Tenon Medical, Inc.

Previous wording

We have incurred net losses since our inception in 2012. As of March 31, 2025, we had an accumulated deficit of approximately $72.4 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.

Current wording

We have incurred net losses since our inception in 2012. As of June 30, 2025, we had an accumulated deficit of approximately $75.1 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

We utilize contract manufacturers for production of The Catamaran System implants and Catamaran Tray Sets. Cost of goods sold consists primarily of costs of the components of The Catamaran System implants and instruments, overhead related to operation personnel and facility costs, quality inspection, packaging, scrap and inventory obsolescence, as well as distribution-related expenses such as logistics and shipping costs. We anticipate that certain of our cost of goods sold will increase in absolute dollars as case levels increase.

Current wording

We utilize contract manufacturers for production of The Catamaran System implants and Catamaran Tray Sets. Cost of goods sold consists primarily of costs of the components of The Catamaran System implants and instruments, depreciation of Catamaran tray sets, overhead related to operations personnel and facility costs, quality inspection, packaging, scrap and inventory obsolescence, as well as distribution-related expenses such as logistics and shipping costs. We anticipate that certain of our cost of goods sold will increase in absolute dollars as case levels increase.

Previous wording

Comparison of the Three Months Ended March 31, 2025 and 2024 (in thousands, except percentages)

Current wording

Comparison of the Three and Six Months Ended June 30, 2025 and 2024 (in thousands, except percentages)

Previous wording

*Revenue.*The increase in revenue for the three months ended March 31, 2025 as compared to 2024 was primarily due to an increase in revenue per surgical procedure on a consistent number of surgical procedures in which The Catamaran System was used.

Current wording

Revenue. The decrease in revenue for the three and six months ended June 30, 2025 as compared to the same periods in 2024 was primarily due to a decrease in the number of surgical procedures in which The Catamaran System was used, while implants per procedure remained relatively constant.

Previous wording

Cost of Goods Sold, Gross Profit, and Gross Margin. The change in cost of goods sold for the three months ended March 31, 2025 as compared to 2024 was due to the absorption of production overhead costs into our standard cost in 2024 and operating leverage created due to lower relative fixed costs.

Current 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, 2025 as compared to the same periods in 2024 was due to the absorption of production overhead costs into our standard cost in 2024 and operating leverage created due to lower relative fixed costs.

Previous wording

Research and Development Expenses. Research and development expenses for the three months ended March 31, 2025 increased as compared to 2024 primarily due to increased payroll and employee expenses ($87), partially offset by decreased professional fees ($55) and stock-based compensation ($18).

Current wording

Research and Development Expenses. Research and development expenses for the three months ended June 30, 2025 decreased as compared to 2024 primarily due to decreased professional fees ($58) and stock-based compensation ($150), partially offset by increased payroll and employee expenses ($13). Research and development expenses for the six months ended June 30, 2025 decreased as compared to 2024 primarily due to decreased professional fees ($139) and stock-based compensation ($168), partially offset by increased payroll and employee expenses ($100).

Previous wording

*Sales and Marketing Expenses.*Sales and marketing expenses for the three months ended March 31, 2025 increased as compared to the same period in 2024 primarily due to increased commission expenses ($104), payroll and employee expenses ($116) and consulting and professional fees ($32), partially offset by decreases in stock-based compensation ($6).

Current wording

*Sales and Marketing Expenses.*Sales and marketing expenses for the three months ended June 30, 2025 decreased as compared to the same period in 2024 primarily due to decreased commission expenses ($251), payroll and employee expenses ($58), consulting and professional fees ($34), and stock-based compensation ($7). Sales and marketing expenses for the six months ended June 30, 2025 decreased as compared to the same period in 2024 primarily due to decreased commission expenses ($148) and stock-based compensation ($13), partially offset by increases in payroll and employee expenses ($58) and professional fees ($11).

Previous wording

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2025 decreased as compared to the same period in 2024 primarily due to decreased insurance costs ($199), stock-based compensation ($122), partially offset by increases in professional service fees ($25) and payroll and employee expenses ($59).

Current wording

General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2025 decreased as compared to the same period in 2024 primarily due to decreased stock-based compensation ($461), insurance costs ($221) and professional service fees ($26), partially offset by increases in payroll and employee expenses ($31). General and administrative expenses for the six months ended June 30, 2025 decreased as compared to the same period in 2024 primarily due to decreased stock-based compensation ($582), insurance costs ($325) and professional service fees ($70), partially offset by increases in payroll and employee expenses ($86).

Previous wording

Gain on investments for the three months ended March 31, 2025 increased as compared to 2024 due to interest on our increased cash and cash equivalent balances. Interest expense for the three months ended March 31, 2024 related to our convertible debt. Other expense, net in 2024 was related to foreign exchange losses on the liquidation of our Swiss subsidiary.

Current wording

Gain on investments for the three and six months ended June 30, 2025 increased as compared to the same periods in 2024 due to interest on our increased cash and cash equivalent balances. Interest expense for the six months ended June 30, 2024 related to our convertible debt. Other income (expense), net in 2024 was related to foreign exchange losses on the liquidation of our Swiss subsidiary.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $10.3 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 March 31, 2025, we had no outstanding debt.

Current wording

As of June 30, 2025, we had cash and cash equivalents of $7.8 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, 2025, we had no outstanding debt.

Previous wording

As of March 31, 2025, we had an accumulated deficit of $72.4 million and we 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 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 June 30, 2025, we had an accumulated deficit of $75.1 million and we 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 financial statements were filed. 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 three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily attributable to our increased net loss ($40), adjusted for decreases in non-cash stock-based compensation expenses ($146), in addition to increased accounts payable ($294), partially offset by decreases in accrued expenses ($303).

Current wording

The decrease in net cash used in operating activities for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily attributable to our decreased net loss ($1,017), adjusted for decreases in non-cash stock-based compensation expenses ($763), in addition to decreased accounts payable ($153) and accrued expenses ($243), partially offset by decreases in accounts receivable ($300).

Previous wording

Cash used in investing activities for the three months ended March 31, 2024 consisted of purchases of property and equipment ($119).

Current wording

Cash used in investing activities for the six months ended June 30, 2025 and 2024 consisted of purchases of property and equipment ($192 and $119, respectively).

Previous wording

Cash provided by financing activities for the three months ended March 31, 2025 consisted primarily of proceeds from the issuance of common stock from our securities purchase agreements ($4,010) and proceeds from the exercise of warrants under the inducement agreement ($3,057), partially offset by offering costs ($808). Cash provided by financing activities for the three months ended March 31, 2024 consisted primarily of proceeds from the issuance of Series A Convertible Preferred Stock ($2,437) and from the issuance of common stock ($1,934).

Current wording

Cash provided by financing activities for the six months ended June 30, 2025 consisted primarily of proceeds from the issuance of common stock from our securities purchase agreements ($4,010) and proceeds from the exercise of warrants under the inducement agreement ($3,057), partially offset by offering costs ($867). Cash provided by financing activities for the six months ended June 30, 2024 consisted primarily of proceeds from the issuance of Series A Convertible Preferred Stock ($2,605) and from the issuance of common stock ($1,990), partially offset by offering costs ($224).

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 three months ended March 31, 2025, there were no significant changes to our existing critical accounting policies from those disclosed in 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 six months ended June 30, 2025, there were no significant changes to our existing critical accounting policies from those disclosed in our Annual Report on Form 10-K.