What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 132 added, 244 removed, 412 unchanged (48% of the section changed)

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(In Thousands, Except Share Data)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current assets:

Cash and cash equivalents $ 51,047 $ 31,055

Cash $ 33,439 $ 43,820

Restricted cash 1,990 1,957

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50,000,000 shares authorized;

24,214,046 shares and 23,378,408 shares issued as of September 30, 2024 and December 31, 2023, respectively

24,827,977 shares and 24,217,508 shares issued as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 604,989 600,897

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(In Thousands, Except Share and Per Share Data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net revenue $ 52,411 $ 44,685

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General and administrative 30,280 24,730

Tradename impairment — 985 — 985

Restructuring 40 —

Research and development 2,351 2,998

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Operating loss ( 10,981 ) ( 9,723 )

Other expense (income):

Other (income) expense:

Interest expense, net 1,126 637

Loss on early extinguishment of debt 3,230 — 3,230 —

Fair value adjustment of contingent consideration — — — ( 2,974 )

Other expense (income), net ( 63 ) ( 787 ) 33 ( 1,407 )

Total other expense (income), net 3,571 ( 766 ) 4,565 ( 4,276 )

Loss before income taxes $ ( 9,137 ) $ ( 3,742 ) $ ( 25,520 ) $ ( 14,409 )

Provision for income taxes (benefit) ( 1,218 ) 849 ( 3,767 ) ( 126 )

Other income ( 1,644 ) ( 24 )

Total other (income) expense, net ( 518 ) 613

Net loss before income taxes $ ( 10,463 ) $ ( 10,336 )

Income tax charge (benefit) 196 ( 2,531 )

Net loss $ ( 10,659 ) $ ( 7,805 )

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(Unaudited) (In Thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net loss $ ( 10,659 ) $ ( 7,805 )

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Unrealized gain on short-term investments 69 109

Adjustment for realized gain on securities — ( 559 ) ( 118 ) ( 860 )

Other comprehensive income (loss), net of tax 3,623 ( 4,255 ) ( 1,075 ) ( 6,766 )

Adjustment for realized gains (loss) 7 ( 118 )

Other comprehensive loss, net of tax ( 853 ) ( 1,435 )

Comprehensive loss $ ( 11,512 ) $ ( 9,240 )

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(In Thousands, Except Share Data)

Three and Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Additional Other Total

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Restricted stock 601,547 — 3,859 — — 3,859

Issuance of common stock 8,922 — 233 — — 233

Balance at March 31, 2025 24,827,977 $ 6 $ 604,989 $ ( 246,223 ) $ ( 11,626 ) $ 347,146

Net loss — — — ( 6,029 ) — ( 6,029 )

Other comprehensive loss — — — — ( 3,263 ) ( 3,263 )

Stock portion of MedTech anniversary payment 4,288 — 133 — — 133

Stock portion of ApiFix anniversary installment 245,812 — 6,929 — — 6,929

Restricted stock 426,227 — 2,939 — — 2,939

Balance at June 30, 2024 24,216,738 $ 6 $ 593,087 $ ( 211,576 ) $ ( 10,224 ) $ 371,293

Net loss — — — ( 7,919 ) — ( 7,919 )

Other comprehensive income — — — — 3,623 3,623

Restricted stock ( 2,692 ) — 3,922 — — 3,922

Balance at September 30, 2024 24,214,046 $ 6 $ 597,009 $ ( 219,495 ) $ ( 6,601 ) $ 370,919

See notes to condensed consolidated financial statements.

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(In Thousands, Except Share Data)

Three and Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Additional Other Total

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Balance at March 31, 2024 23,440,411 $ 6 $ 583,086 $ ( 205,547 ) $ ( 6,961 ) $ 370,584

Net loss — — — ( 2,886 ) — ( 2,886 )

Other comprehensive loss — — — — ( 1,865 ) ( 1,865 )

Restricted stock 14,591 — 3,456 — — 3,456

Consideration for MedTech acquisition 43,751 — 2,274 — — 2,274

Stock portion of ApiFix anniversary installment 140,003 — 6,178 — — 6,178

Balance at June 30, 2023 23,340,463 $ 6 $ 574,677 $ ( 186,460 ) $ ( 7,911 ) $ 380,312

Net loss — — — ( 4,591 ) — ( 4,591 )

Other comprehensive loss — — — — ( 4,255 ) ( 4,255 )

Stock option exercise 670 — 21 — — 21

Restricted stock ( 1,290 ) — 2,364 — — 2,364

Consideration for Rhino 11,133 — 478 — — 478

Balance at September 30, 2023 23,350,976 $ 6 $ 577,540 $ ( 191,051 ) $ ( 12,166 ) $ 374,329

See notes to condensed consolidated financial statements.

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(Unaudited) (In Thousands)

Nine Months Ended

September 30,

Three Months Ended

OPERATING ACTIVITIES

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Adjustments to reconcile net loss to net cash used in operating activities:

Tradename impairment — 985

Depreciation and amortization 5,048 5,028

Stock-based compensation 3,859 2,799

Loss on early extinguishment of debt 3,230 —

Fair value adjustment of contingent consideration — ( 2,974 )

Accretion of acquisition installment payable 62 281

Deferred income taxes 196 ( 2,445 )

Non-cash other 139 —

Changes in certain operating assets and liabilities:

Accounts receivable - trade ( 1,497 ) 1,155

Inventories, net ( 14,154 ) ( 22,198 )

Inventories ( 1,906 ) ( 6,631 )

Prepaid expenses and other current assets ( 519 ) ( 953 )

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Clinic acquisition, net of cash acquired ( 220 ) —

Acquisition of MedTech, net of cash acquired — ( 3,097 )

Acquisition of Rhino assets — ( 546 )

Investment in private companies ( 380 ) —

Sale of short-term marketable securities — 23,474

Purchase of short-term marketable securities ( 25,000 ) ( 48,600 )

Investment in private companies ( 1,540 ) —

Purchases of property and equipment ( 4,227 ) ( 6,460 )

Net cash (used in) provided by investing activities ( 10,750 ) 23,755

Net cash used in investing activities ( 5,987 ) ( 3,679 )

FINANCING ACTIVITIES

Installment payment for ApiFix ( 2,250 ) ( 2,000 )

Installment payment for MedTech ( 1,250 ) —

Proceeds from issuance of debt 73,533 —

Payment on debt ( 12,231 ) —

Payment of debt issuance costs ( 3,085 ) —

Proceeds from exercise of stock options — 21

Payments on acquisition note ( 928 ) —

Payments on mortgage notes ( 39 ) ( 35 )

Net cash provided by (used in) financing activities 53,676 ( 2,086 )

Payments on clinic acquisition notes ( 87 ) ( 538 )

Net cash used in financing activities ( 126 ) ( 573 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 79 ) 1,479

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 20,018 1,770

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 10,348 ) ( 9,463 )

Cash, cash equivalents and restricted cash, beginning of year $ 45,777 $ 33,027

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Cash paid for interest $ 1,269 $ 223

Issuance of common shares to acquire Rhino $ — $ 478

Transfer of instruments between property and equipment and inventory $ ( 461 ) $ 117

Issuance of common shares for ApiFix installment $ 6,929 $ 6,178

Issuance of common shares for MedTech installment $ 133 $ 2,274

Right-of-use assets obtained in exchange for lease liabilities $ 1,682 $ 347

Debt issuance costs not yet paid $ 260 $ —

Issuance of common shares in connection with Boston O&P acquisition $ 233 $ —

See notes to condensed consolidated financial statements.

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NOTE 1 – BUSINESS

We sell our specialized products, including PediLoc ® , PediPlates ® , Cannulated Screws, PediFlex TM nail, PediNail TM , PediLoc ® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSE TM Spine, BandLoc Duo ® , Pediatric Nailing Platform | Femur, Devise Rail, Orthex ® , The Fassier-Duval Telescopic Intramedullary System ® , SLIM TM Nail, The GAP Nail TM , The Free Gliding SCFE Screw System TM , GIRO ® Growth Modulation System, PNP Tibia System, ApiFix ® Mid-C System and Mitchell Ponseti ® specialized bracing products to various hospitals and medical facilities throughout the United States and various international markets.

We currently use a contract manufacturing model for the manufacturing of Boston Brace 3D, implants and related surgical instrumentation while our orthopedic bracing products are manufactured in-house.

OrthoPediatrics Corp., a Delaware corporation, is a medical device company committed to designing, developing and marketing anatomically appropriate implants, instruments and specialized braces for children with orthopedic conditions, giving pediatric orthopedic surgeons and caregivers the ability to treat children with technologies specifically designed to meet their needs, including PediLoc ® , PediPlates ® , Cannulated Screws, PediFlex TM nail, PediNail TM , PediLoc ® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSE TM Spine, BandLoc TM , Pediatric Nailing Platform | Femur, Devise Rail, Orthex ® , The Fassier-Duval Telescopic Intramedullary System ® , SLIM TM Nail, The GAP Nail TM , The Free Gliding SCFE Screw System TM , GIRO TM Growth Modulation System, PNP Tibia System, ApiFix ® Mid-C System and Mitchell Ponseti ® and Boston Brace 3D specialized bracing products to various hospitals and medical facilities throughout the United States and various international markets.

We currently use a contract manufacturing model for the manufacturing of implants and related surgical instrumentation while our orthopedic bracing products are manufactured in-house.

We also operate multiple orthotic and prosthetic ("O&P") clinics delivering leading pediatric non-surgical O&P treatment.

We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis, sports medicine, specialty bracing and clinical services to the pediatric orthopedic market in order to improve the lives of children with orthopedic conditions.

We design, develop and commercialize innovative orthopedic implants, instruments and specialized braces to meet the needs of pediatric surgeons or orthotists and their patients, who we believe have been largely neglected by the orthopedic industry.

We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis and sports medicine product offering to the pediatric orthopedic market in order to improve the lives of children with orthopedic conditions.

We design, develop and commercialize innovative orthopedic implants, instruments and braces as well as provide O&P clinic services to meet the specialized needs of pediatric surgeons and their patients, who we believe have been largely neglected by the orthopedic industry.

We currently serve three of the largest categories in this market.

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necessary for the fair presentation of the financial statements for the interim periods.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year or for any other period.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full fiscal year or for any other period.

The accompanying condensed consolidated financial statements have been prepared assuming our Company will continue as a going concern.

We have experienced recurring losses from operations since our inception and had an accumulated deficit of $ 219,495 and $ 197,742 as of September 30, 2024 and December 31, 2023, respectively.

We have experienced recurring losses from operations since our inception and had an accumulated deficit of $ 246,223 and $ 235,564 as of March 31, 2025 and December 31, 2024, respectively.

Management continues to monitor cash flows and liquidity on a regular basis.

We believe that our cash balance at September 30, 2024 and expected cash flows from operations for the next twelve months subsequent to the issuance of the accompanying condensed consolidated financial statements, are sufficient to enable us to maintain current and essential planned operations for more than the next twelve months.

We believe that our cash balance at March 31, 2025 and expected cash flows from operations for the next twelve months subsequent to the issuance of the accompanying condensed consolidated financial statements, are sufficient to enable us to maintain current and essential planned operations for more than the next twelve months.

Use of Estimates

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Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

Any changes in these estimates will be reflected in our consolidated financial statements.

Any changes in these estimates will be reflected in our condensed consolidated financial statements.

Significant Accounting Policies

There have been no changes in the Company's significant accounting polices as disclosed in Note 2 to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K.

Reclassification

In the condensed consolidated financial statements, the Company has reclassified stock-based compensation to conform to the current period presentation.

All stock-based compensation was previously recorded within general and administrative expenses, and such costs have now been allocated between general and administrative expenses, research and development expenses and sales and marketing expenses.

The current presentation results in stock-based compensation expense being recorded in the same manner in which the award recipient's payroll costs are classified.

This reclassification did not affect previously reported total operating expenses, loss before income taxes, or net loss in the condensed consolidated statements of operations.

The following tables present the impact of the reclassification on our condensed consolidated statements of operations:

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Sales and marketing (prior presentation) $ 13,582 $ 38,963

Reclassification 360 1,061

Sales and marketing (new presentation) $ 13,942 $ 40,024

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

General and administrative (prior presentation) $ 18,507 $ 55,827

Reclassification ( 534 ) ( 1,585 )

General and administrative (new presentation) $ 17,973 $ 54,242

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Research and development (prior presentation) $ 2,387 $ 7,449

Reclassification 174 524

Research and development (new presentation) $ 2,561 $ 7,973

There have been no changes in the Company's significant accounting policies as disclosed in Note 2 to the audited consolidated financial statements included in the 2024 Annual Report on Form 10-K.

Financial Instruments and Concentration of Credit Risk

Financial instruments that could subject the Company to credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable.

We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents.The Company performs ongoing credit evaluations of customers and maintains a reserve for expected credit losses.

We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents.

The Company performs ongoing credit evaluations of customers and maintains a reserve for expected credit losses.

The Company believes the risk of credit losses associated with accounts receivable is low given the history of collections and customer base.

Additionally, the Company considers the risk for credit losses associated with short-term investments to be low given the types of investments which primarily include Certificates of Deposits and Treasury Bonds.

Additionally, the Company considers the risk for credit losses associated with short-term investments to be low given the types of investments which primarily include Corporate Bonds and Treasury Bonds.

Recent Accounting Pronouncements

In October 2023, the FASB issued ASU No.

In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023-06 " Disclosure Improvements - Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative".

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The update is specific to disclosures and, therefore, is not expected to have a material impact to the condensed consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, " Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ." The standard requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity's CODM.

The amendments in this update also expand the interim segment disclosure requirements.

This authoritative guidance will be effective for us in fiscal 2024 for annual periods and in the first quarter of fiscal 2025 for interim periods, with early adoption permitted.

We are currently evaluating the effect of this new guidance on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No.

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The ASU is effective for public companies for fiscal years beginning on or after December 15, 2024, with early adoption permitted.

The amendments in ASU 2023-09 should be applied

on a prospective basis.

The amendments in ASU 2023-09 should be applied on a prospective basis.

Retrospective application is permitted.

We are currently evaluating the effect of this new guidance on our consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU No.

2024-03, "Disaggregation of Income Statement Expenses" which requires disaggregated disclosure of income statement expenses into specified categories in disclosures within the footnotes to the financial statements.

The standard is effective for annual periods beginning after December 15, 2026.

We are currently evaluating the effect of this ASU on our consolidated financial statements and disclosures.

NOTE 3 - BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

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Boston O&P has developed and manufactures pediatric orthotic and prosthetic devices, including non-surgical scoliosis treatment options, and provides related clinical services.

Under the terms of the stock purchase agreement, the Company paid to the shareholders of Boston O&P consideration of $ 21,534 in cash, after adjusting for closing net working capital, transaction expenses, and funded indebtedness.

Under the terms of the stock purchase agreement, the Company paid to the shareholders of Boston O&P consideration of $ 21,535 in cash and $ 233 in shares of common stock, after adjusting for closing net working capital, transaction expenses, and funded indebtedness.

Additionally, certain employees and executives of Boston O&P also received awards of restricted stock of the Company which will vest in three years subject to continuous service.

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The restricted stock units are not considered part of the purchase consideration.

The following table summarizes the total consideration paid for Boston O&P and the preliminary allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date:

The following table summarizes the total consideration paid for Boston O&P and the final allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date:

Fair value of estimated total acquisition consideration $ 21,767

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Customer Relationships & Other 2,963 12 years

The following table represents the pro forma net revenue and net loss assuming the acquisition of Boston O&P occurred on January 1, 2023.

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Net revenue $ 54,573 $ 46,585 $ 152,491 $ 130,857

Net loss $ ( 7,903 ) $ ( 4,475 ) $ ( 21,712 ) $ ( 13,935 )

On July 1, 2024, Boston O&P also completed an acquisition of the assets, including inventory, related to orthotic and prosthetic device clinics located in Virginia and Maryland.

Boston O&P paid $ 950 in total consideration, which was comprised of $ 475 of cash and a promissory note in the original principal amount of $ 475 payable in six quarterly installments with interest at a rate of 5.0 % per annum.

Rhino Pediatric Orthopedic Designs, Inc.

On July 1, 2023, the Company completed an acquisition of assets, including inventory and certain intangible assets, of Rhino Pediatric Orthopedic Designs, Inc.

Rhino's product portfolio included several pediatric orthopedic products in the bracing and soft goods space, including the Cruiser TM , Kicker TM , and Rhino Stomper TM .

The Company paid $ 1,024 in total consideration for the assets which was comprised of $ 546 of cash, including $ 46 of transactions costs, and 11,133 shares of the Company’s common stock, par value $ 0.00025 per share, representing approximately $ 478 (based on closing price of $ 42.91 on July 1, 2023).

Medtech Concepts LLC

On May 1, 2023, the Company purchased all of the issued and outstanding membership interest of Medtech Concepts LLC, a Delaware limited liability company (“MedTech”).

MedTech has developed an early-stage, pre-commercial enabling technology platform designed to increase efficiency in the perioperative environment.

The solution combines hardware, software, and data analytics to help streamline operative care and support better decision making in the operating room.

In the future, the Company believes this enabling technology platform will provide valuable intraoperative resources for surgeons that will improve decision making, drive operating room efficiency, and ultimately improve healthcare for children.

The Company also expects that the acquisition will further support future market share gains for its implant systems, similar to what the Company has experienced with the FIREFLY ® Technology and the 7D Surgical FLASH TM Navigation platform.

No revenue was recorded from this platform in 2023, and the Company does not anticipate material revenue contributions from the platform in 2024.

The sellers of MedTech are being paid a purchase price of approximately $ 15,274 in the following manner:

(i) cash in the aggregate amount of $ 3,000 was paid on May 1, 2023, the transaction closing date (the “Closing Date”);

(ii) 43,751 unregistered shares of the Company’s common stock, par value

$ 0.00025 per share, representing approximately $ 2,274 (based on a closing share price of $ 51.98 on May 1, 2023), were issued on the Closing Date;

and (iii) an aggregate of $ 2,500 payable 50 % in cash and 50 % in shares of unregistered common stock, will be paid on each of the first four anniversaries of the Closing Date, all subject to the conditions set forth in the Membership Interest Purchase Agreement (the "Purchase Agreement"), as amended, relating to the transaction.

The Company concluded that the business acquired did not comprise an integrated set of activities that meet the definition of a business and therefore did not result in the acquisition of a business.

Instead, the Company accounted for the transaction as an asset acquisition for accounting purposes.

Under the Purchase Agreement, a number of future payments in the form of common stock are contingent on continued service through each applicable payment anniversary date.

As such, these amounts have been excluded from measuring the cost of the acquisition.

The result is $ 4,500 of stock compensation which is being recognized on a straight-line basis over the four year service period.

Future cash payments and stock issuances that are not contingent on continuous service are included in the calculation of consideration.

The total consideration is $ 10,043 after discounting the future guaranteed fixed payments to their present value.

Additionally, since this was treated as an asset acquisition, the Company included $ 97 of transaction costs in the total consideration.

The table below reconciles the payments and issuances to total consideration transferred after discounting the future payments to present value.

Consideration Present Value

Cash consideration $ 3,000 $ 3,000

Issuance of common stock 2,274 2,274

Anniversary payments 5,500 4,672

Transaction costs 97 97

Total consideration transferred $ 10,871 $ 10,043

As result of this asset acquisition, the Company recorded a trademark asset in the amount of $ 520 with an indefinite useful life and an intellectual property asset relating to software acquired of $ 9,523 which is being amortized over a useful life of ten years .

During the nine months ended September 30, 2024, the Company paid the first anniversary payment consisting of $ 1,250 in cash and issued 4,288 of the Company's common stock approximating $ 133 which reduced the amount of the acquisition installment payable on our balance sheet.

In addition, we issued 38,594 shares of our common stock to one individual on the first anniversary date in exchange for their continued service through the vesting date which had been accounted for as stock based compensation expense in the post-combination consolidated financial statements.

Kevin Unger, a member of the Company’s Board of Directors (the “Board”) through April 28, 2023, was one of the sellers in the transaction.

As a result, the Board formed a special committee comprised of independent and disinterested directors (the “Special Committee”) with the exclusive authority to review, evaluate, and negotiate, or reject, the potential MedTech acquisition.

The Purchase Agreement and the transactions contemplated thereby were approved by both the Special Committee and the full Board (with Mr.

Unger abstaining).

In 2024, Boston O&P purchased all the issued and outstanding share capital or acquired the assets of multiple domestic orthotic and prosthetic device clinics.

Total consideration for all O&P clinics acquired during 2024 was approximately $ 4,818 , which comprised of $ 3,388 of cash and promissory notes in the original principal amount of $ 1,430 payable in installment s with an interest rate of 5.0 % per annum.

We allocated $ 680 to customer relationship intangible assets and $ 3,367 to goodwill, and the rest to net working capital and other assets acquired and liabilities assumed.

The allocation of the purchase price is considered preliminary.

In 2025, Boston O&P also purchased all of the issued and outstanding membership interest related to an orthotic and prosthetic device clinic.

Boston O&P paid $ 275 in total consideration, which was comprised of $ 175 of cas h and a promissory note in the original principal amount of $ 100 with interest at a rate of 4.0 % per annum.

NOTE 4 - GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the nine months ended September 30, 2024 were as follows:

Changes in the carrying amount of goodwill for the three months ended March 31, 2025 were as follows:

Goodwill at January 1, 2025 $ 93,844

Boston O&P acquisition 8,296

Other clinic acquisitions 627

Clinic acquisitions 188

Boston O&P measurement period adjustment 233

Foreign currency translation impact ( 592 )

Goodwill at September 30, 2024

Goodwill at March 31, 2025

Intangible Assets

As of September 30, 2024, the balances of amortizable intangible assets were as follows:

As of March 31, 2025, the balances of amortizable intangible assets were as follows:

Weighted-Average Amortization Period Gross Intangible Assets Accumulated Amortization Net Intangible Assets

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Licenses are tied to product launches and do not begin amortizing until the product is launched to the market.

Trademarks are non-amortizing intangible assets which were $ 18,744 and $ 15,287 as of September 30, 2024 and December 31, 2023, respectively.

Trademarks are non-amortizing intangible assets which were $ 16,736 and $ 16,752 as of March 31, 2025 and December 31, 2024, respectively.

Trademarks are recorded in Other intangible assets on the condensed consolidated balance sheets.

The change in balance during the nine months ended September 30, 2024 was driven by foreign currency translation adjustments and the Boston O&P acquisition.

The change in balance during the three months ended March 31, 2025 was driven by foreign currency translation adjustments.

During 2024, management determined that a triggering event occurred, indicating that it was more likely than not the fair value of the ApiFix trademark asset was less than the carrying value.

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Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data.

The following table summarizes the assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023.

September 30, 2024

The following table summarizes the assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024.

March 31, 2025

Level 1 Level 2 Level 3 Total

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Short-term investments

Exchange Trade Mutual Funds $ 25,017 $ — $ — $ 25,017

Corporate Bonds $ — $ 9,882 $ — $ 9,882

Treasury Bonds $ 10,468 $ — $ — $ 10,468

Asset-Backed Securities $ — $ 4,687 $ — $ 4,687

Exchange Mutual Funds $ 296 $ — $ — $ 296

December 31, 2024

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Short-term investments

Certificates of Deposit $ — $ 25,792 $ — $ 25,792

Exchange Trade Mutual Funds $ 5,015 $ — $ — $ 5,015

Corporate Bonds $ 10,598 $ — $ — $ 10,598

Treasury Bonds $ 9,274 $ — $ — $ 9,274

Other $ 207 $ — $ — $ 207

The Company's Level 1 assets consist of short-term, liquid investments with original maturity of three months or less at inception and other short-term investments which are comprised of exchange traded mutual funds and marketable securities with a maturity date greater than 3 months.

The Company's Level 2 assets pertain to certain asset-backed securities, collateralized by non-mortgage-related consumer debt, or certificates of deposit.

Asset-Backed Securities $ 4,889 $ — $ — $ 4,889

Exchange Mutual Funds $ 252 $ — $ — $ 252

The Company's Level 1 assets consist of short-term, liquid investments with original maturity of three months or less at inception and other short-term investments which are comprised of exchange traded mutual funds, US treasury bonds and marketable securities with a maturity date greater than 3 months.

The Company's Level 2 assets pertain to certain asset-backed securities, collateralized by non-mortgage-related consumer debt, or corporate bonds.

These securities are predominately priced by third parties, either by a pricing vendor or dealer with significant inputs observable in active markets.

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The significant inputs of such models are not always observable in the market, such as forecasted annual revenues, expected volatility and discount rates.

The contingent consideration was zero as of both September 30, 2024 and December 31, 2023.

NOTE 6 - DEBT AND CREDIT ARRANGEMENTS

Long-term debt consisted of the following as of the dates indicated:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Term loan and Final Payment $ 25,500 $ 25,500

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The Term Loan Agreement includes customary conditions to borrowing, representations and warranties and covenants, including affirmative covenants and negative covenants that restrict the Credit Parties’ and their subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions.

The Term Loan Agreement also has financial covenants requiring the Credit Parties to (i) maintain at all times unrestricted cash held in US accounts subject to Lenders’ first priority lien equal to at least 25 % of the aggregate principal amount of any outstanding Term Loans and (ii) maintain certain minimum net product sales over a trailing twelve month period as set forth therein.

The Term Loan Agreement also has financial covenants requiring the Credit Parties to (i) maintain at all times unrestricted cash held in US accounts subject to Lenders’ first priority lien equal to

at least 25 % of the aggregate principal amount of any outstanding Term Loans and (ii) maintain certain minimum net product sales over a trailing twelve month period as set forth therein.

The Term Loan Agreement also contains customary events of default, including among other things, the Credit Parties’ failure to make any principal or interest payments when due, the occurrence of certain bankruptcy or insolvency events, or the Credit Parties’ breach of the covenants under the Term Loan Agreement.

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In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Notes are redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after February 21, 2028 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if (i) the Notes are Freely Tradable (as defined in the Indenture) and any accrued and unpaid additional interest pursuant to the Notes has been paid as of the redemption date, and (ii) the last reported sale price per share of the Company’s common stock exceeds 140 % of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (2) the trading day immediately before the date the Company sends such notice.

In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case

the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.

In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

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Borrowings under the MidCap Credit Agreement accrued interest at an annual rate equal to the greater of (a) One Month Term SOFR plus 6.50 % or (b) 9.0 % and interest on the Revolving Loan would have accrued at the greater of (a) One Month Term SOFR plus 4.0 % or (b) 6.50 % (the “Applicable Rate”).

The Company paid MidCap an unused commitment fee in an amount equal to the per annum rate of 0.50 % (computed on the basis of a year of 360 days and the actual number of days elapsed) times the

daily unused portion of the revolving credit commitment.

The Company paid MidCap an unused commitment fee in an amount equal to the per annum rate of 0.50 % (computed on the basis of a year of 360 days and the actual number of days elapsed) times the daily unused portion of the revolving credit commitment.

The unused commitment fee was payable quarterly in arrears.

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The MidCap Credit Agreement was amended on May 3, 2024 to clarify the inputs into the financial covenant calculations.

As a result of the termination of the MidCap Credit Agreement, the Company recorded a loss on the extinguishment of debt in the amount of $ 3,230 on the consolidated statement of operations for the three and nine months ended September 30, 2024.

Squadron Revolver

The MidCap Credit Agreement replaced the Fourth Amended and Restated Loan and Security Agreement with Squadron Capital, LLC ("Squadron"), (as amended, the "Squadron Loan Agreement"), which provided the Company with a $ 50,000 revolving credit facility.

There was no indebtedness outstanding under the Squadron Loan Agreement when it was terminated in connection with the MidCap Credit Agreement on December 31, 2023.

Borrowings under the Squadron Loan Agreement accrued interest at an annual rate equal to the greater of (a) six month SOFR plus 8.69 % and (b) 10.0 %, and the Company was permitted to make interest only payments on amounts outstanding.

Prior to December 31, 2021, the interest rate on the facility had been equal to the greater of (a) three month LIBOR plus 8.61 % and (b) 10.0 %.

The Company paid Squadron an unused commitment fee in an amount equal to the per annum rate of 0.50 % (computed on the basis of a year of 360 days and the actual number of days elapsed) times the daily unused portion of the revolving credit commitment.

The unused commitment fee was payable quarterly in arrears.

Borrowings under the Squadron Loan Agreement were made under a Second Amended and Restated Revolving Note, dated June 13, 2022 (the “Amended Revolving Note”), payable, jointly and severally, by the Company and each of its subsidiaries party thereto.

The Amended Revolving Note matured at the earlier of:

(i) the date on which any person or persons acquire (x) capital stock of the Company possessing the voting power to elect a majority of the Company’s Board of Directors (whether by merger, consolidation, reorganization, combination, sale or transfer), or (y) all or substantially all of the Company’s assets, determined on a consolidated basis;

and (ii) January 1, 2024.

Borrowings under the Squadron Loan Agreement were secured by substantially all of the Company's assets and were unconditionally guaranteed by each of its subsidiaries with the exception of Vilex in

Tennessee, Inc.

There were no traditional financial covenants associated with the Squadron Loan Agreement.

However, there were negative covenants that prohibited us from, among other things, transferring any of our material assets, merging with or acquiring another entity, entering into a transaction that would result in a change of control, incurring additional indebtedness, creating any lien on our property, making investments in third parties and redeeming stock or paying dividends, in each case subject to certain exceptions.

In connection with the purchase of our office and warehouse space in Warsaw, Indiana in August 2013, we entered into a mortgage note payable to Tawani Enterprises Inc., an affiliate of Squadron.

In connection with the purchase of our office and warehouse space in Warsaw, Indiana in August 2013, we entered into a mortgage note payable to Tawani Enterprises Inc., an affiliate of Squadron Capital, LLC ("Squadron").

Pursuant to the terms of the mortgage note, we pay Tawani Enterprises Inc.

monthly principal and interest installments of $ 16 with interest compounded at 5 % unt il maturity in 2028, at which time a final payment of remaining principal and interest is due.

At September 30, 2024, the mortgage balance was $ 649 of which current principal of $ 158 was included in the current portion of long-term debt.

At March 31, 2025, the mortgage balance was $ 572 of which current principal of $ 162 was included in the current portion of long-term debt.

As of December 31, 2024, the mortgage balance was $ 611 of which current principal due of $ 160 was included in the current portion of long-term debt.

The aggregate interest expense relating to the notes payable to Squadron, the mortgage note payable to Tawani Enterprises Inc., the term loan with MidCap, the term loan with Braidwell, and the convertible note with Braidwell, was $ 945 and $ 10 for the three months ended September 30, 2024 and 2023, respectively, and $ 1,705 and $ 32 for the nine months ended September 30, 2024 and 2023, respectively.

The aggregate interest expense relating to the mortgage note payable to Tawani Enterprises Inc., the term loan with MidCap, the term loan with Braidwell, and the convertible note with Braidwell, was $ 1,269 and $ 339 for the three months ended March 31, 2025 and 2024, respectively.

NOTE 7 - INCOME TAXES

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The income tax provision or benefit is computed by multiplying the estimated annual effective tax rate by the year-to-date pre-tax book income (loss).

For the nine months ended September 30, 2024, the income tax benefit was $ 3,767 compared to $ 126 for the nine months ended September 30, 2023.

Our effective income tax rate was 14.8 % and 0.9 % for the nine months ended September 30, 2024 and 2023, respectively.

The higher effective rate compared to the prior period is from the remeasurement of the valuation allowance subsequent to recording the deferred tax liability as a result of the purchase accounting from the Boston O&P acquisition.

The deferred tax assets were fully offset by a valuation allowance at September 30, 2024 and December 31, 2023, with the exception of certain deferred tax liabilities recognized in a foreign jurisdiction as a result of fair value adjustments recorded upon the acquisition of ApiFix, Ltd.

and Pega Medical (OrthoPediatrics Canada ULC).

The Company has recorded a tax benefit for losses generated in Israel and a tax expense for income generated in Canada during the period ended September 30, 2024.

For the three months ended March 31, 2025, the income tax charge was $ 196 compared to a tax benefit of $ 2,531 for the three months ended March 31, 2024.

Our effective income tax rate was ( 1.9 )% and 24.5 % for the three months ended March 31, 2025 and 2024, respectively.

The lower effective rate compared to the prior period is from the remeasurement of the valuation allowance subsequent to recording the deferred tax liability as a result of the purchase accounting from the Boston O&P acquisition in the prior year.

The deferred tax assets were fully offset by a valuation allowance at March 31, 2025, with the exception of certain deferred tax liabilities in Canada.

The Company has recorded a tax expense for income generated in Canada during the period ended March 31, 2025.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.

A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended September 30, 2024.

A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended March 31, 2025.

Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

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Vested ( 131,283 ) —

Outstanding at September 30, 2024

Outstanding at March 31, 2025

1,514,457 2.1 31,901 1.5

On June 11, 2024, we granted an aggregate of 345,985 shares of restricted stock to eight members of management.

The restricted stock was granted pursuant to the Company's 2024 Incentive Award Plan.

While restricted stock awards generally vest over three years , these restricted stock awards provide for a vesting period ending on March 15, 2027 in order to align the vesting dates with the vesting dates of other restricted stock awards held by members of management.

At September 30, 2024, there was $ 22,247 of unrecognized compensation expense remaining related to our service-based restricted stock awards and restricted stock units.

At March 31, 2025, there was $ 30,468 of unrecognized compensation expense remaining related to our service-based restricted stock awards and restricted stock units.

The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.0 years or earlier upon an elimination of the restriction period as a result of a change in control event.

Stock-based compensation expense on restricted stock amounted to $ 3,922 and $ 2,368 for the three months ended September 30, 2024 and 2023, respectively, and $ 9,660 and $ 7,779 for the nine months ended September 30, 2024 and 2023, respectively.

Stock-based compensation expense on restricted stock amounted to $ 3,859 and $ 2,799 for the three months ended March 31, 2025 and 2024, respectively.

In connection with its approval of the Term Loan Agreement, Purchase Agreement, the Indenture and Notes, on August 2, 2024, the Board of Directors of the Company also approved a stock repurchase program of up to $ 5,000 in aggregate investment of the Company’s outstanding common stock, contingent upon the closing of the Term Loan and the Notes.

The stock repurchases may, at the discretion of management, be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions or pursuant to a Rule 10b5-1 plan all as effected in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time.

No shares have been purchased under this program as of September 30, 2024.

No shares have been purchased under this program as of March 31, 2025.

The dollar limit on repurchases under the program after December 31, 2024 was reduced to $ 250 per annum.

NOTE 9 – NET LOSS PER SHARE

The following is a reconciliation of basic and diluted net loss per share:

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Net loss $ ( 10,659 ) $ ( 7,805 )

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For the periods presented with a net loss, the weighted average shares outstanding remained consistent between basic and diluted as the effect of any outstanding common stock equivalents would have been anti-dilutive.

The contingently issuable shares in the paragraph above do not include shares of our common stock associated with our obligation to issue a variable number of our common shares as a result of our recent acquisitions of Pega Medical, ApiFix or MedTech.

See Note 3 for additional information regarding our commitment to issue future equity under the MedTech acquisition.

Additionally, as a component of the acquisition of ApiFix, the Company was obligated to make anniversary installment payments on the second, third and fourth anniversary of the acquisition date.

These payments included a minimum cash component with the remaining settled in common stock.

See Note 3 under Item 8 in the Company's Annual Report on Form 10-K for additional information regarding this business combination.

During the nine months ended September 30, 2024, the final anniversary payment was made to ApiFix and no additional shares of common stock are issuable under the ApiFix acquisition.

The Company had 1,546,358 and 693,448 contingently issuable and convertible equity shares excluded from the calculation of diluted net (loss) earnings per share as of March 31, 2025 and 2024, respectively, because their effect would have been anti-dilutive.

The contingently issuable shares discussed in the previous paragraph do not include shares of our common stock associated with our obligation to issue a variable number of our common shares as a result of our acquisition of MedTech Concepts, LLC ("MedTech").

Under the MedTech Purchase Agreement, a number of future payments in the form of common stock are contingent on continued service through each applicable payment anniversary date.

As such, these amounts have been excluded from measuring the cost of the acquisition.

The result is $ 4,500 of stock compensation which will be recognized on a straight-line basis over the four-year service period.

During the year ended December 31, 2024, the Company paid the first anniversary payment consisting of $ 1,250 in cash and issued 4,288 of the Company's common stock approximating $ 133 which reduced the amount of the acquisition installment payable on our consolidated balance sheet.

The present value of the remaining acquisition installment payable is $ 3,861 as of March 31, 2025, of which $ 1,368 is recorded as a current liability.

We are obligated to issue additional shares of our common stock to Braidwell in the event that our convertible note is converted into shares of common stock.

See Note 6 - Debt and Credit Arrangements for additional information.

NOTE 10 – BUSINESS SEGMENT

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We have one operating and reportable segment, which designs, develops and markets anatomically appropriate implants and devices for children with orthopedic problems.

Our chief operating decision-maker, our Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance, accompanied by disaggregated revenue information by product category.

We determined that disaggregating revenue into these categories achieves the disclosure objective of illustrating the differences in the nature, timing and uncertainty of our revenue streams.

product category.

The Chief Executive Officer is regularly provided with consolidated expenses consistent with those presented in the condensed consolidated statements of operations.

We do not assess the performance of our individual product categories on measures of profit or loss, or other asset-based metrics.

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Product sales attributed to a country or region includes product sales to hospitals, physicians and distributors and is based on the final destination where the products are sold.

No individual customer accounted for more than 10% of total product sales for the three and nine months ended September 30, 2024 or 2023.

No individual customer accounted for more than 10% of consolidated accounts receivable as of September 30, 2024 and December 31, 2023.

No individual customer accounted for more than 10% of total product sales for the three months ended March 31, 2025 or 2024.

No individual customer accounted for more than 10% of consolidated accounts receivable as of March 31, 2025 and December 31, 2024.

Product sales by source were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Product sales by geographic location:

$ 40,891 $ 34,305

$ 42,714 $ 29,360 $ 118,269 $ 82,748

International 11,520 10,380

Total $ 52,411 $ 44,685

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Product sales by category:

2024 2023 2024 2023

Trauma and deformity $ 37,867 $ 33,302

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NOTE 11 - RELATED PARTY TRANSACTIONS

In addition to the expired debt and credit agreements and mortgage with Squadron (the Company's largest investor) and its affiliate (see Note 6), we currently use Structure Medical, LLC (“Structure Medical”) as one of our suppliers.

Structure Medical is affiliated with Squadron and a supplier with which we maintain certain long-term agreements.

We made aggregate payments to Structure Medical for inventory purchases of $ 206 and $ 234 for the three months ended September 30, 2024 and 2023, respectively, and $ 729 and $ 628 for the nine months ended September 30, 2024 and 2023, respectively.

NOTE 12 - EMPLOYEE BENEFIT PLAN

We have a defined-contribution plan, OrthoPediatrics 401(k) Retirement Plan (the “401(k) Plan”), which includes a cash or deferral (Section 401(k)) arrangement.

The 401(k) Plan covers those employees who meet certain eligibility requirements and elect to participate.

Employee contributions are limited to the annual amounts permitted under the Internal Revenue Code.

The 401(k) Plan allows us to make a discretionary matching contribution.

Discretionary matching contributions are determined annually by management.

We have elected to match our employees' 401(k) contributions up to 4 % of employees' salary.

Additionally, employees of MD Ortho and Boston O&P receive contribution matches up to 3 % of their salary.

We currently use Structure Medical, LLC (“Structure Medical”) as one of our suppliers.

Structure Medical is affiliated with Squadron (the Company's largest investor) and a supplier with which we maintain certain long-term agreements.

We made aggregate payments to Structure Medical for inventory purchases of $ 132 and $ 382 for the three months ended March 31, 2025 and 2024, respectively.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

As of September 30, 2024, the Company has recorded a lease liability of $ 6,572 and corresponding right-of-use asset of $ 6,940 on its condensed consolidated balance sheet .

We assumed $ 2,828 of operating right-of-use assets and lease liabilities in connection with our acquisition of Boston O&P.

Restructuring

In connection with the global restructuring plan that was initiated in the fourth quarter 2024, the Company had recorded a restructuring accrual of $ 596 and $ 1,072 as of March 31, 2025 and December 31, 2024 within accrued expenses and other current liabilities on its condensed consolidated balance sheet.

Legal Proceedings

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On October 16, 2020, the Company, its wholly-owned subsidiary, Orthex, LLC (“Orthex”), the Company’s largest investor, Squadron, and certain other defendants, were named in a lawsuit filed by IMED Surgical, LLC, a New Jersey company ("IMED"), in Broward County, Florida Circuit Court.

In the lawsuit, IMED claims, among other things, that it is the rightful owner of certain patented point-and-click planning software being used by the Company, Orthex and Squadron (specifically, U.S.

In the lawsuit, IMED

claims, among other things, that it is the rightful owner of certain patented point-and-click planning software being used by the Company, Orthex and Squadron (specifically, U.S.

10,258,377 (titled “Point and click alignment method for orthopedic surgeons, and surgical and clinical accessories and devices,” issued on April 16, 2019) (hereinafter, the “’377 Patent”).

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Although we believe Boston O&P has strong defenses to this lawsuit and we intend to vigorously defend the claims asserted against us, litigation can involve complex factual and legal questions, and an adverse resolution of such proceedings could have a material adverse effect on our business, operating results and financial condition.

As part of the Company's purchase of Boston O&P, the selling equityholders of Boston O&P expressly agreed to indemnify the Company for any claims related to this lawsuit pursuant to the Stock Purchase Agreement.

We are not presently a party to any other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate materially affect our financial position or results of operations or cash flows.

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Additionally, the contract requires future purchase commitments based upon a percentage of historical purchases.

As a result and as of September 30, 2024, the Company met its purchase commitment for the year ended December 31, 2024 and $ 1,456 future purchase commitments are required for the year ended December 31, 2025.

As a result and as of March 31, 2025, the remaining purchase commitments under the agreement was $ 1,092 for the year ended December 31, 2025 and $ 1,092 future purchase commitments are required for the year ended December 31, 2026.

On July 20, 2021, we entered into an amended license agreement, resulting in a five-year extension of our exclusive distribution rights of the FIREFLY Technology.

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The Company analyzes its projected achievement of these performance metrics and accrues for any estimated shortfall.

During the nine months ended September 30, 2024, the Company recorded an expense of $ 1,200 based on current estimates.

The Company recorded $ 1,053 of expense for the nine months ended September 30, 2023.

As of September 30, 2024, we are contracted to pay royalties to individuals and entities that provide research and development services, which range from 0.5 % to 20 % of sales.

During the three months ended March 31, 2025, the Company recorded an expense of $ 430 based on current estimates.

The Company recorded $ 542 of expense for the three months ended March 31, 2024.

As of March 31, 2025, we are contracted to pay royalties to individuals and entities that provide research and development services, which range from 0.5 % to 20 % of sales.

We have products in development that have royalty commitments.

In any development project, there are significant variables that will affect the amount and timing of these payments and as of September 30, 2024, we have not been able to determine the amount and timing of payments.

In any development project, there are significant variables that will affect the amount and timing of these payments and as of March 31, 2025, we have not been able to determine the amount and timing of payments.

We do not anticipate these future payments will have a material impact on our financial results.

NOTE 13 – SUBSEQUENT EVENTS

On May 6, 2025, as part of the Company’s ongoing efforts to preserve cash, the Board of Directors of the Company approved (i) the issuance of unregistered shares of the Company’s common stock representing an aggregate of approximately $ 3,750 in value to the members of MedTech in lieu of the three remaining annual $ 1,250 cash payments otherwise required under the MedTech Purchase Agreement on or about May 1st of each of 2025, 2026, and 2027;

and (ii) an Amended and Restated Non-Employee Director Compensation Policy that increases the total director compensation from approximately $ 180 to $ 207 per year and provides for the payment of the remaining director compensation for 2025 in shares of restricted stock in lieu of cash.

For the 2025 service year, each non-employee director will be automatically granted, in a lump-sum issuance, shares of restricted stock representing approximately $ 175.5 in value and will receive no cash payment for general Board of Director service beyond the $ 22.5 cash fee already paid to each director during the first quarter of 2025).

For service years after 2025, each non-employee director will be automatically granted, in lump-sum issuances, shares of restricted stock representing approximately $ 90 in value (the “Annual Award”) and $ 117 in value (the “Election Award”).

Both the Annual Award and the Election Award will generally vest over a three-year period;

provided, however, that each non-employee director has the option to extend the vesting period of the Election Award to instead vest 100 % at the end of a five-year period.

Beginning with the 2026 calendar year, each non-employee director will have the option to elect to receive all, but not less than all, of the Election Award in the form of cash rather than shares of restricted stock.

Each non-employee director who makes such election will receive a cash fee of $ 22.5 each quarter during such year.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements