Tenon Medical(TNON) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements (unaudited) Unaudited H1 2025 statements reveal decreased revenue, continued net losses, asset growth from financing, and substantial doubt about going concern Condensed Balance Sheets 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] Condensed Statements of Operations and Comprehensive Loss 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] Condensed Statements of Convertible Preferred Stock and Stockholders' Equity - Total stockholders' equity increased from $5.97 million at December 31, 2024, to $6.71 million at June 30, 2025[19][20] - 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] Condensed Statements of Cash Flows 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] Notes to Condensed Financial Statements - 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] - 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][30] - 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][50][51] - 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][72] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes H1 2025 revenue decline to fewer procedures, reduced operating expenses, but liquidity remains critical with going concern doubt 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] - 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] Results of Operations 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] - 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][99][100] Liquidity and Capital Resources - 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][104] - 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][105] - 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][108] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings during the period - There are no legal proceedings to report[117] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - The company reported no unregistered sales of equity securities[119] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported[121] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[122] Item 5. Other Information The company reported no other information - None reported[123] Item 6. Exhibits 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]