UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to .
Commission File Number
(Exact name of Registrant as Specified in its Charter)
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Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
At May 3, 2023, the registrant has
Summary of the Material Risks Associated with Our Business
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q constitutes forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology.
You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:
Although the forward-looking statements in this Quarterly Report on Form 10-Q, are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as may be required by law, to re-issue this Quarterly Report on Form 10-Q, or otherwise make public statements updating our forward-looking statements.
TABLE of CONTENTS
Part 1. FINANCIAL INFORMATION
Item 1. Financial statements
MYOMO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31, |
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December 31, |
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2023 |
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2022 |
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(unaudited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total Current Assets |
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Operating lease assets with right of use, net |
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Equipment, net |
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Investment in Jiangxi Myomo Medical Assistive Appliance Co. Ltd. |
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Other assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable and accrued expenses |
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Current operating lease liability |
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Income taxes payable |
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Deferred revenue |
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Total Current Liabilities |
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Non-current operating lease liability |
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Deferred revenue, net of current portion |
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Total Liabilities |
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Commitments and Contingencies |
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Stockholders’ Equity: |
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Preferred stock, $ |
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Common stock par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Treasury stock, |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
1
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
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For the Three Months Ended |
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March 31, |
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2023 |
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2022 |
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Revenue |
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Product revenue |
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$ |
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$ |
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License revenue |
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Cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Loss from operations |
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Other (income) expense, net |
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Interest income |
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Other expense, net |
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Loss on equity investment |
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Loss before income taxes |
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Income tax expense |
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Net loss |
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$ |
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$ |
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Weighted average number of common shares outstanding: |
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Basic and diluted |
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Net loss per share attributable to common stockholders |
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Basic and diluted |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
2
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)
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For the Three Months Ended |
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March 31, |
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2023 |
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2022 |
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Net loss |
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$ |
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$ |
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Other comprehensive income, net of tax: |
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Foreign currency translation gain |
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Other comprehensive income |
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Comprehensive loss |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
3
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)
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For the Three Month Period Ending March 31, 2023 and 2022 |
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Common stock |
Additional |
Comprehensive |
Accumulated |
Treasury Stock |
Total |
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Amount |
Capital |
Income |
Deficit |
Shares |
Amount |
Equity |
Balance, January 1, 2023 |
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$ |
$ |
$( |
$( |
$ |
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Common stock issued upon vesting of restricted stock units |
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Proceeds from sale of common stock in public offering, net of offering costs of $ |
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Proceeds from sale of |
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Stock-based compensation |
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Unrealized gain on foreign currency |
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Net loss |
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Balance, March 31, 2023 |
$ |
$ |
$ |
$( |
$( |
$ |
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Balance, January 1, 2022 |
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$ |
$( |
$( |
$( |
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Common stock issued upon vesting of restricted stock units |
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Stock-based compensation |
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Unrealized gain on foreign currency |
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Net loss |
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Balance, March 31, 2022 |
$ |
$ |
$( |
$( |
$( |
$ |
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The accompanying notes are an integral part of the consolidated financial statements.
4
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the Three Months Ended March 31, |
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2023 |
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2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to net cash used in operations: |
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Depreciation |
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Stock-based compensation |
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Bad debt expense |
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Loss on equity investment |
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Amortization of right-of-use assets |
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Other non-cash charges |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventories |
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Prepaid expenses and other current assets |
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Other assets |
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Accounts payable and accrued expenses |
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Income taxes payable |
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Operating lease liabilities |
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Deferred revenue |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Investment in Jiangxi Myomo Medical Assistive Appliance Co. Ltd. |
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Purchases of equipment |
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Net cash used in investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Net proceeds from common stock offering |
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Proceeds from sale of pre-funded warrants, net of offering costs |
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Net cash provided by financing activities |
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Effect of foreign exchange rate changes on cash |
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Net increase (decrease) in cash, cash equivalents |
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Cash, cash equivalents, beginning of period |
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Cash, cash equivalents, end of period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING |
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Right of use assets obtained in exchange for lease liabilities |
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$ |
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$ |
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Deferred offering costs incurred in a prior period to additional paid-in capital |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
5
MYOMO, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED 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 U.S. Food and Drug Administration as a Class II medical device. The Company sells its products directly to patients, to Orthotics and Prosthetics ("O&P") providers around the world, the Veterans Health Administration, and distributors in Europe and Australia. The Company was incorporated in the State of Delaware on September 1, 2004 and is headquartered in Boston, Massachusetts.
Note 2 — Going Concern and Management Plans
The Company incurred net losses of approximately $
The Company has historically funded its operations through financing activities, including raising equity and debt. On January 17, 2023, the Company completed a public equity offering, selling
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 CMS, or CMS states its intention to reimburse for its products. As a result, the Company has undertaken cost reduction activities, including the reduction of approximately
The Company believes that it has access to capital resources through 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 Capital Partners ("Keystone") under the Common Stock Purchase Agreement (the "Purchase Agreement") or under its At-Market Sales Facility, or 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
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.
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Note 3 — Summary of Significant Accounting Policies
Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information pursuant to Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) that are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of March 31, 2023 and for the three months ended March 31, 2023 and 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results for the fiscal year ending December 31, 2023, or any other period. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and related disclosures of the Company as of December 31, 2022 and 2021 and for the years then ended, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Basis of Consolidation
The condensed 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 Income
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 income includes changes in foreign currency translation adjustments. There were
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 these estimates. The Company’s significant estimates include deferred tax valuation allowances, valuation of stock-based compensation, warranty obligations and reserves for slow-moving inventory.
Cash and Cash Equivalents
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 for doubtful 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 March 31, 2023, and December 31, 2022, the Company recorded an allowance for doubtful accounts which was immaterial to the financial statements.
Joint Venture
On March 28, 2022, the Company invested cash consideration of $
7
condensed consolidated statement of operations in other expense (income). The Company recorded a loss on equity investment of approximately $
Revenue Recognition
The Company accounts for revenue under ASC 606, “Revenue from Contracts with Customers” and all of 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:
Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
Product Revenue
Increasingly, the Company derives its revenue from direct billing. The Company also derives revenue from the sale of its products to O&P providers in the United States and internationally, the Veterans Administration (“VA”) and distributors in Europe and Australia. Under direct billing, the Company recognizes revenue when all of the following criteria are met:
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 the reflects the consideration the Company expects to receive in exchange for the device. These insurers represented
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. During the three months ended March 31, 2023 and 2022, the Company recognized revenue of approximately $
For revenues derived from O&P providers, the VA and rehabilitation hospitals, 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. 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.
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.
8
On January 21, 2021, we entered into a definitive agreement with Ryzur Medical to form the JV Company to manufacture and sell our current and future products in greater China, including Hong Kong, Macau and Taiwan (the “JV Agreements”). Under the JV Agreements, we are entitled to receive an upfront license fee of $
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 $
Disaggregated Revenue from Contracts with Customers
The following table presents revenue by major source:
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For the Three Months |
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2023 |
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2022 |
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Direct to patient |
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$ |
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$ |
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Clinical/Medical providers |
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License revenue |
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Total revenue from contracts with customers |
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$ |
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$ |
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Geographic Data
The Company generated
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. In certain cases, the Company ships the MyoPro device to O&P providers, or provides the device directly to patients, pending reimbursement from third-party payers, after which revenue is recognized. For the three months ended March 31, 2023 and 2022, the Company recorded cost of goods sold of approximately $
Advertising
The Company charges the costs of advertising to operating expenses as incurred. Advertising expense amounted to approximately $
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 during the three months ended March 31, 2023 were immaterial and included in accumulated other comprehensive income in the condensed consolidated balance sheet. Transaction and translation foreign exchange gains and losses from a foreign currency to the functional currency are included in cost of revenue expenses in the condensed consolidated statements of operations. Such amounts were immaterial for the three months ended March 31, 2023 and 2022. The balance sheet is translated using the spot rate on the day of reporting and the statement of operations is translated monthly using the average rate for the month.
Net Loss per Share
Basic net 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,
9
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 three months ended March 31, 2023 and 2022, and as a result, all potentially dilutive common shares are considered antidilutive for these periods.
Potential dilutive common shares issuable consist of the following at:
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March 31, |
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2023 |
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2022 |
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Stock options |
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Restricted stock units |
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Other warrants |
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Total |
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Due to their nominal exercise price of $
Recently Adopted Accounting Standards
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 has adopted this new standard, which did not have a material impact on its financial position and results of operations.
Subsequent Events
The Company evaluates whether there have been subsequent events through the date the financial statements were issued and determines whether subsequent events exist that would require recognition in the financial statements or disclosure in the notes to the financial statements.
Note 4 — Inventories
Inventories consist of the following at:
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March 31, |
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December 31, |
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Finished goods |
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$ |
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$ |
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Work in process |
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Rental units |
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Parts and subassemblies |
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Less: reserve for rental and trial units |
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( |
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( |
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Inventories, net |
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$ |
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$ |
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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 Measurement” (“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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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 consist of 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 measured at fair value on a recurring basis at March 31, 2023 were as follows:
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In Active |
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Significant |
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Significant |
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Total |
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Cash equivalents |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Cash equivalents measured at fair value on a recurring basis at December 31, 2022 were as follows:
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In Active |
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Significant |
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Significant |
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Total |
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Cash equivalents |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Note 6 - Accounts Payable and Accrued Expenses:
Accounts Payable and Other Accrued Expenses consists of the following at:
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March 31, |
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December 31, |
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Trade payables |
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$ |
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$ |
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Accrued compensation and benefits |
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Accrued professional services |
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Warranty reserve |
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Customer deposits |
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