UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _________ to __________

COMMISSION FILE NUMBER 001-41364

TENON MEDICAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		45-5574718
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

104 Cooper Court Los Gatos, CA 95032		(408) 649-5760
(Address of principal executive offices) (Zip Code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		TNON		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of November 14, 2024, the registrant had a total of 3,136,589 shares of its common stock, par value $0.001 per share, issued and outstanding.

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
SIGNATURES		26

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends impacting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “intend,” “seek,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “might,” “forecast,” “continue,” or the negative of those terms, and similar expressions and comparable terminology intended to reference future periods. Forward-looking statements include, but are not limited to, statements about:

	●	Our ability to effectively operate our business;

	●	Our ability to manage our research, development, expansion, growth and operating expenses;

●

Our ability to evaluate and measure our business, prospects and performance metrics;

●

Our ability and our distributors’ ability to compete, directly and indirectly, and succeed in the highly competitive medical devices industry;

●

Our ability to respond and adapt to changes in technology and customer behavior; and

●

Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand.

Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Accordingly, the forward-looking statements in this Quarterly Report on Form 10-Q should not be regarded as representations that the results or conditions described in such statements will occur or that our objectives and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements.

PART I – FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements (Unaudited)

Tenon Medical, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)

	September 30,			December 31,
	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	9,162		$	2,428
Accounts receivable, net		876			518
Inventory		607			554
Prepaid expenses and other current assets		543			389
Total current assets		11,188			3,889
Fixed assets, net		906			961
Deposits		51			51
Operating lease right-of-use asset		463			646
Deferred offering costs		431			798
TOTAL ASSETS	$	13,039		$	6,345

Liabilities and Stockholders’ EQUITY
Current liabilities:
Accounts payable	$	1,093		$	433
Accrued expenses		908			808
Current portion of accrued commissions		898			470
Current portion of operating lease liability		279			256
Convertible notes payable and accrued interest, net of debt discount of $0 and $77 at September 30, 2024 and December 31, 2023, respectively		—			1,173
Total current liabilities		3,178			3,140
Accrued commissions, net of current portion		1,454			1,999
Operating lease liability, net of current portion		216			428
Total liabilities		4,848			5,567
Commitments and contingencies (Note 8)
Stockholders’ equity:
Series A convertible preferred stock, $0.001 par value; 4,500,000 shares authorized at September 30, 2024 and December 31, 2023; 256,968 and 0 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		3,300			—
Series B convertible preferred stock, $0.001 par value; 491,222 shares authorized at September 30, 2024 and December 31, 2023; 86,454 and 0 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		452			—
Common stock, $0.001 par value; 130,000,000 shares authorized at September 30, 2024 and December 31, 2023; 3,136,013 and 325,039 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		3			—
Additional paid-in capital		70,095			55,897
Accumulated deficit		(65,659	)		(55,073	)
Accumulated other comprehensive loss		—			(46	)
Total stockholders’ equity		8,191			778
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,039		$	6,345

The accompanying notes are an integral part of these condensed consolidated financial statements.

Tenon Medical, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue	$	887		$	944		$	2,507		$	2,120
Cost of sales		469			409			1,149			1,438
Gross Profit		418			535			1,358			682

Operating Expenses
Research and development		657			737			2,034			2,472
Sales and marketing		1,212			1,527			4,041			5,436
General and administrative		1,764			1,649			5,876			5,360
Total Operating Expenses		3,633			3,913			11,951			13,268

Loss from Operations		(3,215	)		(3,378	)		(10,593	)		(12,586	)

Other Income (Expense)
Gain on investments		31			50			97			143
Interest expense		—			(4	)		(34	)		(4	)
Other income (expense), net		—			—			(56	)		—
Total Other Income (Expense), net		31			46			7			139
Net Loss	$	(3,184	)	$	(3,332	)	$	(10,586	)	$	(12,447	)
Net Loss Per Share of Common Stock
Basic and diluted	$	(3.63	)	$	(11.69	)	$	(18.60	)	$	(63.18	)

Weighted-Average Shares of Common Stock Outstanding
Basic and diluted		877			285			569			197

Consolidated Statements of Comprehensive Loss:
Net loss	$	(3,184	)	$	(3,332	)	$	(10,586	)	$	(12,447	)
Unrealized gain on investments		—			—			—			16
Foreign currency translation adjustment		—			(30	)		46			(18	)
Total comprehensive loss	$	(3,184	)	$	(3,362	)	$	(10,540	)	$	(12,449	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Tenon Medical, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Unaudited)

(In thousands, except share data)

Three months ended September 30, 2024 and 2023:

	Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Total
Balance at June 30, 2024		256,968	$	3,300		—	$	—		472,604	$	—	$	60,007		$	(62,475	)	$	—		$	832
Stock-based compensation expense		—		—		—		—		—		—		910			—			—			910
Issuance of Series B preferred stock and warrants, net of issuance costs		—		—		86,454		452		—		—		37			—			—			489
Issuance of common stock, prefunded warrants, and warrants, net of issuance costs		—		—		—		—		55,000		—		3,862			—			—			3,862
Issuance of common stock upon exercise of prefunded warrants		—		—		—		—		1,167,850		1		(1	)		—			—			—
Issuance of common stock and warrants under inducement agreement		—		—		—		—		1,222,850		1		4,305			—			—			4,306
Issuance of common stock upon exercise of warrants		—		—		—		—		32,266		—		812			—			—			812
Issuance of common stock, net of issuance costs		—		—		—		—		37,618		—		164			—			—			164
Issuance of common stock for reverse stock split		—		—		—		—		147,825		1		(1	)		—			—			—
Net loss		—		—		—		—		—		—		—			(3,184	)		—			(3,184	)
Balance at September 30, 2024		256,968	$	3,300		86,454	$	452		3,136,013	$	3	$	70,095		$	(65,659	)	$	—		$	8,191

Balance at June 30, 2023		—	$	—		—	$	—		270,297	$	—	$	49,582		$	(48,607	)	$	(72	)	$	903
Stock-based compensation expense		—		—		—		—		—		—		1,070			—			—			1,070
Release of restricted stock units		—		—		—		—		641		—		—			—			—			—
Issuance of common stock, net of issuance costs		—		—		—		—		25,576		—		453			—			—			453
Common stock issued for services		—		—		—		—		12,364		—		289			—			—			289
Reclassification of warrant liability to equity		—		—		—		—		—		—		3,164			—			—			3,164
Other comprehensive income		—		—		—		—		—		—		—			—			(30	)		(30	)
Net loss		—		—		—		—		—		—		—			(3,332	)					(3,332	)
Balance at September 30, 2023		—	$	—		—	$	—		308,877	$	—	$	54,558		$	(51,939	)	$	(102	)	$	2,517

Nine months ended September 30, 2024 and 2023:

	Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Total
Balance at December 31, 2023		—	$	—		—	$	—		325,039	$	—	$	55,897		$	(55,073	)	$	(46	)	$	778
Stock-based compensation expense		—		—		—		—		—		—		2,962			—			—			2,962
Issuance of Series A preferred stock and warrants, net of issuance costs		256,968		3,300		—		—		—		—		254			—			—			3,554
Issuance of Series B preferred stock and warrants, net of issuance costs		—		—		86,454		452		—		—		37			—			—			489
Issuance of common stock, prefunded warrants, and warrants, net of issuance costs		—		—		—		—		55,000		—		3,862			—			—			3,862
Issuance of common stock upon exercise of prefunded warrants		—		—		—		—		1,167,850		1		(1	)		—			—			—
Issuance of common stock and warrants under inducement agreement		—		—		—		—		1,222,850		1		4,305			—			—			4,306
Issuance of common stock upon exercise of warrants		—		—		—		—		32,266		—		812			—			—			812
Issuance of common stock, net of issuance costs		—		—		—		—		178,048		—		1,968			—			—			1,968
Release of restricted stock units		—		—		—		—		7,135		—		—			—			—			—
Issuance of common stock for reverse stock split		—		—		—		—		147,825		1		(1	)		—			—			—
Other comprehensive income		—		—		—		—		—		—		—			—			46			46
Net loss		—		—		—		—		—		—		—			(10,586	)		—			(10,586	)
Balance at September 30, 2024		256,968	$	3,300		86,454	$	452		3,136,013	$	3	$	70,095		$	(65,659	)	$	—		$	8,191

Balance at December 31, 2022		—	$	—		—	$	—		140,460	$	—	$	45,844		$	(39,492	)	$	(100	)	$	6,252
Stock-based compensation expense		—		—		—		—		—		—		3,164			—			—			3,164
Release of restricted stock units		—		—		—		—		5,478		—		—			—			—			—
Issuance of common stock and warrants, net of issuance costs		—		—		—		—		125,000		—		1,644			—			—			1,644
Issuance of common stock, net of issuance costs		—		—		—		—		25,576		—		453			—			—			453
Common stock issued for services		—		—		—		—		12,364		—		289			—

SEC Form 10-Q filed by Tenon Medical Inc.