Business Context and Reporting Period
Myomo, Inc. (MYO) filed a Form 8-K on November 4, 2025, reporting the entry into a material definitive agreement. The filing also references the announcement of financial results for the third quarter ended September 30, 2025, made on November 10, 2025.
Key Financial Metrics and Debt Structure
The Company secured a committed term loan facility with an aggregate principal amount of up to $17.5 million, structured as follows:
- Tranche 1: $12.5 million funded on the Closing Date (November 4, 2025).
- Tranche 2: Up to $5.0 million available between November 4, 2026, and May 4, 2027, subject to no default.
- Discretionary Tranche 3: Up to an additional $10.0 million available between January 1, 2027, and December 31, 2027, subject to mutual agreement.
Loan Terms:
- Interest Rate: 4.75% plus the prime rate (with a floor equal to the prime rate on the Closing Date).
- Maturity Date: June 1, 2029.
- Repayment: Interest-only payments for 18 months (extendable by 6 months if Tranche 2 is funded), followed by equal monthly principal installments.
- Prepayment Fees: 3.0% (within 1 year), 2.0% (years 1-2), or 1.0% (after year 2).
- Final Payment Fee: 3.25% of the principal amount upon maturity or prepayment.
- Collateral: Senior secured lien on all Company assets, including intellectual property.
Equity Components:
- Warrant: Issued for $1,312,500 worth of common stock. Exercise price is the lesser of $0.96 or the price of the next bona fide equity financing before June 30, 2026. Expires November 4, 2030.
- Conversion Rights: Lender may convert up to $3.0 million of Tranche 1 and $1.0 million of Tranche 2 principal into common stock at 120% of the Warrant exercise price.
- Participation Right: Lender may participate in future equity financings up to $1.0 million on the same terms as other investors.
Financial Covenants:
- Maintain at least $2.5 million in unrestricted cash.
- Achieve at least 75% of trailing three-month projected revenue.
- Cash burn for the trailing six months must not exceed the greater of 150% of projected cash burn or $2.0 million.
Revenue, Profit, and Cash Flow: The filing text does not provide specific numerical values for revenue, profit, cash flow, or margins for the third quarter ended September 30, 2025. These details are contained in the press release filed as Exhibit 99.1, which is referenced but not included in the provided text.
Material Changes
The primary material change is the incurrence of significant new debt and the issuance of unregistered equity securities (Warrant and Conversion Securities) to Avenue Venture Opportunities Fund II, L.P. This transaction alters the Company's capital structure and imposes new financial covenants and repayment obligations.
Guidance, Risks, and Contingencies
Risks and Contingencies:
- Default Consequences: Events of default include non-payment, covenant breaches, insolvency, or a material adverse effect. Upon default, the Agent may accelerate all obligations, increase interest rates, and terminate commitments.
- Dilution: The Warrant and conversion features introduce potential dilution to existing shareholders, with the Warrant exercise price capped at $0.96 or the next financing round price.
- Liquidity Constraints: The Company must maintain $2.5 million in unrestricted cash, which may limit operational flexibility.
Management Commentary: The filing does not contain direct management commentary or forward-looking guidance beyond the terms of the loan agreement and the reference to the Q3 2025 press release.
Key Facts for Investor Verification
- Verify the specific Q3 2025 revenue and cash burn figures in the press release (Exhibit 99.1) to assess compliance with the new loan covenants.
- Confirm the current unrestricted cash balance to ensure it meets the $2.5 million covenant requirement.
- Review the terms of the Warrant exercise price ($0.96 cap) and its potential impact on share price and dilution.
- Monitor the Company's ability to trigger Tranche 2 funding between November 2026 and May 2027.
- Assess the impact of the 3.25% final payment fee and prepayment penalties on future refinancing or exit strategies.