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Item 8. Financial Statements and Supplementary Data

2026-03-27 compared with 2025-03-26 · 613 added, 986 removed, 258 unchanged (86% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Tenon Medical, Inc.

Consolidated Financial Statements

December 31, 2024 and 2023

Medical, Inc.

2025 and 2024

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Audited Consolidated Financial Statements:

Consolidated Balance Sheets F-3

Consolidated Statements of Operations and Comprehensive Loss F-4

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity F-5

Consolidated Statements of Cash Flows F-6

Notes to Consolidated Financial Statements F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

Audited Financial Statements:

Balance Sheets F-3

Statements of Operations and Comprehensive Loss F-4

Statements of Convertible Preferred Stock and Stockholders’ Equity F-5

Statements of Cash Flows F-6

Notes to Financial Statements F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Tenon Medical, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Tenon Medical,

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive

loss, convertible preferred stock and stockholders’ equity, and cash flows for each of the years then ended, and the related notes

(collectively, the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly,

in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results

of its operations and its cash flows for each of the years then ended, in conformity with U.S.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Tenon Medical, Inc.

(the “Company”) as of December 31, 2025 and 2024, the related statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively, the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years then ended, in conformity with U.S.

generally accepted accounting principles.

Going Concern

The accompanying consolidated financial statements have been prepared

assuming that the Company will continue as a going concern.

As described in Note 2 to the consolidated financial statements, the Company

has experienced recurring losses, negative cash flows from operations, and has limited capital resources.

These matters raise substantial

doubt about the Company’s ability to continue as a going concern.

Management’s plans regarding these matters are also described

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As described in Note 2 to the financial statements, the Company has experienced recurring losses, negative cash flows from operations, and has limited capital resources.

These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans regarding these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are

the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal

control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Haskell & White LLP

2 unchanged sentences

March 27, 2026

Tenon Medical, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

Medical, Inc.

thousands, except share data)

Current assets:

1 unchanged sentence

Accounts receivable, net 1,698 863

Inventory, net

Inventory 1,054 606

Prepaid expenses and other current assets 260 206

1 unchanged sentence

Property and equipment, net 918 752

Deposits 51 51

Operating lease right-of-use asset 131 399

Deferred offering costs — 431

Liabilities and Stockholders’ EQUITY

Current liabilities:

Intangible assets, net (Notes 3 and 6) 485 —

Goodwill (Note 3) 2,407 —

TOTAL ASSETS $ 10,760 $ 9,843

and Stockholders’ EQUITY

Accounts payable $ 845 $ 369

2 unchanged sentences

Current portion of operating lease liability 141 287

Convertible notes payable and accrued interest, net of debt discount of $ 0 and $ 77 at December 31, 2024 and 2023, respectively

Total current liabilities 3,213 1,869

1 unchanged sentence

Operating lease liability, net of current portion — 141

Contingent consideration (Note 3) 993 —

Total liabilities 5,720 3,872

Commitments and contingencies (Note 10)

Stockholders’ equity:

Stockholders’

Series A convertible preferred stock, $ 0.001 par value;

3 unchanged sentences

491,222 shares authorized at December 31, 2025 and 2024;

86,454 and 0 shares issued and outstanding at December 31, 2024 and 2023, respectively

86,454 shares issued and outstanding at December 31, 2025 and 2024 452 452

Common stock, $ 0.001 par value;

3 unchanged sentences

Accumulated deficit ( 81,302 ) ( 68,746 )

Accumulated other comprehensive loss

Total stockholders’ equity 5,040 5,971

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 10,760 $ 9,843

The accompanying notes are an integral part

of these consolidated financial statements.

See Report of Independent Registered Public

Accounting Firm.

Tenon Medical, Inc.

Consolidated Statements of Operations and Comprehensive

(In thousands, except per share data)

accompanying notes are an integral part of these financial statements.

Report of Independent Registered Public Accounting Firm.

Medical, Inc.

of Operations and Comprehensive Loss

thousands, except per share data)

Years Ended December 31,

Revenue $ 3,944 $ 3,277

Cost of sales 1,586 1,566

Gross Profit 2,358 1,711

Operating Expenses

8 unchanged sentences

Other expense, net — ( 56 )

Total Other Income (Expense), net

Total Other Income, net 236 93

Net Loss $ ( 12,556 ) $ ( 13,673 )

Net Loss Per Share of Common Stock

2 unchanged sentences

Basic and diluted 7,384 1,214

Consolidated Statements of Comprehensive Loss:

Unrealized loss on investments

Statements of Comprehensive Loss:

Net loss $ ( 12,556 ) $ ( 13,673 )

Foreign currency translation adjustment — 46

Total Comprehensive Loss $ ( 12,556 ) $ ( 13,627 )

The accompanying notes are an integral part

of these consolidated financial statements.

See Report of Independent Registered Public

Accounting Firm.

Tenon Medical, Inc.

Consolidated Statements of Convertible Preferred

Stock and Stockholders’ Equity

(In thousands, except share data)

Series A Convertible Preferred Stock

Series B Convertible Preferred Stock

Comprehensive

Balance at December 31, 2022

Stock-based compensation expense

Release of restricted stock units

Issuance of common stock and warrants, net of issuance costs

Issuance of common stock, net of issuance costs

Common stock issued for services

Issuance of common stock upon exercise of warrants

Warrants issued in connection with convertible debt

Shares issued for reverse stock split

Other comprehensive income

accompanying notes are an integral part of these financial statements.

Report of Independent Registered Public Accounting Firm.

Medical, Inc.

of Convertible Preferred Stock and Stockholders’ Equity

thousands, except share data)

A Convertible Preferred Stock

B Convertible Preferred Stock

Other Compre -

Balance at December 31, 2023 — $ — — $ — 325,039 $ — $ 55,897 $ ( 55,073 ) $ ( 46 ) $ 778

10 unchanged sentences

Other comprehensive income — — — — — — — — 46 46

Net loss — — — — — — — ( 13,673 ) ( 13,673 )

Balance at December 31, 2024 256,968 3,300 86,454 452 3,138,804 3 70,962 ( 68,746 ) — 5,971

The accompanying notes are an integral part

of these consolidated financial statements.

See Reports of Independent Registered Public

Accounting Firms.

Tenon Medical, Inc.

Consolidated Statements of Cash Flows

(In thousands)

Years Ended December 31,

Stock-based compensation expense — — — — — — 1,691 — — 1,691

Issuance of common stock, pre-funded warrants and warrants under inducement agreement, net of issuance costs — — — — 2,445,700 3 2,732 — — 2,735

Issuance of common stock, prefunded warrants, and warrants, net of issuance costs — — — — 2,005,000 2 3,522 — — 3,524

Shares issued for acquisition of assets of SiVantage, Inc.

— — — — 710,300 1 1,365 — — 1,366

Issuance of common stock upon conversion of Series A convertible preferred stock ( 52,809 ) ( 678 ) — — 300,005 — 678 — — —

Issuance of common stock and warrants, net of issuance costs — — — — 2,217,904 2 2,728 — — 2,730

Release of restricted stock units — — — — 33,560 — — — — —

Deferred financing costs — — — — — — ( 421 ) — — ( 421 )

Net loss — — — — — — — ( 12,556 ) — ( 12,556 )

Balance at December 31, 2025 204,159 $ 2,622 86,454 $ 452 10,851,273 $ 11 $ 83,257 $ ( 81,302 ) $ — $ 5,040

accompanying notes are an integral part of these financial statements.

Reports of Independent Registered Public Accounting Firms.

Medical, Inc.

of Cash Flows

Ended December 31,

Cash Flows from Operating Activities

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

Net loss $ ( 12,556 ) $ ( 13,673 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Stock-based compensation expense 1,691 3,845

2 unchanged sentences

Amortization of operating right-of-use asset 268 247

Increase (decrease) in cash resulting from changes in:

Increase (decrease) in

cash resulting from changes in:

Accounts receivable ( 851 ) ( 386 )

Inventory ( 387 ) ( 52 )

Prepaid expenses and other assets ( 35 ) 183

3 unchanged sentences

Net cash used in operating activities ( 10,745 ) ( 9,878 )

Cash Flows from Investing Activities

Sales of short-term investments

Purchases of short-term investments

Cash Flows from Investing

Purchase of assets from SiVantage, Inc.

Purchases of property and equipment ( 273 ) ( 186 )

Net cash (used in) provided by investing activities

Cash Flows from Financing Activities

Gross proceeds from issuance of Series A convertible preferred stock

Gross proceeds from issuance of Series B convertible preferred stock

Net cash used in investing activities ( 1,023 ) ( 186 )

Cash Flows from Financing

Gross proceeds from issuance of common stock, prefunded warrants, and warrants 4,010 4,500

1 unchanged sentence

Gross proceeds from issuance of common stock and warrants 2,850 —

Gross proceeds from issuance of Series A convertible preferred stock — 2,605

Gross proceeds from issuance of Series B convertible preferred stock — 550

Gross proceeds from issuance of common stock — 2,106

Gross proceeds from issuance of convertible notes payable

Gross proceeds from exercise of warrants — 812

2 unchanged sentences

Effect of foreign currency translation on cash flow — 46

Net Increase in Cash and Cash Equivalents

Net (Decrease) Increase in Cash and Cash Equivalents ( 2,779 ) 4,107

Cash and Cash Equivalents at Beginning of Year 6,535 2,428

Cash and Cash Equivalents at End of Year $ 3,756 $ 6,535

Cash at End of Year

Cash Equivalents at End of Year

Supplemental Disclosures of Cash Flow Information

Non-cash investment and financing activities:

Preferred stock issued upon conversion of debt and accrued interest, net of unamortized debt issuance costs

Reclassification of deferred offering costs to additional paid-in capital

Supplemental Disclosures

of Cash Flow Information

Non-cash investment

and financing activities:

Warrant modification costs $ 5,133 $ 992

The accompanying notes are an integral part

of these consolidated financial statements.

See Report of Independent Registered Public

Accounting Firm.

Notes to Consolidated Financial Statements (in

thousands, except share and per-share data)

Preferred stock issued upon conversion of debt and accrued interest $ — $ 1,186

Reclassification of deferred offering costs to additional paid-in capital $ 421 $ 367

Common stock issued upon conversion of Series A preferred stock $ 678 $ —

Common stock issued for purchase of assets from SiVantage, Inc.

Contingent consideration for purchase of assets from SiVantage, Inc.

accompanying notes are an integral part of these financial statements.

Report of Independent Registered Public Accounting Firm.

to Financial Statements (in thousands, except share and per-share data)

Organization and Business

1 unchanged sentence

Tenon Medical, Inc.

(the “Company”)

was incorporated in the State of Delaware on June 19, 2012 and was headquartered in San Ramon, California until June 2021 when it relocated

to Los Gatos, California.

The Company is a medical device company that has developed The Catamaran™ SI Joint Fusion System (“The

Catamaran System”) that offers a novel, less invasive approach to the sacroiliac joint (the “SI Joint”) using a single,

robust, titanium implant for treatment of the most common types of SI Joint disorders that cause lower back pain.

The Company received

(the “Company”) was incorporated in the State of Delaware on June 19, 2012 and was headquartered in San Ramon, California until June 2021 when it relocated to Los Gatos, California.

The Company is a medical device company dedicated to transforming care for patients with certain sacro-pelvic disorders.

The Company currently offers two systems to treat a diseased sacroiliac joint (“SI Joint”).

The Company has developed The Catamaran®™ SI Joint Fusion System (“The Catamaran System”) that offers a novel, less invasive approach to the SI Joint using a single, robust, titanium implant for treatment of the most common types of SI Joint disorders that cause lower back pain.

The Company received U.S.

Food and Drug Administration (“FDA”) clearance in 2018 for The Catamaran System and is currently focused on the US market.

Since the national launch of The Catamaran System in October 2022, the Company is focused on three commercial opportunities:

SI Joint procedures, 2) Revision procedures of failed SI Joint implants and 3) SI Joint fusion adjunct to a spine fusion construct.

Basis of consolidation

The consolidated financial statements of the

Company for the year ended December 31, 2023 include the accounts of its wholly-owned subsidiary, Tenon Technology AG

(“TTAG”), a Swiss company.

All intercompany balances and transactions have been eliminated in consolidation.

financial statements of TTAG are prepared for the same reporting period as the parent, using consistent accounting policies in all

material respects.

In 2024, TTAG was dissolved and, as such, the financial statements for the year ended December 31, 2024 only

include the accounts of the Company since the date of dissolution.

TTAG had no substantial operations.

1) Primary SI Joint procedures, 2) Revision procedures of failed SI Joint implants and 3) SI Joint fusion adjunct to a spine fusion construct.

In August 2025, the Company acquired substantially all of the assets of SiVantage®, Inc.

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

Summary of Significant Accounting Principles

Basis of presentation

The accompanying

consolidated financial statements have been prepared on the accrual basis in accordance with generally accepted accounting principles

as promulgated in the United States of America (“U.S.

The accompanying financial statements have been prepared on the accrual basis in accordance with generally accepted accounting principles as promulgated in the United States of America (“U.S.

Going concern uncertainty and liquidity requirements

The accompanying consolidated financial statements

have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement

of liabilities and commitments in the normal course of business.

There is substantial doubt about the Company’s ability to continue

as a going concern for one year after the date that these financial statements are issued.

Since inception, the Company has incurred losses

and negative cash flows from operations.

Management expects to incur additional operating losses and negative cash flows from operations

in the foreseeable future as the Company continues its product development programs and the commercialization of The Catamaran System.

Based on the Company’s expected level of revenues and expenditures, the Company believes that its existing cash and cash equivalents

as of December 31, 2024 will not provide sufficient funds to enable it to meet its obligations for a period of at least twelve months

from the date of the filing of these consolidated financial statements.

The Company plans to raise the necessary additional capital through

one or a combination of public or private equity offerings, debt financings, and collaborations (see Note 13).

The consolidated financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

There is substantial doubt about the Company’s ability to continue as a going concern for one year after the date that these financial statements are issued.

Since inception, the Company has incurred losses and negative cash flows from operations.

Management expects to incur additional operating losses and negative cash flows from operations in the foreseeable future as the Company continues its product development programs and the commercialization of The Catamaran System and The SImmetry+ System.

Based on the Company’s expected level of revenues and expenditures, the Company believes that its existing cash and cash equivalents as of December 31, 2025 will not provide sufficient funds to enable it to meet its obligations for a period of at least twelve months from the date of the filing of these financial statements.

The Company plans to raise the necessary additional capital through one or a combination of public or private equity offerings, debt financings, and collaborations (see Note 14).

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Notice from Nasdaq

On February 25, 2026, the Company received a letter (the “Notification Letter”) from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) stating that for the 30 consecutive business day period between January 9, 2026 and February 24, 2026, the common stock of the Company had not maintained a minimum closing bid price of $ 1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar days, or until August 24, 2026 (the “Compliance Period”), to regain compliance with the Bid Price Rule.

To regain compliance, the closing bid price of the Company’s common stock must be at least $ 1.00 per share for a minimum of 10 consecutive business days during the Compliance Period.

If the Company does not regain compliance with the Bid Price Rule by August 24, 2026, the Company may be eligible for an additional 180-day period to regain compliance.

To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Bid Price Rule, and would need to provide written notice of its intention to cure the bid price deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

If the Company cannot regain compliance during the Compliance Period or any subsequently granted compliance period, the common stock of the Company will be subject to delisting.

At that time, the Company may appeal the delisting determination to a Nasdaq hearings panel.

The notice from Nasdaq has no immediate effect on the listing of the Company’s common stock and its common stock will continue to be listed on The Nasdaq Capital Market under the symbol “TNON.” The Company is currently evaluating its options for regaining compliance with the Bid Price Rule.

There can be no assurance that the Company will regain compliance with the Bid Price Rule or maintain compliance with any of the other Nasdaq continued listing requirements.

Use of estimates

The preparation of the consolidated financial

statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect certain reported amounts and

The preparation of the financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures.

Accordingly, actual results could differ from those estimates.

Significant estimates made by management include, but are

not limited to, realization of deferred tax assets, accrued liabilities, obsolescence of inventory, the fair value of accrued commissions

and stock-based compensation.

Reverse Stock Splits

On November 2, 2023, the Company effected a 1-for-10

reverse stock split (the “2023 Reverse Stock Split”) by filing an amendment to the Company’s Amended and Restated Certificate

of Incorporation, as amended, with the Delaware Secretary of State.

The 2023 Reverse Stock Split combined every ten shares of our common

stock issued and outstanding immediately prior to effecting the 2023 Reverse Stock Split into one share of common stock.

No fractional

shares were issued in connection with the 2023 Reverse Stock Split.

On September 6, 2024, the Company effected a 1-for-8

reverse stock split (the “2024 Reverse Stock Split”) by filing an amendment to the Company’s Amended and Restated Certificate

of Incorporation, as amended, with the Delaware Secretary of State.

The 2024 Reverse Stock Split combined every eight shares of our common

stock issued and outstanding immediately prior to effecting the 2024 Reverse Stock Split into one share of common stock.

No fractional

shares were issued in connection with the 2024 Reverse Stock Split.

All historical share and per share amounts reflected

throughout this document have been adjusted to reflect the 2023 Reverse Stock Split and the 2024 Reverse Stock Split.

The authorized number

of shares and the par value per share of the Company’s common stock were not affected by the 2023 Reverse Stock Split or the 2024

Significant estimates made by management include, but are not limited to, the fair value of assets acquired and liabilities assumed in business combinations, estimates of purchase price consideration and contingent consideration, realization of deferred tax assets, accrued liabilities, obsolescence of inventory, the fair value of accrued commissions and stock-based compensation.

Reverse Stock Split

On September 6, 2024, the Company effected a 1-for-8 reverse stock split (the “2024 Reverse Stock Split”) by filing an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State.

The 2024 Reverse Stock Split combined every eight shares of our common stock issued and outstanding immediately prior to effecting the 2024 Reverse Stock Split into one share of common stock.

No fractional shares were issued in connection with the 2024 Reverse Stock Split.

All historical share and per share amounts reflected throughout this document have been adjusted to reflect the 2024 Reverse Stock Split.

The authorized number of shares and the par value per share of the Company’s common stock were not affected by the 2024 Reverse Stock Split.

The Company operates in one business segment:

Although the Company’s Swiss subsidiary is located in a different geographical area, management uses one measurement of profitability

and does not segregate its business for internal reporting.

the SI Joint segment.

Business Combinations

The Company accounts for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations , which requires that assets acquired and liabilities assumed be recorded at their respective fair values on the date of acquisition.

The fair value of the consideration paid is assigned to the underlying net assets of the acquired business based on their respective fair values.

Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded to goodwill.

Intangible assets acquired are amortized over the expected life of the asset.

Fair value determinations and useful life estimates are based on, among other factors, estimates of expected future cash flows, estimates of appropriate discount rates, estimated useful lives of the intangible assets acquired and other factors.

Although the Company believes the assumptions and estimates made have been reasonable and appropriate, actual results may vary significantly from estimated results.

The Company’s assumptions and estimates are subject to refinement and, as a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Cash and cash equivalents

The Company considers all highly liquid investments

with maturities of 90 days or less at the date of purchase to be cash equivalents.

The Company classifies its investments in marketable

securities as available-for-sale and records them at fair value in its consolidated balance sheets.

The net unrealized gains and losses

are recorded as a separate component of stockholders’ equity.

Realized gains and losses are recorded in the consolidated statements

of operations and comprehensive loss.

The Company determines any realized gains or losses on the sale of marketable debt securities on

a specific identification method and records such gains and losses as a component of other income (expense) net.

Accounts receivable and expected credit

Accounts receivable are derived from products

delivered to customers and are stated at their net realizable value.

The Company records an allowance for estimated uncollectible accounts

in an amount approximating anticipated losses.

Individual uncollectible accounts are written off against the allowance when collection

of the individual accounts appears doubtful.

In determining the amount of the allowance, the Company considers its historical level of

credit losses.

The Company also makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations,

and the Company assesses current economic trends that might impact the level of credit losses in the future.

Historically, the Company

has had no significant write-offs of accounts receivable.

However, since the Company cannot reliably predict future changes in the financial

stability of its customers, it cannot guarantee that its allowances will continue to be adequate.

If actual credit losses are significantly

greater than the allowance, the Company would increase its general and administrative expenses and increase its reported net losses.

Company’s allowance for expected credit losses was $ 41 and $0 at December 31, 2024 and 2023, respectively.

Inventory is stated at lower of cost or net

realizable value.

The Company establishes the inventory basis by determining the cost based on standard costs approximating the

purchase costs on a first-in, first-out basis.

The excess and obsolete inventory is estimated based on quantities on hand,

expectations of future demand and market conditions.

The Company considers all highly liquid investments with maturities of 90 days or less at the date of purchase to be cash equivalents.

When applicable, the Company classifies its investments in marketable securities as available-for-sale and records them at fair value in its balance sheets.

The net unrealized gains and losses are recorded as a separate component of stockholders’ equity.

Realized gains and losses are recorded in the statements of operations and comprehensive loss.

The Company determines any realized gains or losses on the sale of marketable debt securities on a specific identification method and records such gains and losses as a component of other income (expense) net.

Accounts receivable and expected credit losses

Accounts receivable are derived from products delivered to customers and are stated at their net realizable value.

The Company records an allowance for estimated uncollectible accounts in an amount approximating anticipated losses.

Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful.

In determining the amount of the allowance, the Company considers its historical level of credit losses.

The Company also makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in the future.

Historically, the Company has had no significant write-offs of accounts receivable.

However, since the Company cannot reliably predict future changes in the financial stability of its customers, it cannot guarantee that its allowances will continue to be adequate.

If actual credit losses are significantly greater than the allowance, the Company would increase its general and administrative expenses and increase its reported net losses.

The Company’s allowance for expected credit losses was $ 22 and $ 41 at December 31, 2025 and 2024, respectively.

Inventory is stated at lower of cost or net realizable value.

The Company establishes the inventory basis by determining the cost based on standard costs approximating the purchase costs on a first-in, first-out basis.

The excess and obsolete inventory is estimated based on quantities on hand, expectations of future demand and market conditions.

Inventory write-downs are charged to cost of goods sold.

As of December 31,

2024 and 2023, inventory consisted of finished goods and raw materials.

As of December 31, 2025 and 2024, inventory consisted of finished goods and raw materials (Note 4).

Deferred offering costs

Deferred offering costs, which consist of

direct incremental legal, consulting, banking, and accounting fees relating to the Company’s future offerings, are

capitalized, and are offset against proceeds received upon the effectiveness of the offering or the closing of an equity

Deferred offering costs, which consist of direct incremental legal, consulting, banking, and accounting fees relating to the Company’s future offerings, are capitalized, and are offset against proceeds received upon the effectiveness of the offering or the closing of an equity transaction.

In the event an anticipated offering is terminated, deferred offering costs will be expensed.

Property and equipment, net

Property and equipment are stated at cost less accumulated

depreciation.

Property and equipment are stated at cost less accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

Equipment, computers,

software, and furniture and fixtures are depreciated over periods ranging from three to seven years , and leasehold improvements over the

shorter of the lease term or the life of the asset.

Construction in progress pertains to the cost of individual components of a custom

instrument set used for surgical placement of the Company’s products that have not yet been placed into service.

The cost of maintenance

and repairs is charged to expense as incurred;

Equipment, computers, software, and furniture and fixtures are depreciated over periods ranging from three to seven years, and leasehold improvements over the shorter of the lease term or the life of the asset.

Construction in progress pertains to the cost of individual components of a custom instrument set used for surgical placement of the Company’s products that have not yet been placed into service.

The cost of maintenance and repairs is charged to expense as incurred;

significant renewals and betterments are capitalized.

Deductions are made for retirements

resulting from renewals or betterments.

The Company leases its headquarters in Los Gatos,

Deductions are made for retirements resulting from renewals or betterments.

The Company leases its headquarters in Los Gatos, California.

At the inception of a contract, the Company assesses whether that contract is, or contains, a lease.

The Company’s assessment

(1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially

all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of

At inception of a lease, the Company allocates the consideration in the contract to each lease and non-lease component based

on the component’s relative stand-alone price to determine the lease payments.

Lease and non-lease components are accounted for

Leases are classified as either finance leases

or operating leases based on criteria in accordance with Accounting Standards Codification (“ASC”) 842, Leases .

Company’s facility lease is classified as an operating lease.

Right-of-use assets represent the Company’s right to use an

underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.

lease right-of-use assets and liabilities are recognized at the lease’s commencement date based on the present value of lease payments

over the lease term.

When a lease did not provide an implicit rate, the Company used its estimated incremental borrowing rate based on

the information available at the commencement date in determining the present value of future payments.

The Company has elected not to

recognize ROU assets and lease liabilities for short-term operating leases that have a term of 12 months or less.

Lease expense for operating

leases is recognized on a straight-line basis over the lease term and is included in operating expenses in the consolidated statements

of operations and comprehensive loss.

The Company’s assessment is based on:

(1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of the asset.

At inception of a lease, the Company allocates the consideration in the contract to each lease and non-lease component based on the component’s relative stand-alone price to determine the lease payments.

Lease and non-lease components are accounted for separately.

Leases are classified as either finance leases or operating leases based on criteria in accordance with Accounting Standards Codification (“ASC”) 842, Leases .

The Company’s facility lease is classified as an operating lease.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.

Operating lease right-of-use assets and liabilities are recognized at the lease’s commencement date based on the present value of lease payments over the lease term.

When a lease did not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

The Company has elected not to recognize ROU assets and lease liabilities for short-term operating leases that have a term of 12 months or less.

Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in operating expenses in the statements of operations and comprehensive loss.

Long-lived assets

The Company regularly reviews the carrying value

and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of impairment may

exist that warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation include management’s

estimate of the asset’s ability to generate positive income from operations and positive undiscounted cash flow in future periods

as well as the strategic significance of the assets to the Company’s business objectives.

The Company regularly reviews the carrying value and estimated lives of all of its long-lived assets, including property and equipment and intangible assets, to determine whether indicators of impairment may exist that warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive undiscounted cash flow in future periods as well as the strategic significance of the assets to the Company’s business objectives.

Fair value measurements

In accordance with ASC 820,

Fair Value Measurement , fair value is the price that would be received from selling an asset or paid to transfer a liability (i.e.,

the exit price) in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a fair value hierarchy

for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring

that the most observable inputs be used when available.

Observable inputs are those that market participants

would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs

reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability based on

the best information available in the circumstances.

The fair value hierarchy is categorized into three

levels based on the inputs as follows:

Level 1 – Quoted prices are available

in active markets for identical assets or liabilities as of the reported date.

Level 2 – Pricing inputs are other

than quoted prices in active markets, which are either directly or indirectly observable as of the reported date.

The nature of these

financial instruments includes cash instruments for which quoted prices are available but are traded less frequently, derivative instruments

whose fair values have been derived using a model where inputs to the model are directly observable in the market and instruments that

are fair valued using other financial instruments, the parameters of which can be directly observed.

Level 3 – Instruments that have

little to no pricing observability as of the measurement date.

These financial instruments are measured using management’s best

estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

The degree of judgment exercised by the Company

in determining fair value is greatest for assets categorized in Level 3.

In certain cases, the inputs used to measure fair value may fall

into different levels of the fair value hierarchy.

In such cases, for disclosure purposes, the level in the fair value hierarchy within

which the fair value measurement falls in its entirety is determined by the lowest level input that is significant to the fair value measurement.

Income taxes are recorded in accordance with

ASC 740, Income Taxes , which provides for deferred taxes using an asset and liability approach.

this method, the Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences

between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in

effect when the differences are expected to reverse.

Valuation allowances are provided when necessary to reduce net deferred tax assets

to the amount that is more likely than not to be realized.

Based on the available evidence, the Company is unable, at this time, to support

the determination that it is more likely than not that its deferred tax assets will be utilized in the future.

Accordingly, the Company

recorded a full valuation allowance as of December 31, 2024 and 2023.

The Company intends to maintain valuation allowances until sufficient

evidence exists to support its reversal.

Current income taxes are based upon the year’s

income taxable for federal, state, and foreign tax reporting purposes.

Deferred income taxes are provided for certain income and expenses,

which are recognized in different periods for tax and financial reporting purposes.

The Company’s policy is not to record deferred

income taxes on the undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations.

In accordance with ASC 820, Fair Value Measurement , fair value is the price that would be received from selling an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available in the circumstances.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date.

The nature of these financial instruments includes cash instruments for which quoted prices are available but are traded less frequently, derivative instruments whose fair values have been derived using a model where inputs to the model are directly observable in the market and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.

Level 3 – Instruments that have little to no pricing observability as of the measurement date.

These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

The degree of judgment exercised by the Company in determining fair value is greatest for assets categorized in Level 3.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined by the lowest level input that is significant to the fair value measurement.

Certain non-financial assets and liabilities, such as acquired intangible assets and contingent liabilities, are valued using management’s best estimate of fair value, which includes estimates of expected cash flows.

Income taxes are recorded in accordance with ASC 740, Income Taxes , which provides for deferred taxes using an asset and liability approach.

Under this method, the Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect when the differences are expected to reverse.

Valuation allowances are provided when necessary to reduce net deferred tax assets to the amount that is more likely than not to be realized.

Based on the available evidence, the Company is unable, at this time, to support the determination that it is more likely than not that its deferred tax assets will be utilized in the future.

Accordingly, the Company recorded a full valuation allowance as of December 31, 2025 and 2024.

The Company intends to maintain valuation allowances until sufficient evidence exists to support its reversal.

Current income taxes are based upon the year’s income taxable for federal, state, and foreign tax reporting purposes.

Deferred income taxes are provided for certain income and expenses, which are recognized in different periods for tax and financial reporting purposes.

Revenue recognition

The Company’s revenue is derived from the

sale of its products to medical groups and hospitals in the United States.

Revenue is recognized when control is transferred to the customer,

in an amount that reflects the consideration we expect to be entitled to in exchange for the goods or services, using the following five

step approach:

(1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the

transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a

performance obligation is satisfied.

The Company generates revenue from the sale of

products to hospitals or medical facilities where its products are delivered in advance of a procedure.

The performance obligation is

the delivery of the products along with the completion of the surgery and therefore, revenue is recognized upon delivery to the customers

and completion of the surgery, net of rebates and price discounts.

The Company accounts for rebates and price discounts as a reduction

Sales prices are specified prior to the transfer of control to the customer, via either the customer contract, agreed price

list, purchase order, or written communication with the customer.

For direct sales to end-user customers, the Company’s standard payment

terms are generally net 30 days.

The Company offers its standard warranty to all

customers and does not sell any warranties on a standalone basis.

The Company’s warranty provides that its products are free of

material defects and conform to specifications, and includes an offer to replace or refund the purchase price of defective products.

assurance does not constitute a service and is not considered a separate performance obligation.

The Company estimates warranty liabilities

at the time of revenue recognition and records them as a charge to cost of goods sold.

Contract modifications generally do not occur

during the performance of the Company’s contracts.

Payments received prior to satisfying the revenue

recognition criteria are recorded as deferred revenue on the consolidated balance sheets.

As of December 31, 2024 and 2023, there were

no remaining performance obligations that would give rise to deferred revenue.

Except as described in Note 9, sales commissions are recorded in sales and marketing

expenses during the same period as the corresponding revenues.

The Company’s revenue is derived from the sale of its products to medical groups and hospitals in the United States.

Revenue is recognized when control is transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods or services, using the following five step approach:

(1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company generates revenue from the sale of products to hospitals or medical facilities where its products are delivered in advance of a procedure.

The performance obligation is the completion of the surgery and therefore, revenue is recognized upon completion of the surgery, net of rebates and price discounts.

The Company accounts for rebates and price discounts as a reduction to revenue.

Sales prices are specified prior to the transfer of control to the customer, via either the customer contract, agreed price list, purchase order, or written communication with the customer.

For direct sales to end-user customers, the Company’s standard payment terms are generally net 30 days.

The Company offers its standard warranty to all customers and does not sell any warranties on a standalone basis.

The Company’s warranty provides that its products are free of material defects and conform to specifications, and includes an offer to replace or refund the purchase price of defective products.

This assurance does not constitute a service and is not considered a separate performance obligation.

The Company estimates warranty liabilities at the time of revenue recognition and records them as a charge to cost of goods sold.

Contract modifications generally do not occur during the performance of the Company’s contracts.

Payments received prior to satisfying the revenue recognition criteria are recorded as deferred revenue on the balance sheets.

As of December 31, 2025 and 2024, there were no remaining performance obligations that would give rise to deferred revenue.

Except as described in Note 10, sales commissions are recorded in sales and marketing expenses during the same period as the corresponding revenues.

Research and development

The Company engages in improving existing products

and new product development efforts.

The Company engages in improving existing products and new product development efforts.

Research and development expenses relating to these efforts are expensed as incurred.

Stock-based compensation

The Company accounts for all stock-based compensation

awards using a fair-value method on the grant date and recognizes the fair value of each award as an expense over the requisite service

The Company recognizes compensation costs

related to stock-based awards granted to employees, directors, and consultants, including restricted stock units and stock options,

based on the estimated fair value of the awards on the date of grant.

For restricted stock units, the Company estimates grant

date fair value based on the closing market price on the date of grant.

For stock options, the company estimates the grant date fair

value using the Black-Scholes option-pricing model.

The grant date fair value of the stock-based

awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of

the respective awards.

The Black-Scholes option-pricing model requires

the use of subjective assumptions to determine the fair value of stock-based awards.

The Company accounts for all stock-based compensation awards using a fair-value method on the grant date and recognizes the fair value of each award as an expense over the requisite service period.

The Company recognizes compensation costs related to stock-based awards granted to employees, directors, and consultants, including restricted stock units and stock options, based on the estimated fair value of the awards on the date of grant.

For restricted stock units, the Company estimates grant date fair value based on the closing market price on the date of grant.

For stock options, the company estimates the grant date fair value using the Black-Scholes option-pricing model.

The grant date fair value of the stock-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.

The Black-Scholes option-pricing model requires the use of subjective assumptions to determine the fair value of stock-based awards.

These assumptions include:

Expected Term —The expected term

represents the period that stock-based awards are expected to be outstanding.

The expected term for option grants is determined

using the simplified method as the Company does not have significant stock option exercises in its history.

The simplified method

deems the expected term to be the midpoint between the vesting date and the contractual life of the stock-based awards.

Expected Volatility —Since the Company

has only been publicly held since April 2022 and does not have any trading history for its common stock prior to that date, the expected

volatility was estimated based on the average volatility for comparable publicly traded companies over a period equal to the expected

term of the stock option grants.

The comparable companies were chosen based on their similar size, stage in the life cycle, or area of

Risk-Free Interest Rate —The risk-free

interest rate is based on the U.S.

Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected

term of option.

Expected Dividend s—The Company has

never paid dividends on its common stock and has no plans to pay dividends on its common stock.

Therefore, an expected dividend yield

of zero is used.

Expected Term —The expected term represents the period that stock-based awards are expected to be outstanding.

The expected term for option grants is determined using the simplified method as the Company does not have significant stock option exercises in its history.

The simplified method deems the expected term to be the midpoint between the vesting date and the contractual life of the stock-based awards.

Expected Volatility —Since the Company has only been publicly held since April 2022 and did not have any trading history for its common stock prior to that date, the expected volatility was estimated based on the average volatility for comparable publicly traded companies over a period equal to the expected term of the stock option grants.

The comparable companies were chosen based on their similar size, stage in the life cycle, or area of specialty.

Risk-Free Interest Rate —The risk-free interest rate is based on the U.S.

Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Expected Dividends —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock.

Therefore, an expected dividend yield of zero is used.

The Company accounts for forfeitures as they occur.

The Company’s board of directors intends

all options granted to be exercisable at a price per share not less than the per share fair value of our common stock underlying those

options on the date of grant.

Foreign currency translation and other comprehensive

The functional currency of Tenon Technology AG

is the Swiss franc.

Accordingly, TTAG’s assets and liabilities are translated from their respective functional currency into U.S.

Dollars at period-end rates, and TTAG’s revenue and expenses are translated at the weighted-average exchange rate for the period.

Adjustments resulting from this translation process are classified as other comprehensive income or loss and shown as a separate component

When intercompany foreign currency transactions

between entities included in the consolidated financial statements are of a long-term investment nature (i.e., those for which settlement

is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those transactions are

included in stockholders’ equity as accumulated other comprehensive loss or income.

When intercompany transactions are

deemed to be of a short-term nature, translation adjustments are required to be included in the consolidated statements of operations.

The Company’s board of directors intends all options granted to be exercisable at a price per share not less than the per share fair value of our common stock underlying those options on the date of grant.

Net loss per share

Basic net loss per share is based upon the weighted-average

number of common shares outstanding.

Diluted net loss per share is based on the assumption that all potential common stock equivalents

(convertible preferred stock, stock options, and warrants) are converted or exercised.

The calculation of diluted net loss per share excludes

potential common stock equivalents if the effect is anti-dilutive.

For the periods presented, the Company’s weighted-average common

shares outstanding for basic and diluted are the same because the effect of the potential common stock equivalents is anti-dilutive.

The Company had the following dilutive common

stock equivalents as of December 31, 2024 and 2023 which were excluded from the calculation because their effect was anti-dilutive.

Basic net loss per share is based upon the weighted-average number of common shares outstanding.

Diluted net loss per share is based on the assumption that all potential common stock equivalents (convertible preferred stock, stock options, and warrants) are converted or exercised.

The calculation of diluted net loss per share excludes potential common stock equivalents if the effect is anti-dilutive.

For the periods presented, the Company’s weighted-average common shares outstanding for basic and diluted are the same because the effect of the potential common stock equivalents is anti-dilutive.

The Company had the following dilutive common stock equivalents as of December 31, 2025 and 2024 which were excluded from the calculation because their effect was anti-dilutive.

Outstanding restricted stock units 917,422 20,224

2 unchanged sentences

Outstanding Convertible Preferred Shares 1,822,080 896,661

Adoption of New Accounting Pronouncements

In November 2023, the Financial Accounting Standards

Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which increases the disclosures about reportable segments including more detailed

information about a reportable segment’s expenses.

This guidance is effective for the Company for the fiscal year ended December

31, 2024 and the interim periods thereafter.

Adoption of this guidance had no effect on the Company’s results of operations, as the

changes are disclosure related.

Total 10,931,113 3,656,367

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as modified by the Jumpstart Our Business Startups Act (the “JOBS Act”), and has elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.

These exemptions include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.

In addition, under the JOBS Act, emerging growth companies are permitted to delay the adoption of certain new or revised accounting standards until such time as those standards apply to private companies.

The Company has elected to use this extended transition period for complying with new or revised accounting standards, and, as a result, its financial statements may not be comparable to companies that comply with public company effective dates.

The Company will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering, (ii) the last day of the fiscal year in which we have total annual gross revenues of at least $ 1.235 billion, (iii) the date on which we are deemed to be a large accelerated filer, or (iv) the date on which we have issued more than $ 1.0 billion in non-convertible debt securities during the prior three-year period.

Adoption of New Accounting Pronouncement

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires additional tax disclosures about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

This guidance is effective on a prospective basis, with the option to apply it retrospectively, for the Company’s fiscal years beginning after December 15, 2025.

The early adoption of ASU 2023-09 expanded the Company’s income tax disclosures in its Annual Report on Form 10-K, but had no impact on reported income tax (benefit) expense or related tax assets or liabilities.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU

2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures , which requires additional tax

disclosures about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

guidance will be effective on a prospective basis, with the option to apply it retrospectively, for fiscal years beginning after

December 15, 2024.

We are currently evaluating the impact of adopting this new accounting guidance.

In November 2024, the FASB issued ASU 2024-03,

Disaggregation of Income Statement Expenses , which requires additional disclosure of specific types of expenses included in the

expense captions presented on the face of the income statement as well as disclosures about selling expenses.

ASU 2024-03 is effective

for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

The requirements

will be applied prospectively with the option for retrospective application.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which requires additional disclosure of specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

The requirements will be applied prospectively with the option for retrospective application.

Early adoption is permitted.

We are currently evaluating

the impact of adopting this new accounting guidance.

Inventory, net

Inventory, net of reserves, consisted of the following:

We are currently evaluating the impact of adopting this new accounting guidance.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides a practical expedient to measure credit losses on current accounts receivable and contract assets.

The practical expedient allows companies to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset.

For public companies, ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

The Company is currently evaluating the impact of adopting this guidance on its condensed financial statements.

On August 1, 2025 (the “SI Closing Date”), the Company entered into an asset purchase agreement (the “SI APA”) with SiVantage, Inc., a Delaware corporation (“SI”), pursuant to which the Company acquired substantially all of the assets of SI, including the assignment of its intellectual property related to sacropelvic fixation and fusion procedures (the “SI Products”), and assumed certain of its current liabilities and contract obligations, as set forth in the SI APA (the “SImmetry Acquisition”).

The SImmetry Acquisition closed on the SI Closing Date.

On the SI Closing Date, SI received, as consideration for the SImmetry Acquisition, the purchase price consisting of:

(i) $ 750,000 in cash;

(ii) 710,300 shares of the Company’s common stock, of which 473,533 are to be held by the Company for a period of one-year as security to satisfy any indemnification claims against SI in accordance with the SI APA;

(iii) a royalty equal to 15 % of the sales of all SI Products during the one-year period following the SI Closing Date and 10 % of the sales of all SI Products during the following four-year period, subject to a cap of $ 5.0 million;

and (iv) a deferred cash payment of up to a maximum of approximately $ 1.3 million in the event that the all of the currently issued and outstanding warrants of the Company are exercised (which deferred cash payment will be made pro rata based on the actual number of warrants exercised).

In addition, during the three-year period following the SI Closing Date, the Company will issue SI additional shares of its common stock upon the achievement of the following milestones:

● upon the Company having $ 1 million in aggregate sales of the SI Products after the SI Closing Date, the Company will issue SI an additional 276,228 shares of its common stock;

● upon the Company achieving $ 10 million in aggregate sales of the SI Products after the SI Closing Date, the Company will issue SI an additional 276,228 shares of its common stock;

● upon the Company achieving $ 20 million in aggregate sales of the SI Products after the SI Closing Date, the Company will issue SI an additional 314,900 shares of its common stock.

On August 1, 2025, the Company also entered into an asset purchase agreement (the “ SIMPL APA”) with SIMPL Medical, LLC, a Delaware limited liability (“SIMPL”), pursuant to which the Company acquired substantially all of the assets of SIMPL, including the assignment of its intellectual property related to posterior sacroiliac implant technology (the “SIMPL Products”), and assumed certain of its contract obligations, as set forth in the SIMPL APA (the “SIMPL Acquisition”).

The SIMPL Acquisition closed on August 4, 2025.

The aggregate purchase price for the SIMPL Acquisition payable by the Company is a royalty equal to 30 % of the net revenue received by the Company from the sale of any SIMPL Products during the five-year period following the first commercial sale of any SIMPL Products;

provided that in the event that the aggregate royalty payments made by the Company to SIMPL exceed $ 20.0 million, then from and after such time, the Company shall pay SIMPL 20 % of the net revenue received by the Company from the sale of any SIMPL Products during the remainder of such five-year period.

The royalty payments noted above shall be paid quarterly by the Company.

The Company has the option, subject to certain limitations, to pay up to 33.3 % of any quarterly royalty by the issuance of its shares of common stock, based upon the trailing 10-day VWAP at the end of any applicable quarter.

SI and SIMPL are under common control and the acquisitions were conditional upon one another;

therefore, the Company determined that they are considered related businesses and the acquisition of the SI and SIMPL assets was treated as a single business acquisition (the “SI Acquisition”) in accordance with ASC 805, Business Combinations .

The Company further determined that the SI Acquisition does not constitute an asset acquisition under accounting pronouncements, and instead constitutes a business combination.

Thus, the acquisition method was applied to the acquisition.

The Company further determined that the acquisitions met the definition of a business.

Purchase Consideration

The total purchase consideration was $ 3,127 and consisted of the following:

Cash paid at closing $ 750

Fair value of common stock issued 1,366

Fair value of contingent consideration 1,011

Total consideration $ 3,127

Identifiable Assets Acquired and Liabilities Assumed

Prepaid expenses $ 19

Property and equipment 131

Intangible assets:

Developed technology 103

Trademarks/trade names 196

Customer relationships 210

Total identifiable assets 720

Goodwill 2,407

Total consideration $ 3,127

Goodwill arising from the SI Acquisition is primarily attributable to the assembled workforce, expected synergies, and expansion into new markets.

Intangible Assets Acquired

Asset Estimated Useful Life in Years Fair Value

Developed technology 7 - 8 $ 103

Trademarks/trade names 10 196

Customer relationships 8 210

Contingent Consideration

Contingent consideration relates to the royalty to be paid to SI for sales of SI Products, the royalty to be paid to SIMPL for sales of SIMPL products, and amount related to future warrant exercises, and was calculated using the present value of expected payments based on current revenue and other estimates using a discount rate of 14.6%.

The fair value of the contingent consideration was determined using level 3 fair value inputs.

A reconciliation of the contingent consideration from the date of acquisition through December 31, 2025 is as follows:

Balance at August 1, 2025 $ 1,011

Amounts earned ( 87 )

Balance at December 31, 2025 $ 993

Acquisition-Related Costs

The Company incurred approximately $ 779 of acquisition-related costs, including legal, accounting, and valuation fees.

These costs are included in general and administrative expenses in the statement of operations and comprehensive loss.

Pro Forma Financial Information

The following unaudited pro forma information presents the combined results of operations as if the acquisition had occurred on January 1, 2024.

The pro forma results include adjustments for amortization of acquired intangible assets.

These pro forma results are presented for informational purposes only and do not purport to represent the actual results that would have occurred if the acquisition had been completed on the date indicated, nor are they necessarily indicative of future operating results.

Year Ended December 31,

Revenue $ 4,817 $ 4,316

Net loss $ ( 13,785 ) $ ( 15,328 )

Basic and diluted net loss per share of common stock $ ( 1.77 ) $ ( 7.97 )

Inventory consisted of the following:

Raw materials $ 21 $ 21

Finished goods 1,033 585

Propety and Equipment, net

Inventory $ 1,054 $ 606

Property and Equipment, net

Property and equipment, net, consisted of the following:

Instrument tray sets $ 829 $ 785

Construction in progress 836 541

Catamaran tray sets

Leasehold improvements

Lab equipment 79 14

IT equipment 56 56

Leasehold improvements 15 15

Office furniture 9 9

2 unchanged sentences

Property and equipment, net $ 918 $ 752

Construction in progress is made up of reusable

components that are intended to be assembled into Catamaran Tray Sets.

Depreciation expense was approximately $ 395 and $ 193 for the years ended December 31,

2024 and 2023, respectively.

Construction in progress is made up of reusable components that are intended to be assembled into Catamaran Tray Sets.

Depreciation expense was approximately $ 238 and $ 395 for the years ended December 31, 2025 and 2024, respectively.

Intangible Assets, net

Intangible assets, net relate to developed technology, trademarks/trade names and customer relationships acquired in the SI Acquisition (see Note 3).

Intangible assets were valued based on their estimated fair value on the date of acquisition and are being amortized on a straight-line basis over estimated useful lives of 7 - 8 years for developed technology, 10 years for trademarks/trade names and 8 years for customer relationships.

Intangible assets as of December 31, 2025 consist of the following:

Gross Value Accumulated

Amortization Net Value

Developed technology $ 103 $ ( 5 ) $ 98

Trademarks/trade names 196 ( 8 ) 188

Customer relationships 210 ( 11 ) 199

Total $ 509 $ ( 24 ) $ 485

Amortization expense for years ended December 31, 2025 and 2024 was $ 24 and $ 0 , respectively.

As of December 31, 2025, future amortization of amortizable intangible assets is as follows:

Thereafter 249

Accrued Expenses

Accrued expenses consisted of the following:

2025 December 31,

Accrued compensation $ 710 $ 416

2 unchanged sentences

Total accrued expenses $ 1,637 $ 910

Convertible notes payable

In November 2023, the Company entered into Securities

Purchase Agreements with certain investors (the “Investors”), pursuant to which the Company sold to the Investors a total

of $ 1,250 ,000 in secured notes (the “Convertible Notes”) and warrants to purchase 5,625 shares of the Company’s common

stock at an exercise price equal to $ 15.52 per share.

The Convertible Notes bear an interest rate of

10 % per annum with a default rate of 12 % per annum and have a maturity date of November 21, 2024 .

All principal and accrued interest is

payable at maturity.

At any time during the term of the Convertible Notes, the principal amount together with all accrued interest thereon

(the “Prepayment Amount”) may be paid in full, but not in part, by the Company.

The Prepayment Amount may be paid by the Company

in cash or by the issuance to the Investors of shares of Series A Preferred Stock, if prior to such payment with Series A Preferred Stock

(i) certain stockholder proposals described in the Convertible Notes are approved by the Company’s stockholders;

and (ii) the Company

has commitments from investors other than the Investors to purchase shares of Series A Preferred Stock with a stated value of at least

$ 3,750 ,000.

The Convertible Notes are secured by a first priority security interest in all of the assets of the Company.

expire five years from the issuance date.

The warrants contain a “cashless exercise” feature and contain anti-dilution rights

on subsequent issuances of equity or equity equivalents.

On February 20, 2024, the Investors agreed to

a complete prepayment of the Company’s obligations under the Convertible Notes, including accrued interest, in exchange for 84,729

shares of Series A Preferred Stock and warrants to purchase 19,637 shares of our common stock at $ 10.164 per share and the Convertible

Notes were cancelled.

In June 2021, the Company entered into a facility

lease agreement for its company headquarters in Los Gatos, California.

In June 2021, the Company entered into a facility lease agreement for its company headquarters in Los Gatos, California.

This non-cancellable operating lease expires in June 2026 .

lease costs for the facility lease were $ 292 and $ 292 for the years ended December 31, 2024 and 2023, respectively.

Supplemental balance sheet information related

to leases was as follows:

Operating lease costs for the facility lease were $ 292 and $ 292 for the years ended December 31, 2025 and 2024, respectively.

Supplemental balance sheet information related to leases was as follows:

December 31, December 31,

Operating lease right-of-use asset $ 131 $ 399

2 unchanged sentences

Total operating lease liabilities $ ( 141 ) $ ( 428 )

Future maturities of operating lease liabilities

as of December 31, 2024 were as follows:

Future maturities of operating lease liabilities as of December 31, 2025 were as follows:

Total lease payments 144

7 unchanged sentences

Stockholders’ Equity

The Company’s current Amended and Restated

Certificate of Incorporation dated February 18, 2014 authorizes the issuance of 130,000,000 shares of common stock and 20,000,000 shares

of preferred stock, both with a par value of $ 0.001 per share.

With respect to the preferred stock, 4,500,000 shares are designated Series

A Preferred Stock and 491,222 shares are designated Series B Preferred Stock.

The Company’s current Amended and Restated Certificate of Incorporation dated February 18, 2014 authorizes the issuance of 130,000,000 shares of common stock and 20,000,000 shares of preferred stock, both with a par value of $ 0.001 per share.

With respect to the preferred stock, 4,500,000 shares are designated Series A Preferred Stock and 491,222 shares are designated Series B Preferred Stock.

At-the-Market Offering Program

On May 4, 2023, the Company entered into an Equity

Distribution Agreement to establish an at-the-market offering program, under which the Company may sell from time to time, at its option,

shares of its common stock having an aggregate gross sales price of $ 5.5 million.

The Company is required to pay the Sales Agents a commission

of 3 % of the gross proceeds from the sale of shares and has also agreed to provide the Sales Agents with customary indemnification rights.

During the year ended December 31, 2023, 29,013 shares of the Company’s common stock were sold under the program at a weighted-average

price of $ 18.16 per share with aggregate net proceeds of $ 495 .

During the year ended December 31, 2024, 129,199 shares of the Company’s

common stock were sold under the program at a weighted-average price of $ 14.63 per share with aggregate proceeds, net of issuance costs,

2023 Registered Offering

On June 16, 2023, the Company closed the Registered Offering of a total of 1,000,000 units (the “Units”)

for proceeds, net of issuance costs, of $ 4,808 , with each Unit consisting of (i) one share of the Company’s common stock, and (ii)

two warrants, each warrant to purchase one share of the Company’s common stock at an exercise price equal to $ 44.80 per share (the

“Offering Warrants”).

The Offering Warrants were exercisable upon issuance and will expire five years from the date of issuance.

Per the terms of the Offering Warrants, the exercise price reset on July 16, 2023 to $ 25.168 per share.

On May 4, 2023, the Company entered into an Equity Distribution Agreement to establish an at-the-market offering program, under which the Company may sell from time to time, at its option, shares of its common stock having an aggregate gross sales price of $ 5.5 million.

The Company is required to pay the Sales Agents a commission of 3 % of the gross proceeds from the sale of shares and has also agreed to provide the Sales Agents with customary indemnification rights.

During the year ended December 31, 2023, 29,013 shares of the Company’s common stock were sold under the program at a weighted-average price of $ 18.16 per share with aggregate net proceeds of $ 495 .

During the year ended December 31, 2024, 129,199 shares of the Company’s common stock were sold under the program at a weighted-average price of $ 14.63 per share with aggregate proceeds, net of issuance costs, of $ 1,709 .

There were no sales of common stock under the program during the year ended December 31, 2025.

Per the terms of the Equity Distribution Agreement, no shares are available to be issued under the program as of December 31, 2025.

Equity Line of Credit

On July 24, 2023, the Company entered into a purchase

agreement (“Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), under which, subject to

specified terms and conditions, the Company may sell to Lincoln Park up to $ 10 million of shares of common stock from time to time during

the term of the Purchase Agreement.

On September 22, 2023 (the “Commencement Date”) and on May 10, 2024, the Company filed

registration statements with the SEC covering the resale of shares of common stock issued to Lincoln Park under the Purchase Agreement.

Beginning on the Commencement Date and for a period

of 24 months thereafter, under the terms and subject to the conditions of the Purchase Agreement, from time to time, at the Company’s

discretion, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up

to $ 10 million of shares of common stock, subject to certain limitations set forth in the Purchase Agreement.

Specifically, from time

to time from and after the Commencement Date, the Company may, at its discretion, direct Lincoln Park to purchase on any single business

day on which the closing price of its common stock on The Nasdaq Capital Market (“Nasdaq”) is equal to or greater than $ 1.50

up to 10,000 shares of common stock (a “Regular Purchase”);

provided, that the Company may direct Lincoln Park to purchase

in a Regular Purchase (i) up to 12,500 shares of common stock, if the closing sale price of its common stock on Nasdaq on such business

day is at least $15.00 per share and (ii) up to 15,000 shares of common stock, if the closing sale price of its common stock on Nasdaq

on such business day is at least $25.00 per share .

In no case, however, will Lincoln Park’s commitment with respect to any single

Regular Purchase exceed $ 500,000 ;

provided, that the parties may mutually agree at any time to increase the maximum number of shares of

common stock the Company may direct Lincoln Park to purchase in any single Regular Purchase to up to 100,000 shares or any number of shares

that shall not exceed 4.99 % of the then outstanding shares of common stock.

The foregoing share amounts and per share prices will be adjusted

for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring after

the date of the Purchase Agreement with respect to our common stock.

The purchase price per share for each such Regular Purchase will

be based on prevailing market prices of the Company’s common stock immediately preceding the time of sale, as determined under the

Purchase Agreement.

During the year ended December 31, 2024, 48,849

shares of the Company’s common stock were sold under the program at a weighted-average price of $ 5.56 per share with aggregate net

proceeds of $ 260 .

On July 24, 2023, the Company entered into a purchase agreement (“Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), under which, subject to specified terms and conditions, the Company may sell to Lincoln Park up to $ 10 million of shares of common stock from time to time during the term of the Purchase Agreement.

On September 22, 2023 (the “Commencement Date”) and on May 10, 2024, the Company filed registration statements with the SEC covering the resale of shares of common stock issued to Lincoln Park under the Purchase Agreement.

Beginning on the Commencement Date and for a period of 24 months thereafter, under the terms and subject to the conditions of the Purchase Agreement, from time to time, at the Company’s discretion, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to $ 10 million of shares of common stock, subject to certain limitations set forth in the Purchase Agreement.

Specifically, from time to time from and after the Commencement Date, the Company may, at its discretion, direct Lincoln Park to purchase on any single business day on which the closing price of its common stock on The Nasdaq Capital Market (“Nasdaq”) is equal to or greater than $ 1.50 up to 10,000 shares of common stock (a “Regular Purchase”);

provided, that the Company may direct Lincoln Park to purchase in a Regular Purchase (i) up to 12,500 shares of common stock, if the closing sale price of its common stock on Nasdaq on such business day is at least $15.00 per share and (ii) up to 15,000 shares of common stock, if the closing sale price of its common stock on Nasdaq on such business day is at least $25.00 per share.

In no case, however, will Lincoln Park’s commitment with respect to any single Regular Purchase exceed $ 500,000 ;

provided, that the parties may mutually agree at any time to increase the maximum number of shares of common stock the Company may direct Lincoln Park to purchase in any single Regular Purchase to up to 100,000 shares or any number of shares that shall not exceed 4.99 % of the then outstanding shares of common stock.

The foregoing share amounts and per share prices will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring after the date of the Purchase Agreement with respect to the Company’s common stock.

The purchase price per share for each such Regular Purchase will be based on prevailing market prices of the Company’s common stock immediately preceding the time of sale, as determined under the Purchase Agreement.

During the year ended December 31, 2024, 48,849 shares of the Company’s common stock were sold under the program at a weighted-average price of $ 5.56 per share with aggregate net proceeds of $ 260 .

There were no sales of common stock under the program during the year ended December 31, 2025.

The Purchase Agreement terminated in September 2025.

Series A Preferred Stock

On February 20, 2024, the Company entered into

a Securities Purchase Agreement with certain investors, pursuant to which the Company agreed to sell, issue and deliver to these investors,

in a private placement offering, a total of 172,239 shares of the Company’s Series A Preferred Stock and warrants (the “Series

A Warrants”) to purchase 258,374 shares of Common Stock at an exercise price equal to $ 1.2705 per share for net proceeds of $ 2,437

after deducting offering costs.

Additionally, on February 20, 2024, the Investors

agreed to a complete prepayment of the Company’s obligations under the Convertible Notes, including accrued interest, in exchange

for 84,729 shares of Series A Preferred Stock and warrants to purchase 157,094 shares of our common stock at $ 1.2705 per share and the

Convertible Notes were cancelled.

On February 20, 2024, the Company entered into a Securities Purchase Agreement with certain investors, pursuant to which the Company agreed to sell, issue and deliver to these investors, in a private placement offering, a total of 172,239 shares of the Company’s Series A Preferred Stock and warrants (the “Series A Warrants”) to purchase 258,374 shares of common stock at an exercise price equal to $ 1.2705 per share for net proceeds of $ 2,437 after deducting offering costs.

Additionally, on February 20, 2024, the Investors agreed to a complete prepayment of the Company’s obligations under its convertible notes issued in November 2023 (the “Convertible Notes”), including accrued interest, in exchange for 84,729 shares of Series A Preferred Stock and warrants to purchase 157,094 shares of common stock at $ 1.2705 per share and the Convertible Notes were cancelled.

The Series A Warrants are immediately exercisable and expire five years from the date of issuance.

The Series A Preferred Stock is convertible, at

any time, at the option of the holder into shares of Common Stock.

Each share of Series A Preferred Stock shall be convertible, at any

time after the date of issuance, at the option of the holder thereof (or, upon a Required Conversion (as defined below), at the option

of the Corporation), into that number of shares of Common Stock determined by dividing the Stated Value (as defined below) for such share

of Series A Preferred Stock by the Conversion Price (as defined below).

“Stated Value” means for any share of Series A Preferred

Stock, an amount equal to the product of (x) $15.125 multiplied by (y) the sum of 1 plus the product of (A) 0.06 multiplied by (B) a fraction

equal to the number of days that such share of Series A Preferred Stock has been issued divided by 365.

“Conversion Price”

means (i) for the shares of Series A Preferred Stock issued on the Closing Date, $1.5125 and (ii) for each share of Series A Preferred

Stock issued thereafter, an amount equal to the greater of (x) $1.5125 and the average of the VWAPs for the 10 Trading Days prior the

issuance date of such share of Series A Preferred Stock, in each case subject to adjustment as set forth herein.

On any date that ten

out of the last 15 daily VWAPs of the Common Stock is 250% higher than the Conversion Price on such date, then the Company will have the

right to require 50% of the Preferred Stock to be converted into shares of Common Stock.

Additionally, on and after the time on which

the Company has $2.25 million in revenues in any single financial quarter, the Company will have the right to require 50% of the Preferred

Stock to be converted into shares of Common Stock (a “Required Conversion”).

No dividends are payable on the Series A Preferred

The Series A Preferred Stock is convertible, at any time, at the option of the holder into shares of common stock.

Each share of Series A Preferred Stock shall be convertible, at any time after the date of issuance, at the option of the holder thereof (or, upon a Required Conversion (as defined below), at the option of the Corporation), into that number of shares of common stock determined by dividing the Stated Value (as defined below) for such share of Series A Preferred Stock by the Conversion Price (as defined below).

“Stated Value” means for any share of Series A Preferred Stock, an amount equal to the product of (x) $15.125 multiplied by (y) the sum of 1 plus the product of (A) 0.06 multiplied by (B) a fraction equal to the number of days that such share of Series A Preferred Stock has been issued divided by 365.

“Conversion Price” means (i) for the shares of Series A Preferred Stock issued on the Closing Date, $1.5125 and (ii) for each share of Series A Preferred Stock issued thereafter, an amount equal to the greater of (x) $1.5125 and the average of the VWAPs for the 10 Trading Days prior the issuance date of such share of Series A Preferred Stock, in each case subject to adjustment as set forth herein.

On any date that ten out of the last 15 daily VWAPs of the Company’s common stock is 250% higher than the Conversion Price on such date, then the Company will have the right to require 50% of the Preferred Stock to be converted into shares of common stock.

Additionally, on and after the time on which the Company has $2.25 million in revenues in any single financial quarter, the Company will have the right to require 50% of the Preferred Stock to be converted into shares of common stock (a “Required Conversion”).

No dividends are payable on the Series A Preferred Stock.

The Series A Preferred Stock will vote together with the common stock on all matters other than as required by law;

provided however

that any additional shares underlying the Series A Preferred Stock as a result of the anti-dilution provision described below shall not

vote on an “as converted” basis and shall only vote when issued upon conversion.

Notwithstanding the foregoing, the vote of

an individual holder of Series A Preferred Stock (and underlying Common Stock) shall be capped at 9.99% (or 4.99% if selected by the holder).

The Conversion Price is subject to anti-dilution

adjustment as the result of any subdivision, combination of shares or recapitalization, stock dividends, stock splits and similar transactions

affecting the Common Stock.

In addition, the Series A Preferred Stock will have weighted average anti-dilution protection providing for

adjustment of the Conversion Price in the event of issuance of, or commitments to issue, Common Stock for less than the Conversion Price

then in effect immediately prior to such issue or sale (a “Dilutive Issuance”), subject to customary exceptions;

however the anti-dilution for Dilutive Issuances shall not be operative until the stockholders of the Company have approved the terms

of the Series A Preferred Stock, which approval was granted at the annual shareholder meeting on July 23, 2024.

Upon any liquidation or winding up of the Company (a “Liquidation”), the holders of Series

A Preferred Stock will be entitled to receive in preference to any other class or series of the Company’s equity securities the

greater of (i) the Stated Value plus accrued and unpaid dividends and (ii) what would be paid if the Series A Preferred Stock plus accrued

and unpaid dividends had been converted into Common Stock.

A consolidation or merger of the Company or sale or transfer of all or substantially

all of its assets, or any transaction which results in the stockholders of the Company owning less than 50 % of the equity or voting power

of the surviving entity (excluding the issuance of Common Stock in any financing transaction unless more than 50 % of the Company’s

shares are issued to one stockholder or a number of stockholders who act as a one group) shall be deemed a Liquidation (a “Deemed

Liquidation”) with respect to the shares of Series A Preferred Stock of any holder who opts to have such occurrence treated as a

Deemed Liquidation;

provided that if the liquidation preference payable on a Deemed Liquidation is less than 110 % of the stated value

of the Series A Preferred Stock, the dividend rate on any accrued and unpaid dividends payable with respect to such Deemed Liquidation

will increase to 10 %.

All liquidation preferences payable in respect of a Deemed Liquidation will be payable in shares of Common Stock

based on the closing price of the Common Stock on the date of such Deemed Liquidation.

Consent of the majority of the holders will be

required to (i) amend the Certificate of Incorporation or Bylaws of the Company so as to adversely alter the rights, preferences, privileges

of the Series A Preferred Stock, (ii) create any new class of shares pari passu or senior to the Series A Preferred Stock or increase

or decrease the number of authorized shares of Common Stock or preferred stock, (iii) pay or declare any dividend on Common Stock or other

junior securities, or incur indebtedness in any single transaction in excess of $ 1 million or (iv) redeem, purchase or otherwise acquire

any share or shares of preferred stock or Common Stock (other than (a) the repurchase of shares of Common Stock pursuant to a written

benefit plan or employment or consulting agreement, or (b) the repurchase of any equity securities in connection with the Company’s

right of first offer with respect to those securities contained in any written agreement with the Company).

provided however that any additional shares underlying the Series A Preferred Stock as a result of the anti-dilution provision described below shall not vote on an “as converted” basis and shall only vote when issued upon conversion.

Notwithstanding the foregoing, the vote of an individual holder of Series A Preferred Stock (and underlying common stock) shall be capped at 9.99% (or 4.99% if selected by the holder).

The Conversion Price is subject to anti-dilution adjustment as the result of any subdivision, combination of shares or recapitalization, stock dividends, stock splits and similar transactions affecting the Company’s common stock.

In addition, the Series A Preferred Stock will have weighted average anti-dilution protection providing for adjustment of the Conversion Price in the event of issuance of, or commitments to issue, common stock for less than the Conversion Price then in effect immediately prior to such issue or sale (a “Dilutive Issuance”), subject to customary exceptions;

provided however the anti-dilution for Dilutive Issuances shall not be operative until the stockholders of the Company have approved the terms of the Series A Preferred Stock, which approval was granted at the annual shareholder meeting on July 23, 2024.

Upon any liquidation or winding up of the Company (a “Liquidation”), the holders of Series A Preferred Stock will be entitled to receive in preference to any other class or series of the Company’s equity securities the greater of (i) the Stated Value plus accrued and unpaid dividends and (ii) what would be paid if the Series A Preferred Stock plus accrued and unpaid dividends had been converted into common stock.

A consolidation or merger of the Company or sale or transfer of all or substantially all of its assets, or any transaction which results in the stockholders of the Company owning less than 50 % of the equity or voting power of the surviving entity (excluding the issuance of common stock in any financing transaction unless more than 50 % of the Company’s shares are issued to one stockholder or a number of stockholders who act as a one group) shall be deemed a Liquidation (a “Deemed Liquidation”) with respect to the shares of Series A Preferred Stock of any holder who opts to have such occurrence treated as a Deemed Liquidation;

provided that if the liquidation preference payable on a Deemed Liquidation is less than 110 % of the stated value of the Series A Preferred Stock, the dividend rate on any accrued and unpaid dividends payable with respect to such Deemed Liquidation will increase to 10 %.

All liquidation preferences payable in respect of a Deemed Liquidation will be payable in shares of common stock based on the closing price of the common stock on the date of such Deemed Liquidation.

Consent of the majority of the holders will be required to (i) amend the Certificate of Incorporation or Bylaws of the Company so as to adversely alter the rights, preferences, privileges of the Series A Preferred Stock, (ii) create any new class of shares pari passu or senior to the Series A Preferred Stock or increase or decrease the number of authorized shares of common stock or preferred stock, (iii) pay or declare any dividend on common stock or other junior securities, or incur indebtedness in any single transaction in excess of $ 1 million or (iv) redeem, purchase or otherwise acquire any share or shares of preferred stock or common stock (other than (a) the repurchase of shares of common stock pursuant to a written benefit plan or employment or consulting agreement, or (b) the repurchase of any equity securities in connection with the Company’s right of first offer with respect to those securities contained in any written agreement with the Company).

Series B Preferred Stock

On September 5, 2024, the Company entered into

a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors, pursuant to which the Company agreed to

sell, issue and deliver to the Investors, in a private placement offering, a total of 86,454 shares of the Company’s Series B Preferred

Stock (the “Series B Preferred Stock”) and warrants (the “Series B Warrants”) to purchase 16,214 shares of Common

Stock at an exercise price equal to $ 4.2756 per share for net proceeds of $ 489,000 after deducting offering costs.

The Series B Warrants

are immediately exercisable and expire five years from the date of issuance.

The Series B Preferred Stock is convertible, at

any time, at the option of the holder into shares of Common Stock.

Each share of Series B Preferred Stock shall be convertible, at any

time after the date of issuance, at the option of the holder thereof (or, upon a Required Conversion (as defined below), at the option

of the Corporation), into that number of shares of Common Stock determined by dividing the Stated Value (as defined below) for such share

of Series B Preferred Stock by the Conversion Price (as defined below).

“Stated Value” means for any share of Series B Preferred

Stock, an amount equal to the product of (x) $6.3625 multiplied by (y) the sum of 1 plus the product of (A) 0.06 multiplied by (B) a fraction

equal to the number of days that such share of Series B Preferred Stock has been issued divided by 365.

“Conversion Price”

means $5.09 per share, subject to adjustment as set forth herein.

On any date that ten out the last 15 daily VWAPs of the Common Stock

is 250% higher than the Conversion Price on such date, then the Company will have the right to require 50% of the Preferred Stock to be

converted into shares of Common Stock.

Additionally, on and after the time on which the Company has $2.25 million in revenues in any single

financial quarter, the Company will have the right to require 50% of the Preferred Stock to be converted into shares of Common Stock (a

“Required Conversion”).

On September 5, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors, pursuant to which the Company agreed to sell, issue and deliver to the Investors, in a private placement offering, a total of 86,454 shares of the Company’s Series B Preferred Stock (the “Series B Preferred Stock”) and warrants (the “Series B Warrants”) to purchase 16,214 shares of common stock at an exercise price equal to $ 4.2756 per share for net proceeds of $ 489,000 after deducting offering costs.

The Series B Warrants are immediately exercisable and expire five years from the date of issuance.

The Series B Preferred Stock is convertible, at any time, at the option of the holder into shares of common stock.

Each share of Series B Preferred Stock shall be convertible, at any time after the date of issuance, at the option of the holder thereof (or, upon a Required Conversion (as defined below), at the option of the Corporation), into that number of shares of common stock determined by dividing the Stated Value (as defined below) for such share of Series B Preferred Stock by the Conversion Price (as defined below).

“Stated Value” means for any share of Series B Preferred Stock, an amount equal to the product of (x) $6.3625 multiplied by (y) the sum of 1 plus the product of (A) 0.06 multiplied by (B) a fraction equal to the number of days that such share of Series B Preferred Stock has been issued divided by 365.

“Conversion Price” means $5.09 per share, subject to adjustment as set forth herein.

On any date that ten out the last 15 daily VWAPs of the Company’s common stock is 250% higher than the Conversion Price on such date, then the Company will have the right to require 50% of the Preferred Stock to be converted into shares of common stock.

No dividends are payable on the Series B Preferred Stock.

The Series B Preferred Stock will vote together

with the Common Stock on all matters other than as required by law;

provided however that any additional shares underlying the Series

B Preferred Stock as a result of the anti-dilution provision described below shall not vote on an “as converted” basis and

shall only vote when issued upon conversion.

Notwithstanding the foregoing, the vote of an individual holder of Series B Preferred Stock

(and underlying Common Stock) shall be capped at 9.99% (or 4.99% if selected by the holder).

The Conversion Price is subject to anti-dilution

adjustment as the result of any subdivision, combination of shares or recapitalization, stock dividends, stock splits and similar transactions

affecting the Common Stock.

In addition, the Series B Preferred Stock will have weighted average anti-dilution protection providing for

adjustment of the Conversion Price in the event of issuance of, or commitments to issue, Common Stock for less than the Conversion Price

then in effect immediately prior to such issue or sale (a “Dilutive Issuance”), subject to customary exceptions;

however the anti-dilution for Dilutive Issuances shall not be operative until the stockholders of the Company have approved the terms

of the Series B Preferred Stock.

Upon any liquidation or winding up of the Company (a “Liquidation”), the holders of Series

B Preferred Stock will be entitled to receive in preference to any other class or series of the Company’s equity securities the

greater of (i) the Stated Value plus accrued and unpaid dividends and (ii) what would be paid if the Series B Preferred Stock plus accrued

and unpaid dividends had been converted into Common Stock.

A consolidation or merger of the Company or sale or transfer of all or substantially

all of its assets, or any transaction which results in the stockholders of the Company owning less than 50 % of the equity or voting power

of the surviving entity (excluding the issuance of Common Stock in any financing transaction unless more than 50 % of the Company’s

shares are issued to one stockholder or a number of stockholders who act as a one group) shall be deemed a Liquidation (a “Deemed

Liquidation”) with respect to the shares of Series B Preferred Stock of any holder who opts to have such occurrence treated as a

Deemed Liquidation;

provided that if the liquidation preference payable on a Deemed Liquidation is less than 110 % of the stated value

of the Series B Preferred Stock, the dividend rate on any accrued and unpaid dividends payable with respect to such Deemed Liquidation

will increase to 10 %.

All liquidation preferences payable in respect of a Deemed Liquidation will be payable in shares of Common Stock

based on the closing price of the Common Stock on the date of such Deemed Liquidation.

Consent of the majority of the holders will be

required to (i) amend the Certificate of Incorporation or Bylaws of the Company so as to adversely alter the rights, preferences, privileges

of the Series B Preferred Stock, (ii) create any new class of shares pari passu or senior to the Series B Preferred Stock or increase

or decrease the number of authorized shares of Common Stock or preferred stock, (iii) pay or declare any dividend on Common Stock or other

junior securities, or incur indebtedness in any single transaction in excess of $ 1 million or (iv) redeem, purchase or otherwise acquire

any share or shares of preferred stock or Common Stock (other than (a) the repurchase of shares of Common Stock pursuant to a written

benefit plan or employment or consulting agreement, or (b) the repurchase of any equity securities in connection with the Company’s

right of first offer with respect to those securities contained in any written agreement with the Company)

The Series B Preferred Stock will vote together with the common stock on all matters other than as required by law;

provided however that any additional shares underlying the Series B Preferred Stock as a result of the anti-dilution provision described below shall not vote on an “as converted” basis and shall only vote when issued upon conversion.

Notwithstanding the foregoing, the vote of an individual holder of Series B Preferred Stock (and underlying common stock) shall be capped at 9.99% (or 4.99% if selected by the holder).

In addition, the Series B Preferred Stock will have weighted average anti-dilution protection providing for adjustment of the Conversion Price in the event of issuance of, or commitments to issue, common stock for less than the Conversion Price then in effect immediately prior to such issue or sale (a “Dilutive Issuance”), subject to customary exceptions;

provided however the anti-dilution for Dilutive Issuances shall not be operative until the stockholders of the Company have approved the terms of the Series B Preferred Stock.

Upon any liquidation or winding up of the Company (a “Liquidation”), the holders of Series B Preferred Stock will be entitled to receive in preference to any other class or series of the Company’s equity securities the greater of (i) the Stated Value plus accrued and unpaid dividends and (ii) what would be paid if the Series B Preferred Stock plus accrued and unpaid dividends had been converted into common stock.

A consolidation or merger of the Company or sale or transfer of all or substantially all of its assets, or any transaction which results in the stockholders of the Company owning less than 50 % of the equity or voting power of the surviving entity (excluding the issuance of common stock in any financing transaction unless more than 50 % of the Company’s shares are issued to one stockholder or a number of stockholders who act as a one group) shall be deemed a Liquidation (a “Deemed Liquidation”) with respect to the shares of Series B Preferred Stock of any holder who opts to have such occurrence treated as a Deemed Liquidation;

provided that if the liquidation preference payable on a Deemed Liquidation is less than 110 % of the stated value of the Series B Preferred Stock, the dividend rate on any accrued and unpaid dividends payable with respect to such Deemed Liquidation will increase to 10 %.

All liquidation preferences payable in respect of a Deemed Liquidation will be payable in shares of common stock based on the closing price of the Company’s common stock on the date of such Deemed Liquidation.

Consent of the majority of the holders will be required to (i) amend the Certificate of Incorporation or Bylaws of the Company so as to adversely alter the rights, preferences, privileges of the Series B Preferred Stock, (ii) create any new class of shares pari passu or senior to the Series B Preferred Stock or increase or decrease the number of authorized shares of common stock or preferred stock, (iii) pay or declare any dividend on common stock or other junior securities, or incur indebtedness in any single transaction in excess of $ 1 million or (iv) redeem, purchase or otherwise acquire any share or shares of preferred stock or common stock (other than (a) the repurchase of shares of common stock pursuant to a written benefit plan or employment or consulting agreement, or (b) the repurchase of any equity securities in connection with the Company’s right of first offer with respect to those securities contained in any written agreement with the Company)

2024 Public Offering

On September 12, 2024, the Company entered into

a placement agency agreement (the “Placement Agency Agreement”) with A.G.P./Alliance Global Partners (the “Placement

Agent”), and a securities purchase agreement (the “Purchase Agreement”) with a single health-care focused institutional

investor pursuant to which the Company agreed to issue and sell, in a “reasonable best efforts” public offering (the “Offering”),

(i) 55,000 shares (the “Shares”) of the Company’s common stock, par value $ 0.001 (the “Common Stock”), (ii)

pre-funded warrants to purchase up to 1,167,850 shares of Common Stock (the “Pre-Funded Warrants”) and (iii) warrants to purchase

up to 1,222,850 shares of Common Stock at an exercise price of $ 3.55 per share (the “Common Warrants”) at a combined offering

price of $ 3.68 per Share and accompanying Common Warrant, and $ 3.68 , less $ 0.0001 per Pre-Funded Warrant and accompanying Common Warrant

for net proceeds of $ 3,846 after deducting offering costs.

The Common Warrants were exercisable upon issuance and will expire five years

from the date of issuance.

On September 12, 2024, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with A.G.P./Alliance Global Partners (the “Placement Agent”), and a securities purchase agreement (the “Purchase Agreement”) with a single health-care focused institutional investor pursuant to which the Company agreed to issue and sell, in a “reasonable best efforts” public offering, (i) 55,000 shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to 1,167,850 shares of common stock (the “Pre-Funded Warrants”) and (iii) warrants to purchase up to 1,222,850 shares of common stock at an exercise price of $ 3.55 per share (the “Common Warrants”) at a combined offering price of $ 3.68 per share and accompanying Common Warrant, and $ 3.68 , less $ 0.0001 per Pre-Funded Warrant and accompanying Common Warrant for net proceeds of $ 3,846 after deducting offering costs.

The Common Warrants were exercisable upon issuance and will expire five years from the date of issuance.

2024 Warrant Inducement

On September 16, 2024, the Company entered into

an Inducement Letter with Armistice Capital, LLC (the “Selling Stockholder”) who held all of the Common Warrants.

to the Inducement Letter, the Selling Stockholder agreed to exercise the Common Warrants for cash at the exercise price of $ 3.55 per share

in consideration for the Company’s agreement to issue, for an additional payment of $ 0.125 per New Warrant, (i) the Series A New

Warrants to purchase up to an aggregate of 1,222,850 shares of Common Stock at an exercise price of $ 4.28 per share, which are exercisable

for five years after issuance and (ii) the Series B New Warrants to purchase up to an aggregate of 1,222,850 shares of Common Stock at

an exercise price of $ 4.28 per share, which are exercisable for three years after issuance.

The Company received net proceeds of approximately

$ 4,306 from the exercise of the Common Warrants and the placement of the New Warrants, after deducting financial advisor fees and other

transaction expenses.

On September 16, 2024, the Company entered into an inducement letter with Armistice Capital, LLC (“Armistice”) who held all of the Common Warrants.

Pursuant to the inducement letter, Armistice agreed to exercise the Common Warrants for cash at the exercise price of $ 3.55 per share in consideration for the Company’s agreement to issue, for an additional payment of $ 0.125 per New Warrant, (i) the Series A New Warrants to purchase up to an aggregate of 1,222,850 shares of common stock at an exercise price of $ 4.28 per share, which are exercisable for five years after issuance and (ii) the Series B New Warrants to purchase up to an aggregate of 1,222,850 shares of common stock at an exercise price of $ 4.28 per share, which are exercisable for three years after issuance (the “2024 Warrant Inducement”).

The Company received net proceeds of approximately $ 4,306 from the 2024 Warrant Inducement, after deducting financial advisor fees and other transaction expenses.

The 2024 Warrant Inducement was accounted for as a modification of the Common Warrants.

2025 Warrant Inducement

On March 11, 2025, the Company entered into a warrant exercise inducement offer letter agreement (the “Inducement Letter”) with the holder of the Series A New Warrants and Series B New Warrants (the “Existing Warrants”), pursuant to which, the holder agreed to exercise the Existing Warrants at a reduced exercise price of $ 1.25 per share in consideration for the Company’s agreement to issue (i) new unregistered five-year warrants (the “Series C-1 Warrants”) to purchase up to an aggregate of 2,445,700 shares of common stock at an exercise price of $ 1.25 per share and (ii) new unregistered three-year warrants (the “Series C-2 Warrants,” and together with the Series C-1 Warrants, the “New Warrants”) to purchase up to an aggregate of 1,222,850 shares of common stock at an exercise price of $ 1.25 per share (the “2025 Warrant Inducement”).

The New Warrants were not exercisable without approval by the Company’s stockholders (the “Approval Date”), which was obtained on September 18, 2025.

The Series C-1 Warrants are exercisable five years from the Approval Date, and the Series C-2 Warrants are exercisable three years from the Approval Date.

Pursuant to the 2025 Warrant Inducement, the Company received proceeds, net of financial advisor fees and other transaction expenses, of $ 2,735 .

The incremental value of the consideration to the holders of the Existing Warrants was $ 5,113 .

The Company filed a registration statement on Form S-1 on April 4, 2025 providing for the resale of the shares of common stock issuable upon the exercise of the New Warrants.

The Company has agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any common stock or common stock equivalents or file any registration statement or any amendment or supplement to any existing registration statement, subject to certain exceptions, for a period of 60 calendar days after the effectiveness of the Resale Registration Statement.

Furthermore, the Company is also prohibited from entering into any agreement to issue common stock or common stock equivalents involving a variable rate transaction (as defined in the Inducement Letter), subject to certain exceptions, for a six-month period commencing on March 12, 2025.

2025 Securities Purchase Agreements

On March 25, 2025, the Company entered into a securities purchase agreement for the issuance of 733,500 shares of its common stock (or common stock equivalents in lieu thereof) in a registered direct offering at a purchase price of $ 2.00 per share.

In a concurrent private placement, the Company also agreed to issue to the same investor warrants to purchase up to 733,500 shares of its common stock at an exercise price of $ 2.00 per share, which will be exercisable immediately, and will expire five years following the date of issuance.

Pursuant to the agreements, the Company received proceeds, net of financial advisor fees and other transaction expenses, of $ 1,234 .

Also on March 25, 2025, the Company entered into a securities purchase agreement for the issuance of 1,271,500 shares of its common stock (or common stock equivalents in lieu thereof) in a registered direct offering at a purchase price of $ 2.00 per share.

In a concurrent private placement, the Company also agreed to issue to the same investor warrants to purchase up to 1,271,500 shares of its common stock at an exercise price of $ 2.00 per share, which will be exercisable immediately, and will expire five years following the date of issuance.

Pursuant to the agreements, the Company received proceeds, net of financial advisor fees and other transaction expenses, of $ 2,290 .

On November 10, 2025, the Company entered into securities purchase agreements with certain accredited investors in an at-the-market private investment in public equity (the “PIPE”) pursuant to which the Company agreed to issue and sell an aggregate of 2,217,904 shares of common stock, par value $ 0.001 per share and/or pre-funded common stock purchase warrants, and common stock purchase warrants, each exercisable for one share of common stock of the Company, at a combined offering price of $ 1.285 per share and warrant to purchase one share of common stock.

The warrants have an exercise price of $ 1.16 per share and expire three years from the date of issuance.

Pursuant to the purchase agreements, the Company received proceeds, net of transaction expenses, of $ 2,730 .

Voting rights

The holders of vested shares of common stock are

entitled to vote on any matter submitted to a vote of the stockholders and each such holder is entitled to one vote per share of common

The holders of Series A and Series B Preferred Stock are entitled to vote together with the common stock as a single class

on any matter submitted to a vote of the stockholders.

Holders of Series A and Series B Preferred Stock are entitled to the number of

votes equal to the number of common stock issuable upon conversion of their respective Series A and Series B Preferred Stock at the time

such shares are voted.

The holders of a majority of the preferred stock had additional voting rights as specified in the Company’s

Amended and Restated Certificate of Incorporation, as amended.

The holders of vested shares of common stock are entitled to vote on any matter submitted to a vote of the stockholders and each such holder is entitled to one vote per share of common stock held.

The holders of Series A and Series B Preferred Stock are entitled to vote together with the common stock as a single class on any matter submitted to a vote of the stockholders.

Holders of Series A and Series B Preferred Stock are entitled to the number of votes equal to the number of common stock issuable upon conversion of their respective Series A and Series B Preferred Stock at the time such shares are voted.

The holders of a majority of the preferred stock had additional voting rights as specified in the Company’s Amended and Restated Certificate of Incorporation, as amended.

Equity awards

In 2012, the Board of Directors of the Company

(the “Board”) approved the Tenon Medical, Inc.

2012 Equity Incentive Plan (the “2012 Plan”).

The 2012 Plan provides

for the issuance of common stock options, appreciation rights, and other awards to employees, directors, and consultants.

Options issued

under the 2012 Plan generally vest over a period of two to four years and have a 10-year expiration date.

In April 2021, the Board increased

the number of shares of common stock reserved for issuance under the 2012 Plan to 662,516 .

In July 2021, the Board increased the number

of shares of common stock reserved for issuance under the 2012 Plan to 737,516 .

In August 2021, the Board increased the number of shares

of common stock reserved for issuance under the 2012 Plan from 737,516 shares to 799,266 shares and approved the form of a 2022 Equity

Incentive Plan.

On January 10, 2022 and February 2, 2022, the

Board and stockholders, respectively, of the Company approved the Tenon Medical, Inc.

In 2012, the Board of Directors of the Company (the “Board”) approved the Tenon Medical, Inc.

2012 Equity Incentive Plan (the “2012 Plan”).

which was effective on April 25, 2022.

The number of shares of common stock that may be subject to awards and sold under the 2022 Plan

is equal to 1,600,000 .

Automatic annual increases in number of shares available for issuance under the 2022 Plan is equal to the least

of (a) 1,100,000 shares, (b) 4 % of the total number of shares of all classes of common stock outstanding on the last day of the immediately

preceding fiscal year, or (c) such number determined by the 2022 Plan administrator no later than the last day of the immediately preceding

Annual increases will continue until the tenth anniversary of the earlier of the Board or stockholder approval of the 2022

Plan, which is January 10, 2032.

Upon the effective date of the 2022 Plan, the Board terminated the 2012 Plan such that no new equity

awards will be issued by the 2012 Plan.

The 2012 Plan provides for the issuance of common stock options, appreciation rights, and other awards to employees, directors, and consultants.

Options issued under the 2012 Plan generally vest over a period of two to four years and have a 10-year expiration date.

In April 2021, the Board increased the number of shares of common stock reserved for issuance under the 2012 Plan to 662,516 .

In July 2021, the Board increased the number of shares of common stock reserved for issuance under the 2012 Plan to 737,516 .

In August 2021, the Board increased the number of shares of common stock reserved for issuance under the 2012 Plan from 737,516 shares to 799,266 shares and approved the form of a 2022 Equity Incentive Plan.

On January 10, 2022 and February 2, 2022, the Board and stockholders, respectively, of the Company approved the Tenon Medical, Inc.

2022 Equity Incentive Plan (the “2022 Plan”), which was effective on April 25, 2022.

The number of shares of common stock that may be subject to awards and sold under the 2022 Plan is equal to 1,600,000 .

Automatic annual increases in number of shares available for issuance under the 2022 Plan is equal to the least of (a) 2,200,000 shares, (b) 4 % of the total number of shares of all classes of common stock outstanding on the last day of the immediately preceding fiscal year, or (c) such number determined by the 2022 Plan administrator no later than the last day of the immediately preceding fiscal year.

Annual increases will continue until the tenth anniversary of the earlier of the Board or stockholder approval of the 2022 Plan, which is January 10, 2032.

Upon the effective date of the 2022 Plan, the Board terminated the 2012 Plan such that no new equity awards will be issued by the 2012 Plan.

Option Exchange

On April 8, 2024, the Company issued an offer

to holders of outstanding stock options to purchase an aggregate of 11,387 shares of the Company’s common stock to exchange their

options for a lesser number of new restricted stock units (“RSUs”) to be granted under the 2022 Plan upon the terms and subject

to the conditions set forth in the Offer to Exchange Certain Outstanding Stock Options for Restricted Stock Units (the “Offer to

On April 8, 2024, the Company issued an offer to holders of outstanding stock options to purchase an aggregate of 11,387 shares of the Company’s common stock to exchange their options for a lesser number of new restricted stock units (“RSUs”) to be granted under the 2022 Plan upon the terms and subject to the conditions set forth in the Offer to Exchange Certain Outstanding Stock Options for Restricted Stock Units (the “Offer to Exchange”).

The Offer to Exchange expired on May 6, 2024.

A total of 27 eligible participants participated in the exchange.

Company accepted for exchange options to purchase an aggregate of 10,436 shares of common stock of the Company.

All surrendered options

were cancelled effective as of the expiration of the Option Exchange, and immediately thereafter, in exchange therefor, the Company granted

a total of 5,226 new RSUs under the 2022 Plan.

The incremental fair value of the new RSUs that were vested at the issuance date was $ 32

and was immediately expensed.

Compensation expense for the years ended December

31, 2024 and 2023 includes the portion of awards vested in the periods for all equity-based awards granted, based on the grant date fair

value as estimated using a Black-Scholes option valuation model.

Grant date fair value for restricted stock units is estimated using the

fair value of the Company’s common stock on the date of grant.

Grant date fair value for stock options is estimated using a Black-Scholes

option valuation model using the weighted-average assumptions in the table below:

The Company accepted for exchange options to purchase an aggregate of 10,436 shares of common stock of the Company.

All surrendered options were cancelled effective as of the expiration of the Option Exchange, and immediately thereafter, in exchange therefor, the Company granted a total of 5,226 new RSUs under the 2022 Plan.

The incremental fair value of the new RSUs that were vested at the issuance date was $ 32 and was immediately expensed.

Compensation expense for the years ended December 31, 2025 and 2024 includes the portion of awards vested in the periods for all equity-based awards granted, based on the grant date fair value as estimated using a Black-Scholes option valuation model.

Grant date fair value for restricted stock units is estimated using the fair value of the Company’s common stock on the date of grant.

Grant date fair value for stock options is estimated using a Black-Scholes option valuation model using the weighted-average assumptions in the table below:

Years ended December 31,

3 unchanged sentences

Expected term in years 5.85 5.61

Estimates of fair value are not intended to predict

actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative

of the reasonableness of the original estimates of fair value made by the Company in accordance with authoritative guidance.

A summary of the Company’s share option

and restricted stock unit activity under its plans is as follows:

Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company in accordance with authoritative guidance.

A summary of the Company’s share option and restricted stock unit activity under its plans is as follows:

Price per Share

RSUs Weighted

Average Grant

Number of RSUs Weighted Average Grant Date Fair Value per Share

Balance as of December 31, 2023 12,777 $ 340.44 7.41 9,637 $ 555.85

Granted 10,621 $ 5.59 21,309 $ 6.67

( 7,637 ) $ 656.51

Released — — ( 10,072 ) $ 344.54

Canceled ( 12,076 ) $ 346.20 ( 650 ) $ 22.64

1 unchanged sentence

Granted 9,000 $ 1.22 943,791 $ 1.05

( 10,072 ) $ 344.54

Released — — ( 45,527 ) $ 38.55

Canceled ( 2,625 ) $ 5.36 ( 1,066 ) $ 128.81

1 unchanged sentence

Exercisable at December 31, 2025 7,377 $ 27.20 8.43

The weighted-average grant-date fair value of

options granted during the years ended December 31, 2024 and 2023 was $ 3.95 and $ 61.00 , respectively.

The aggregate intrinsic value of

outstanding options at December 31, 2024 was $0 .

The aggregate intrinsic value is equal to the difference between the exercise price of

the underlying option and the fair value of the Company’s common stock for in-the-money options.

As of December 31, 2024, total

compensation cost not yet recognized related to unvested options was $ 29 , which is expected to be recognized over a weighted-average period

of 1.57 years, and total compensation costs not yet recognized related to unvested RSUs was $ 1,443 , which is expected to be recognized

over a weighted-average period of 0.48 years.

The following table sets forth stock-based compensation

expense recognized for the years ended December 31, 2024 and 2023:

The weighted-average grant-date fair value of options granted during the years ended December 31, 2025 and 2024 was $ 0.73 and $ 3.95 , respectively.

The aggregate intrinsic value of outstanding options at December 31, 2025 was $ 0 .

The aggregate intrinsic value is equal to the difference between the exercise price of the underlying option and the fair value of the Company’s common stock for in-the-money options.

As of December 31, 2025, total compensation cost not yet recognized related to unvested options was $ 10 , which is expected to be recognized over a weighted-average period of 1.42 years, and total compensation costs not yet recognized related to unvested RSUs was $ 817 , which is expected to be recognized over a weighted-average period of 0.65 years.

The following table sets forth stock-based compensation expense recognized for the years ended December 31, 2025 and 2024:

Years ended December 31,

3 unchanged sentences

Total stock-based compensation expense $ 1,691 $ 3,845

At December 31, 2024, there were 135,971 shares

available for issuance under the 2022 Plan.

In April 2022, in association with the Company’s

initial public offering, the Company granted to The Benchmark Company, LLC and Valuable Capital Limited warrants to purchase a total of

1,200 shares of Common Stock.

The warrants were immediately exercisable at an exercise price of $ 400.00 per share and expire on the fifth

anniversary of the commencement of sales under the IPO.

The fair value of the warrants on the grant date was $ 220.00 per warrant, which

was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 62.55 %, dividend

yield of 0 %, and risk-free interest rate of 2.92 %.

The Company recorded the fair value of these warrants of $ 264 as an issuance cost to

additional paid-in capital in 2022.

In June 2023, in connection with a registered

offering of stock, the Company issued warrants to purchase a total of 250,000 shares of Common Stock (the “Offering Warrants”).

At December 31, 2025, there were 348,115 shares available for issuance under the 2022 Plan.

In April 2022, in association with the Company’s initial public offering, the Company granted to The Benchmark Company, LLC and Valuable Capital Limited warrants to purchase a total of 1,200 shares of common stock.

The warrants were immediately exercisable at an exercise price of $ 400.00 per share and expire on the fifth anniversary of the commencement of sales under the IPO.

The fair value of the warrants on the grant date was $ 220.00 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 62.55 %, dividend yield of 0 %, and risk-free interest rate of 2.92 %.

The Company recorded the fair value of these warrants of $ 264 as an issuance cost to additional paid-in capital in 2022.

All of the IPO warrants remain outstanding as of December 31, 2025.

Registered Offering Warrants

In June 2023, in connection with a registered offering of stock, the Company issued warrants to purchase a total of 250,000 shares of common stock (the “Offering Warrants”).

The Offering Warrants were exercisable upon issuance and will expire five years from the date of issuance.

Per the terms of the Offering

Warrants, the exercise price of the Offering Warrants reset on July 16, 2023, to $ 25.168 per share.

The fair value of the Offering Warrants

on the grant date of $ 3,164 , or $ 12.64 per warrant, was calculated using a Monte-Carlo simulation to estimate the final exercise price,

which is considered a Level 3 fair value measurement, using as inputs;

the starting value of $ 24.00 per share, the Company’s VWAP

Per the terms of the Offering Warrants, the exercise price of the Offering Warrants reset on July 16, 2023, to $ 25.168 per share.

The fair value of the Offering Warrants on the grant date of $ 3,164 , or $ 12.64 per warrant, was calculated using a Monte-Carlo simulation to estimate the final exercise price, which is considered a Level 3 fair value measurement, using as inputs;

the starting value of $24.00 per share, the Company’s VWAP on June 16;

an assumed daily distribution of returns;

a mean daily return of 5.18 %;

a short-term annual volatility of 100 % and a standard

deviation of 6.3 %.

The model used Black-Scholes to then calculate the estimated fair value of the Offering Warrants, using an estimated

time to maturity of 4.9 years, a risk-free interest rate of 3.99 % and a long-term volatility of 60 %.

In November 2023, in connection with the issuance

of the Convertible Notes, the Company issued warrants to purchase a total of 5,625 shares of Common Stock at an exercise price equal to

$ 15.52 per share.

a short-term annual volatility of 100 % and a standard deviation of 6.3 %.

The model used Black-Scholes to then calculate the estimated fair value of the Offering Warrants, using an estimated time to maturity of 4.9 years, a risk-free interest rate of 3.99 % and a long-term volatility of 60 %.

All of the Registered Offering warrants remain outstanding as of December 31, 2025.

Convertible Note Warrants

In November 2023, in connection with the issuance of the Convertible Notes, the Company issued warrants to purchase a total of 5,625 shares of common stock at an exercise price equal to $ 15.52 per share.

The warrants expire five years from the issuance date.

The fair value of the warrants on the grant date was $ 10.32 per

warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5 .00 years, expected volatility of

68.89 %, dividend yield of 0 %, and risk-free interest rate of 4.41 %.

The Company recorded the fair value of these warrants of approximately

$ 58 as an issuance cost to additional paid-in capital in 2023.

On February 20, 2024, in connection with the issuance

of Series A Preferred Stock, the Company issued the Series A Warrants to purchase a total of 51,937 shares of Common Stock at an exercise

price equal to $ 4.28 per share.

The fair value of the warrants on the grant date was $ 10.32 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 68.89 %, dividend yield of 0 %, and risk-free interest rate of 4.41 %.

The Company recorded the fair value of these warrants of approximately $ 58 as an issuance cost to additional paid-in capital in 2023.

All of the Convertible Note Warrants remain outstanding as of December 31, 2025.

Series A Preferred Stock Warrants

On February 20, 2024, in connection with the issuance of Series A Preferred Stock, the Company issued the Series A Warrants to purchase a total of 51,937 shares of common stock at an exercise price equal to $ 4.28 per share.

The Series A Warrants are immediately exercisable and expire five years from the date of issuance.

fair value of the Series A Warrants on the grant date was $ 4.88 per warrant, which was calculated using a Black-Scholes option valuation

model with an expected term of 5 .00 years, expected volatility of 68.24 %, dividend yield of 0 %, and risk-free interest rate of 4.3 %.

Company recorded the fair value of these warrants of $ 254 to additional paid-in capital in 2024.

On September 5, 2024, in connection with the issuance

of Series B Preferred Stock, the Company issued the Series B Warrants to purchase a total of 16,214 shares of Common Stock at an exercise

price equal to $ 4.28 per share.

The fair value of the Series A Warrants on the grant date was $ 4.88 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 68.24 %, dividend yield of 0 %, and risk-free interest rate of 4.3 %.

The Company recorded the fair value of these warrants of $ 254 to additional paid-in capital in 2024.

All of the Series A Preferred Stock warrants remain outstanding as of December 31, 2025.

Series B Preferred Stock Warrants

On September 5, 2024, in connection with the issuance of Series B Preferred Stock, the Company issued the Series B Warrants to purchase a total of 16,214 shares of common stock at an exercise price equal to $ 4.28 per share.

The Series B Warrants are immediately exercisable and expire five years from the date of issuance.

fair value of the Series B Warrants on the grant date was $ 2.25 per warrant, which was calculated using a Black-Scholes option valuation

model with an expected term of 5 .00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 3.5 %.

Company recorded the fair value of these warrants of $ 37 to additional paid-in capital in 2024.

On September 16, 2024, in connection with the

Warrant Inducement agreement, the Company issued Series A New Warrants to purchase a total of 1,222,850 shares of Common Stock at an exercise

price of $ 4.28 per share, which are exercisable for five years after issuance and Series B New Warrants to purchase a total of 1,222,850

shares of Common Stock at an exercise price of $ 4.28 per share, which are exercisable for three years after issuance.

The fair value of

the Series A New Warrants on the grant date was $ 5.49 per warrant, which was calculated using a Black-Scholes option valuation model with

an expected term of 5.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 3.4 %.The fair value

of the Series B New Warrants on the grant date was $ 4.87 per warrant, which was calculated using a Black-Scholes option valuation model

with an expected term of 3.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 3.4 %.

recorded the fair value of these warrants to additional paid-in capital in 2024.

The fair value of the Series B Warrants on the grant date was $ 2.25 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 3.5 %.

The Company recorded the fair value of these warrants of $ 37 to additional paid-in capital in 2024.

All of the Series B Preferred Stock warrants remain outstanding as of December 31, 2025.

Inducement Warrants

On September 16, 2024, in connection with the 2024 Warrant Inducement, the Company issued Series A New Warrants to purchase a total of 1,222,850 shares of common stock at an exercise price of $ 4.28 per share, which are exercisable for five years after issuance and Series B New Warrants to purchase a total of 1,222,850 shares of common stock at an exercise price of $ 4.28 per share, which are exercisable for three years after issuance.

The fair value of the Series A New Warrants on the grant date was $ 5.49 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 3.4 %.The fair value of the Series B New Warrants on the grant date was $ 4.87 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 3.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 3.4 %.

The Company recorded the fair value of these warrants to additional paid-in capital in 2024.

All of the Series A New Warrants and the Series B New Warrants were exercised as part of the 2025 Warrant Inducement.

Series C Warrants

On March 11, 2025, in connection with 2025 Warrant Inducement, the Company issued new unregistered five-year warrants (the “Series C-1 Warrants”) to purchase up to an aggregate of 2,445,700 shares of common stock at an exercise price of $ 1.25 per share and new unregistered three-year warrants (the “Series C-2 Warrants,” and together with the Series C-1 Warrants, the “Series C Warrants”) to purchase up to an aggregate of 1,222,850 shares of common stock at an exercise price of $ 1.25 per share.

The Series C Warrants were exercisable upon approval by the Company’s stockholders, which was obtained on September 18, 2025 (the “Approval Date”).

The Series C-1 Warrants are exercisable five years from the Approval Date, and the Series C-2 Warrants are exercisable three years from the Approval Date.

Pursuant to the 2025 Warrant Inducement, the Company received proceeds, net of financial advisor fees and other transaction expenses, of $ 2,735 .

The fair value of the Series C-1 Warrants on the grant date was $ 0.97 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 4.0 %.

The fair value of the Series C-2 Warrants on the grant date was $ 0.80 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 3.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 4.0 %.

The Company recorded the fair value of these warrants to additional paid-in capital in the first quarter of 2025.

The Company recorded the excess of the incremental value of the modified Series A New Warrants and Series B New Warrants and the fair value of the Series C Warrants over the cash proceeds from the exercise of the modified Series A New Warrants and Series B New Warrants as equity offering costs.

All of the Series C Warrants remain outstanding as of December 31, 2025.

Series D Warrants

On March 25, 2025, in connection with a securities purchase agreement, the Company issued warrants to purchase up to 733,500 shares of its common stock at an exercise price of $ 2.00 per share (the “Series D Warrants”), which were exercisable upon issuance, and will expire five years following the date of issuance.

The fair value of the Series D Warrants on the grant date was $ 2.72 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 4.1 %.

The Company recorded the fair value of these warrants to additional paid-in capital in the first quarter of 2025.

All of the Series D Warrants remain outstanding as of December 31, 2025.

Series E Warrants

Also on March 25, 2025, in connection with a securities purchase agreement, the Company issued warrants to purchase up to 1,271,500 shares of its common stock at an exercise price of $ 2.00 per share (the “Series E Warrants”), which were exercisable upon issuance, and will expire five years following the date of issuance.

The fair value of the Series E Warrants on the grant date was $ 2.72 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 5.00 years, expected volatility of 68.40 %, dividend yield of 0 %, and risk-free interest rate of 4.1 %.

The Company recorded the fair value of these warrants to additional paid-in capital in the first quarter of 2025.

All of the Series E Warrants remain outstanding as of December 31, 2025.

PIPE Warrants

On November 11, 2025, in connection with the PIPE, the Company issued warrants to purchase 2,217,904 shares of its common stock at an exercise price of $ 1.16 per share, with an expiration date of 3 years from the date of issuance (the “PIPE Warrants”).

The fair value of the PIPE Warrants on the grant date was $ 0.44 per warrant, which was calculated using a Black-Scholes option valuation model with an expected term of 3.00 years, expected volatility of 48.80 %, dividend yield of 0 %, and risk-free interest rate of 3.6 %.

The Company recorded the fair value of these warrants to additional paid-in capital.

All of the PIPE Warrants remain outstanding as of December 31, 2025.

Commitments and Contingencies

Sales Representative Agreement

In April 2020, the Company entered into an Exclusive

Sales Representative Agreement, under which the counterparty to the agreement (the “Representative”) received exclusive rights

to market, promote, and distribute The Catamaran System in the United States and Puerto Rico.

The agreement is for an initial period of

five years , and automatically renews for an additional five years unless written notice is given by either party prior to April 27, 2023.

In April 2020, the Company entered into an Exclusive Sales Representative Agreement, under which the counterparty to the agreement (the “Representative”) received exclusive rights to market, promote, and distribute The Catamaran System in the United States and Puerto Rico.

The agreement is for an initial period of five years , and automatically renews for an additional five years unless written notice is given by either party prior to April 27, 2023.

The agreement provides for a bonus to be paid to the Representative upon an acquisition or IPO.

In May 2021, the Company entered into

an Amended and Restated Exclusive Sales Representative Agreement (the “Restated Sales Agreement”).

In connection with the

amended agreement, the Company paid $ 500 cash and issued 53,757 shares of common stock to the Representative, for which the Company recorded

a combined total of $ 880 as sales and marketing expense.

In addition, the Representative received anti-dilution protections to maintain

ownership of 3.0 % of the fully diluted equity of the Company through the date of an initial public offering.

In October 2021, the Company

issued 4,445 shares of common stock with a fair value of approximately $ 333 to the Representative in accordance with the anti-dilution

In April 2022, the Company issued 31,235 shares of common stock to the Representative in accordance with the anti-dilution

provision, fully satisfying the Company’s obligations.

The Restated Sales Agreement restructured the

calculation of the bonus paid to the Representative upon an acquisition, removed the bonus payable upon an IPO, and allows the Company

to terminate the Restated Sales Agreement as long as the bonus paid to the Representative is at least $ 6,000 .

On October 6, 2022, the Company entered into

the Terminating Amended and Restated Exclusive Sales Representative Agreement (the “Termination Agreement”) with the

Representative, which terminated the Restated Sales Agreement.

In accordance with the Termination Agreement, (i) the Company paid

the Representative $1,000 in cash;

and (ii) the Company agreed to pay the Representative (a) $85 per month during the six months

after the date of the Termination Agreement in return for efforts by the Representative to transition operations to the Company, (b)

20% of net sales of the product sold in the United States and Puerto Rico until December 31, 2023 and (c) after December 31, 2023,

10% of net sales until such time as the aggregate amount paid to the Representative under this clause (c) and clause (b) above equal

In the event of an acquisition of the Company, the Company will pay the Representative $3,600 less previous amounts paid

pursuant to clause (b) and clause (c) above.

The Company recorded a charge of $1,000 for the payment to the Representative in the

fourth quarter of 2022 and expensed the $85 per month charges as incurred over the six-month period.

For payments under clause (b)

and clause (c) above, the Company estimated the fair value of the liability using level 3 hierarchy inputs based on a Monte Carlo

simulation of future revenues with a 25% quarterly estimated standard deviation of growth rates and a 10% probability of

dissolution, discounted at an estimated discount rate of 15.4%.

Based on the Company’s fair value analysis, a total of $2,611

was charged to sales and marketing expense in the 2022 consolidated statements of operations and comprehensive loss and recorded as

accrued commissions in the consolidated balance sheets.

A reconciliation of the liability under clause

(b) and clause (c) for the year ended December 31, 2024 is as follows:

In May 2021, the Company entered into an Amended and Restated Exclusive Sales Representative Agreement (the “Restated Sales Agreement”).

In connection with the amended agreement, the Company paid $ 500 cash and issued 53,757 shares of common stock to the Representative, for which the Company recorded a combined total of $ 880 as sales and marketing expense.

In addition, the Representative received anti-dilution protections to maintain ownership of 3.0 % of the fully diluted equity of the Company through the date of an initial public offering.

In October 2021, the Company issued 4,445 shares of common stock with a fair value of approximately $ 333 to the Representative in accordance with the anti-dilution provision.

In April 2022, the Company issued 31,235 shares of common stock to the Representative in accordance with the anti-dilution provision, fully satisfying the Company’s obligations.

The Restated Sales Agreement restructured the calculation of the bonus paid to the Representative upon an acquisition, removed the bonus payable upon an IPO, and allows the Company to terminate the Restated Sales Agreement as long as the bonus paid to the Representative is at least $ 6,000 .

On October 6, 2022, the Company entered into the Terminating Amended and Restated Exclusive Sales Representative Agreement (the “Termination Agreement”) with the Representative, which terminated the Restated Sales Agreement.

In accordance with the Termination Agreement, (i) the Company paid the Representative $ 1,000 in cash;

and (ii) the Company agreed to pay the Representative (a) $ 85 per month during the six months after the date of the Termination Agreement in return for efforts by the Representative to transition operations to the Company, (b) 20 % of net sales of the product sold in the United States and Puerto Rico until December 31, 2023 and (c) after December 31, 2023, 10 % of net sales until such time as the aggregate amount paid to the Representative under this clause (c) and clause (b) above equal $ 3,600 .

In the event of an acquisition of the Company, the Company will pay the Representative $3,600 less previous amounts paid pursuant to clause (b) and clause (c) above.

The Company recorded a charge of $ 1,000 for the payment to the Representative in the fourth quarter of 2022 and expensed the $ 85 per month charges as incurred over the six-month period.

For payments under clause (b) and clause (c) above, the Company estimated the fair value of the liability using level 3 hierarchy inputs based on a Monte Carlo simulation of future revenues with a 25 % quarterly estimated standard deviation of growth rates and a 10 % probability of dissolution, discounted at an estimated discount rate of 15.4 %.

Based on the Company’s fair value analysis, a total of $ 2,611 was charged to sales and marketing expense in the 2022 statements of operations and comprehensive loss and recorded as accrued commissions in the balance sheets.

A reconciliation of the liability under clause (b) and clause (c) for the year ended December 31, 2025 is as follows:

Balance at January 1, 2025 $ 2,101

1 unchanged sentence

Balance at December 31, 2025 $ 1,836

Per the terms of the Termination Agreement, the

Company ultimately expects to expense $ 3,600 under clause (b) and clause (c).

Simultaneously with the execution of the Termination

Agreement, the Company entered into a Consulting Agreement dated October 6, 2022, with the Representative (the “Consulting Agreement”).

Under the terms and conditions of the Consulting Agreement, the Representative is tasked with organizing, recruiting, training, and coordinating

the Company’s Clinical Specialist program, Physician Education program and Sales Education program as more specifically described

in the Consulting Agreement.

The term of the Consulting Agreement was from

October 6, 2022, until October 5, 2023, when it terminated in accordance with the terms of the Consulting Agreement.

In consideration

for the services to be provided, the Company paid the Representative a base consulting fee of $ 700 per year, payable in monthly instalments,

along with additional compensation of $ 62.5 per quarter, if certain sales targets were met, for four quarters;

along with any travel and

related out-of-pocket expenses incurred by the Representative in connection with the performance of the services.

In the normal course of business, the Company

may possibly be named as a defendant in various lawsuits.

Per the terms of the Termination Agreement, the Company ultimately expects to expense $ 3,600 under clause (b) and clause (c).

Simultaneously with the execution of the Termination Agreement, the Company entered into a Consulting Agreement dated October 6, 2022, with the Representative (the “Consulting Agreement”).

Under the terms and conditions of the Consulting Agreement, the Representative is tasked with organizing, recruiting, training, and coordinating the Company’s Clinical Specialist program, Physician Education program and Sales Education program as more specifically described in the Consulting Agreement.

The term of the Consulting Agreement was from October 6, 2022, until October 5, 2023, when it terminated in accordance with the terms of the Consulting Agreement.

In consideration for the services to be provided, the Company paid the Representative a base consulting fee of $ 700 per year, payable in monthly instalments, along with additional compensation of $ 62.5 per quarter, if certain sales targets were met, for four quarters;

along with any travel and related out-of-pocket expenses incurred by the Representative in connection with the performance of the services.

In the normal course of business, the Company may possibly be named as a defendant in various lawsuits.

Concentrations of Risk

Financial instruments that potentially subject

the Company to concentrations of credit risk consist principally of cash and cash equivalents.

The Company maintains cash balances at financial

institutions located in California and Switzerland.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.

The Company maintains cash balances at financial institutions located in California.

Accounts at the U.S.

financial institutions are secured by the Federal Deposit Insurance

financial institutions are secured by the Federal Deposit Insurance Corporation.

At times, balances may exceed federally insured limits.

The Company has not experienced any losses in such accounts.

believes that the Company is not exposed to any significant credit risk with respect to its cash and cash equivalents.

The Company grants unsecured credit to its customers

based on an evaluation of the customer’s financial condition and a cash deposit is generally not required.

Management believes its

credit policies do not result in significant adverse risk and historically has not experienced significant credit-related losses.

Currency risk

The Company’s subsidiary, Tenon Technology

AG, realizes a portion of its expenses in Swiss francs.

Consequently, certain assets and liabilities are exposed to foreign currency fluctuations.

At December 31, 2024 and 2023, approximately $0 and $ 741 , respectively, of the Company’s net monetary assets were denominated in

Swiss francs.

The Company has not entered into any hedging transactions to reduce the exposure to currency risk.

The components of loss before income taxes are

Management believes that the Company is not exposed to any significant credit risk with respect to its cash and cash equivalents.

The Company grants unsecured credit to its customers based on an evaluation of the customer’s financial condition and a cash deposit is generally not required.

Management believes its credit policies do not result in significant adverse risk and historically has not experienced significant credit-related losses.

The components of loss before income taxes are as follows:

Years ended December 31,

United States $ ( 12,556 ) $ ( 13,673 )

International

Loss before income taxes $ ( 12,556 ) $ ( 13,673 )

The components of current income tax expense are

The components of current income tax expense are as follows:

Years ended December 31,

United States $ — $ —

Total income tax expense $ — $ —

A reconciliation of the expected tax computed

statutory federal income tax rate to the total provision for income taxes for the years ended December 31, 2024 and 2023 is

Years ended December 31,

The Company has elected to prospectively adopt the guidance in ASU 2023-09.

The following table contains a reconciliation of the U.S.

federal statutory rate of 21 % to the Company’s effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No.

December 31, 2025

Income tax benefit at U.S.

standard rate $ ( 2,637 ) ( 21 )%

State and local income taxes, net of federal benefit 64 1 %

Changes in valuation allowance 2,190 17 %

Nontaxable or nondeductible items:

Stock options 376 3 %

Other nontaxable or nondeductible differences 15 —

Changes in unrecognized tax benefits ( 8 ) —

Provision for taxes — —

The following table is a reconciliation of the U.S.

federal statutory rate of 21% to the Company’s effective rate for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09:

Year ended December 31,

Statutory rate ( 21 )%

3 unchanged sentences

Provision for taxes —

Significant components of the Company’s net deferred

tax assets at December 31, 2024 and 2023 are as follows:

Significant components of the Company’s net deferred tax assets at December 31, 2025 and 2024 are as follows:

Years ended December 31,

5 unchanged sentences

Stock-based compensation 741 1,274

Intangibles 188 193

Operating lease liability 35 114

8 unchanged sentences

Net deferred tax assets $ — —

In assessing the realizability of deferred tax

assets at December 31, 2024, management considered whether it is more likely than not that some portion or all of the deferred tax assets

will be realized, and determined that a valuation allowance was required for those deferred tax assets that are not expected to provide

future tax benefits.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during

the periods in which those temporary differences become deductible.

At December 31, 2024, the Company has available

net operating loss carryforwards of approximately $ 41,551 for federal income tax purposes, of which approximately $ 41,239 was generated

after 2017 and can be carried forward indefinitely under the Tax Cuts and Jobs Act.

The remaining federal net operating loss of approximately

$ 222 , which was generated prior to 2018, will start to expire in 2034 if not utilized.

At December 31, 2024, the net operating loss

carryforwards for state purposes are approximately $ 27,347 and will begin to expire in 2032 if not utilized.

In addition, the

Company had foreign net operating loss carryforwards of approximately $ 1,378 at December 31, 2024 that will start to expire in 2025

if not utilized.

The Company had credit carryforwards of approximately

$ 100 for federal income tax purposes.

In assessing the realizability of deferred tax assets at December 31, 2025, management considered whether it is more likely than not that some portion or all of the deferred tax assets will be realized, and determined that a valuation allowance was required for those deferred tax assets that are not expected to provide future tax benefits.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

At December 31, 2025, the Company has available net operating loss carryforwards of approximately $ 54,145 for federal income tax purposes, of which approximately $ 53,923 was generated after 2017 and can be carried forward indefinitely under the Tax Cuts and Jobs Act.

The remaining federal net operating loss of approximately $ 222 , which was generated prior to 2018, will start to expire in 2034 if not utilized.

At December 31, 2025, the net operating loss carryforwards for state purposes are approximately $ 32,750 and will begin to expire in 2032 if not utilized.

The Company had credit carryforwards of approximately $ 110 for federal income tax purposes.

The federal tax credits will begin to expire in 2041.

The Company also had credit carryforwards of

approximately $ 30 for California income tax purposes.

The Company also had credit carryforwards of approximately $ 30 for California income tax purposes.

These credits have no expiration.

The Company has not completed a study to determine whether any ownership

change per the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions, has occurred;

The Company has not completed a study to determine whether any ownership change per the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions, has occurred;

however, it believes that, given the equity transactions undertaken, such a change has most likely occurred.

In general, an “ownership

change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting

in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders.

Utilization of

the Company’s net operating loss and income tax credit carryforwards may be subject to a substantial annual limitation due to ownership

changes that may have occurred or that could occur in the future.

These ownership changes may limit the amount of the net operating loss

and income tax credit carryover that can be utilized annually to offset future taxable income.

In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders.

Utilization of the Company’s net operating loss and income tax credit carryforwards may be subject to a substantial annual limitation due to ownership changes that may have occurred or that could occur in the future.

These ownership changes may limit the amount of the net operating loss and income tax credit carryover that can be utilized annually to offset future taxable income.

Uncertain tax positions

In accordance with authoritative guidance, the

impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than

not to be sustained upon audit by the relevant taxing authority.

An uncertain income tax position will not be recognized if it has less

than a 50 % likelihood of being sustained.

In accordance with authoritative guidance, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority.

An uncertain income tax position will not be recognized if it has less than a 50 % likelihood of being sustained.

The following shows the changes in the gross amount of recognized tax benefits:

5 unchanged sentences

Unrecognized tax benefits, end of year $ 34 $ 44

The Company recognizes interest and penalties

related to unrecognized tax positions within the income tax expense line in the accompanying consolidated statements of operations and

comprehensive loss.

The Company does not anticipate that its total unrecognized tax benefits will significantly change due to settlement

of examination or the expiration of statute of limitations during the next 12 months.

Due to the full valuation allowance at December

31, 2024, current adjustments to the unrecognized tax benefit will have no impact on our effective income tax rate.

The Company currently has no federal or state

tax examinations in progress nor has it had any federal or state tax examinations since its inception.

As a result of the Company’s net

operating loss and credit carryforwards, all of its years are subject to federal and state examination.

The Company recognizes interest and penalties related to unrecognized tax positions within the income tax expense line in the accompanying statements of operations and comprehensive loss.

The Company does not anticipate that its total unrecognized tax benefits will significantly change due to settlement of examination or the expiration of statute of limitations during the next 12 months.

Due to the full valuation allowance at December 31, 2025, current adjustments to the unrecognized tax benefit will have no impact on our effective income tax rate.

The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since its inception.

As a result of the Company’s net operating loss and credit carryforwards, all of its years are subject to federal and state examination.

Reportable Segment

The Company operates in one business segment,

The Company operates in one reportable business segment:

the SI Joint segment.

The SI Joint segment derives revenue from the sale of the Catamaran System for treatment of the most common types

of SI Joint disorders that cause lower back pain, which is the Company’s only product.

The accounting policies of the SI Joint segment

are the same as those described in the summary of significant accounting principles in Note 2.

The chief operating decision maker, which

is the Company’s senior executive committee that includes the chief executive officer, the chief financial officer and the chief

technology officer, assesses the performance of the SI Joint segment and decides how to allocate resources based on net income which is

reported in the consolidated statements of operations as net loss.

The measure of segment assests is reported on the balance sheet as

total assets.

The chief operating decision maker uses net loss

to evaluate income generated from segment assets in deciding whether to continue investing in the segment.

Net loss is used to monitor

budget versus actual results, to prepare operating budgets, and to assess the performance of the segment and in establishing management

compensation.

The SI Joint segment derives revenue from the sale of the Catamaran System and the SImmetry SI Joint Fusion System for treatment of the most common types of SI Joint disorders that cause lower back pain.

The accounting policies of the SI Joint segment are the same as those described in the summary of significant accounting principles in Note 2.

The chief operating decision maker, which is the Company’s senior executive committee that includes the chief executive officer, the chief financial officer and the chief technology officer, assesses the performance of the SI Joint segment and decides how to allocate resources based on net income which is reported in the statements of operations and comprehensive loss as net loss.

The measure of segment assets is reported on the balance sheet as total assets.

The chief operating decision maker uses net loss to evaluate income generated from segment assets in deciding whether to continue investing in the segment.

Net loss is used to monitor budget versus actual results, to prepare operating budgets, and to assess the performance of the segment and in establishing management compensation.

The Company does not have intra-entity sales or transfers.

The following table presents selected financial

information for the Company’s single business segment for the year ended December 31, 2024:

Year ended December 31,

The following table presents selected financial information for the Company’s single business segment for the years ended December 31, 2025 and 2024:

Years ended December 31,

Revenue $ 3,944 $ 3,277

Cost of sales 1,586 1,566

3 unchanged sentences

Other expenses, net 236 93

Net loss $ ( 12,556 ) $ ( 13,673 )

Subsequent Events

On March 11, 2025, the Company entered into a

warrant exercise inducement offer letter agreement (the “Inducement Letter”) with the holder (the “Holder”) of

the Series A New Warrants and Series B New Warrants (the “Existing Warrants”), pursuant to which, the Holder agreed to exercise

the Existing Warrants at a reduced exercise price of $ 1.25 per share in consideration for the Company’s agreement to issue (i) new

unregistered five-year warrants (the “Series C-1 Warrants”) to purchase up to an aggregate of 2,445,700 shares of common stock

at an exercise price of $1.25 per share and (ii) new unregistered three-year warrants (the “Series C-2 Warrants,” and together

with the Series C-1 Warrants, the “New Warrants”) to purchase up to an aggregate of 1,222,850 shares of common stock at an

exercise price of $1.25 per share (the “Inducement Transaction”).

The New Warrants are not exercisable without approval by

the Company’s stockholders (“Stockholder Approval”), which, pursuant to the Inducement Letter, the Company is required

to obtain at a meeting of stockholders no later than 165 days after the consummation of the Inducement Transaction.

The Series C-1 Warrants

will be exercisable five years from the date on which Stockholder Approval is obtained, and the Series C-2 Warrants will be exercisable

three years from the date on which Stockholder Approval is obtained.

Pursuant to the Inducement Transaction, the Company received proceeds,

net of financial advisor fees and other transaction expenses, of $ 2,727 .

The Company has agreed to file a registration statement on Form S-3 (or other appropriate form, including on

Form S-1, if it is not eligible to utilize Form S-3) providing for the resale of the shares of common stock issuable upon the exercise

of the New Warrants within 30 calendar days following the date of the Inducement Letter.

The Company has also agreed not to issue, enter

into any agreement to issue or announce the issuance or proposed issuance of any common stock or common stock equivalents or file any

registration statement or any amendment or supplement to any existing registration statement, subject to certain exceptions, for a period

of 60 calendar days after the effectiveness of the Resale Registration Statement.

Furthermore, the Company is also prohibited from entering

into any agreement to issue common stock or common stock equivalents involving a variable rate transaction (as defined in the Inducement

Letter), subject to certain exceptions, for a six-month period commencing on March 12, 2025.

On March 25, 2025, the Company

entered into a securities purchase agreement for the issuance of 733,500 shares of its common stock (or common stock equivalents in lieu

thereof) in a registered direct offering at a purchase price of $ 2.00 per share.

In a concurrent private placement, the Company also

agreed to issue to the same investor warrants to purchase up to 733,500 shares of its common stock at an exercise price of $ 2.00 per

share, which will be exercisable immediately, and will expire five years following the date of issuance.

Pursuant to the agreements,

the Company received proceeds, net of financial advisor fees and other transaction expenses, of $ 1,234 .

Also on March 25, 2025, the Company entered into

a securities purchase agreement for the issuance of 1,271,500 shares of its common stock (or common stock equivalents in lieu thereof)

in a registered direct offering at a purchase price of $ 2.00 per share.

In a concurrent private placement, the Company also agreed to

issue to the same investor warrants to purchase up to 1,271,500 shares of its common stock at an exercise price of $ 2.00 per share, which

will be exercisable immediately, and will expire five years following the date of issuance.

Pursuant to the agreements, the Company received

proceeds, net of financial advisor fees and other transaction expenses, of $ 2,290 .

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosures

Convertible Promissory Notes

On March 11, 2026, the Company entered into securities purchase agreements with certain accredited investors, pursuant to which the Company agreed to issue and sell in a private placement an aggregate principal amount of approximately $ 5.2 million 20 % original issue discount senior convertible promissory notes (the “Convertible Promissory Notes”) for aggregate gross proceeds of approximately $ 4.3 million before deducting fees and expenses of the placement agent.

The Convertible Promissory Notes have a maturity date of September 11, 2026 , which, at the option of the Company, can be extended until December 11, 2026.

Following the six month anniversary of the issuance date, the Convertible Promissory Notes will be convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion price per share equal to the greater of 80 % of the VWAP for the 3 trading days immediately prior to the date of conversion and $ 0.1567 , subject to adjustment for stock splits and pro rata distributions as provided in the Convertible Promissory Notes.

If the maturity date of the Convertible Promissory Notes is extended, the outstanding principal amount will be increased by 5 %.

Any prepayment of the Convertible Promissory Notes will be prepaid at 102.5 % of the principal prepayment.

In addition, the Company is required to prepay the Convertible Promissory Notes from 15% of the net proceeds it may receive from future securities financing transactions less certain amount attributable to the original issue discount.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

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-K

Item 8. Financial Statements and Supplementary Data