Tenon Medical, Inc.

Previous wording

We have incurred net losses since our inception in 2012. As of December 31, 2024, we had an accumulated deficit of approximately $68.7 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.

Current wording

We have incurred net losses since our inception in 2012. As of December 31, 2025, we had an accumulated deficit of approximately $81.3 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 September 6, 2024, we effected a 1-for-8 reverse stock split (the “2024 Reverse Stock Split”) by filing an amendment to the our Amended and Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State. The 2024 Reverse Stock Split 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.

Current wording

On September 6, 2024, we effected a 1-for-8 reverse stock split (the “2024 Reverse Stock Split”) by filing an amendment to the our Amended and Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State. The 2024 Reverse Stock Split 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. All historical share and per share amounts reflected throughout this document have been adjusted to reflect 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 2024 Reverse Stock Split.

Previous wording

Our management’s discussion and analysis of our financial condition and results of operations is based on our audited consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles (“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 other sources. Actual results could differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the accounting policies discussed below are those that are most critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. For more detail on our critical accounting policies, see Note 2 to our consolidated financial statements.

Current wording

Our management’s discussion and analysis of our financial condition and results of operations is based on our audited financial statements, which have been prepared in accordance with United States generally accepted accounting principles (“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 other sources. Actual results could differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the accounting policies discussed below are those that are most critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. For more detail on our critical accounting policies, see Note 2 to our financial statements.

Previous wording

We generate our revenue from the sale of products to hospitals or medical facilities where our products are delivered in advance of a procedure. The performance obligation is the delivery of the products along with the completion of the surgery and therefore, revenue is recognized upon delivery to the customers and completion of the surgery, net of rebates and price discounts. We account for rebates and price discounts as a reduction to revenue. Sales prices are specified prior to the transfer of control to the customer, via either the customer contract, agreed price list, purchase order, or written communication with the customer. For direct sales to end-user customers, our standard payment terms are generally net 30 days.

Current wording

We generate our revenue from the sale of products to hospitals or medical facilities where our products are delivered in advance of a procedure. The performance obligation is the completion of the surgery and therefore, revenue is recognized upon completion of the surgery, net of rebates and price discounts. We account for rebates and price discounts as a reduction to revenue. Sales prices are specified prior to the transfer of control to the customer, via either the customer contract, agreed price list, purchase order, or written communication with the customer. For direct sales to end-user customers, our standard payment terms are generally net 30 days.

Previous wording

Expected Volatility—Since we have only been publicly held since April 2022 and do not have any trading history for our common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle, or area of specialty.

Current wording

Expected Volatility—Since we have only been publicly held since April 2022 and did not have any trading history for our common stock prior to that date, the expected volatility was estimated based on the average volatility for comparable publicly traded companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle, or area of specialty.

Previous wording

We account for warrants for shares of common stock as equity or liabilities in accordance with the accounting guidance for derivatives. The accounting guidance provides a scope exception from classifying and measuring as a financial liability a contract that would otherwise meet the definition of a derivative if the contract is both (i) indexed to the entity’s own stock and (ii) classified in the stockholders’ deficit section of the consolidated balance sheet. We estimate the fair value of our warrants for shares of common stock by using the Black-Scholes option pricing model. Warrants classified as equity are recorded as additional paid-in capital on the consolidated balance sheet and no further adjustments to their valuation are made after the issuance of the warrants.

Current wording

We account for warrants for shares of common stock as equity or liabilities in accordance with the accounting guidance for derivatives. The accounting guidance provides a scope exception from classifying and measuring as a financial liability a contract that would otherwise meet the definition of a derivative if the contract is both (i) indexed to the entity’s own stock and (ii) classified in the stockholders’ deficit section of the balance sheet. We estimate the fair value of our warrants for shares of common stock by using the Black-Scholes option pricing model. Warrants classified as equity are recorded as additional paid-in capital on the balance sheet and no further adjustments to their valuation are made after the issuance of the warrants.

Previous wording

We derive substantially all our revenue from sales of The Catamaran System to a limited number of clinicians. Revenue from sales of The Catamaran System fluctuates based on volume of cases (procedures performed), discounts, rebates, and the number of implants used for a particular patient. Similar to other orthopedic companies, our revenue can also fluctuate from quarter to quarter due to a variety of factors, including reimbursement, changes in independent sales representatives and physician activities.

Current wording

We derive substantially all our revenue from sales of The Catamaran System and The SImmetry+ System to a limited number of clinicians. Revenue from sales of The Catamaran System and The SImmetry+ System fluctuates based on volume of cases (procedures performed), discounts, rebates, and the number of implants used for a particular patient. Similar to other orthopedic companies, our revenue can also fluctuate from quarter to quarter due to a variety of factors, including reimbursement, changes in independent sales representatives and physician activities.

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 and The SImmetry+ System implants and tray sets. Cost of goods sold consists primarily of costs of the components of The Catamaran System and The SImmetry+ System implants and instruments, 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

Our gross margins have been and will continue to be affected by a variety of factors, including the cost to have our product manufactured for us, pricing pressure from increasing competition, and the factors described above impacting our revenue.

Current wording

Our gross margins have been and will continue to be affected by a variety of factors, including the cost to have our products manufactured for us, pricing pressure from increasing competition, and the factors described above impacting our revenue.

Previous wording

Sales and marketing expenses primarily consist of salaries, commissions, stock-based compensation expense and travel and entertainment expenses of our sales and market personnel along with commissions paid to our independent distributors. We expect our sales and marketing expenses to increase in absolute dollars with the increased sales of The Catamaran System resulting in higher commissions and salaries, increased clinician and sales representative training, and the cost to complete our clinical study to gain wider clinician adoption of The Catamaran System. Our sales and marketing expenses may fluctuate from period to period due to the timing of sales and marketing activities related to the commercial activity of our product.

Current wording

Sales and marketing expenses primarily consist of salaries, commissions, stock-based compensation expense and travel and entertainment expenses of our sales and market personnel along with commissions paid to our independent distributors. We expect our sales and marketing expenses to increase in absolute dollars with the increased sales of The Catamaran System and The SImmetry+ System resulting in higher commissions and salaries, increased clinician and sales representative training, and the cost to complete our clinical study to gain wider clinician adoption of The Catamaran System. Our sales and marketing expenses may fluctuate from period to period due to the timing of sales and marketing activities related to the commercial activity of our product.

Previous wording

Our research and development expenses primarily consist of engineering, product development, regulatory expenses, and consulting services, outside prototyping services, outside research activities, materials, and other costs associated with the development and refinement of our product. Research and development expenses also include related personnel and consultants’ compensation and stock-based compensation expense. We expense research and development costs as they are incurred. We expect research and development expense to increase in absolute dollars as we improve The Catamaran System, develop new products, add research and development personnel, and undergo clinical activities that may be required for regulatory clearances of future products.

Current wording

Our research and development expenses primarily consist of engineering, product development, regulatory expenses, and consulting services, outside prototyping services, outside research activities, materials, and other costs associated with the development and refinement of our product. Research and development expenses also include related personnel and consultants’ compensation and stock-based compensation expense. We expense research and development costs as they are incurred. We expect research and development expense to increase in absolute dollars as we improve The Catamaran System and The SImmetry+ System, develop new products, add research and development personnel, and undergo clinical activities that may be required for regulatory clearances of future products.

Previous wording

*Revenue.*The increase in revenue for the year ended December 31, 2024 as compared to 2023 was primarily due to an increase in revenue per surgical procedure on a 0% change in the number of surgical procedures in which The Catamaran System was used.

Current wording

*Revenue.*The increase in revenue for the year ended December 31, 2025 as compared to 2024 was primarily due to an increase in the number of surgical procedures and the addition of revenue related to The SImmetry+ System.

Previous wording

Cost of Goods Sold, Gross Profit, and Gross Margin. The change in cost of goods sold for the year ended December 31, 2024 as compared to 2023 was due to the absorption of production overhead costs into our standard cost 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 year ended December 31, 2025 as compared to 2024 was due to the absorption of production overhead costs into our standard cost and operating leverage created due to lower relative fixed costs and increased revenue volume.

Previous wording

Research and Development Expenses. Research and development expenses for the year ended December 31, 2024 decreased as compared to 2023 primarily due to decreased professional fees ($528), stock-based compensation ($73) and payroll expenses ($39) as we move our focus from research to sustaining our Catamaran portfolio.

Current wording

Research and Development Expenses. Research and development expenses for the year ended December 31, 2025 decreased as compared to 2024 primarily due to decreased stock-based compensation ($772) and payroll expenses ($1), partially offset by increased professional fees ($206).

Previous wording

Sales and Marketing Expenses. Sales and marketing expenses for the year ended December 31, 2024 decreased as compared to 2023 primarily due to SpineSource transition fees in 2023 ($932), decreased payroll and employee expenses ($499), and consulting and professional fees ($178), partially offset by increased commission expense ($21) due to restructuring of our sales operations.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses for the year ended December 31, 2025 increased as compared to 2024 primarily due to increased commission expense ($544) related to our increased revenue and increased payroll and employee expenses ($174) and consulting and professional fees ($174), partially offset by decreased stock-based compensation ($13).

Previous wording

Interest Expense. Interest expense for the year ended December 31, 2024 increased as compared to 2023 primarily due to the convertible debt.

Current wording

Interest Expense. Interest expense for the year ended December 31, 2024 related to convertible debt, whose outstanding principal and interest were converted to common stock in 2024.

Previous wording

As of December 31, 2024, we had cash and cash equivalents of $6.5 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 December 31, 2024, we had no outstanding debt.

Current wording

As of December 31, 2025, we had cash and cash equivalents of $3.8 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 December 31, 2025, we had no outstanding debt. As of December 31, 2025, we had an accumulated deficit of $81.3 million and we expect to incur additional losses in the future. We have not achieved positive cash flow from operations to date.

Previous wording

As of December 31, 2024, we had an accumulated deficit of $68.7 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 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

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; (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

As we attempt to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our sales and marketing efforts, research and development activities, or other operations. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, and collaborations. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we are unable to raise capital, we will need to delay, reduce, or terminate planned activities to reduce costs. Doing so will likely harm our ability to execute our business plans. Due to the uncertainty in our ability to raise capital, management believes that there is substantial doubt in our ability to continue as a going concern for the next twelve months from the issuance of these consolidated financial statements.

Current wording

As we attempt to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our sales and marketing efforts, research and development activities, or other operations. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, and collaborations. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we are unable to raise capital, we will need to delay, reduce, or terminate planned activities to reduce costs. Doing so will likely harm our ability to execute our business plans. Due to the uncertainty in our ability to raise capital, management believes that there is substantial doubt in our ability to continue as a going concern for the next twelve months from the issuance of these financial statements.

Previous wording

The decrease in net cash used in operating activities for the year ended December 31, 2024 as compared to 2023 was primarily attributable to our decreased net loss ($1,908) and decreased prepaid expenses ($484) and increased depreciation and amortization ($209), partially offset increases in accounts receivable ($96) and decreases in non-cash stock-based compensation expenses ($300).

Current wording

The increase in net cash used in operating activities for the year ended December 31, 2025 as compared to 2024 was primarily attributable to decreases in stock-based compensation ($2,154) and increased accounts receivable ($465) and prepaid expenses ($218), partially offset by a decrease in net loss ($1,117) and increases in accrued expenses ($819) and accounts payable ($550).

Previous wording

Cash used in investing activities for the year ended December 31, 2024 related to purchases of property and equipment ($186). Cash provided by investing activities for the year ended December 31, 2023 consisted primarily of the net sales of short-term investments ($6,503) to fund operations, partially offset by purchases of property and equipment ($361) as we acquired the components for our surgical tray sets.

Current wording

Cash used in investing activities for the year ended December 31, 2025 consisted of the cash payment for the SI Acquisition ($750) and purchases of property and equipment ($273). Cash used in investing activities for the year ended December 31, 2024 related to purchases of property and equipment ($186).

Previous wording

Cash provided by financing activities for the year ended December 31, 2024 consisted primarily of net proceeds from the issuance of common stock and warrants ($3,846), the exercise of warrants under the inducement agreement ($4,306), the issuance of Series A Convertible Preferred Stock ($2,567) and Series B Convertible Preferred Stock ($489) and from issuances of common stock ($2,105). Cash provided by financing activities for the year ended December 31, 2023 consisted of the net proceeds received from our offerings of stock in 2023 ($5,303) in addition to proceeds from the issuance of the Convertible Notes ($1,250).

Current wording

Cash provided by financing activities for the year ended December 31, 2025 consisted of gross proceeds from the issuance of common stock from our securities purchase agreements ($4,010), the exercise of warrants under the inducement agreement ($3,057) and the issuance of common stock and warrants ($2,850), net of total cash offering costs ($928). Cash provided by financing activities for the year ended December 31, 2024 consisted of gross proceeds from the issuance of common stock and warrants ($4,500), the exercise of warrants under the inducement agreement ($4,648), the issuance of Series A Convertible Preferred Stock ($2,605) and Series B Convertible Preferred Stock ($550) and from issuances of common stock ($2,106) and the exercise of warrants ($812), net of total cash offering costs ($1,096).

Previous wording

As of December 31, 2024 and 2023, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Current wording

As of December 31, 2025 and 2024, we did not have any relationships with organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.