of Technology (“MIT”) for access to certain patent rights that require the payment of royalties, which vary based on the level of the Company’s net sales and whether the customer is located in the U.S., or in an international location. As part of the agreement, the Company must pay to MIT a nonrefundable annual license maintenance fee which may be credited to any royalty amounts due in that same year. The license agreement can be terminated if certain sales targets are not achieved. The royalty charge for each of the years ended December 31, 2022 and 2021 was approximately $264,200 and $262,200, respectively, and is included as a component of cost of revenue.

The future minimum amount due under this agreement for 2023, the final year of the agreement, is $25,000:

Under the MIT License, the Company has issued 205 shares of Common Stock to MIT. The MIT License includes a share adjustment provision in the event that the Company has a dilutive financing, as defined. The MIT License also includes an anti-dilution provision such that MIT’s ownership of the outstanding common stock shall not fall below 1% on a fully diluted basis. Under this anti-dilution provision, MIT has the right to purchase additional shares of common stock at the then current market price in order to maintain its pro rata ownership. As a result of the follow-on equity offering in January 2023 (See Note 13), MIT is entitled to receive an additional 928 shares of common stock.

On November 15, 2016, the Company and MIT entered into a waiver agreement with regard to certain revenue and commercialization milestones of the Company required under the License Agreement. Under the waiver agreement, MIT waived the compliance with any and all of such milestone obligations prior to the date of the waiver agreement. For the year ended December 31, 2022 the Company met its minimum sales covenant of $750,000.

Warranty Liability

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

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Changes in warranty liability were as follows:

Accrued warranty liability, beginning of year $ 176,281 $ 119,713

Accrual provided for warranties issued during the period 117,986 79,142

Adjustments to prior accruals — 26,735

Credit Risk

Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents and restricted cash and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash, with balances in excess of federally insured limits, with major financial institutions that management believes are financially sound and have minimum credit risk. The Company has not experienced any losses in such accounts and believes credit risks related to its cash, cash equivalents and restricted cash are limited based upon the creditworthiness of the financial institutions holding these funds.

Major Customers

For the year ended December 31, 2022 and 2021, there were no customers which accounted for more than 10% of revenues. For the year ended December 31, 2022 a U.S. insurance payer represented 32% of product revenues. For the year ended December 31, 2021, a U.S insurance payer represented 30% of product revenues and another represented 11% of revenues, respectively.

For the year ended December 31, 2022 and 2021, one insurer and its affiliates accounted for approximately 62% and 43% of accounts receivable, respectively.

For the year ended December 31, 2022 and 2021, approximately 60% and 59% of the Company's product revenues were derived from patients with Medicare Advantage insurance plans, respectively.

Note 12 — Income Taxes

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

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The income tax provision (benefit) for the years ended December 31, 2022 and 2021 consist of the following:

U.S. federal

Current $ — $ —

State and local

Current — —

Foreign

Deferred — —

The reconciliation between the U.S statutory federal income tax rate and the Company’s effective rate for the years ended December 31, 2022 and 2021 is as follows:

U.S. federal statutory rate 21.00 % 21.00 %

MYO US Equity

MYO · 10-K · period ended 2022-12-31

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

Item 8.Financial Statements and Supplementary Data

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.Controls and Procedures

Item 9B.Other Information

Item 9C.Disclosure Regarding Foreign Jurisdiction That Prevent Inspections

Item 10.Directors, Executive Officers and Corporate Governance

Item 11.Executive Compensation

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.Certain Relationships and Related Transactions, and Director Independence

Item 14.Principal Accounting Fees and Services

Item 15. Exhibits and Financial Statement Schedules

Item 16.Form 10-K Summary

MYO US Equity☆

MYO · 10-K · period ended 2022-12-31

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

Item 8.Financial Statements and Supplementary Data

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.Controls and Procedures

Item 9B.Other Information

Item 9C.Disclosure Regarding Foreign Jurisdiction That Prevent Inspections

Item 10.Directors, Executive Officers and Corporate Governance

Item 11.Executive Compensation

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.Certain Relationships and Related Transactions, and Director Independence

Item 14.Principal Accounting Fees and Services

Item 15. Exhibits and Financial Statement Schedules

Item 16.Form 10-K Summary

MYO US Equity