TNON 10-K & 10-Q changes, risk factors and insider trading

Our business business is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occur, our business and financial performance could be adversely affected, our actual results could differ materially from our expectations, and the price of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties not currently known to us or that we currently do not believe are material that may adversely affect our business and financial performance. You should carefully consider the risks described below, together with all other information included in this Annual Report on Form 10-K, including our financial statements and related notes, before making an investment decision. If any of the adverse developments described in the following risk factors actually occurs,occur, our business, financial condition, or results of operations could be harmed. In that case, the trading price of our common stock could decline, and investors in our securities may lose all or part of their investment.

Our recurring losses from operations and negative cash flows raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements for the fiscal year ended, December 31, 2024,2025, describing the existence of substantial doubt about our ability to continue as a going concern. Our expected future capital requirements may depend on many factors including expanding our clinician base, increasing the rate at which we train clinicians, the number of additional clinical papers initiated, and the timing and extent of spending on the development of our technology to increase our product offerings. We may need additional funding to fund our operationsoperations, but additional funds may not be available to us on acceptable terms on a timely basis, if at all. We may seek funds through borrowings or through additional rounds of financing, including private or public equity or debt offerings. If we raise additional funds by issuing equity securities, our stockholders may may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation or asset sale transactions. Any future debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. Furthermore, we cannot be certain that additional funding will be available on acceptable terms, if at all. If we are unable to raise additional capital or generate sufficient cash from operations to adequately fund our operations, we will need to curtail planned activities to reduce costs, which will likely harm our ability to execute on our business plan and continue operations.

Growing sales of our productproducts dependsdepend on the availability of adequate coverage and reimbursement from third-party payors, including government programs programs such as Medicare and Medicaid, private insurance plans, and managed care programs. Hospitals, clinicians, and other healthcare providers providers that purchase or use medical devices generally rely on third-party payors to pay for all or part of the costs and fees associated with with the procedures performed with these devices.

Adequate coverage coverage and reimbursement for procedures performed with our products is central to the acceptance of our current and future products. We may be unable to sell our products on a profitable basis if third-party payors deny coverage, continue to deny coverage or reduce their current levels of payment, or if our costs for the productproducts increase faster than increases in reimbursement levels.

Many private payors refer to coverage decisions and payment amounts determined by the Centers for Medicare and Medicaid Services, or CMS, which administers the Medicare program, as guidelines for setting their coverage and reimbursement policies. By June 30, 2016, all Medicare Administrative Contractors were regularly reimbursing for minimally invasive and/or open SI-JointSI Joint fusion. Private payors that do not follow the Medicare guidelines may adopt different coverage and reimbursement policies for procedures performed with our products. Private commercial payors have been slower to adopt positive coverage policies for minimally invasive and/or open SI-JointSI Joint fusion, and many private payors still have policies that treat the procedure as experimental or investigational and do not regularly reimburse for the procedure. Future action by CMS or third-party payors may further reduce the availability of payments to physicians, outpatient surgery centers, and/or hospitals for procedures using our products.

When a Tenon procedure utilizing The Catamaran System or The SImmetry+ System is performed, both the clinician and the healthcare facility, a hospital (inpatient or outpatient clinic), submit claims for reimbursement to the patient’s insurer. Generally, the facility obtains a lump sum payment, or facility fee, for SI-JointSI Joint fusions. Our products are purchased by the facility, along with other supplies used in the procedure. The facility must also pay for its own fixed costs of operation, including certain operating room personnel involved in the procedure, and other medical services care. If these costs exceed the facility reimbursement, the facility’s managers may discourage or restrict clinicians from performing the procedure in the facility or using certain technologies, such as The Catamaran System or The SImmetry+ System, to perform the procedure.

The Medicare 2023 2025 national average hospital outpatient clinic payment is $17,756.$17,914. We believe that insurer payments to facilities are generally adequate adequate for these facilities to offer The Catamaran System and The SImmetry+ System. However, there can be no guarantee that these facility payments will not decline in the future. The number of procedures performed, and the prices paid for our implants may maydecline in the future decline if payments to facilities for SI-JointSI Joint fusions decline.

Clinicians are are reimbursed separately for their professional time and effort to perform a surgical procedure. Depending on the surgical approach, the the incision size, type and extent of imaging guidance, indication for procedure, and the insurer, The Catamaran System procedureand The SImmetry+ System procedures may be reported by the clinician using any one of the applicable following CPT® codes 27279,27279 27280,and 27299.27280. The Medicare 20222026 nationalpayment average paymentrates for CPT® codes 27279 isand $80727280 are $759 and $1,325$1,284, for 27280. CPT® 27299 has no national valuation. Clinicians, however, can present a crosswalk to another procedure believed to be fairly equivalent and/or comparison to a code for which there is an existing valuation.respectively.

We believe that some clinicians view the current Medicare reimbursement amount as insufficient for the procedure, given the work effort involved with the procedure, including the time to diagnose the patient and obtain prior authorization from the patient’s health insurer when necessary. Many private payors require extensive documentation of a multi-step diagnosis before authorizing SI-JointSI Joint fusion for a patient. We believe that some private payors apply their own coverage policies and criteria inconsistently, and clinicians may experience difficulties in securing approval and coverage for sacroiliac fusion procedures. Additionally, many private payors limit coverage for open SI-Joint SI Joint fusion to trauma, tumors or extensive spine fusion procedures involving multiple levels. The perception by physicians that the reimbursement for SI-JointSI Joint fusion is insufficient to compensate them for the work required, including diagnosis, documentation, obtaining payor approval for the procedure, and burden on their office staff, may negatively affect the number of procedures performed and may therefore impede the growth of our revenues or cause them to decline.

We may not be able to convince physicians that The Catamaran System isand anThe SImmetry+ System are attractive alternativealternatives to our competitors’ products and that our procedure isprocedures are an attractive alternative to existing surgical and non-surgical treatments of the SI-Joint.SI Joint.

Clinicians play play the primary role in determining the course of treatment in consultation with their patients and, ultimately, the product that will be be used to treat a patient. In order for us to sell The Catamaran System and The SImmetry+ System successfully, we must convince clinicians through education and training that treatment with The Catamaran System and The SImmetry+ System is beneficial, safe, and cost-effective for patients as compared to our competitors’ products. If we are not successful in convincing clinicians of the merits of The Catamaran System and The SImmetry+ System, they may not use our product, and we will be unable to increase our sales and achieve or grow profitability.

Historically, most most spine clinicians did not include SI-JointSI Joint pain in their diagnostic work-up because they did not have an adequate surgical procedure to to perform for patients diagnosed with the condition. As a result, some patients with lower back pain resulting from SI-JointSI Joint dysfunction are misdiagnosed. We believe that educating clinicians and other healthcare professionals about the clinical merits and patient benefits of The Catamaran System and The SImmetry+ System is an important element of our growth. If we fail to effectively educate clinicians and other medical professionals, they may not include a SI-JointSI Joint evaluation as part of their diagnosis and, as a result, those patients may continue to receive unnecessary or only non-surgical treatment.

Furthermore, we we believe clinicians may not widely adopt The Catamaran System or The SImmetry+ System unless they determine, based on experience, clinical data, and published peer-reviewed publications, that surgical intervention provides benefits or is an attractive alternative to non-surgical treatments of SI-Joint SI Joint dysfunction. In addition, we believe support of our products relies heavily on long-term data showing the benefits of using our product. If we are unable to provide that data, clinicians may not use our product. In such circumstances, we may not achieve expected sales and may be unable to achieve profitability.

Clinicians and payors may not find our clinical evidence to be compelling, which could limit our sales, and on-going and future research may prove our productproducts to be less safe and effective than initially anticipated.

All of the component parts of The Catamaran System and The SImmetry+ System have either received premarket clearance under Section 510(k) of the U.S. federalFederal Food, Drug, and Cosmetic Act, or FDCA, or are exempt from premarket review. The 510(k) clearance process of the U.S. Food and Drug Administration, orFDA FDA, requires us to document that our productproducts isare “substantially equivalent” to another 510(k) -cleared product. The 510(k) process process is shorter and typically requires the submission of less supporting documentation than other FDA approval processes, such as a premarket approval, or PMA, and does not usually require pre-clinical or clinical studies. Additionally, to date, we have not been required to complete clinical studies in connection with the sale of our product. For these reasons, clinicians may be slow to adopt our product, third-party payors may be slow to provide coverage, and we may be subject to greater regulatory and product liability risks. Further, Further, future patient studies or clinical experience may indicate that treatment with our productproducts does not improve patient outcomes. Such results would slow the adoption of our productproducts by clinicians, significantly reduce our ability to achieve expected sales, and could prevent prevent us from achieving profitability. Moreover, if future results and experience indicate that our productproducts causescause unexpected or serious complications complications or other unforeseen negative effects, we could be subject to mandatory product recalls, suspension, or withdrawal of FDA clearance.

Pricing pressure pressure from our competitors, changes in third-party coverage and reimbursement, healthcare provider consolidation, payor consolidation and the proliferation of “physician-owned distributorships” may impact our ability to sell our productproducts at prices necessary to support our current business strategies.

If competitive competitive forces drive down the prices we are able to charge for our product,products, our profit margins will shrink, which will adversely affect our ability to invest in and grow our business. The SI-JointSI Joint fusion market has attracted numerous new companies and technologies. As a result of this increased competition, we believe there will be continued and increased pricing pressure, resulting in lower gross margins, with respect to our product.

Even to the extent our productproducts and procedures using our productproducts are currently covered and reimbursed by third-party private and public payors, adverse changes in coverage and reimbursement policies that affect our product, discounts, and number of implants used may also drive our prices down and harm our ability to market and sell our product.

We are unable to predict what changes will be made to the reimbursement methodologies used by third-party payors. We cannot be certain that under current and future payment systems, in which healthcare providers may be reimbursed a set amount based on the type of procedure performed, such as those utilized by Medicare and in many privately managed care systems, the cost of our productproducts will be justified and incorporated into the overall cost of the procedure. In addition, to the extent there is a shift from inpatient setting to outpatient settings, we may experience pricing pressure and a reduction in the number of The Catamaran System procedures performed.

The Company’s Catamaranproducts System isare subject to intense competition. Many of our competitors are major medical device companies that have substantially greater financial, technical, and marketing resources than we do, and they may succeed in developing products that would render our product products obsolete or non-competitive. In addition, many of these competitors have significantly longer operating histories and more established reputations reputations than we do. Our field is intensely competitive, subject to rapid change and highly sensitive to the introduction of new products or other market activities of industry participants. Our ability to compete successfully will depend on our ability to develop proprietary products products that reach the market in a timely manner, receive adequate coverage and reimbursement from third-party payors, and are safer, less invasive, and more effective than alternatives available for similar purposes as demonstrated in peer-reviewed clinical publications. Because of the size of the potential market, we anticipate that other companies will dedicate significant resources to developing competing products.

In the United States, we believe that our primary competitors are currently SI-bone, Inc., Globus Medical, Inc., Medtronic plc, XTant Medical Holdings, Inc., and RTI Surgical, Inc. At any time, these or other industry participants may develop alternative treatments, products or procedures for the treatment of the SI-JointSI Joint that compete directly or indirectly with our product. If alternative treatments are, or are perceived to be, superior to our product, sales of our productproducts and our results of operations could be negatively affected. Some of our larger competitors are either publicly traded or divisions or subsidiaries of publicly traded companies. These competitors may enjoy several competitive advantages over us, including:

New participants participants have increasingly entered the medical device industry. Many of these new competitors specialize in a specific product or focus on a particular market segment, making it more difficult for us to increase our overall market position. The frequent introduction by competitors of products that are or claim to be superior to our productproducts or that are alternatives to our existing or planned products may make it difficult to differentiate the benefits of our productproducts over competing products. In addition, the entry of multiple new products and competitors may lead some of our competitors to employ pricing strategies that could adversely affect the pricing of our product products and pricing in the market generally.

As a result, without the timely introduction of new products and enhancements, our productproducts may become obsolete over time. If we are unable to develop innovative new products, maintain competitive pricing, and offer products that clinicians and other physicians perceive to be as reliable as those of our competitors, our sales or margins could decrease, thereby harming our business.

Presently we do not sell any products other than The Catamaran SystemSystem, The SImmetry+ System, and related tools and instruments. Therefore, we are solely dependent on widespread market adoption of Thethese Catamaran Systemproducts and we will continue to be dependent on the success of this single productthese products for the foreseeable future. There can be no assurance that Theeither Catamaran Systemsystem will gain a substantial degree of market acceptance among clinicians, patients or healthcare providers. Our failure to successfully increase sales of Thethese Catamaran Systemproducts or any other event impeding our ability to sell The Catamaran System,them, would result in a material adverse effect on our results of operations, financial condition and continuing operations.

Even though we were formed in 20122012, we have justrecently built the infrastructure necessary to commercially launchcommercialize The Catamaran System and The SImmetry+ System. Accordingly, we have a limited operating history upon which to base an evaluation of our business and prospects. In assessing our prospects, you must consider the risks and difficulties frequently encountered by early-stage companies in new and rapidly evolving markets, particularly companies engaged in the development and sales of medical devices. These risks include our inability to:

Since we had our first sales of the Catamaran System in April 2021 and2021, our official national launch commencedof the Catamaran System in October 2022,2022 and acquired The SImmetry+ System in August 2025, we have limited history with respect to how rapidly adoption of Theour Catamaran System products will occur. Sales growth could be slower than we have projected. Our sales and results of operations will be affected by numerous factors, including, among other things:

Our business strategy was based on assumptions about the market that might prove wrong. We believe that various demographics and industry-specific trends will help drive growth in the market and our business, but these demographics and trends have been and will continue to be uncertain. Actual Actual demand for our productproducts could differ materially from projected demand if our assumptions regarding these factors prove to be incorrect or do not materialize, or if alternative treatments to those offered by our productproducts gainsgain widespread acceptance. Also, our strategy of focusing exclusively on the SI-JointSI Joint market may limit our ability to grow. In addition, in order to increase our sales, we will need to identify and contract with independent sales representatives in existing and new regions as well, and in the future, commercialize new products. Moreover, we may decide to alter or discontinue aspects of our business strategy and may adopt different strategies due to business or competitive factors not currently foreseen, such as new medical technologies that would make our productproducts obsolete. Any failure to implement our business strategy may adversely affect our business, results of operations, and financial condition.

The manufacture manufacture and distribution of our productproducts is challenging. Changes that our contract manufacturers may make outside the purview of our direct control can have an impact on our processes, quality of our product, and the successful delivery of products to our customers. Mistakes and mishandling are not uncommon and can affect supply and delivery. Some of these risks include:

If any of these risks were to materialize, our ability to provide our productproducts to customers on a timely basis would be adversely impacted.

We are dependent on a limited number of contract manufacturers, some of them single-source and some of them in single locations, for our product, products, and the loss of any of these contract manufacturers, or their inability to provide us with an adequate supply of products in a timely and cost-effective manner, could materially adversely affect our business.

We rely on contract manufacturers to supply our product.products. For us to be successful, our contract manufacturers must be able to provide us with product in substantial quantities, in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable prices, and on a timely basis. We have a limited history with our current contract manufacturers and do not have long-term supply contracts with them. We are in the process of identifying and evaluating new contract manufacturers for our product. The inability to find the required contract manufacturers or the time required to switch contract manufacturers could adversely affect sales.

If any one or more of these risks materialize, it could significantly increase our costs and impact our ability to meet demand for our product. If we are unable to satisfy commercial demand for our productproducts in a timely manner, our ability to generate revenue would be impaired, market acceptance of our productproducts could be adversely affected, and customers may instead purchase or use our competitors’ products. Additionally, Additionally, we could be forced to seek alternative sources of supply.

Because of the nature of our internal quality control requirements, regulatory requirements, and the custom and proprietary nature of our product, we we may not be able to quickly engage additional or replacement contract manufacturers for our productproducts and accessories. We may also be required required to assess any potential new contract manufacturer’s compliance with all applicable regulations and guidelines, which could further further impede our ability to obtain our productproducts in a timely manner. As a result, we could incur increased product costs, experience delays in deliveries of our product, suffer damage to our reputation, and experience an adverse effect on our business and financial results. Failure of any of our contract manufacturers to meet our product demand level would limit our ability to meet our sales commitments to our customers and could have a material adverse effect on our business.

As our sales grow, our contract manufacturers may encounter problems or delays in the manufacturing of our productproducts or fail to meet certain regulatory regulatory requirements which could result in an adverse effect on our business and financial results.

To become profitable, our contract manufactures must manufacture our productproducts in adequate quantities in compliance with regulatory requirements and at an acceptable cost. Increasing their capacity to manufacture and inspect our productproducts may require them to improve internal efficiencies or require us to re-design or change the specifications of our product. Our contract manufacturers may encounter several difficulties in increasing this capacity, including:

If we are unable to satisfy commercial demand for Theour Catamaran Systemproducts due to our contract manufacturer’s inability to manufacture and inspect our our product,products, our ability to generate revenue would be impaired, market acceptance of our productproducts could be adversely affected and customers may instead purchase or use our competitors’ products.

The size size and future growth in the market for the SI-JointSI Joint fixation market have not been established based on market reports and our estimates are based on our own review and analysis of public information and may be smaller than we estimate, possibly materially. In addition, our estimates of cost savings to the economy and healthcare system as a result of Theour Catamaran System procedureproducts are based on our internal estimates and market research and could also be smaller than we estimate, possibly materially. If our estimates and projections overestimate the size of this market or cost savings, our sales growth may be adversely affected.

We are not aware of an independent third-party study that reliably reports the potential market size for the SI-JointSI Joint fixation market. Therefore, our our estimates of the size and future growth in the market for Theour Catamaran System product,products, including cost savings to the economy overall, including including patients and employers, and to the healthcare system and the number of people currently suffering from lower back pain who may benefit from and be amenable to our procedure, is based on a number of internal and third-party studies, surveys, reports, and estimates. While While we believe these factors have historically provided and may continue to provide us with effective tools in estimating the total market market for our productproducts and procedures and health cost savings, these estimates may not be correct and the conditions supporting our estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. For example, we have consulted with our clinical advisors and utilized public information as the basis for our market projections. Additionally, the surveys we have conducted are based on a small number of respondents and are not statistically significant and may have other limitations. The actual incidence of lower back pain, and the actual demand for our productproducts or competitive products, could differ materially from our projections if our assumptions and estimates are incorrect. As a result, our estimates of the size and future growth in the market for our productproducts may prove prove to be incorrect. In addition, actual health cost savings to the healthcare system as a result of Theour Catamaran System procedureproducts may materially differ differ from those presented in this report. If the actual number of people with lower back pain who would benefit from Theour Catamaran Systemproducts and the size and future growth in the market and related costs savings to the healthcare system is smaller than we have estimated, it may impair our projected sales growth and have an adverse impact on our business.

In the future our productproducts may become obsolete, which would negatively affect operations and financial condition.

The medical device industry is characterized by rapid and significant change. There can be no assurance that other companies will not succeed in developing or marketing devices, and products that are more effective than The Catamaran System or The SImmetry+ System or that would render The Catamaran Systemthem obsolete or non-competitive. Additionally, new surgical procedures, medications and other therapies could be developed that replace or reduce the importance of our product. Accordingly, our success will depend in part on our ability to respond quickly to medical and changes through the development and introduction of new products. Product development involves a high degree of risk and there can be no assurance that our new product development efforts will result in any commercially successful products.

In August 2025, we acquired substantially all of the assets of SiVantage, Inc. and SIMPL Medical, LLC, including The SImmetry+ System. From time to time, we expect to consider further opportunities to acquire or make investments in other technologies, products, and businesses that may enhance our capabilities, complement our current product, or expand the breadth of our markets or customer base. Potential and completed acquisitions and strategic investments involve numerous risks, including:

We have no current commitments with respect to any such acquisition or investment. We do not know if we will be able to identify acquisitions, we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired business, product, or technology into our business or retain any key personnel, suppliers, or distributors. Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete, and integrate suitable target businesses and to obtain any necessary financing. These efforts could be expensive and time consuming and may disrupt our ongoing business and prevent management from focusing on our operations. If we are unable to successfully integrate any acquired businesses, products, or technologies effectively, our business, results of operations, and financial condition will be materially adversely affected.

Our operations operations could be disrupted by geopolitical conditions, political and social instability, acts of war, terrorist activity or other similar events. In February 2022, Russia initiated significant military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations, and the U.S. and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actions should the conflict continue or worsen. ItOn isFebruary not28, possible to predict the broader consequences of the conflict, including related geopolitical tensions, and the measures and retaliatory actions taken by2026, the U.S. and Israel otherlaunched joint strikes against Iran, killing Iran’s supreme leader and several additional government officials. Iran launched retaliatory missiles and drones targeting Israel and a number of countries inthat respecthost thereofUnited States military bases, including Bahrain, the United Arab Emirates, Kuwait, Qatar, and Saudi Arabia, with Hezbollah firing additional projectiles towards Israel. These current military conflicts, as well as anythe counterarmed measures or retaliatory actions by Russia or Belarusconflicts in response, including, for example, potential cyberattacks or the disruption of energy exports, is likely to cause regional instability, geopolitical shifts, and could materially adversely affect global trade, currency exchange rates, regional economiesIsrael and the globalGaza economy. In addition, the ongoing conflicts in the Middle East may further impact global economic conditions and market sentiments. This, in turn,Strip, could adversely affect the trading price of our shares of common stock and investor interest in us. The outcome of the Russia-Ukraine war and conflicts in the Middle East remain uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affectimpact our business, financial condition, operations and resultsthose of operations.third parties upon which we rely.

In periods of rising inflation, the cost of raw materials, components and labor essential for manufacturing Theour Catamaran Systemproducts may increase and as a consequence, our overall profit margin may be adversely affected. In addition, inflation may result in limitations on healthcare spending, specifically for procedures that are deemed elective or non-critical, which may include treatments utilizing Theour Catamaran System. products. A decrease in demand for these procedures may significantly impact our financial condition and results of operations.

In the United States, all of the components to The Catamaran System and The SImmetry+ System have either received premarket clearance under Section 510(k) of the FDCA or are exempt from premarket review. If the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline. In addition, the FDA may determine that future products will require the more costly, lengthy, and uncertain PMA process. Although we do not currently market any devices under PMA, the FDA may demand that we obtain a PMA prior to marketing certain of our future products. In addition, if the FDA disagrees with our determination that a product, we currently market is subject to an exemption from premarket review, the FDA may require us to submit a 510(k) or PMA in order to continue marketing the product. Further, even with respect to those future products where a PMA is not required, we cannot assure you that we will be able to obtain the 510(k) clearances with respect to those products.

In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay clearance or approval of our productproducts under development or impact our ability to modify our currently approved or cleared productproducts on a timely basis.

Any delay in, or failure to receive or maintain, clearance or approval for our productproducts under development could prevent us from generating revenue from these products or achieving profitability.

The FDA and other regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some clinicians from using our productproducts and adversely affect our reputation and the perceived safety and effectiveness of our product.

Failure to comply with applicable regulations could jeopardize our ability to sell our productproducts and result in enforcement actions such as:

Adverse action action by an applicable regulatory agency the FDA could result in inability to produce our productproducts in a cost-effective and timely manner, or or at all, decreased sales, higher prices, lower margins, additional unplanned costs or actions, damage to our reputation, and could have have material adverse effect on our reputation, business, results of operations, and financial condition.

We have entered into consulting agreements with clinicians who are also customers. We anticipate entering into additional agreements with clinicians clinicians who use our productproducts as we continue to commercialize our product. The primary mission of these clinician advisors is research and development and clinician education. Medical device technology development requires thoughtful clinician input from experienced healthcare professionals. professionals. Medical device clinician education requires experienced faculty for didactic and anatomic lab activities in a peer-to-peer setting. We believe these engagements will allow us to successfully meet the expectations of the physician community. In addition, a small number of clinicians (which are or may become customers) own less than 1.0% of our stock, or were granted stock options which they either purchased in an arm’s length transaction on terms identical to those offered to others or received from us as fair market value consideration for consulting services performed. While all of these transactions were structured with the intention of complying with all applicable laws, including the federal Anti-Kickback Statute, state anti-kickback laws and other applicable laws, to the extent applicable, it is possible that regulatory agencies may view these transactions as prohibited arrangements that must be restructured, or discontinued, or for which we could be subject to significant penalties. We would be materially and adversely affected if regulatory agencies interpret our financial relationships with clinicians who order our productproducts to be in violation of applicable laws and we were unable to comply with such laws, which could subject us to, among other things, monetary penalties for non-compliance, the cost of which could be substantial.

In certain cases, federal and state authorities pursue actions for false claims on the basis that manufacturers and distributors are promoting unapproved, unapproved, or “off-label” uses of their products. Pursuant to FDA regulations, we can only market our productproducts for cleared or approved uses. Although clinicians are permitted to use medical devices for indications other than those cleared or approved by the FDA, we are prohibited from promoting products for “off-label” uses. We market our productproducts and provide promotional materials and training programs to clinicians regarding the use of our product. If it is determined that our marketing, promotional materials or training programs constitute promotion of unapproved uses, we could be subject to significant fines in addition to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure, criminal penalty, and damage to our reputation. Federal and state authorities also pursue actions for false claims based upon improper billing and coding advice or recommendations, as well as decisions related to the medical necessity of procedures, including the site-of-service where procedures are performed. Actions under the federal False Claims Act may also be brought by whistleblowers under its qui tam provisions.

Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement actions against us, including fines, fines, imprisonment of company officials and public censure, claims for damages by end-customers, and other affected individuals, and the imposition of integrity obligations and agency oversight, damage to our reputation, and loss of goodwill, any of which could harm on our operations, financial performance, and business. Evolving and changing definitions of personal data and personal information, within the United States, and elsewhere, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. Moreover, if the relevant laws and regulations change, or are interpreted and applied in a manner that is inconsistent with our data practices or the operation of our product, or if we expand into new regions and are required to comply with new requirements, we may need to expend resources in order to change our business operations, data practices, or the manner in which our productproducts operates.operate. Even the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of of our product.

Even ifthough our productproducts isare approved by regulatory authoritiesauthorities, if our contract manufacturers fail to comply with ongoing FDA,FDA requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K. In addition to historical financial information, this discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. You should not place undue reliance on these forward-looking statements, which involve risks and uncertainties. As a result of many factors, including but not limited to those set forth under “‘‘Risk Factors,”Factors,’’ our actual results may differ materially from those anticipated in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

Reverse Stock SplitsSplit

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.

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 of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 judgments and estimates. For more detail on our critical accounting policies, see Note 2 to our consolidated financial statements.

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.

Expected Volatility—Since we have only been publicly held since April 2022 and dodid not have any trading history for our common stock,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.

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 option pricing model. Warrants classified as equity are recorded as additional paid-in capital on the consolidated balance sheet and no further adjustments adjustments to their valuation are made after the issuance of the warrants.

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.

We utilize contract manufacturers for production of The Catamaran System and The SImmetry+ System implants and Catamarantray Tray Sets.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 operationoperations 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.

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

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.

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.

Revenue. The increase in revenue for the year ended December 31, 20242025 as compared to 20232024 was primarily due to an increase in revenue per surgical procedure on a 0% change in the number of surgical procedures inand whichthe addition of revenue related to The CatamaranSImmetry+ System was used.System.

Cost of Goods Sold, Gross Profit, and Gross Margin. The change in cost of goods sold for the year ended December 31, 20242025 as compared to 20232024 was due to the absorption of production overhead costs into our standard cost and operating leverage created due to lower relative fixed costs.costs and increased revenue volume.

Research and Development Expenses. Research and development expenses for the year ended December 31, 20242025 decreased as compared to 2023 2024 primarily due to decreased professional fees ($528), stock-based compensation ($73$772) and payroll expenses ($39$1), aspartially weoffset moveby ourincreased focusprofessional from research to sustaining our Catamaran portfolio.fees ($206).

Sales and Marketing Expenses. Sales and marketing expenses for the year ended December 31, 20242025 decreasedincreased as compared to 20232024 primarily due to SpineSourceincreased transitioncommission fees in 2023expense ($932$544), decreasedrelated to our increased revenue and increased payroll and employee expenses ($499$174), and consulting and professional fees ($178$174), partially offset by increased commissiondecreased expensestock-based compensation ($21$13) due to restructuring of our sales operations..

General and Administrative Expenses. General and administrative expenses for the year ended December 31, 20242025 increaseddecreased as compared to 2023 2024 primarily due to increaseddecreased stock-based compensation ($1,367), insurance costs ($331$614), legal and professional service fees ($289), payroll and employee expenses ($146), and bad debt expense ($41$87), partially offset by decreasesacquisition expenses ($778) and increases in stock-basedemployee compensationexpenses ($147$321) dueand toother continuedfees operatingand expenses.expenses ($206).

Interest Expense. Interest expense for the year ended December 31, 2024 increased as comparedrelated to 2023convertible primarilydebt, duewhose outstanding principal and interest were converted to thecommon convertiblestock debt.in 2024.

As of December 31, 2024,2025, we had cash and cash equivalents of $6.5$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, 2024, 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.

As of December 31, 2024, we had an accumulatedBased 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.filed. We plan to raise the necessary additional capital through one or a combination of public or private equity offerings, debt financings, and collaborations. We continue to face challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to (a) the uncertainty of future revenues from The Catamaran System; (b) changes we may make to the business that affect ongoing operating expenses; (c) changes we may make in our business strategy; (d) regulatory developments affecting our existing products; (e) changes we may make in our research and development spending plans; and (f) other items affecting our forecasted level of expenditures and use of cash resources.

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.

Cash provided by financing activities for the year ended December 31, 20242025 consisted primarily of netgross proceeds from the issuance of common stock andfrom our warrantssecurities purchase agreements ($3,846$4,010), the exercise of warrants under the inducement agreement ($4,306$3,057), and the issuance of Series A Convertible Preferred Stock ($2,567)common stock and Series B Convertible Preferred Stockwarrants ($489$2,850), and from issuancesnet of commontotal stockcash offering costs ($2,105$928). Cash provided by financing activities for the year ended December 31, 20232024 consisted of the net proceeds received from our offerings of stock in 2023 ($5,303) in addition togross 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 NotesPreferred Stock ($1,250$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).

As of December 31, 20242025 and 2023,2024, 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.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and the other information set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 27, 2026. In addition to historical financial information, this discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. You should not place undue reliance on these forward-looking statements, which involve risks and uncertainties. As a result of many factors, including but not limited to those set forth under “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 27, 2026, our actual results may differ materially from those anticipated in these forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”

Tenon Medical, Inc. was incorporated in the State of Delaware on June 19, 2012 and was headquartered in San Ramon, California until June 2021 when it relocated to Los Gatos, California. We are a medical device company dedicated to transforming care for patients with certain sacro-pelvic disorders. We currently offer two systems to treat a diseased SI Joint. We developed The Catamaran®™ SI Joint Fusion System (“The Catamaran System”) that offers a novel, less invasive approach to the SI Joint using a single, robust, titanium implant for treatment of the most common types of SI Joint disorders that cause lower back pain. We received U.S. Food and Drug Administration (“FDA”) clearance in 2018 for The Catamaran System and are currently focused on the USU.S. market.

In August 2025, we acquired substantially all of the assets of SiVantage, Inc. and SIMPL Medical, LLC, including the SImmetry+® SI Joint Fusion System (“The SImmetry+ System”) that treats disorders of the SI Joint through a minimally invasive lateral access solution that incorporates well-established orthopedic fusion principles-including joint decortication, bone graft placement, and rigid fixation-with the goal of achieving a true biological fusion across the SI Joint.

We have incurred net losses since our inception in 2012. As of MarchJune 31,30, 2026, we had an accumulated deficit of approximately $84.8$88.8 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.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025 (in thousands, except percentages)

Revenue. The increase in revenue for both the three and six months ended MarchJune 31,30, 2026 as compared to 2025 was primarily due to ana significant increase in the number of surgical proceduresprocedures, andincluding the addition of revenue related to The SImmetry+ System.

Cost of Goods Sold,Sales, Gross Profit, and Gross Margin. The change in cost of goods soldsales for the three and six months ended MarchJune 31,30, 2026 as compared to 2025 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.

Research and Development Expenses. Research and development expenses for the three months ended MarchJune 31,30, 2026 decreasedincreased as compared to 2025 primarily due to decreasesincreased inprofessional stock-based compensationfees ($254$273) and payroll and employee expenses ($42$74), partially offset by increasesdecreased instock-based compensation ($107). Research and development expenses for the six months ended June 30, 2026 increased as compared to 2025 primarily due to increased professional fees ($203$501) and payroll and employee expenses ($32), partially offset by decreased stock-based compensation ($360).

Sales and Marketing Expenses. Sales and marketing expenses for the three months ended MarchJune 31,30, 2026 increased as compared to the same period in 2025 primarily due to increased commission expenses ($369), payroll and employee expenses ($82$309) and stock-based compensation ($8), commissionpartially expensesoffset ($48)by anddecreased consulting and professional fees ($7$2). Sales and marketing expenses for the six months ended June 30, 2026 increased as compared to the same period in 2025 primarily due to increased commission expense ($417) and payroll and employee expenses ($408), partially offset by decreases indecreased consulting and professional fees ($72) and stock-based compensation ($25$16).

General and Administrative Expenses. General and administrative expenses for the three months ended MarchJune 31,30, 2026 increased as compared to the same period in 2025 primarily due to increased stock-based compensation ($92) and payroll and employee expenses ($66), partially offset by decreased professional service fees ($111). General and administrative expenses for the six months ended June 30, 2026 increased as compared to the same period in 2025 primarily due to increased payroll and employee expenses ($188), professional service fees ($80$255) and insurance costs ($26$25), partially offset by a decrease indecreased stock-based compensation ($262$170) and professional service fees ($23).

Gain on Investments, Interest Expense and Other ExpenseIncome

Gain on investments for the three and six months ended March 31,June 30, 2026 decreased as compared to 2025 due to interest on lower average cash and cash equivalent balances. Interest expense for the three and six months ended MarchJune 31,30, 2026 related to interest on our convertible notes. Other expenseincome infor the three and six months ended June 30, 2026 related to lossesgains on the change in fair value of our derivative liability.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $4.6$1.7 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 MarchJune 31,30, 2026, we had an accumulated deficit of $84.8$88.8 million, and we expect to incur additional losses in the future. We have not achieved positive cash flow from operations to date.

The increase in net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 as compared to the three months ended March 31, 2025 was primarily attributable to our increased net loss as adjusted for reducedincreased non-cash expenses ($263$460) in addition to decreased accounts payable ($326$742) and increased accounts receivable ($259$348), partially offset by decreases in inventory ($237$598).

Cash used in investing activities for the three six months ended MarchJune 31,30, 2026 and 2025 consisted of purchases of property and equipment ($56$228 and $192, respectively).

Cash provided by financing activities for the three six months ended MarchJune 31,30, 2026 consisted of the net proceeds from the issuance of convertible notes ($3,867). Cash provided by financing activities for the threesix months ended MarchJune 31,30, 2025 consisted primarily of gross proceeds from the issuance of common stock from our securities purchase agreements ($4,010) and gross proceeds from the exercise of warrants under the inducement agreement ($3,057), net of total offering costs ($808$867).

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported results of operations during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from three other sources. Actual results could differ from these estimates under different assumptions or conditions. For the threesix months ended MarchJune 31,30, 2026, there were no significant changes to our existing critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K with the exception of our policy for derivative liabilities which is included herein.in Note 2 to our condensed financial statements.

As of MarchJune 31,30, 2026, and December 31, 2025, 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.