Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $564,000, down from $901,000 in the same period last year, with a six-month revenue of $1,300,000 compared to $1,600,000 in the prior year [9] - Gross profit was $245,000 or 43% of revenue in Q2 2025, compared to $470,000 or 52% of revenue in the prior year quarter, with a six-month gross profit of $568,000 or 44% of revenue compared to $940,000 or 58% in the previous year's period [10] - Operating expenses totaled $3,100,000 in Q2 2025, down from $4,300,000 in the prior year period, reflecting a 29% reduction driven by lower expenses across various departments [11] - Net loss for Q2 was $2,800,000 or $0.36 per share, compared to a net loss of $3,800,000 or $8.16 per share in 2024, with a six-month net loss of $6,400,000 compared to $7,400,000 in the same year-ago period [12] Business Line Data and Key Metrics Changes - The Catamaran platform is advancing with real-world adoption in complex spine procedures, supported by FDA clearance for uses in thoracolumbar fixation [4] - The Catamaran SE, a second-generation low-profile implant, is on track for full commercial launch in the coming weeks, with positive feedback from alpha reviews [4] - The company is preparing for initial alpha surgeries using the newly developed Symmetry Plus system, expected to begin in Q4 2025 [5] Market Data and Key Metrics Changes - The strategic acquisition of SciVantage enhances the company's commercial organization and market access, providing new pathways through hospital approval processes and distribution networks [3] - The acquisition is expected to increase active case volume and revenue-generating technologies, contributing to the company's growth trajectory [2] Company Strategy and Development Direction - The company is focused on delivering solutions that promote true biologic fusion and structural stability for patients with sacropelvic disorders, with a commitment to driving value for patients, physicians, and shareholders [14] - The integration of SciVantage is expected to create a more diversified product offering, allowing the company to address various clinical needs in the sacropelvic region [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in recovering from the recent decline in revenue, anticipating a quick rebound as the integration with SciVantage progresses [28] - The company is optimistic about the upcoming launches of Catamaran SE and Symmetry Plus, which are expected to drive top-line growth [12][44] Other Important Information - The company ended the quarter with $7,800,000 in cash and no debt, providing flexibility to execute its strategic roadmap [12] - The company hosted 16 physician workshops in Q2 to support long-term adoption strategies and accelerate the learning curve for new users [7] Q&A Session Summary Question: How does the acquisition help achieve scale? - Management confirmed that the acquisition provides a pathway to scale and enhances access to hospital systems and contract groups, allowing for a more diversified product offering [17][20] Question: What is the timeline for filing audited financials for the acquisition? - The company indicated a 75-day post-close period to file the audited financials for SciVantage, expected by mid-October [24][27] Question: How should investors view Catamaran revenues in Q3 and Q4? - Management suggested that Q2 was disrupted by the acquisition process but expects a quick recovery in Catamaran revenues moving forward [28][30] Question: What is the reimbursement landscape for the new products? - The new products will participate in existing CPT codes for SI procedures, similar to the Catamaran system, with a focus on supporting technologies with data [40][41] Question: What is the expected impact of the Symmetry Plus launch? - The Symmetry Plus launch is anticipated to begin with alpha surgeries in October, with a full-scale launch expected early next year [44]

PART I. FINANCIAL INFORMATION [Item 1. Condensed Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Financial%20Statements%20(unaudited)) Unaudited H1 2025 statements reveal decreased revenue, continued net losses, asset growth from financing, and substantial doubt about going concern [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $7,846 | $6,535 | | Total current assets | $9,884 | $8,210 | | **TOTAL ASSETS** | **$11,114** | **$9,843** | | Total current liabilities | $2,563 | $1,869 | | **Total liabilities** | **$4,401** | **$3,872** | | **Total stockholders' equity** | **$6,713** | **$5,971** | - Cash and cash equivalents increased to **$7.8 million** as of June 30, 2025, from **$6.5 million** at the end of 2024, primarily due to financing activities[14](index=14&type=chunk) [Condensed Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $564 | $901 | $1,290 | $1,620 | | Gross Profit | $245 | $470 | $568 | $940 | | Loss from Operations | $(2,857) | $(3,872) | $(6,534) | $(7,378) | | Net Loss | $(2,769) | $(3,826) | $(6,385) | $(7,402) | | Net Loss Per Share (Basic & Diluted) | $(0.36) | $(8.16) | $(1.14) | $(17.92) | - Revenue for the three and six months ended June 30, 2025, decreased by **37%** and **20%** respectively compared to the same periods in 2024[17](index=17&type=chunk) [Condensed Statements of Convertible Preferred Stock and Stockholders' Equity](index=6&type=section&id=Condensed%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity) - Total stockholders' equity increased from **$5.97 million** at December 31, 2024, to **$6.71 million** at June 30, 2025[19](index=19&type=chunk)[20](index=20&type=chunk) - During the first six months of 2025, the company issued common stock, pre-funded warrants, and warrants, raising net proceeds of **$2.7 million** from an inducement agreement and **$3.5 million** from other offerings[20](index=20&type=chunk) [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,697) | $(4,758) | | Net cash used in investing activities | $(192) | $(119) | | Net cash provided by financing activities | $6,200 | $4,371 | | **Net Increase (Decrease) in Cash** | **$1,311** | **$(460)** | - Financing activities in the first six months of 2025 provided **$6.2 million** in cash, primarily from the issuance of common stock and warrants, which more than offset the **$4.7 million** cash used in operations[22](index=22&type=chunk) [Notes to Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) - The company is a medical device firm focused on its Catamaran™ SI Joint Fusion System for treating lower back pain, which received FDA clearance in 2018[25](index=25&type=chunk) - Management has expressed substantial doubt about the company's ability to continue as a going concern for at least one year, as existing cash is insufficient to meet obligations, and plans to raise additional capital to fund operations[29](index=29&type=chunk)[30](index=30&type=chunk) - In March 2025, the company raised net proceeds of **$2.7 million** through a warrant exercise inducement and an additional **$3.5 million** through securities purchase agreements[48](index=48&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Subsequent to the quarter end, on August 1, 2025, the company acquired substantially all assets of SiVantage, Inc. (the "SImmetry Acquisition") and SIMPL Medical, LLC (the "SIMPL Acquisition") to expand its product portfolio in sacropelvic fixation and fusion[70](index=70&type=chunk)[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes H1 2025 revenue decline to fewer procedures, reduced operating expenses, but liquidity remains critical with going concern doubt [Overview](index=21&type=section&id=Overview) - The company's core product is the FDA-approved Catamaran™ SI Joint Fusion System, a less invasive implant for treating SI Joint dysfunction, a cause of chronic lower back pain[81](index=81&type=chunk) - Tenon Medical has incurred net losses since its inception in 2012 and had an accumulated deficit of approximately **$75.1 million** as of June 30, 2025[85](index=85&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Comparison of Operating Results (in thousands) | Metric | Six Months 2025 | Six Months 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,290 | $1,620 | $(330) | (20)% | | Gross Profit | $568 | $940 | $(372) | (40)% | | Total Operating Expenses | $7,102 | $8,318 | $(1,216) | (15)% | - The decrease in revenue for the first six months of 2025 was primarily due to a reduction in the number of surgical procedures performed using The Catamaran System[96](index=96&type=chunk) - Total operating expenses for the six months ended June 30, 2025, decreased by **$1.2 million** (**15%**) compared to the prior year, driven by reductions in stock-based compensation, insurance costs, and professional fees across all expense categories[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had cash and cash equivalents of **$7.8 million** and an accumulated deficit of **$75.1 million**[103](index=103&type=chunk)[104](index=104&type=chunk) - Management states that existing cash is not sufficient to fund operations for the next 12 months, which raises substantial doubt about the company's ability to continue as a going concern[104](index=104&type=chunk)[105](index=105&type=chunk) - For the six months ended June 30, 2025, net cash provided by financing activities was **$6.2 million**, primarily from stock and warrant issuances, which offset the **$4.7 million** of cash used in operating activities[106](index=106&type=chunk)[108](index=108&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Tenon Medical is not required to provide this information - The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a "smaller reporting company"[111](index=111&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of June 30, 2025, due to a material weakness in internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025[112](index=112&type=chunk) - A material weakness exists in internal controls due to the inability to effectively segregate accounting duties, which is attributed to the company's limited size and resources[113](index=113&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - There are no legal proceedings to report[117](index=117&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, no material changes to risk factors were reported from the prior Annual Report on Form 10-K - There were no material changes in the company's risk factors as previously disclosed in its Annual Report on Form 10-K filed on March 26, 2025[118](index=118&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - The company reported no unregistered sales of equity securities[119](index=119&type=chunk) [Item 3. Defaults Upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None reported[121](index=121&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[122](index=122&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) The company reported no other information - None reported[123](index=123&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with the Form 10-Q, including corporate governance documents and certifications - This section lists all exhibits filed as part of the quarterly report, including certifications by the CEO and CFO[125](index=125&type=chunk)

Financial Data and Key Metrics Changes - Revenue for the first quarter of 2025 was $726,000, a 1% increase from $719,000 in the first quarter of 2024, primarily driven by an increase in implants for surgical procedures, partially offset by a slight decrease in average selling price (ASP) due to account mix [14][15] - Gross profit for the first quarter of 2025 was $323,000, representing 44% of revenue, compared to $470,000 or 65% of revenue in the same quarter of the previous year [16] - Net loss for the first quarter of 2025 was $3,600,000, consistent with the loss in the same period of 2024 [17][18] Business Line Data and Key Metrics Changes - The upcoming full launch of the new Catamaran SE platform is expected to enhance the product offering for physicians preferring a smaller implant for SI joint fusion procedures [4][5] - The FDA clearance for the Catamaran SI Joint Fusion System for an extended indication to augment thoracolumbar fusion is anticipated to open new market opportunities [5][6] Market Data and Key Metrics Changes - The company received two European patents during the first quarter, enhancing its intellectual property portfolio, which now includes 12 issued patents and 31 pending applications [6] - The Catamaran technology is positioned to address a significant market segment lacking peer-reviewed data, which is crucial for gaining positive coverage from payers [11][12] Company Strategy and Development Direction - The company is focusing on sustainable revenue growth through a stable cost structure and plans to invest heavily in commercial operations, clinical research, and product refinement [12][19] - The strategy includes expanding the sales force and enhancing market access efforts to drive top-line growth [17][19] Management's Comments on Operating Environment and Future Outlook - Management anticipates improvements in the reimbursement environment, which has been a challenge due to coding confusion, and expects this to contribute to incremental growth [22][23] - The launch of the SE platform is viewed as an inflection point that will attract more physicians to adopt the technology [26][27] Other Important Information - The company completed equity financing of $7,100,000 in March 2025, contributing to a cash balance of $10,300,000 at the end of the quarter, with no outstanding debt [12][18] - The ongoing Main Sail study aims to evaluate clinical outcomes for patients treated with the Catamaran system, with interim results showing significant pain reduction and high patient satisfaction [9][10] Q&A Session Summary Question: Expectations for top line revenues trajectory through the year - Management expects incremental growth as reimbursement issues improve and the sales team expands [22][24] Question: Impact of SE launch on revenue - The SE launch is anticipated to be an inflection point, bringing more physicians into the adoption phase [26][27] Question: General and Administrative expenses trends - G&A expenses were lower in the first quarter, and this trend is expected to continue with some additional investments in sales initiatives [28] Question: Expansion of total addressable market due to new indication - The new indication for augmenting spinal fusion is expected to significantly increase the addressable market, particularly in complex spine surgeries [33][36] Question: Physician reaction to new approval and reimbursement considerations - Initial physician reactions are positive, with interest in the sacropelvic component of long constructs, and existing codes are anticipated to apply for the new procedures [37][38] Question: Targeting physicians for workshops - The company has improved its targeting capabilities and is now able to provide training more efficiently at physicians' clinics [40][41]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $726,000, a 1% increase from $719,000 in Q1 2024, primarily driven by an increase in surgical implants, partially offset by a slight decrease in average selling price (ASP) due to account mix [16][17] - Gross profit for Q1 2025 was $323,000, representing 44% of revenue, compared to $470,000 or 65% of revenue in the same quarter of the previous year [17] - Net loss for Q1 2025 was $3,600,000, consistent with the loss in Q1 2024, with expectations of continued losses in the future [19][20] Business Line Data and Key Metrics Changes - The upcoming launch of the Catamaran SE platform is expected to enhance the product offering, particularly for physicians preferring a smaller implant for SI joint fusion procedures [5][6] - The FDA clearance for the Catamaran SI Joint Fusion System to augment thoracolumbar fusion expands its indications, potentially increasing market adoption [6][36] Market Data and Key Metrics Changes - The company is focusing on expanding its addressable market through the new indication for multiple spinal fusion surgeries, which is expected to significantly increase the total addressable market [36] - The company has received positive feedback from physicians regarding the new indication, indicating a strong interest in the sacropelvic component of spinal constructs [37] Company Strategy and Development Direction - The company is committed to investing in growth through commercial operations, clinical research, and product refinement, with a focus on expanding its sales force and enhancing market access efforts [14][21] - The company aims to leverage clinical research to reinforce the value proposition of its technologies and achieve positive coverage throughout the payer network [13] Management's Comments on Operating Environment and Future Outlook - Management anticipates improvements in the reimbursement environment, which has been a challenge due to coding confusion, and expects this to contribute to incremental growth [24][26] - The company is optimistic about the upcoming SE launch being an inflection point for growth, particularly in attracting more physicians to adopt the technology [28][29] Other Important Information - The company received $7,100,000 in gross proceeds from equity financing, contributing to a cash balance of $10,300,000 at the end of Q1 2025, with no outstanding debt [20] - The company is actively conducting workshops to train physicians, enhancing their ability to adopt the technology effectively [40] Q&A Session Summary Question: Expectations for top line revenues trajectory through the year - Management expects incremental growth as reimbursement issues improve and the sales team expands [25][26] Question: Impact of SE launch on growth - Management believes the SE launch will serve as an inflection point, attracting more physicians and enhancing revenue [28][29] Question: General and Administrative expenses trends - Management indicates that the lower G&A expenses in Q1 are reflective of the quarter, with expectations for additional investments in sales initiatives moving forward [30] Question: Expansion of total addressable market due to new indication - Management highlights that the new indication for multiple spinal fusion surgeries significantly increases the addressable market, addressing a critical need in the industry [36] Question: Physician reaction to new indication and reimbursement considerations - Management reports positive reactions from physicians and anticipates existing codes will apply for the new procedures [37][38] Question: Targeting physicians for workshops - Management confirms improvements in targeting and training physicians, enhancing retention rates and procedure adoption [40]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Financial%20Statements%20(unaudited)) The company reports a Q1 net loss of $3.6 million and highlights a going concern uncertainty due to insufficient cash Condensed Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $10,311 | $6,535 | | Total current assets | $11,990 | $8,210 | | **Total Assets** | **$13,394** | **$9,843** | | **Liabilities & Equity** | | | | Total current liabilities | $2,195 | $1,869 | | **Total Liabilities** | **$4,018** | **$3,872** | | **Total Stockholders' Equity** | **$9,376** | **$5,971** | Condensed Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $726 | $719 | | Gross Profit | $323 | $470 | | Loss from Operations | $(3,677) | $(3,506) | | **Net Loss** | **$(3,616)** | **$(3,576)** | | Net Loss Per Share (Basic and diluted) | $(1.01) | $(10.02) | - During Q1 2025, the company issued common stock and warrants, resulting in **net proceeds of $2,735 thousand** from an inducement agreement and **$3,524 thousand** from other offerings[17](index=17&type=chunk) - Total stockholders' equity increased to **$9,376 thousand** as of March 31, 2025, up from $5,971 thousand at December 31, 2024[17](index=17&type=chunk) Summary of Cash Flows (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,483) | $(2,338) | | Net cash used in investing activities | $0 | $(119) | | Net cash provided by financing activities | $6,259 | $4,371 | | **Net Increase in Cash** | **$3,776** | **$1,960** | - The company is a medical device firm focused on its FDA-cleared Catamaran™ SI Joint Fusion System for lower back pain[21](index=21&type=chunk) - Management has **substantial doubt about the Company's ability to continue as a going concern**, as existing cash will not be sufficient to meet obligations for at least twelve months from the filing date[25](index=25&type=chunk)[26](index=26&type=chunk) - In March 2025, the company raised **net proceeds of $2.7 million** through a warrant inducement transaction and an additional **$3.5 million** through two securities purchase agreements[43](index=43&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses flat revenue, declining gross margins, and substantial doubt about its going concern status - The company has developed the FDA-approved Catamaran™ SI Joint Fusion System to treat SI Joint dysfunction, a cause of chronic lower back pain[77](index=77&type=chunk) - As of March 31, 2025, the company had an **accumulated deficit of approximately $72.4 million** and has incurred net losses since its inception in 2012[81](index=81&type=chunk) - Management states that **existing cash and cash equivalents will not be sufficient** to fund operating expenses for at least the next 12 months, and they plan to raise additional capital[99](index=99&type=chunk) Comparison of Results for the Three Months Ended March 31 (in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $726 | $719 | $7 | 1% | | Cost of goods sold | $403 | $249 | $154 | 62% | | Gross profit | $323 | $470 | $(147) | (31)% | | Gross profit percentage | 44% | 65% | - | - | | Total operating expenses | $4,000 | $3,976 | $24 | 1% | - Sales and marketing expenses **increased by 19%** due to higher commission, payroll, and consulting fees[95](index=95&type=chunk) - General and administrative expenses **decreased by 14%**, primarily due to lower insurance and stock-based compensation costs[96](index=96&type=chunk) - The company had **cash and cash equivalents of $10.3 million** and an **accumulated deficit of $72.4 million** as of March 31, 2025[98](index=98&type=chunk)[99](index=99&type=chunk) - Management believes there is **substantial doubt in the company's ability to continue as a going concern** for the next twelve months due to insufficient capital[101](index=101&type=chunk) Cash Flow Summary for Q1 2025 vs Q1 2024 (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in Operating activities | $(2,483) | $(2,338) | | Net cash used in Investing activities | $0 | $(119) | | Net cash provided by Financing activities | $6,259 | $4,371 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from market risk disclosures as a smaller reporting company - Disclosure is not required under Regulation S-K for **"smaller reporting companies"**[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective as of March 31, 2025, due to a material weakness - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's **disclosure controls and procedures are not effective** at the reasonable assurance level[108](index=108&type=chunk) - A **material weakness exists** due to the company's inability to effectively segregate accounting duties because of its small size and limited resources[109](index=109&type=chunk) - **No changes in internal control** over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[111](index=111&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[113](index=113&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the last Annual Report - There have been **no material changes** in risk factors as previously disclosed in the Annual Report on Form 10-K filed on March 26, 2025[114](index=114&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[115](index=115&type=chunk) [Item 3. Defaults Upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[116](index=116&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[117](index=117&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) The company reported no other information - None[118](index=118&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q

Part I [Business](index=7&type=section&id=Item%201.%20Business) Tenon Medical focuses on its FDA-cleared Catamaran™ SI Joint Fusion System for sacroiliac joint disorders, launched nationally in October 2022, targeting a **$2.0 billion** U.S. market [Introduction and Opportunity](index=7&type=section&id=Item%201.%20Business%20-%20Introduction%20and%20Opportunity) Tenon Medical developed The Catamaran™ SI Joint Fusion System for SI joint disorders, launched nationally in October 2022, targeting a significantly underserved market - The company developed The Catamaran™ SI Joint Fusion System, a novel, less invasive approach for treating SI Joint disorders, which cause **15% to 30%** of all chronic lower back pain[20](index=20&type=chunk)[21](index=21&type=chunk) - Tenon estimates the potential U.S. market for surgical intervention of the SI-Joint to be **279,000 procedures annually**, representing an approximate **$2.0 billion** market[42](index=42&type=chunk) - The company believes the current market is only **5-7% penetrated**, indicating significant upside for a next-generation device[23](index=23&type=chunk)[44](index=44&type=chunk) [The Catamaran™ System and Commercialization](index=9&type=section&id=Item%201.%20Business%20-%20The%20Catamaran%E2%84%A2%20System%20and%20Commercialization) The Catamaran™ System features a unique single, dual-pontoon titanium implant designed for an inferior-posterior approach to the SI-Joint, aiming to minimize morbidity and enhance safety, with national commercial launch in October 2022 - The Catamaran System uses a single implant with a patented dual pontoon design, contrasting with competitive systems that may require multiple implants[37](index=37&type=chunk)[52](index=52&type=chunk) - The system utilizes an inferior-posterior approach, designed to be direct to the joint, pass through minimal muscle, and maintain a trajectory away from neural and vascular structures for enhanced safety[37](index=37&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk) - An independent biomechanical study demonstrated that a single Catamaran device was superior to a predicate device in fixation strength, shear stiffness, dynamic endurance, and pullout strength[70](index=70&type=chunk) - The company initiated its national commercial launch in **October 2022** and markets its system through independent distributors to a target base of approximately **12,000 physicians**[36](index=36&type=chunk)[80](index=80&type=chunk) [Coverage and Reimbursement](index=16&type=section&id=Item%201.%20Business%20-%20Coverage%20and%20Reimbursement) Reimbursement for Catamaran System procedures involves separate payments to facilities and physicians, with Medicare rates ranging from **$17,756 to $46,437** for facilities and **$807 to $1,352** for physicians 2023 Medicare National Average Reimbursement | Payer/Provider | Reimbursement Type | Amount (USD) | | :--- | :--- | :--- | | Hospital (Inpatient) | Facility Fee (depending on complexity) | $25,661 - $46,437 | | Hospital (Outpatient) | Facility Fee | $17,756 | | Physician (CPT® 27279) | Professional Fee | $807 (2022 rate) | | Physician (CPT® 27280) | Professional Fee | $1,352 (2022 rate) | - The company believes some clinicians view current Medicare reimbursement as insufficient given the work involved, and that private payors can be inconsistent in approving SI-Joint fusion procedures[78](index=78&type=chunk) [Intellectual Property and Regulation](index=20&type=section&id=Item%201.%20Business%20-%20Intellectual%20Property%20and%20Regulation) As of March 26, 2025, Tenon holds **8 issued U.S. utility patents** and **21 pending applications**, with products regulated by the FDA as Class II medical devices and subject to extensive fraud and abuse laws - As of **March 26, 2025**, the company owns **8 issued U.S. utility patents**, **21 pending U.S. utility patent applications**, and **13 registered trademarks** (**7 U.S.** and **6 foreign**)[93](index=93&type=chunk)[97](index=97&type=chunk) - The Catamaran System has received FDA **510(k) clearance** as a **Class II medical device** for sacroiliac joint fusion[83](index=83&type=chunk)[103](index=103&type=chunk) - The company is subject to extensive regulation by the FDA, including Quality System Regulation (QSR), and must comply with federal and state healthcare fraud and abuse laws such as the Anti-Kickback Statute and the Physician Payment Sunshine Act[98](index=98&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) [Manufacturing and Human Capital](index=29&type=section&id=Item%201.%20Business%20-%20Manufacturing%20and%20Human%20Capital) Tenon Medical outsources all manufacturing to five contract manufacturers without long-term agreements and, as of March 26, 2025, employed **27 full-time employees** - The company does not manufacture any products and uses five contract manufacturers for all instruments and implants, managed through purchase orders without long-term agreements[125](index=125&type=chunk)[126](index=126&type=chunk) - As of **March 26, 2025**, Tenon had **27 full-time employees** and four senior consulting advisors[132](index=132&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including recurring net losses, going concern doubt, dependence on third-party reimbursement, intense competition, and reliance on a single product line [Risks Related to Business and Operations](index=30&type=section&id=Item%201A.%20Risk%20Factors%20-%20Business%20and%20Operations) The company has a history of losses and a going concern warning, with success dependent on third-party payor reimbursement, facing intense competition and reliance on a single product - The company has a history of recurring losses and negative cash flows, and its independent auditor's report expresses substantial doubt about its ability to continue as a going concern[136](index=136&type=chunk)[137](index=137&type=chunk) - Successful commercialization depends on adequate coverage and reimbursement from third-party payors; if providers cannot obtain sufficient reimbursement, adoption of the product will be limited[138](index=138&type=chunk)[139](index=139&type=chunk) - The company is solely dependent on its single product, The Catamaran System, and its failure to gain market acceptance would materially harm financial results[161](index=161&type=chunk) - Tenon operates in a very competitive environment against major medical device companies with greater financial, technical, and marketing resources, such as SI-bone, Inc., Globus Medical, Inc., and Medtronic plc[157](index=157&type=chunk)[158](index=158&type=chunk) - The company is dependent on a limited number of contract manufacturers, some of which are single-source, and the loss of any could materially adversely affect the business[172](index=172&type=chunk) [Risks Related to Legal and Regulatory Environment](index=44&type=section&id=Item%201A.%20Risk%20Factors%20-%20Legal%20and%20Regulatory) Tenon is subject to extensive FDA and government regulations, with non-compliance or off-label promotion risking enforcement actions, fines, and product recalls - The medical device industry is extensively regulated by the FDA, and failure to comply with complex and stringent requirements could harm the business[202](index=202&type=chunk)[203](index=203&type=chunk) - The company must comply with U.S. federal and state fraud and abuse laws, including the Anti-Kickback Statute, which prohibits improper payments to induce referrals or purchases of items covered by federal healthcare programs[213](index=213&type=chunk)[214](index=214&type=chunk) - Promoting products for "off-label" uses (indications not cleared by the FDA) is prohibited and could lead to significant fines, regulatory enforcement, and reputational damage[217](index=217&type=chunk)[232](index=232&type=chunk) - Modifications to the product may require new **510(k) clearances**, and if the FDA disagrees, the company may have to cease marketing or recall the modified product[240](index=240&type=chunk)[241](index=241&type=chunk) [Risks Related to Intellectual Property](index=55&type=section&id=Item%201A.%20Risk%20Factors%20-%20Intellectual%20Property) Protecting intellectual property through patents, trademarks, and trade secrets is critical but uncertain, with risks from litigation, limited patent lifespans, and less effective foreign IP laws - The company relies on patents, trademarks, and trade secrets to protect its technology, but cannot guarantee that patents will be issued, be of sufficient scope, or that competitors will not circumvent them[252](index=252&type=chunk)[253](index=253&type=chunk) - The medical device industry is characterized by significant patent litigation; a lawsuit, even without merit, could be costly, divert management resources, and potentially prevent the company from selling its product[259](index=259&type=chunk) - Patents have a limited lifespan, generally **20 years** from filing; the company's patents may not provide protection for a sufficient duration to secure its market position[260](index=260&type=chunk) - Protecting intellectual property rights throughout the world is expensive and may be less effective in foreign countries, allowing competitors to market similar products in those jurisdictions[262](index=262&type=chunk) [Risks Related to Ownership of Common Stock and Warrants](index=58&type=section&id=Item%201A.%20Risk%20Factors%20-%20Ownership%20of%20Common%20Stock) Tenon's common stock faces high volatility, dilution risk from future sales, delisting risk due to reverse stock splits, and reduced disclosure as an "emerging growth company" - The trading price of the company's common stock has been and is likely to continue to be highly volatile[270](index=270&type=chunk) - Future sales of common stock, including up to approximately **$9.7 million** available under an equity financing facility with Lincoln Park Capital, could cause significant dilution to existing stockholders[267](index=267&type=chunk) - The company has effected two reverse stock splits (**1-for-10** and **1-for-8**) in the last two years and may be unable to cure a future Nasdaq bid price deficiency if the stock price falls below **$0.32 per share** before **November 3, 2025**[268](index=268&type=chunk) - The company is an "emerging growth company" and a "smaller reporting company," which allows for reduced public company reporting and disclosure requirements, potentially making the stock less attractive to investors[291](index=291&type=chunk) - Management has identified a material weakness in internal controls over financial reporting due to a lack of segregation of duties[280](index=280&type=chunk)[523](index=523&type=chunk) [Unresolved Staff Comments](index=64&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - The company reports no unresolved staff comments[300](index=300&type=chunk) [Cybersecurity](index=65&type=section&id=Item%201C.%20Cybersecurity) The company maintains a cyber-risk management program overseen by the Board of Directors and has not experienced any significant cybersecurity attacks to date - The company has a cyber-risk management program overseen by the Board of Directors to manage threats to its data and information systems[301](index=301&type=chunk)[303](index=303&type=chunk) - As of the report date, the company has not experienced any significant cybersecurity attacks, and these risks have not materially affected the business[304](index=304&type=chunk) [Properties](index=65&type=section&id=Item%202.%20Properties) The company leases its primary office space at 104 Cooper Court, Los Gatos, CA 95032 and does not own any real estate - The company's principal executive offices are leased and located at **104 Cooper Court, Los Gatos, CA 95032**[305](index=305&type=chunk) [Legal Proceedings](index=65&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no legal proceedings - The company reports no legal proceedings[306](index=306&type=chunk) [Mine Safety Disclosures](index=65&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - This item is not applicable to the company[307](index=307&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=66&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "TNON", with **5,584,965 shares** outstanding as of March 26, 2025, and no cash dividends expected in the foreseeable future - The company's common stock trades on the Nasdaq Capital Market under the symbol "**TNON**"[309](index=309&type=chunk) - As of **March 26, 2025**, there were **5,584,965 shares** of common stock outstanding held by **61 stockholders of record**[309](index=309&type=chunk) - The company has never declared or paid a cash dividend and does not expect to in the foreseeable future[310](index=310&type=chunk) Equity Compensation Plan Information as of December 31, 2024 | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 31,546 | $20.79 | 135,971 | | Total | 31,546 | $20.79 | 135,971 | [Reserved](index=68&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=69&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For FY2024, revenue increased **12%** to **$3.3 million**, net loss decreased to **$13.7 million**, and the company raised **$6.2 million** in March 2025, but substantial doubt about going concern remains [Overview](index=69&type=section&id=Item%207.%20MD%26A%20-%20Overview) Tenon Medical, commercializing its Catamaran™ SI Joint Fusion System, has incurred significant net losses since 2012, with an accumulated deficit of **$68.7 million** as of December 31, 2024 - The company has incurred net losses since its **2012 inception** and had an accumulated deficit of approximately **$68.7 million** as of **December 31, 2024**[334](index=334&type=chunk) - The company executed a **1-for-10 reverse stock split** in **November 2023** and a **1-for-8 reverse stock split** in **September 2024**, with all historical share and per-share data adjusted[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk) [Results of Operations](index=74&type=section&id=Item%207.%20MD%26A%20-%20Results%20of%20Operations) In 2024, revenue increased **12%** to **$3.3 million**, gross margin improved to **52%**, and total operating expenses decreased **9%**, leading to a reduced loss from operations of **$13.8 million** Comparison of Operations for Years Ended December 31, (in thousands) | | 2024 | 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$3,277** | **$2,928** | **$349** | **12%** | | Cost of goods sold | $1,566 | $1,687 | ($121) | (7)% | | **Gross Profit** | **$1,711** | **$1,241** | **$470** | **38%** | | *Gross Margin* | *52%* | *42%* | | | | Research and development | $2,603 | $3,163 | ($560) | (18)% | | Sales and marketing | $5,109 | $6,778 | ($1,669) | (25)% | | General and administrative | $7,765 | $7,027 | $738 | 11% | | **Total operating expenses** | **$15,477** | **$16,968** | **($1,491)** | **(9)%** | | **Loss from operations** | **($13,766)** | **($15,727)** | **$1,961** | **(12)%** | | **Net loss** | **($13,673)** | **($15,581)** | **$1,908** | **(12)%** | - The **12% increase** in revenue was primarily due to an increase in revenue per surgical procedure[360](index=360&type=chunk) - Sales and marketing expenses decreased by **$1.7 million** (**25%**) mainly due to the absence of 2023 SpineSource transition fees and lower payroll expenses[363](index=363&type=chunk) - General and administrative expenses increased by **$0.7 million** (**11%**) due to higher insurance, legal, and payroll costs[364](index=364&type=chunk) [Liquidity and Capital Resources](index=75&type=section&id=Item%207.%20MD%26A%20-%20Liquidity%20and%20Capital%20Resources) As of December 31, 2024, the company had **$6.5 million** in cash and an accumulated deficit of **$68.7 million**, raising substantial doubt about going concern, despite raising **$6.2 million** in March 2025 - As of **December 31, 2024**, the company had cash and cash equivalents of **$6.5 million** and an accumulated deficit of **$68.7 million**[367](index=367&type=chunk)[372](index=372&type=chunk) - Management believes existing cash is not sufficient to fund operations for at least the next **12 months**, raising substantial doubt about the company's ability to continue as a going concern[372](index=372&type=chunk)[373](index=373&type=chunk) - In **March 2025**, the company raised net proceeds of **$2.7 million** from a warrant inducement agreement and an additional **$3.5 million** from two registered direct offerings[368](index=368&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk) Net Cash Flow Summary (in thousands) | | Years Ended December 31, | | :--- | :--- | | | 2024 | 2023 | | Net cash used in operating activities | $(9,878) | $(12,183) | | Net cash (used in) provided by investing activities | $(186) | $6,142 | | Net cash provided by financing activities | $14,125 | $6,302 | [Quantitative and Qualitative Disclosures about Market Risk](index=77&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Tenon Medical, Inc. is not required to provide the information for this item - The Company is a smaller reporting company and is not required to provide the information under this item[378](index=378&type=chunk) [Financial Statements and Supplementary Data](index=79&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited consolidated financial statements for 2024 and 2023 are presented, with the auditor's report highlighting going concern doubt due to recurring losses and limited capital [Report of Independent Registered Public Accounting Firm](index=80&type=section&id=Item%208.%20Financial%20Statements%20-%20Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion but included a "Going Concern" paragraph due to recurring losses, negative cash flows, and limited capital resources - The auditor's report contains a "Going Concern" paragraph, noting that the company's recurring losses, negative cash flows, and limited capital resources raise substantial doubt about its ability to continue as a going concern[385](index=385&type=chunk) [Key Financial Data](index=81&type=section&id=Item%208.%20Financial%20Statements%20-%20Key%20Financial%20Data) For FY2024, the company reported a net loss of **$13.7 million** on revenues of **$3.3 million**, with total assets of **$9.8 million** and total liabilities of **$3.9 million** as of December 31, 2024 Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $6,535 | $2,428 | | Total current assets | $8,210 | $3,889 | | **Total Assets** | **$9,843** | **$6,345** | | **Liabilities & Equity** | | | | Total current liabilities | $1,869 | $3,140 | | **Total Liabilities** | **$3,872** | **$5,567** | | **Total Stockholders' Equity** | **$5,971** | **$778** | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Revenue | $3,277 | $2,928 | | Gross Profit | $1,711 | $1,241 | | Loss from Operations | $(13,766) | $(15,727) | | **Net Loss** | **$(13,673)** | **$(15,581)** | | Net Loss Per Share (Basic & Diluted) | $(11.26) | $(68.64) | [Selected Notes to Financial Statements](index=85&type=section&id=Item%208.%20Financial%20Statements%20-%20Notes%20to%20Financials) Key notes highlight going concern uncertainty, **$41.6 million** in federal NOL carryforwards, a **$2.1 million** termination liability, and significant capital raised in March 2025 - The financial statements were prepared assuming the company will continue as a going concern, but management notes there is substantial doubt due to recurring losses and negative cash flows; the company plans to raise additional capital to fund operations (Note 2)[401](index=401&type=chunk)[402](index=402&type=chunk) - The company has federal net operating loss carryforwards of approximately **$41.6 million** and state NOLs of **$27.3 million**, but a full valuation allowance has been recorded against the resulting deferred tax assets (Note 11)[501](index=501&type=chunk)[502](index=502&type=chunk) - In **March 2025**, the company raised net proceeds of **$2.7 million** from a warrant exercise inducement transaction and a total of **$3.5 million** from two separate registered direct offerings (Note 13)[510](index=510&type=chunk)[512](index=512&type=chunk)[513](index=513&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=110&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - The company reports no changes in or disagreements with its accountants on accounting and financial disclosure[515](index=515&type=chunk) [Controls and Procedures](index=110&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective as of December 31, 2024, due to a material weakness in internal control over financial reporting from lack of segregation of duties - Management concluded that the company's disclosure controls and procedures were not effective as of **December 31, 2024**[517](index=517&type=chunk) - A material weakness was identified in internal control over financial reporting due to a lack of segregation of duties, stemming from the company's limited size and resources[518](index=518&type=chunk)[519](index=519&type=chunk)[523](index=523&type=chunk) - The company plans to remediate the weakness by increasing the capacity of its qualified financial personnel[520](index=520&type=chunk)[524](index=524&type=chunk) [Other Information](index=111&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - The company reports no other information[527](index=527&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=111&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reports no disclosures regarding foreign jurisdictions that prevent inspections - The company reports no disclosures regarding foreign jurisdictions that prevent inspections[528](index=528&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=112&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) As of March 26, 2025, the board consists of seven directors, four independent, with three standing committees, and the company has adopted a code of ethics and related policies - The Board of Directors consists of **seven members**, with **four** determined to be independent: Ivan Howard, Kristine M. Jacques, Robert K. Weigle, and Stephen H. Hochschuler, M.D[546](index=546&type=chunk)[548](index=548&type=chunk) - The Board has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each with a defined charter[549](index=549&type=chunk) - The company has adopted a Code of Ethics, an executive compensation clawback policy, and an insider trading policy[555](index=555&type=chunk)[556](index=556&type=chunk)[557](index=557&type=chunk) [Executive Compensation](index=120&type=section&id=Item%2011.%20Executive%20Compensation) For FY2024, total compensation for CEO Steven M. Foster was **$368,521**, CFO Kevin Williamson **$123,942**, and CTO Richard Ginn **$285,333**, with independent directors receiving **$243,915** 2024 Summary Compensation Table | Name and Principal Position | Salary ($) | Bonus ($) | Option/RSU Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Steven M. Foster, CEO | 363,784 | — | 4,737 | 368,521 | | Kevin Williamson, CFO | 102,127 | — | 21,815 | 123,942 | | Steven Van Dick, former CFO | 318,128 | — | 3,842 | 321,970 | | Richard Ginn, CTO | 282,716 | — | 2,617 | 285,333 | - The company has employment agreements with its named executive officers (Foster, Ginn, Williamson) that include provisions for base salary, annual bonus, and severance upon termination without cause or for good reason[571](index=571&type=chunk)[575](index=575&type=chunk)[578](index=578&type=chunk) - Independent directors received a total of **$243,915** in compensation for fiscal year 2024, primarily in cash retainers and committee fees[585](index=585&type=chunk)[586](index=586&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=124&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 26, 2025, officers and directors as a group beneficially owned less than **1%** of common stock, while key 5%+ stockholders include The Beckham-Shufeldt Family Trust and Ascent Special Ventures LLC - As of **March 26, 2025**, all officers and directors as a group beneficially owned **25,442 shares** of common stock, representing less than **1%** of the class[598](index=598&type=chunk) 5%+ Stockholders as of March 26, 2025 | Name of Beneficial Owner | Class of Stock | Percent of Class | | :--- | :--- | :--- | | The Beckham-Shufeldt Family Trust | Series A Preferred | 25.7% | | Ascent Special Ventures LLC | Series A Preferred | 26.4% | | Dr. James Chappuis | Series B Preferred | 9.1% | | Norton Capital LLC | Series B Preferred | 9.1% | | MNAZ Investment Properties | Series B Preferred | 9.1% | | Vantage FBO Jonathan Fitzhugh Beneficiary IRA | Series B Preferred | 9.1% | | Vantage FBO Todd Douma IRA | Series B Preferred | 9.1% | | The 2017 Theresa A Lungwitz Rev Trust | Series B Preferred | 9.1% | [Certain Relationships and Related Party Transactions, and Director Independence](index=127&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Party%20Transactions%2C%20and%20Director%20Independence) The company has a consulting agreement with Richard Ferrari, its Executive Chairman, under which he receives compensation for his role - The company has a consulting agreement with Richard Ferrari, its Executive Chairman, for which he received compensation of **$270,000** and **$247,500** in fiscal years **2024** and **2023**, respectively[600](index=600&type=chunk)[590](index=590&type=chunk) [Principal Accountant Fees and Services](index=127&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) For FY2024, total fees from Haskell & White LLP were **$384,600**, while in 2023, fees were **$158,500** from Haskell & White LLP and **$234,083** from Armanino LLP Accountant Fees (Haskell & White LLP) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees | $210,600 | $158,500 | | Audit-related fees | $174,000 | — | | **Total fees** | **$384,600** | **$158,500** | Accountant Fees (Armanino LLP) | Fee Type | 2023 | | :--- | :--- | | Audit fees | $179,102 | | Audit-related fees | $54,981 | | **Total fees** | **$234,083** | Part IV [Exhibits, Financial Statement Schedules](index=128&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including corporate documents and officer certifications - This item provides a list of all financial statements, schedules, and exhibits filed with the Form 10-K[605](index=605&type=chunk) [Form 10-K Summary](index=130&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - This item is not applicable[609](index=609&type=chunk)

Financial Data and Key Metrics Changes - Revenue for the full year 2024 increased by 12% to $3.3 million compared to $2.9 million in 2023 [6][19] - Gross margin improved by 10 percentage points to 52% for the full year 2024, up from 42% in the prior year [7][22] - Net loss for the fourth quarter of 2024 was $3.1 million, flat compared to the same period in 2023, while the annual net loss decreased to $13.7 million from $15.6 million [24][25] Business Line Data and Key Metrics Changes - Fourth quarter revenue was $770,000, a decrease of 4.7% from $808,000 in the fourth quarter of 2023, primarily due to a decline in the number of surgical procedures [19][20] - The number of procedures in the fourth quarter was impacted by reimbursement pre-authorization delays and the timing of the restructured sales force [21] Market Data and Key Metrics Changes - The company experienced a revenue decline in the fourth quarter due to temporary reimbursement pre-authorization headwinds, which are expected to improve with future coding clarity [7][21] - The Catamaran System's average selling price (ASP) improved due to account mix and market access efforts [20] Company Strategy and Development Direction - The company is focused on expanding its sales and marketing efforts to build market share for the Catamaran System, with a full commercial launch of the Catamaran SE platform planned for mid-2025 [8][9] - Tenon Medical is committed to funding clinical research to reinforce the safety and effectiveness of its technologies, with ongoing studies like MAINSAIL evaluating patient outcomes [12][16] Management's Comments on Operating Environment and Future Outlook - Management anticipates improvements in the reimbursement landscape, noting that significant progress has been made in obtaining clarity on coding and approvals [32][33] - The company expects to incur additional losses in the future but is optimistic about improving its net loss with ongoing investments in growth initiatives [25][24] Other Important Information - The company received three U.S. patents related to its Catamaran portfolio during the fourth quarter, enhancing its competitive position [10][11] - As of December 31, 2024, the company had cash and cash equivalents of $6.5 million, significantly up from $2.4 million a year prior, and no outstanding debt [25][26] Q&A Session Summary Question: Any improvement in the reimbursement landscape now that you have more data? - Management indicated that while they do not control the reimbursement environment, significant progress has been made in obtaining clarity on coding and approvals [32][33] Question: What is the plan for adding sales personnel in 2025? - Management confirmed that they have made significant additions to the sales organization and anticipate having more coverage in key geographies [36][37] Question: How many independent distributors are currently engaged? - Management stated that there are 42 existing independent distributor contracts, with varying sizes of distributorships [41][42]

Financial Data and Key Metrics Changes - Revenue for the full year 2024 increased by 12% to $3.3 million compared to $2.9 million in 2023 [6][19] - Gross margin improved by 10 percentage points to 52% for the full year 2024, up from 42% in the prior year [7][22] - Fourth quarter revenue decreased by 4.7% to $770,000 compared to $808,000 in the fourth quarter of 2023 [19][20] - Net loss for the fourth quarter of 2024 was $3.1 million, flat compared to the same period in 2023, while the annual net loss decreased to $13.7 million from $15.6 million [24][25] Business Line Data and Key Metrics Changes - The number of surgical procedures using the Catamaran System showed a slight decrease in the fourth quarter, impacting revenue [20][21] - The alpha clinical review of the Catamaran SE platform was completed, with a full commercial launch expected in mid-2025 [8][9] Market Data and Key Metrics Changes - The reimbursement landscape remains challenging, with delays in pre-authorization impacting the number of procedures performed [19][33] - The company is actively working with decision-makers to improve clarity in the reimbursement environment [32][34] Company Strategy and Development Direction - The company is focused on expanding its sales force and enhancing market access efforts to drive revenue growth [21][37] - Investments are being made in the Catamaran SE platform and the MAINSAIL prospective study to support future growth [18][25] Management's Comments on Operating Environment and Future Outlook - Management anticipates that improvements in reimbursement clarity will positively impact future operations [33] - The company expects to incur additional losses in the future but is optimistic about improving its net loss over time [24][25] Other Important Information - The company received three U.S. patents related to the Catamaran portfolio during the fourth quarter, enhancing its competitive position [10][11] - The Catamaran SI Joint Fusion System's intellectual property portfolio now includes 12 issued patents and 23 pending applications [11] Q&A Session Summary Question: Any improvement in the reimbursement landscape? - Management noted that while they do not control the reimbursement environment, significant progress is being made towards clarity in the space [32][33] Question: Plans for sales perspective in 2025? - The company has made significant additions to its sales organization and anticipates increased coverage in key geographies [36][37] Question: How many independent distributors are currently engaged? - There are 42 existing independent distributor contracts, with varying sizes of distributorships [41][42]

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $887,000, a decrease of 6% compared to $944,000 in Q3 2023. For the nine months ended September 30, 2024, revenue was $2.5 million, an increase of 18% compared to $2.1 million in the prior year period [27] - Gross profit in Q3 2024 was $418,000, or 47% of revenue, compared to $535,000 or 57% of revenue in Q3 2023. For the nine months ended September 30, 2024, gross profit was $1.4 million, or 54% of revenue, compared to $682,000 or 32% of revenue in the prior year period [29] - Net loss was $3.2 million for Q3 2024, an improvement from a net loss of $3.3 million in the same period in 2023. For the nine months ended September 30, 2024, net loss was $10.6 million, improving from $12.6 million in the previous year period [33] Business Line Data and Key Metrics Changes - Surgical procedures utilizing the Catamaran System increased by 5% for the nine months ended September 30, 2024, but decreased by 15% in Q3 2024 compared to the same quarter in the previous year [27][28] - The company introduced the Catamaran SE, a second-generation and smaller version of their implant, which is expected to enhance market share during its second year of commercialization [10][12] Market Data and Key Metrics Changes - The company experienced unexpected reimbursement preauthorization headwinds, attributed to coding confusion, which is expected to improve with upcoming coding clarity [8][39] - The company anticipates that the combination of coding clarity and new clinical data will positively impact reimbursement issues going forward [40][42] Company Strategy and Development Direction - The company is focused on building market share for the Catamaran System and securing capital to fund growth initiatives [6] - A significant component of the growth strategy includes investment in clinical research to reinforce the safety and effectiveness of the Catamaran System [14] - The company plans to expand its sales force and continue its post-market study with the publication of further analysis for the Catamaran [11][34] Management's Comments on Operating Environment and Future Outlook - Management believes that the reimbursement impacts and timing of sales force restructuring will become tailwinds moving forward [28] - The company expects to maintain momentum and is excited about the growth trajectory supported by capital resources and expanding commercial infrastructure [36] Other Important Information - The company received an investment of approximately $9.6 million during the quarter, which will be used to expand the sales force and advance the launch of the new Catamaran SE [11][34] - The U.S. Patent Office issued three patents related to the enhanced Catamaran prosthesis, strengthening the company's competitive position [23][24] Q&A Session Summary Question: What caused the unexpected reimbursement preauthorization headwinds? - Management indicated that reimbursement issues are regional and stemmed from coding confusion, which is expected to improve with clarity from recent AMA meetings [38][39] Question: How is the feedback from physicians regarding the system? - Management confirmed that feedback has been positive, leading to the development of the Catamaran SE, which is a smaller version of the system to meet varying physician preferences [43][44] Question: Is the expansion of the sales force currently underway? - Management stated that the expansion of the sales force is an active initiative and will continue over the coming months and quarters [45]

Financial Data and Key Metrics Changes - Revenue for Q1 2024 was $719,000, a 66% increase compared to $433,000 in Q1 2023, primarily driven by a 42% rise in surgical procedures using the Catamaran system [17][7][20] - Gross profit in Q1 2024 was $470,000, representing a gross margin of 65%, compared to a gross loss of $47,000 in the same period last year [18][20] - Operating losses decreased to $3.5 million in Q1 2024 from $4.9 million in Q1 2023, with net loss also improving to $3.6 million from $4.8 million [19][20] Business Line Data and Key Metrics Changes - The Catamaran system saw a 42% increase in surgical procedures during Q1 2024, contributing to the overall revenue growth [7][17] - The company reported its fourth consecutive quarter of positive gross profit, maintaining a steady gross margin of 65% [7][18] Market Data and Key Metrics Changes - Coverage was achieved in two of five geographic regions, with new personnel added to enhance market penetration [6][5] - The company is focusing on a go-to-market strategy targeting SI-focused physicians and network partners [6][5] Company Strategy and Development Direction - The company is prioritizing the scale of its commercialization strategy for the Catamaran system, aiming to broaden its strategic marketing and promotion efforts [22][13] - The addition of Kristine Jacques to the Board of Directors is expected to provide valuable insights into go-to-market strategies in the medical device field [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing momentum in the market, supported by year-over-year increases in Catamaran procedures and positive interim clinical results [23][24] - The company is committed to delivering technologies that improve patient outcomes while pursuing long-term value for shareholders [24] Other Important Information - The company generated $2.6 million from a preferred stock raise and retired $1.25 million in secured debt during Q1 2024, strengthening its balance sheet [15][20] - The ongoing post-market clinical study is nearing completion of enrollment, with interim analysis expected in fall 2024 [10][9] Q&A Session Summary Question: What is the mix between interventional pain physicians and spine surgeons in the workshops? - The company reported a 50-50 mix between orthopedic and neuro spine surgeons and interventional pain surgeons in their workshops [26] Question: How many patients were in the first group of data released from the post-market study? - The first group included six patients who reached the 12-month milestone, with future data releases expected to show increasing numbers [28][31] Question: What is the maximum number of patients for the study and when will physicians feel comfortable using the data? - The study is set for a maximum of 50 patients, with physicians likely to be influenced by the interim analysis at the 12-month mark [32][33] Question: How many active sites are involved in the study? - There are currently eight active sites, with enrollment nearing completion [38] Question: How does the company anticipate the rollout of physician training? - The company expects an increase in training volume as compelling clinical data becomes available, leading to more inquiries from physicians [41] Question: What is the expected gross margin at normal volume? - The company anticipates maintaining a gross margin of around 65% initially, with potential to reach mid-70s as volumes increase [46][48]