What changed in this filing

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Item 1. Financial Statements

2025-08-06 compared with 2025-05-08 · 142 added, 82 removed, 462 unchanged (33% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Current assets:

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50,000,000 shares authorized;

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

25,072,502 shares and 24,217,508 shares issued as of June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 613,790 600,897

7 unchanged sentences

(In Thousands, Except Share and Per Share Data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net revenue $ 61,082 $ 52,802 $ 113,493 $ 97,487

10 unchanged sentences

Interest expense, net 1,116 261 2,242 898

Other income ( 1,644 ) ( 24 )

Other (income) expense ( 4,709 ) 120 ( 6,353 ) 96

Total other (income) expense, net ( 3,593 ) 381 ( 4,111 ) 994

10 unchanged sentences

(Unaudited) (In Thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net loss $ ( 7,113 ) $ ( 6,029 ) $ ( 17,772 ) $ ( 13,834 )

2 unchanged sentences

Unrealized gain on short-term investments 27 — 96 109

Adjustment for realized gains (loss) 7 ( 118 )

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

Adjustment for realized gains (losses) 18 — 25 ( 118 )

Other comprehensive gain (loss), net of tax 6,680 ( 3,263 ) 5,827 ( 4,698 )

Comprehensive loss $ ( 433 ) $ ( 9,292 ) $ ( 11,945 ) $ ( 18,532 )

3 unchanged sentences

(In Thousands, Except Share Data)

Three Months Ended March 31, 2025

Three and Six Months Ended June 30, 2025

Additional Other Total

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

Net loss — — — ( 7,113 ) — ( 7,113 )

Other comprehensive gain — — — — 6,680 6,680

Restricted stock 178,552 — 5,252 — — 5,252

Issuance of common stock 55,143 — 1,261 — — 1,261

Stock portion of MedTech anniversary payment 10,830 — 226 — — 226

Capital contribution associated with reclassification of MedTech liability to equity — — 2,062 — — 2,062

Balance at June 30, 2025 25,072,502 $ 6 $ 613,790 $ ( 253,336 ) $ ( 4,946 ) $ 355,514

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In Thousands, Except Share Data)

Three Months Ended March 31, 2024

Three and Six Months Ended June 30, 2024

Additional Other Total

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Balance at March 31, 2024 23,540,411 $ 6 $ 583,086 $ ( 205,547 ) $ ( 6,961 ) $ 370,584

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

See notes to condensed consolidated financial statements.

2 unchanged sentences

(Unaudited) (In Thousands)

Three Months Ended

Six Months Ended

OPERATING ACTIVITIES

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Purchases of property and equipment ( 7,672 ) ( 13,144 )

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

Net cash (used in) provided by investing activities ( 9,532 ) 16,018

FINANCING ACTIVITIES

Proceeds from issuance of debt 25,000 —

Payments on mortgage notes ( 78 ) ( 71 )

Payment of debt issuance costs — ( 343 )

Installment payment for ApiFix — ( 2,250 )

Installment payment for MedTech — ( 1,250 )

Payments on clinic acquisition notes ( 248 ) ( 928 )

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

Net cash provided by (used in) financing activities 24,674 ( 4,842 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 304 ( 531 )

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

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 828 ( 2,137 )

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

3 unchanged sentences

Transfer of instruments between property and equipment and inventory $ 651 $ 281

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

Issuance of common shares for MedTech installment $ 226 $ 133

Issuance of common shares to settle an obligation with a vendor $ 1,261 $ —

Right-of-use assets obtained in exchange for lease liabilities $ 3,311 $ —

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

Capital contribution associated with reclassification of MedTech liability to equity $ 2,062 $ —

Debt issuance costs not yet paid $ — $ 67

See notes to condensed consolidated financial statements.

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As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations thereunder.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2024 and, in management’s opinion, include all adjustments, consisting of only normal recurring adjustments,

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

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 results of

operations for the three and six months ended June 30, 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 $ 246,223 and $ 235,564 as of March 31, 2025 and December 31, 2024, respectively.

We have experienced recurring losses from operations since our inception and had an accumulated deficit of $ 253,336 and $ 235,564 as of June 30, 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 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.

We believe that our cash balance at June 30, 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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Amendments in this Update should be applied prospectively.

The Company continues to analyze this ASU.

If, by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.

Company continues to analyze this ASU.

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

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Improvements to Income Tax Disclosures " ("ASU 2023-09"), which enhances the transparency and decision usefulness of income tax disclosures.

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

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

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

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NOTE 3 - BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

Medtech Concepts, LLC

On May 1, 2023, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement"), by and among the Company, Kevin Unger, DINZE LLC, and the sole member of DINZE LLC, pursuant to which the Company purchased all of the issued and outstanding membership interest of Medtech Concepts LLC (“MedTech”).

We agreed to pay the sellers of MedTech a purchase price of approximately $ 15,274 in the following manner:

(i) cash in the aggregate amount of $ 3,000 which 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 Purchase Agreement.

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 were initially excluded from measuring the cost of the acquisition, and are being recorded as stock-based compensation expense in the post-combination consolidated financial statements.

All future cash payments and stock issuances that are not contingent on continuous service were included in the calculation of consideration for this asset acquisition.

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

The present value of the remaining acquisition installment payable was $ 3,799 as of December 31, 2024, of which $ 1,347 was recorded as a current liability.

In addition, we issued 38,594 unregistered 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.

On May 9, 2025, as part of the Company’s ongoing efforts to preserve cash, we amended the Purchase Agreement (the “Amendment”) such that the fixed cash portion of all three remaining anniversary payments (with an aggregate gross value of $ 3,750 ) will now be settled through the issuance of unregistered shares of our common stock.

The future equity issuances to one of the sellers (with an aggregate value of $ 2,250 ) is contingent upon their continuous service through the applicable third and fourth anniversary dates.

The number of shares that is contingently issuable at the third and fourth anniversary dates is based on the volume-weighted average price over the thirty trading days ending on the second business day prior to the applicable anniversary date.

As the monetary amount is fixed and

known as of the date of the Amendment, the share-settled liability is being recorded on a straight-line basis over the service period as additional stock-based compensation expense.

During the six months ended June 30, 2025, we paid the second anniversary payment by issuing 10,830 unregistered shares of our common stock approximating $ 226 to one of the sellers, which reduced the amount of the acquisition installment payable on our condensed consolidated balance sheet.

In addition, we issued 97,467 unregistered shares of our common stock, approximately $ 1,250 in value, of which 50 % had previously been recognized as stock-based compensation expense in the post-combination consolidated financial statements, and the other 50 % had been recorded within the acquisition installment payable on the condensed consolidated balance sheet.

We also recorded a capital contribution for $ 2,026 upon execution of the Amendment, which represented the present value of the fixed cash payments that would be paid at the third and fourth anniversary dates, and derecognized the related acquisition installment payable which had previously been recorded on our condensed consolidated balance sheet.

The present value of the remaining acquisition installment payable is $ 485 as of June 30, 2025, of which $ 237 is recorded as a current liability

Boston Brace International, Inc.

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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.

In 2025, Boston O&P purchased all the issued and outstanding membership interest or acquired the assets of multiple orthotic and prosthetic device clinics.

Total consideration for all O&P clinics acquired through June 30, 2025 was approximately $ 475 , which comprised of $ 325 of cash and promissory notes

in the original principal amount of $ 150 payable in installments with an interest rate of 4.0 % per annum.

The allocation of the purchase price is considered preliminary.

NOTE 4 - GOODWILL AND INTANGIBLE ASSETS

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

Changes in the carrying amount of goodwill for the six months ended June 30, 2025 were as follows:

Goodwill at January 1, 2025 $ 93,844

2 unchanged sentences

Foreign currency translation impact 4,628

Goodwill at March 31, 2025

Goodwill at June 30, 2025

Intangible Assets

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

As of June 30, 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 $ 16,736 and $ 16,752 as of March 31, 2025 and December 31, 2024, respectively.

Trademarks are non-amortizing intangible assets which were $ 17,082 and $ 16,752 as of June 30, 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 three months ended March 31, 2025 was driven by foreign currency translation adjustments.

The change in balance during the six months ended June 30, 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.

As such, the Company completed a quantitative analysis whereby we determined the fair value of the ApiFix trademark asset was below the carrying value.

As such, the Company completed a quantitative analysis whereby we determined the fair value of the ApiFix trademark

asset was below the carrying value.

We recorded an impairment charge of $ 1,836 for the year ended December 31, 2024 to reduce the carrying amount of the intangible asset to its estimated fair 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 March 31, 2025 and December 31, 2024.

March 31, 2025

The following table summarizes the assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024.

June 30, 2025

Level 1 Level 2 Level 3 Total

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Term loan and final payment $ 51,000 $ 25,500

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The Term Loan Agreement provides for (i) an initial term loan facility in the initial principal amount of $ 25,000 , which was funded in its entirety on August 12, 2024 and (ii) a delayed draw term loan facility (the “DDTL”) in an aggregate principal amount not to exceed $ 25,000 , which, subject to certain conditions set forth in the Term Loan Agreement, may be drawn until August 5, 2025.

On June 27, 2025, the Company withdrew the delayed draw on the term loan in the amount of $ 25,000 .

Loans borrowed pursuant to the Term Loan Agreement (the “Term Loans”) bear interest at a rate per annum equal to SOFR Interest Rate (as defined in the Term Loan Agreement and with a floor of 3.25 %) plus 6.50 %.

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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;

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

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

At June 30, 2025, the mortgage balance was $ 532 of which current principal of $ 164 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 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.

and $ 421 for the three months ended June 30, 2025 and 2024, respectively, and $ 2,552 and $ 760 for the six months ended June 30, 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 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.

For the six months ended June 30, 2025, the income tax charge was $ 245 compared to a tax benefit of $ 2,549 for the six months ended June 30, 2024.

Our effective income tax rate was ( 1.4 )% and 15.6 % for the six months ended June 30, 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.

The deferred tax assets were fully offset by a valuation allowance at June 30, 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 June 30, 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 March 31, 2025.

A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended June 30, 2025.

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

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Vested ( 206,775 ) —

Outstanding at March 31, 2025

Outstanding at June 30, 2025

1,520,050 1.9 31,901 1.3

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.

At June 30, 2025, there was $ 26,765 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 1.9 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 $ 3,859 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.

Stock-based compensation expense on restricted stock amounted to $ 5,252 and $ 2,939 for the three months ended June 30, 2025 and 2024, respectively, and $ 9,111 and $ 5,738 for the six months ended June 30, 2025 and 2024, respectively.

contingent upon the closing of the Term Loan and the Notes.

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 March 31, 2025.

No shares have been purchased under this program as of June 30, 2025.

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

1 unchanged sentence

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 0 2024

Net loss $ ( 7,113 ) $ ( 6,029 ) $ ( 17,772 ) $ ( 13,834 )

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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 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.

The Company had 1,551,951 and 1,068,624 contingently issuable and convertible equity shares excluded from the calculation of diluted net (loss) earnings per share as of June 30, 2025 and 2024, respectively, because their effect would have been anti-dilutive.

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.

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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.

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

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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 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.

No individual customer accounted for more than 10% of total product sales for the three and six months ended June 30, 2025 or 2024.

No individual customer accounted for more than 10% of consolidated accounts receivable as of June 30, 2025 and December 31, 2024.

Product sales by source were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Product sales by geographic location:

2025 2024 2025 2024

$ 48,147 $ 41,249 $ 89,039 $ 75,554

International 12,935 11,553 24,454 21,933

Total $ 61,082 $ 52,802 $ 113,493 $ 97,487

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Product sales by category:

2025 2024 2025 2024

Trauma and deformity $ 41,655 $ 37,771 $ 79,521 $ 71,073

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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.

We made aggregate payments to Structure Medical for inventory purchases of $ 657 and $ 141 for the three months ended June 30, 2025 and 2024, respectively and $ 789 and $ 523 for the six months ended June 30, 2025 and 2024, respectively.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

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.

In connection with the global restructuring plan that was initiated in the fourth quarter 2024, the Company had recorded a restructuring accrual of $ 2,829 and $ 1,072 as of June 30, 2025 and December 31, 2024 within accrued expenses and other current liabilities on its condensed consolidated balance sheet.

The increased accrual for the three and six months ended June 30, 2025, was due primarily to new severance agreements as part of reducing staff according to the global restructuring plan.

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.

(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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However, contemporaneously, IMED re-initiated arbitration.

Although we believe the Company has strong defenses to the IMED arbitration and we intend to vigorously defend the claims asserted against us, arbitration 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.

Although we believe the Company has strong defenses to the IMED arbitration and we intend to vigorously defend the claims asserted against us, arbitration 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.

Boston O&P Litigation

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

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.

As a result and as of June 30, 2025, the remaining purchase commitments under the agreement was $ 728 for the year ending December 31, 2025 and $ 1,092 future purchase commitments are required for the year ending December 31, 2026.

On July 20, 2021, we entered into an amended license agreement with Mighty Oak Medical, Inc.("Mighty Oak"), resulting in a five-year extension of our exclusive distribution rights of the FIREFLY Technology.

As a component of the agreement the Company is required to meet minimum performance metrics, measured by the number of spine procedures in the fiscal year which used the FIREFLY products against the annual requirement in the agreement.

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

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.

During the six months ended June 30, 2025, the Company recorded an expense of $ 700 based on current estimates.

The Company recorded $ 976 of expense for the six months ended June 30, 2024.

On May 15, 2025, the Company issued 55,143 unregistered shares of the Company's common stock to Mighty Oak to satisfy the obligation that existed for past unmet minimum performance metrics.

As of June 30, 2025, we are contracted to pay royalties to individuals and entities that provide research and development services, which range from 0.25 % 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 March 31, 2025, 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 June 30, 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.

On July 11, 2025, Boston O&P entered into a purchase agreement to acquire certain of the assets, including inventory, related to orthotic and prosthetic device clinics located in New York.

Boston O&P paid $ 5,410 in total consideration for the assets, which was comprised of $ 4,285 of cash and a promissory note in the original principal amount of $ 1,125 payable in eight quarterly installments with interest at the rate of five percent per annum.

The sellers may also be entitled to an earnout up to $ 1,125 , if gross revenues exceed a threshold in the first year after closing.

The sellers promissory note may be subject to adjustments if net sales targets are not achieved.

On July 30, 2025, OP EU B.V., a wholly-owned Netherlands based subsidiary of the Company, entered into a stock purchase agreement related to orthotic and prosthetic device clinics located in Ireland.

This location is complimentary to OrthoPediatrics’ strong implant business presence in one of the country’s largest pediatric hospitals and provides opportunities to expand to additional Ireland based clinics and beyond across the European region.

The Company paid 1,500 Euro in total consideration for the stock, which was comprised of 1,200 Euro of cash and a promissory note in the original principal amount of 300 Euro payable in two annual installments with interest at the rate of four percent per annum.

The sellers promissory note may be subject to adjustments if net sales targets are not achieved.

On August 3, 2025, OrthoPediatrics EU Limited, a wholly-owned UK based subsidiary of the Company, entered into a stock purchase agreement related to a designer and manufacturer of Clubfoot bracing located in the UK.

This acquisition will expand the Company's specialty bracing product offering and represent a new territory.

The Company paid 3,400 GBP in total consideration for the stock, which was comprised of 2,300 GBP of cash and a promissory note in the original principal amount of 1,100 GBP payable in ten quarterly installments with interest at the rate of five percent per annum.

Enactment of Federal Tax Reform

On July 4th, 2025, the President of the United States signed into law significant federal tax legislation, H.R.1 (the “Tax Reform Act of 2025”).

The legislation includes numerous changes to U.S.

corporate income tax law, including but not limited to:

permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest expense, increased Section 179 expensing limits, changes to the international tax regime, and expanded limitations on the deductibility of executive compensation under IRC Section 162(m).

Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions.

The Company is currently evaluating the impact of the Tax Reform Act of 2025 on its consolidated financial statements.

The effects of the new law, including remeasurement of deferred tax assets and liabilities and changes to current and future tax expense, will be reflected in the period of enactment and in future periods as additional guidance is issued and the Company completes its analysis.

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