Business Context and Reporting Period
Myomo, Inc. (MYO) filed a Form 8-K on July 11, 2024, reporting the entry into a material definitive agreement. The company is incorporated in Delaware and operates from Boston, MA.
Key Financial Metrics and Agreement Terms
The filing details a new Loan and Security Agreement with Silicon Valley Bank (a division of First-Citizens Bank & Trust Company). Key terms include:
- Revolving Line of Credit: Up to $4,000,000, with an option to increase to $5,500,000 at the Bank's discretion.
- Borrowing Base: Advances are based on 80% of eligible U.S. accounts receivable, subject to deductions for aged amounts and concentration limits.
- Interest Rate: Floating rate equal to the greater of 8.50% or the Wall Street Journal prime rate plus 0.50%.
- Collateral: Secured by a first priority lien on all company assets, excluding intellectual property and certain customary exceptions.
- Fees: $20,000 commitment fee; 0.50% anniversary fee on the Revolving Line; 0.50% per annum on the average unused portion; 1.00% termination fee if ended early.
- Maturity: Two-year term from the Effective Date (July 11, 2024).
Material Changes and Covenants
This agreement represents a new source of liquidity for working capital and general business purposes. The agreement imposes significant restrictive covenants, including limitations on:
- Incurring additional indebtedness or liens.
- Mergers, consolidations, or acquisitions.
- Disposing of business or property.
- Paying dividends, making distributions, or redeeming equity.
An event of default includes any third-party acceleration of indebtedness exceeding $100,000. The company may also be required to maintain cash deposits equal to 105% (USD) or 110% (foreign currency) of undrawn letters of credit.
Guidance, Outlook, and Risks
The filing does not provide updated financial guidance, revenue forecasts, or management commentary on future performance beyond the intent to use the facility for working capital. The primary risk disclosed is the potential for immediate acceleration of all obligations and termination of the facility if an event of default occurs and is not cured within applicable grace periods.
Investor Verification Checklist
- Verify the company's current eligible accounts receivable to assess the actual borrowing capacity under the 80% advance rate.
- Review the company's existing debt load to understand the impact of the new covenants on future financing flexibility.
- Monitor the company's cash flow to ensure it can service the floating interest rate (minimum 8.50%) and associated fees.
- Check for any existing letters of credit that may require significant cash collateral deposits (105%-110%).