Tenon Medical Inc
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
TNON$1.640.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001213900-24-068416
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001213900-24-098375
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 55 previous paragraphs and 54 current paragraphs.
35 unchanged; 16 reworded; 1 added; 4 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
Reverse Stock Splits
Removed paragraphs (4)
Previous report
2024 Series A Offering
Previous report
On February 20, 2024, we entered into a Securities Purchase Agreement (the “Series A Purchase Agreement”) with certain investors (the “Series A Investors”), pursuant to which the Company agreed to sell, issue and deliver to the Series A Investors, in a private placement offering (the “Series A Offering”), a total of 172,239 shares of the Company’s Series A Preferred Stock (the “Series A Preferred Stock”) and warrants (the “Warrants”) to purchase 258,374 shares of our common stock, par value $0.001 per share, at an exercise price equal to $1.2705 per share for an aggregate offering price of $2,605,000. Under the Series A Purchase Agreement, each Series A Investor paid $15.125 for each share of Series A Preferred Stock and along with their shares of Series A Preferred Stock, received Warrants equal to 15% of the number of shares of our common stock initially underlying such shares of Series A Preferred Stock. In connection with the offering of the Series A Preferred Stock, the Company exchanged the Notes (as defined below) for 84,729 shares of Series A Preferred Stock and Series A Warrants to purchase 157,094 shares of our common stock. There are a total of 256,968 shares of Series A Preferred Stock outstanding as of June 30, 2024.
Previous report
Reverse Stock Split
Previous report
On February 20, 2024, we entered into the Series A Purchase Agreement with certain investors, pursuant to which we agreed to sell, issue and deliver to these investors, in a private placement offering, a total of 172,239 shares of our Series A Preferred Stock and warrants to purchase 258,374 shares of our common stock, par value $0.001 per share, at an exercise price equal to $1.2705 per share for an aggregate offering price of $2,605,000. Additionally, on February 20, 2024, the Series A Investors agreed to a complete prepayment of our obligations under convertible notes (the “Convertible Notes”), including accrued interest, in exchange for 84,729 shares of Series A Preferred Stock and warrants to purchase 157,094 shares of our common stock at $1.2705 per share and the Convertible Notes were cancelled. The Series A Warrants are immediately exercisable and expire five years from the date of issuance. There are a total of 256,968 shares of Series A Preferred Stock outstanding as of May 14, 2024.
Reworded paragraphs (16)
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and the other information set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on March 29, 2024. In addition to historical financial information, this discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. You should not place undue reliance on these forward-looking statements, which involve risks and uncertainties. As a result of many factors, including but not limited to those set forth under “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2024, our actual results may differ materially from those anticipated in these forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”
Current wording
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and the other information set forth in our 2023 Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on March 29, 2024. In addition to historical financial information, this discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. You should not place undue reliance on these forward-looking statements, which involve risks and uncertainties. As a result of many factors, including but not limited to those set forth under “Risk Factors” in our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2024, our actual results may differ materially from those anticipated in these forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”
Previous wording
We have incurred net losses since our inception in 2012. As of June 30, 2024, we had an accumulated deficit of approximately $62.5 million. To date, we have financed our operations primarily through an initial public offering, private placements of equity securities, certain debt-related financing arrangements, and sales of our product. We have devoted substantially all of our resources to research and development, regulatory matters and sales and marketing of our product.
Current wording
We have incurred net losses since our inception in 2012. As of September 30, 2024, we had an accumulated deficit of approximately $65.7 million. To date, we have financed our operations primarily through public equity offerings, private placements of equity securities, certain debt-related financing arrangements, and sales of our product. We have devoted substantially all of our resources to research and development, regulatory matters and sales and marketing of our product.
Previous wording
On November 2, 2023, the Company effected a 1-for-10 reverse stock split by filing an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State. The reverse stock split combined every ten shares of our common stock issued and outstanding immediately prior to effecting the reverse stock split into one share of common stock. No fractional shares were issued in connection with the reverse stock split. All historical share and per share amounts reflected throughout this document have been adjusted to reflect the reverse stock split. The authorized number of shares and the par value per share of the Company’s common stock were not affected by the reverse stock split.
Current wording
All historical share and per share amounts reflected throughout this document have been adjusted to reflect the 2023 Reverse Stock Split and the 2024 Reverse Stock Split. The authorized number of shares and the par value per share of our common stock were not affected by the 2023 Reverse Stock Split or the 2024 Reverse Stock Split.
Previous wording
Comparison of the Three and Six Months Ended June 30, 2024 and 2023 (in thousands, except percentages)
Current wording
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023 (in thousands, except percentages)
Previous wording
*Revenue.*The increase in revenue for the three and six months ended June 30, 2024 as compared to the same periods in 2023 was primarily due to increases of 7% and 19%, respectively, in the number of surgical procedures in which the Catamaran System was used.
Current wording
*Revenue.*The fluctuations in revenue for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was primarily due to a decrease of 15% and an increase of 5%, respectively, in the number of surgical procedures in which the Catamaran System was used. The number of procedures in the third quarter was impacted by the longer timeline of implementation, training and development of our restructured sales operation, as well as unexpected reimbursement pre-authorization impacts, leading to fewer surgeries performed during the quarter.
Previous wording
Cost of Goods Sold, Gross Profit, and Gross Margin. The change in cost of goods sold for the three and six months ended June 30, 2024 as compared to the same periods in 2023 was due to increases of 7% and 19%, respectively, in the number of surgical procedures performed. Gross profit and gross margin percentage for the three and six month periods ended June 30, 2024 as compared to the same periods in 2023 improved due to the absorption of more production overhead costs into our standard cost, operating leverage created due to lower relative fixed costs and higher revenue associated with the increase in the number of surgical procedures.
Current wording
Cost of Goods Sold, Gross Profit, and Gross Margin. The change in cost of goods sold for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was due to a decrease of 15% and an increase of 5%, respectively, in the number of surgical procedures performed. Gross profit and gross margin percentage for the three and nine month periods ended September 30, 2024 as compared to the same periods in 2023 varied due to the absorption of production overhead costs into our standard cost, operating leverage created due to lower relative fixed costs and fluctuations in revenue associated with the fluctuations in the number of surgical procedures.
Previous wording
Research and Development Expenses. Research and development expenses for the three months ended June 30, 2024 decreased as compared to the same period in 2023 primarily due to decreased professional fees ($141), payroll expenses ($29) and stock-based compensation ($19). Research and development expenses for the six months ended June 30, 2024 decreased as compared to the same period in 2023 primarily due to decreased professional fees ($279), payroll expenses ($111) and stock-based compensation ($25).
Current wording
Research and Development Expenses. Research and development expenses for the three months ended September 30, 2024 decreased as compared to the same period in 2023 primarily due to decreased professional fees ($98) and stock-based compensation ($26), partially offset by increased payroll expenses ($52). Research and development expenses for the nine months ended September 30, 2024 decreased as compared to the same period in 2023 primarily due to decreased professional fees ($424), payroll expenses ($59) and stock-based compensation ($51).
Previous wording
*Sales and Marketing Expenses.*Sales and marketing expenses for the three months ended June 30, 2024 decreased as compared to the same period in 2023 primarily due to SpineSource transition fees in 2023 ($260), decreased payroll and employee expenses ($165) and consulting and professional fees ($102) partially offset by increased commission expense ($108). Sales and marketing expenses for the six months ended June 30, 2024 decreased as compared to the same period in 2023 primarily due to SpineSource transition fees in 2023 ($690), decreased payroll and employee expenses ($312) and consulting and professional fees ($197) partially offset by increased commission expense ($153).
Current wording
*Sales and Marketing Expenses.*Sales and marketing expenses for the three months ended September 30, 2024 decreased as compared to the same period in 2023 primarily due to SpineSource transition fees in 2023 ($203), decreased commission expense ($207) and payroll and employee expenses ($49), partially offset by increased consulting and professional fees ($128). Sales and marketing expenses for the nine months ended September 30, 2024 decreased as compared to the same period in 2023 primarily due to SpineSource transition fees in 2023 ($893), decreased payroll and employee expenses ($316), consulting and professional fees ($76) and commission expense ($54).
Previous wording
General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2024 increased as compared to the same period in 2023 primarily due to increased legal and professional service fees ($215), insurance costs ($93), bad debt expense ($36) and stock-based compensation ($25). General and administrative expenses for the six months ended June 30, 2024 increased as compared to the same period in 2023 primarily due to increased insurance costs ($191), legal and professional service fees ($93), bad debt expense ($46) and stock-based compensation ($22).
Current wording
General and Administrative Expenses. General and administrative expenses for the three months ended September 30, 2024 increased as compared to the same period in 2023 primarily due to increased payroll and employee expenses ($85), legal and professional service fees ($15), insurance costs ($35), partially offset by decreased stock-based compensation ($111). General and administrative expenses for the nine months ended September 30, 2024 increased as compared to the same period in 2023 primarily due to increased insurance costs ($226), payroll and employee expenses ($111), legal and professional service fees ($65) and bad debt expense ($46), partially offset by decreases in stock-based compensation ($89).
Previous wording
Gain on investments for the six months ended June 30, 2024 decreased approximately $28 as compared to the six months ended June 30, 2023 due to interest on our investments in money market and corporate debt securities. We did not have significant investments in corporate debt securities during the first six months of 2024. Interest expense for the six months ended June 30, 2024 related to our convertible debt. Other expense, net was related to foreign exchange losses on the liquidation of our Swiss subsidiary.
Current wording
Gain on investments for the three and nine months ended September 30, 2024 decreased as compared to the same periods ended September 30, 2023 due to interest on our investments in money market and corporate debt securities. Interest expense for the nine months ended September 30, 2024 related to our convertible debt. Other expense, net was related to foreign exchange losses on the liquidation of our Swiss subsidiary.
Previous wording
As of June 30, 2024, we had cash and cash equivalents of $2.0 million. Since inception, we have financed our operations through private placements of preferred stock, debt financing arrangements, our initial public offering, additional stock offerings and the sale of our products. As of June 30, 2024, we had no outstanding debt.
Current wording
As of September 30, 2024, we had cash and cash equivalents of $9.2 million. Since inception, we have financed our operations through private placements of preferred stock, debt financing arrangements, our initial public offering, additional stock offerings and the sale of our products. As of September 30, 2024, we had no outstanding debt.
Previous wording
As of June 30, 2024, we had an accumulated deficit of $62.5 million and expect to incur additional losses in the future. We have not achieved positive cash flow from operations to date. Based upon our current operating plan, our existing cash and cash equivalents will not be sufficient to fund our operating expenses and working capital requirements through at least the next 12 months from the date these consolidated financial statements were available to be released. We plan to raise the necessary additional capital through one or a combination of public or private equity offerings, debt financings, and collaborations. We continue to face challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to (a) the uncertainty of future revenues from The Catamaran System; (b) changes we may make to the business that affect ongoing operating expenses; (c) changes we may make in our business strategy; (d) regulatory developments affecting our existing products; (e) changes we may make in our research and development spending plans; and (f) other items affecting our forecasted level of expenditures and use of cash resources.
Current wording
As of September 30, 2024, we had an accumulated deficit of $65.7 million and expect to incur additional losses in the future. We have not achieved positive cash flow from operations to date. Based upon our current operating plan, our existing cash and cash equivalents will not be sufficient to fund our operating expenses and working capital requirements through at least the next 12 months from the date these consolidated financial statements were available to be released. We plan to raise the necessary additional capital through one or a combination of public or private equity offerings, debt financings, and collaborations. We continue to face challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to (a) the uncertainty of future revenues from The Catamaran System; (b) changes we may make to the business that affect ongoing operating expenses; (c) changes we may make in our business strategy; (d) regulatory developments affecting our existing products; (e) changes we may make in our research and development spending plans; and (f) other items affecting our forecasted level of expenditures and use of cash resources.
Previous wording
The decrease in net cash used in operating activities for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily attributable to our decreased net loss of $1.7 million, adjusted for decreases in non-cash stock-based compensation expenses ($42), in addition to increased accounts payable ($316), partially offset by decreases in accrued expenses ($313).
Current wording
The decrease in net cash used in operating activities for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily attributable to our decreased net loss of $1.9 million, adjusted for decreases in non-cash stock-based compensation expenses ($202), in addition to increased accounts payable ($660), partially offset by increases in accounts receivable ($404).
Previous wording
Cash provided by investing activities for the six months ended June 30, 2024 consisted primarily purchases of property and equipment ($119). Cash provided by investing activities for the six months ended June 30, 2023 consisted primarily of the net sales of short-term investments ($6,010) to fund our operations, partially offset by purchases of property and equipment ($212).
Current wording
Cash provided by investing activities for the nine months ended September 30, 2024 consisted primarily of purchases of property and equipment ($223). Cash provided by investing activities for the nine months ended September 30, 2023 consisted primarily of the net sales of short-term investments ($6,503) to fund our operations, partially offset by purchases of property and equipment ($269).
Previous wording
Cash provided by financing activities for the six months ended June 30, 2024 consisted primarily of net proceeds from the issuance of Series A Convertible Preferred Stock ($2,437) and from the issuance of common stock ($1,934). Cash provided by financing activities for the six months ended June 30, 2023 consisted primarily of the $4.8 million, net of relevant expenses, received from our registered offering in June 2023.
Current wording
Cash provided by financing activities for the nine months ended September 30, 2024 consisted primarily of net proceeds from the issuance of common stock and warrants ($3,862), the exercise of warrants under the inducement agreement ($4,306), the issuance of Series A Convertible Preferred Stock ($2,437) and Series B Convertible Preferred Stock ($489) and from issuances of common stock ($2,106). Cash provided by financing activities for the nine months ended September 30, 2023 consisted primarily of the $4.8 million, net of relevant expenses, received from our registered offering in June 2023.
Previous wording
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported results of operations during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from three other sources. Actual results could differ from these estimates under different assumptions or conditions. For the six months ended June 30, 2024, there were no significant changes to our existing critical accounting policies from those disclosed on our Annual Report on Form 10-K.
Current wording
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported results of operations during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from three other sources. Actual results could differ from these estimates under different assumptions or conditions. For the nine months ended September 30, 2024, there were no significant changes to our existing critical accounting policies from those disclosed in our 2023 Annual Report on Form 10-K.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
On November 2, 2023, we effected a 1-for-10 reverse stock split (the “2023 Reverse Stock Split”), which combined every ten shares of our common stock issued and outstanding immediately prior to effecting the 2023 Reverse Stock Split into one share of common stock. No fractional shares were issued in connection with the 2023 Reverse Stock Split.
Current report — wording carried from elsewhere
On September 6, 2024, we effected a 1-for-8 reverse stock split (the “2024 Reverse Stock Split”), which combined every eight shares of our common stock issued and outstanding immediately prior to effecting the 2024 Reverse Stock Split into one share of common stock. No fractional shares were issued in connection with the 2024 Reverse Stock Split.