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What changed in Tenon Medical, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Tenon Medical, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+243 added−273 removedSource: 10-K (2025-03-26) vs 10-K (2024-03-29)

Top changes in Tenon Medical, Inc.'s 2024 10-K

243 paragraphs added · 273 removed · 184 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

41 edited+6 added−3 removed137 unchanged
Biggest changeManufacturing facilities that produce medical devices or component parts intended for distribution world-wide are subject to regulation and periodic planned and unannounced inspection by the FDA and other domestic and international regulatory agencies. 15 In the United States, the product we sell is required to be manufactured in compliance with the QSR, which covers the methods used in, and the facilities used for, the design, testing, control, manufacturing, labelling, quality assurance, packaging, storage, and shipping.
Biggest changeIn the United States, the product we sell is required to be manufactured in compliance with the QSR, which covers the methods used in, and the facilities used for, the design, testing, control, manufacturing, labelling, quality assurance, packaging, storage, and shipping. We are required to demonstrate continuing compliance with applicable regulatory requirements and will be subject to FDA inspections.
Note the trajectory used in the Inferior Posterior approach: The following are the primary factors on which companies compete in our industry: ● product and clinical procedure effectiveness; ● ease of surgical technique and use of associated instruments; 4 ● safety; ● published clinical outcomes and evidence; ● sales force knowledge and service levels; ● product support and service, and customer service; ● comprehensive training, including disease, anatomy, diagnosis, and treatment; ● product innovation and the speed of innovation; ● intellectual property; ● accountability and responsiveness to customers’ demands; ● pricing and reimbursement; ● scientific (biomechanics) data; and ● attracting and retaining key personnel.
Note the trajectory used in the Inferior Posterior approach: The following are the primary factors on which companies compete in our industry: ● product and clinical procedure effectiveness; ● ease of surgical technique and use of associated instruments; ● safety; ● published clinical outcomes and evidence; ● sales force knowledge and service levels; ● product support and service, and customer service; ● comprehensive training, including disease, anatomy, diagnosis, and treatment; 4 ● product innovation and the speed of innovation; ● intellectual property; ● accountability and responsiveness to customers’ demands; ● pricing and reimbursement; ● scientific (biomechanics) data; and ● attracting and retaining key personnel.
This contrasts with several competitive implant systems that require multiple approach pathways and implants to achieve fixation. In addition, the Inferior-Posterior approach is designed to be direct to the joint and through limited anatomical structures which may minimize the morbidity of the approach.
This contrasts with several competitive implant systems that require multiple approach pathways and implants to achieve fixation. In addition, the Inferior-Posterior approach is designed to be direct to the joint and through limited anatomical structures which may minimize the morbidity of the approach.
The implant features a patented dual pontoon open cell design which enables the clinician to pack the pontoons with the patient’s own autologous bone designed to promote bone fusion across the joint.
The implant features a patented dual pontoon open cell design which enables the clinician to pack the pontoons with the patient’s own autologous bone designed to promote bone fusion across the joint.
These include: ● product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action; ● investigational device exemptions to conduct premarket clinical trials, which include extensive monitoring, recordkeeping, and reporting requirements; ● QSR, which requires manufacturers, including contract manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process; ● labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication; ● clearance of product modifications that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; ● approval of product modifications that affect the safety or effectiveness of one of our approved devices; ● medical device reporting regulations, which require that manufacturers comply with FDA requirements to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur; ● post-approval restrictions or conditions, including post-approval study commitments; ● post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device; 11 ● the FDA’s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations; ● regulations pertaining to voluntary recalls; and ● notices of corrections or removals.
These include: ● product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action; ● investigational device exemptions to conduct premarket clinical trials, which include extensive monitoring, recordkeeping, and reporting requirements; ● QSR, which requires manufacturers, including contract manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process; ● labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication; ● clearance of product modifications that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; ● approval of product modifications that affect the safety or effectiveness of one of our approved devices; ● medical device reporting regulations, which require that manufacturers comply with FDA requirements to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur; ● post-approval restrictions or conditions, including post-approval study commitments; ● post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device; ● the FDA’s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations; ● regulations pertaining to voluntary recalls; and ● notices of corrections or removals.
We believe the Catamaran System will address a large market opportunity with a superior product and is distinct from other competitive offerings in the following ways: ● Transfixes the SI joint ● Inferior-Posterior Sacroiliac Fusion Approach ● Reduced Approach Morbidity ● Direct And Visualized Approach to the SI-Joint ● Single Implant Technique ● Insertion Trajectory Away from the Neural Foramen ● Insertion Trajectory Away from Major Vascular Structures ● Autologous Bone Grafting in the Ilium, Sacrum and Bridge ● Radiographic Confirmation of Bridging Bone Fusion of the SI-Joint 5 The fixation device and its key features are shown below: Key Features “Pontoon” in the ilium “Pontoon” in the sacrum “Pontoons and Bridge” filled with autologous bone from drilling process Leading edge osteotome creates defect and facilitates ease of insertion The Catamaran System is a singular implant designed with several proprietary components which allow for it to be explicitly formatted to transfix the SI-Joint with a single approach and implant.
We believe The Catamaran System will address a large market opportunity with a superior product and is distinct from other competitive offerings in the following ways: ● Transfixes the SI joint ● Inferior-Posterior Sacroiliac Fusion Approach ● Reduced Approach Morbidity ● Direct And Visualized Approach to the SI-Joint ● Single Implant Technique ● Insertion Trajectory Away from the Neural Foramen ● Insertion Trajectory Away from Major Vascular Structures ● Autologous Bone Grafting in the Ilium, Sacrum and Bridge ● Radiographic Confirmation of Bridging Bone Fusion of the SI-Joint The fixation device and its key features are shown below: Key Features “Pontoon” in the ilium “Pontoon” in the sacrum “Pontoons and Bridge” filled with autologous bone from drilling process Leading edge osteotome creates defect and facilitates ease of insertion The Catamaran System is a singular implant designed with several proprietary components which allow for it to be explicitly formatted to transfix the SI-Joint with a single approach and implant.
Additionally, to reach the broadest physician and patient audience on case study results from around the United States we plan to implement an active social media campaign incorporating Facebook, Instagram, YouTube, etc. ● Invest in our independent sales representative network to ensure that all Tenon representatives have the latest in marketing and education tools to reduce the time from training to adoption. ● Remain true to our next generation product development strategy by continually bringing out new advancements in and around the SI-Joint and pelvic region. ● Continue to grow our existing intellectual property portfolio. ● Execute post-market clinical research to confirm the benefits of the distinct approach and implant.
Additionally, to reach the broadest physician and patient audience on case study results from around the United States we plan to implement an active social media campaign incorporating Facebook, Instagram, YouTube, etc. 8 ● Invest in our independent sales representative network to ensure that all Tenon representatives have the latest in marketing and education tools to reduce the time from training to adoption. ● Remain true to our next generation product development strategy by continually bringing out new advancements in and around the SI-Joint and pelvic region. ● Continue to grow our existing intellectual property portfolio. ● Execute post-market clinical research to confirm the benefits of the distinct approach and implant.
The FDA governs the following activities that we perform or that are performed on our behalf, to ensure that medical products distributed domestically or exported internationally are safe and effective for their intended uses: ● product design, development, and manufacture; ● product safety, testing, labeling, and storage; ● record keeping procedures; ● product marketing, sales, distribution and export; and ● post-marketing surveillance, complaint handling, medical device reporting, reporting of deaths, serious injuries or device malfunctions, and repair or recall of products.
The FDA governs the following activities that we perform or that are performed on our behalf, to ensure that medical products distributed domestically or exported internationally are safe and effective for their intended uses: ● product design, development, and manufacture; ● product safety, testing, labeling, and storage; ● record keeping procedures; 10 ● product marketing, sales, distribution and export; and ● post-marketing surveillance, complaint handling, medical device reporting, reporting of deaths, serious injuries or device malfunctions, and repair or recall of products.
There are also criminal penalties, including imprisonment and criminal fines, for making or presenting a false or fictitious or fraudulent claim to the federal government. False Claims Act liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of $11,181 to $22,363 per claim (adjusted annually for inflation).
There are also criminal penalties, including imprisonment and criminal fines, for making or presenting a false or fictitious or fraudulent claim to the federal government. 13 False Claims Act liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of $11,181 to $22,363 per claim (adjusted annually for inflation).
These estimates are driven by coding data for SI-Joint injections to treat pain and informed assumptions relative to surgical intervention candidacy Based on public information, we believe that the largest clinical device supplier in this market does approximately 16,000 SI-Joint fixations a year representing the largest market share.
These estimates are driven by coding data for SI-Joint injections to treat pain and informed assumptions relative to surgical intervention candidacy 3 Based on public information, we believe that the largest clinical device supplier in this market does approximately 16,000 SI-Joint fixations a year representing the largest market share.
All of our currently marketed products are Class II devices, subject to 510(k) clearance. After a device receives 510(k) marketing clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, PMA approval.
All of our currently marketed products are Class II devices, subject to 510(k) clearance. 11 After a device receives 510(k) marketing clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, PMA approval.
Once a patent expires, patent protection ends and an invention enters the public domain allowing anyone to commercially exploit the invention without infringing the patent. 10 We cannot guarantee that patents will be issued from any of our pending applications or that issued patents will be of sufficient scope or strength to provide meaningful protection for our technology.
Once a patent expires, patent protection ends and an invention enters the public domain allowing anyone to commercially exploit the invention without infringing the patent. We cannot guarantee that patents will be issued from any of our pending applications or that issued patents will be of sufficient scope or strength to provide meaningful protection for our technology.
We believe this is a significant advantage over competitive devices by providing the clinician the clinical flexibility of offering the best clinical solution and approach for patients. Sales and Marketing We market and sell the Catamaran System primarily through independent distributors and sales representatives specializing in spine sales.
We believe this is a significant advantage over competitive devices by providing the clinician the clinical flexibility of offering the best clinical solution and approach for patients. Sales and Marketing We market and sell The Catamaran System primarily through independent distributors and sales representatives specializing in orthopedics and spine sales.
We also hold an issued patent for the method of placing the Catamaran System into the SI-Joint where one pontoon is in the ilium and the other in the sacrum. 7 The Catamaran System’s unique design has already demonstrated radiographically confirmed fusion in initial patients.
We also hold an issued patent for the method of placing The Catamaran System into the SI-Joint where one pontoon is in the ilium and the other in the sacrum. The Catamaran System’s unique design has already demonstrated radiographically confirmed fusion in initial patients.
The first approval from WCG IRB will support a prospective, multi-center, single arm post market study that will evaluate the clinical outcomes of patients with sacroiliac joint disruptions or degenerative sacroiliitis treated with the Catamaran System. Patients will be followed out to 24 months assessing various patient reported outcomes, radiographic assessments, and adverse events.
The first approval from WCG IRB supports a prospective, multi-center, single arm post market study that will evaluate the clinical outcomes of patients with sacroiliac joint disruptions or degenerative sacroiliitis treated with The Catamaran System. Patients will be followed out to 24 months assessing various patient reported outcomes, radiographic assessments, and adverse events.
Regulatory Status Tenon has received FDA 510(k) clearance to market and sell the Catamaran System for sacroiliac joint fusion for conditions including sacroiliac joint disruptions and degenerative sacroiliitis. Research & Development Our initial development of the Catamaran System has incorporated several differentiating features which we believe will make an important contribution for many patients suffering from SI-Joint pain.
Regulatory Status We have received FDA 510(k) clearance to market and sell The Catamaran System for sacroiliac joint fusion for conditions including sacroiliac joint disruptions and degenerative sacroiliitis. Research & Development Our initial development of The Catamaran System has incorporated several differentiating features which we believe will make an important contribution for many patients suffering from SI-Joint pain.
We believe many clinicians have already been trained using one of the alternative products but have not been satisfied with the approach and technology. This provides Tenon with an opportunity to demonstrate to an already-trained-clinician the unique attributes of the Catamaran System. 8 Our business objective is to introduce the Next Generation Implant for SI-Joint Fixation.
We believe many clinicians have already been trained using one of the alternative products but have not been satisfied with the approach and technology. This provides us with an opportunity to demonstrate to an already-trained-clinician the unique attributes of The Catamaran System. Our business objective is to introduce the Next Generation Implant for SI-Joint Fixation.
Failure by us or by our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other regulatory authorities, which may result in sanctions including, but not limited to: ● untitled letters, warning letters, fines, injunctions, consent decrees, and civil penalties; ● unanticipated expenditures to address or defend such actions ● customer notifications for repair, replacement, refunds; ● Recall, detention, or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products; ● operating restrictions; ● withdrawing 510(k) clearances or PMA approvals that have already been granted: ● refusal to grant export approval for our products; or ● criminal prosecution. 13 The FDA has not yet inspected our contract manufacturer’s manufacturing facilities.
Failure by us or by our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other regulatory authorities, which may result in sanctions including, but not limited to: ● untitled letters, warning letters, fines, injunctions, consent decrees, and civil penalties; ● unanticipated expenditures to address or defend such actions 12 ● customer notifications for repair, replacement, refunds; ● recall, detention, or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products; ● operating restrictions; ● withdrawing 510(k) clearances or PMA approvals that have already been granted: ● refusal to grant export approval for our products; or ● criminal prosecution.
We also have thirteen (13) registered trademarks (seven (7) U.S. and six (6) foreign) and twelve (12) pending trademark applications in the U.S. Our utility patents and patent applications are directed to several different aspects of our sacroiliac (SI) joint stabilization technology and related patent platform.
We also have thirteen registered trademarks (seven U.S. and six foreign) and twelve pending trademark applications in the U.S. Our utility patents and patent applications are directed to several different aspects of our sacroiliac (SI) joint stabilization technology and related patent platform.
The Tenon development plan is to expand the Catamaran System offering by introducing a series of implant lengths so that the clinician has a full complement of sized implants to choose from depending on the patient’s anatomy. These product enhancements will enable the clinician to optimize the size of each implant to ensure full fixation based on anatomy.
Our development plan is to expand The Catamaran System offering by introducing a series of progressively longer pontoons so that the clinician has a full complement of sized implants to choose from depending on the patient’s anatomy. These product enhancements will enable the clinician to optimize the size of each implant to ensure full fixation based on anatomy.
We have included our website address as an inactive textual reference only. 16
We have included our website address as an inactive textual reference only. 15
Non-surgical treatments include: ● Drug Therapy : including opiates and non-steroidal anti-inflammatory medications. ● Physical Therapy : which can involve exercises as well as massage. ● Intra-Articular Injections of Steroid Medications : which are typically performed by physicians who specialize in pain treatment or anesthesia. ● Radiofrequency Ablation : or the cauterizing of the lateral branches of the sacral nerve roots.
Non-surgical treatments include: ● Drug Therapy : including opiates and non-steroidal anti-inflammatory medications. ● Intra-Articular Injections of Steroid Medications : which are typically performed by physicians who specialize in pain treatment or anesthesia. ● Radiofrequency Ablation : or the cauterizing of the lateral branches of the sacral nerve roots.
As of March 29, 2024, we also have priority rights in and to several significant trademarks that support our products and brand, including seven (7) registered U.S. trademarks, twelve (12) U.S. trademark applications and six (6) foreign trademark applications in the European Community (excluding the United Kingdom), Australia and Japan. Regulation Domestic Regulation of Our Products and Business.
As of March 26, 2025, we also have priority rights in and to several significant trademarks that support our products and brand, including seven registered U.S. trademarks, twelve U.S. trademark applications and six foreign trademark applications in the European Community (excluding the United Kingdom), Australia and Japan. Regulation Domestic Regulation of Our Products and Business.
Human Capital Resources As of March 29, 2024, we have a total of 21 employees, all of whom are full-time, and 5 senior consulting advisors of various specialty including product development, general administrative and accounting. None of our employees is subject to a collective bargaining agreement, and we consider our relationship with our employees to be good.
Human Capital Resources As of March 26, 2025, we have a total of 27 employees, all of whom are full-time, and four senior consulting advisors of various specialty including product development, general administrative and accounting. None of our employees is subject to a collective bargaining agreement, and we consider our relationship with our employees to be good.
Even if a trial is completed, the results of clinical testing may not adequately demonstrate the safety and effectiveness of the device or may otherwise not be sufficient to obtain FDA clearance or approval to market the product in the United States. 12 Pervasive and Continuing Regulation.
Even if a trial is completed, the results of clinical testing may not adequately demonstrate the safety and effectiveness of the device or may otherwise not be sufficient to obtain FDA clearance or approval to market the product in the United States. Pervasive and Continuing Regulation. After a device is placed on the market, numerous regulatory requirements continue to apply.
We anticipate completing enrollment by the end of the second quarter of 2024. 3 The Market Based on market research and internal estimates, Tenon believes the potential market for surgical intervention of the SI-Joint to be 279,000 procedures annually in the U.S. alone, for a potential annual market of approximately $2.0 billion.
The Market Based on market research and internal estimates, Tenon believes the potential market for surgical intervention of the SI-Joint to be 279,000 procedures annually in the U.S. alone, for a potential annual market of approximately $2.0 billion.
Promotional Materials “Off-Label” Promotion. Advertising and promotion of medical devices, in addition to being regulated by the FDA, are also regulated by the Federal Trade Commission and by state regulatory and enforcement authorities.
The FDA has not yet inspected our contract manufacturer’s manufacturing facilities. Promotional Materials “Off-Label” Promotion. Advertising and promotion of medical devices, in addition to being regulated by the FDA, are also regulated by the Federal Trade Commission and by state regulatory and enforcement authorities.
This patented titanium implant incorporates the Catamaran SI-Joint Fixation Device pontoon design and the open cell configuration which we believe, when filled with the patient’s autologous bone, promotes fusion.
The Catamaran System shown below has been cleared by the FDA for commercialization. This patented titanium implant incorporates the Catamaran SI-Joint Fixation Device pontoon design and the open cell configuration which we believe, when filled with the patient’s autologous bone, promotes fusion.
As of March 29, 2024, we own four (4) issued U.S. utility patents, sixteen (16) pending U.S. utility patent applications, four (4) issued foreign utility patents in Australia, Canada, Japan and Israel, and two (2) pending foreign utility patent applications in the European Community, Brazil and Japan.
As of March 26, 2025, we own eight issued U.S. utility patents, 21 pending U.S. utility patent applications, four issued foreign utility patents in Australia, Canada, Japan and Israel, and two pending foreign utility patent applications in the European Community, Brazil and Japan.
The Medicare 2022 national average hospital inpatient payment for SI-Joint procedures ranges from approximately $25,000 to approximately $59,000 depending on the procedural approach and the presence of Complication and Comorbidity/Major Complication and Comorbidity. The Medicare 2022 national average hospital outpatient clinic payment is $21,897.
The Medicare 2023 national average hospital inpatient payment for SI-Joint procedures ranges from approximately $25,661 to approximately $46,437 depending on the procedural approach and the presence of Complication and Comorbidity/Major Complication and Comorbidity. 7 The Medicare 2023 national average hospital outpatient clinic payment is $17,756.
The federal Physician Payment Sunshine Act, implemented by CMS as the Open Payments program, requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to CMS information related to payments or other “transfers of value” made to physicians and teaching hospitals, and requires applicable manufacturers to report annually to CMS ownership and investment interests held by physicians and their immediate family members and payments or other “transfers of value” to such physician owners. 14 Certain states also mandate implementation of corporate compliance programs, impose restrictions on device manufacturer marketing practices, and/or require tracking and reporting of gifts, compensation, and other remuneration to healthcare professionals and entities.
The federal Physician Payment Sunshine Act, implemented by CMS as the Open Payments program, requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to CMS information related to payments or other “transfers of value” made to physicians and teaching hospitals, and requires applicable manufacturers to report annually to CMS ownership and investment interests held by physicians and their immediate family members and payments or other “transfers of value” to such physician owners.
Additionally, Tenon will initiate various post marketing clinical studies in accordance with FDA cleared indications for use. Since we have already received FDA 510(k) clearance to market the Catamaran System, our clinical study activities will be focused on capturing post-market safety and efficacy data.
Since we have already received FDA 510(k) clearance to market The Catamaran System, our clinical study activities will be focused on capturing post-market safety and efficacy data.
The Company does not believe its relationship with any one contract manufacturer is material to its business. We believe the manufacturing operations of our contract manufacturers, and those of the suppliers of our manufacturers, comply with regulations mandated by the FDA, as well as Medical Devices Directive regulations in the EEA.
We believe the manufacturing operations of our contract manufacturers, and those of the suppliers of our manufacturers, comply with regulations mandated by the FDA, as well as Medical Devices Directive regulations in the EEA.
The Catamaran™ SIJ Fusion System Single Implant SI Bone iFuse ® Three Implants Our mission will be to continue developing enhancements to the Catamaran System to meet our customers’ changing needs and to improve the surgery’s effectiveness. This includes revision surgery options as well as options as an adjunct to long fusion constructs in the lumbar spine.
The Catamaran™ SIJ Fusion System Single Implant SI Bone iFuse® Three Implants Our mission will be to continue developing enhancements to The Catamaran System to meet our customers’ changing needs and to improve the surgery’s effectiveness.
The Catamaran System is designed specially to resist vertical shear and rotation of the joint in which it was implanted, helping stabilize the joint in preparation for eventual fusion. The instruments we have developed are proprietary to The Catamaran System and specifically designed to facilitate an Inferior Posterior approach that is unique to the system.
The Catamaran System is designed specially to resist vertical shear and rotation of the joint in which it was implanted, helping stabilize the joint in preparation for eventual fusion.
Tenon believes, based on literature searches of prior SI-Joint fixation technologies, that adverse event incidence where the implant has loosened or been misplaced thereby requiring a revision surgery could reach 20%.
We believe, based on literature searches of prior SI-Joint fixation technologies, that adverse event incidence where the implant has loosened or been misplaced thereby requiring a revision surgery could reach 20%. We believe that our ability to make The Catamaran System a specifically sized fixation device will benefit many patients requiring a revision surgery.
Our contract manufacturers source and purchase all raw materials used in the manufacture of the Catamaran System which includes mainly stainless steel and aluminum for our instruments and sterilization cases and titanium for our implants. We do not currently have manufacturing agreements with any of our contract manufacturers and orders are controlled through purchase orders.
The majority of our instruments have a secondary manufacturing supplier, and we continually work with additional manufacturers to establish secondary manufacturing suppliers. Our contract manufacturers source and purchase all raw materials used in the manufacture of The Catamaran System which includes mainly stainless steel and aluminum for our instruments and sterilization cases and titanium for our implants.
As set forth above, these FDA regulations cover, among other things, the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage, and shipping of our products. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections.
Further, we and certain of our contract manufacturers are required to comply with all applicable regulations and current good manufacturing practices. As set forth above, these FDA regulations cover, among other things, the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage, and shipping of our products.
Manufacturing and Supply We do not manufacture any products or component parts and currently use five contract manufacturers to produce all of our instruments, implants and sterilization cases. The majority of our instruments have a secondary manufacturing supplier, and we continually work with additional manufacturers to establish secondary manufacturing suppliers.
We take our data protection obligations seriously, as any improper disclosure, particularly with regard to our customers’ sensitive personal data, could negatively impact our business and/or our reputation. 14 Manufacturing and Supply We do not manufacture any products or component parts and currently use five contract manufacturers to produce all of our instruments, implants and sterilization cases.
Tenon also has developed a proprietary 2D placement protocol as well as a protocol for 3D navigation utilizing the latest techniques in spine surgery. These Tenon advancements are intended to further enhance the safety of the procedure and encourage more physicians to adopt the procedure.
These Tenon advancements are intended to further enhance the safety of the procedure and encourage more physicians to adopt the procedure.
Where we transfer personal data outside the EEA, we do so in compliance with the relevant data export requirements. We take our data protection obligations seriously, as any improper disclosure, particularly with regard to our customers’ sensitive personal data, could negatively impact our business and/or our reputation.
Where we transfer personal data outside the EEA, we do so in compliance with the relevant data export requirements.
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Tenon believes that its ability to make the Catamaran System a specifically sized fixation device will benefit many patients requiring a revision surgery. 9 The Catamaran System shown below has been cleared by the FDA for commercialization.
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The instruments we have developed are proprietary to The Catamaran System and specifically designed to facilitate an Inferior Posterior approach that is unique to the system. 5 Tenon also has developed a proprietary 2D placement protocol as well as a protocol for 3D navigation utilizing the latest techniques in spine surgery.
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After a device is placed on the market, numerous regulatory requirements continue to apply.
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This includes revision surgery options as well as options as an adjunct to long fusion constructs in the lumbar spine. 9 Additionally, we will initiate various post marketing clinical studies in accordance with FDA cleared indications for use.
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We are required to demonstrate continuing compliance with applicable regulatory requirements and will be subject to FDA inspections. Further, we and certain of our contract manufacturers are required to comply with all applicable regulations and current good manufacturing practices.
Added
Certain states also mandate implementation of corporate compliance programs, impose restrictions on device manufacturer marketing practices, and/or require tracking and reporting of gifts, compensation, and other remuneration to healthcare professionals and entities.
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We do not currently have manufacturing agreements with any of our contract manufacturers and orders are controlled through purchase orders. The Company does not believe its relationship with any one contract manufacturer is material to its business.
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Manufacturing facilities that produce medical devices or component parts intended for distribution world-wide are subject to regulation and periodic planned and unannounced inspection by the FDA and other domestic and international regulatory agencies.
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Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

99 edited+38 added−38 removed314 unchanged
Biggest changeIn addition, any product liability claim brought against us, with or without merit, could result in an increase of our product liability insurance rates. Insurance coverage varies in cost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the future on terms acceptable to us or at all.
Biggest changeProduct liability claims in excess of applicable insurance coverage could have a material adverse effect on our business, results of operations, and financial condition. In addition, any product liability claim brought against us, with or without merit, could result in an increase of our product liability insurance rates.
If we enter into in-bound intellectual property license agreements, we may not be able to fully protect the licensed intellectual property rights or maintain those licenses.
If we enter into in-bound intellectual property license agreements, we may not be able to fully protect the licensed intellectual property rights or maintain those licenses.
Future licensors could retain the right to prosecute and defend the intellectual property rights licensed to us, in which case we would depend on the ability of our licensors to obtain, maintain, and enforce intellectual property protection for the licensed intellectual property.
Future licensors could retain the right to prosecute and defend the intellectual property rights licensed to us, in which case we would depend on the ability of our licensors to obtain, maintain, and enforce intellectual property protection for the licensed intellectual property.
These licensors may determine not to pursue litigation against other companies or may pursue such litigation less aggressively than we would. Further, entering into such license agreements could impose various diligence, commercialization, royalty, or other obligations on us.
These licensors may determine not to pursue litigation against other companies or may pursue such litigation less aggressively than we would. Further, entering into such license agreements could impose various diligence, commercialization, royalty, or other obligations on us.
Factors that could cause fluctuations in the trading price of our common stock include the following: ● actual or anticipated fluctuations in our financial condition and operating results; ● actual or anticipated changes in our growth rate relative to our competitors; ● commercial success and market acceptance of our product; ● success of our competitors in developing or commercializing products; ● ability to commercialize or obtain regulatory approvals for our product, or delays in commercializing or obtaining regulatory approvals; ● strategic transactions undertaken by us; ● additions or departures of key personnel; ● product liability claims; ● prevailing economic conditions; ● disputes concerning our intellectual property or other proprietary rights; ● FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry; ● healthcare reform measures in the United States; ● sales of our common stock by our officers, directors or significant stockholders; ● future sales or issuances of equity or debt securities by us; ● business disruptions caused by earthquakes, fires or other natural disasters; ● the exercise and sale of any outstanding warrants or options; ● issuance of new or changed securities analysts’ reports or recommendations regarding us; ● changes in our capital structure, such as future issuances of debt or equity securities; ● short sales, hedging and other derivative transactions involving our capital stock; and ● general economic and geopolitical conditions, including the current or anticipated impact of military conflict and related sanctions imposed on Russia by the United States and other countries due to Russia’s recent invasion of Ukraine.
Factors that could cause fluctuations in the trading price of our common stock include the following: ● actual or anticipated fluctuations in our financial condition and operating results; ● actual or anticipated changes in our growth rate relative to our competitors; ● commercial success and market acceptance of our product; ● success of our competitors in developing or commercializing products; ● ability to commercialize or obtain regulatory approvals for our product, or delays in commercializing or obtaining regulatory approvals; ● strategic transactions undertaken by us; ● additions or departures of key personnel; ● product liability claims; 40 ● prevailing economic conditions; ● disputes concerning our intellectual property or other proprietary rights; ● FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry; ● healthcare reform measures in the United States; ● sales of our common stock by our officers, directors or significant stockholders; ● future sales or issuances of equity or debt securities by us; ● business disruptions caused by earthquakes, fires or other natural disasters; ● the exercise and sale of any outstanding warrants or options; ● issuance of new or changed securities analysts’ reports or recommendations regarding us; ● changes in our capital structure, such as future issuances of debt or equity securities; ● short sales, hedging and other derivative transactions involving our capital stock; and ● general economic and geopolitical conditions, including the current or anticipated impact of military conflict and related sanctions imposed on Russia by the United States and other countries due to Russia’s recent invasion of Ukraine.
Our dependence on such a limited number of contract manufacturers exposes us to risks, including, among other things: ● contract manufacturers may fail to comply with regulatory requirements or make errors in manufacturing that could negatively affect the safety or effectiveness of our product or cause delays in shipments of our product; ● some of our contract manufacturers have long lead times of 12 to 16 weeks and we may not be able to respond to unanticipated changes in customer orders, and if orders do not match forecasts, we or our contract manufacturers may have excess or inadequate inventory of materials and components; ● our contract manufacturers may be subject to price fluctuations due to a lack of long-term supply arrangements for key components; ● our contract manufacturers may lose access to critical services and components, resulting in an interruption in the manufacture, assembly and shipment of our product; ● we may experience delays in delivery by our contract manufacturers due to changes in demand from us or their other customers; ● fluctuations in demand for products that our contract manufacturers manufacture for others may affect their ability or willingness to deliver our product to us in a timely manner; ● our contract manufacturers may wish to discontinue supplying products or services to us for risk management reasons; ● we may not be able to find new or alternative contract manufacturers in a timely manner if our current contract manufacturers stop producing products; and ● our contract manufacturers may encounter financial hardships unrelated to our demand, which could inhibit their ability to fulfil our orders and meet our requirements.
Our dependence on such a limited number of contract manufacturers exposes us to risks, including, among other things: ● contract manufacturers may fail to comply with regulatory requirements or make errors in manufacturing that could negatively affect the safety or effectiveness of our product or cause delays in shipments of our product; ● some of our contract manufacturers have long lead times of 12 to 16 weeks and we may not be able to respond to unanticipated changes in customer orders, and if orders do not match forecasts, we or our contract manufacturers may have excess or inadequate inventory of materials and components; ● our contract manufacturers may be subject to price fluctuations due to a lack of long-term supply arrangements for key components; 22 ● our contract manufacturers may lose access to critical services and components, resulting in an interruption in the manufacture, assembly and shipment of our product; ● we may experience delays in delivery by our contract manufacturers due to changes in demand from us or their other customers; ● fluctuations in demand for products that our contract manufacturers manufacture for others may affect their ability or willingness to deliver our product to us in a timely manner; ● our contract manufacturers may wish to discontinue supplying products or services to us for risk management reasons; ● we may not be able to find new or alternative contract manufacturers in a timely manner if our current contract manufacturers stop producing products; and ● our contract manufacturers may encounter financial hardships unrelated to our demand, which could inhibit their ability to fulfil our orders and meet our requirements.
The failure by us or one of our contract manufacturers to comply with applicable statutes and regulations, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: ● untitled letters, warning letters, fines, injunctions, consent, and civil penalties; ● unanticipated expenditures to address or defend such actions; ● customer notifications for repair, replacement, refunds; ● recall, detention, or seizure of our product; ● operating restrictions or partial suspension or total shutdown of production; 33 ● refusing or delaying our requests for 510(k) clearance or premarket approval and conformity assessments of new products or modified products; ● limitations on the intended uses for which the product may be marketed; ● operating restrictions; ● withdrawing 510(k) clearances or PMA approvals that have already been granted; or ● criminal prosecution.
The failure by us or one of our contract manufacturers to comply with applicable statutes and regulations, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: ● untitled letters, warning letters, fines, injunctions, consent, and civil penalties; ● unanticipated expenditures to address or defend such actions; ● customer notifications for repair, replacement, refunds; ● recall, detention, or seizure of our product; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying our requests for 510(k) clearance or premarket approval and conformity assessments of new products or modified products; ● limitations on the intended uses for which the product may be marketed; ● operating restrictions; ● withdrawing 510(k) clearances or PMA approvals that have already been granted; or ● criminal prosecution.
The laws that may affect our ability to operate include: ● the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, items or services for which payment may be made, in whole or in part, under federal healthcare programs, such as the Medicare and Medicaid programs; ● the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds; knowingly making, using, or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease, or conceal an obligation to pay money to the federal government.
The laws that may affect our ability to operate include: ● the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, items or services for which payment may be made, in whole or in part, under federal healthcare programs, such as the Medicare and Medicaid programs; 29 ● the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds; knowingly making, using, or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease, or conceal an obligation to pay money to the federal government.
The FDA and other U.S. and foreign governmental agencies regulate, among other things, with respect to medical devices: ● design, development, and manufacturing; ● testing, labeling, content, and language of instructions for use and storage; ● clinical trials; ● product safety; 28 ● marketing, sales, and distribution; ● premarket clearance and approval; ● conformity assessment procedures; ● record keeping procedures; ● advertising and promotion; ● compliance with good manufacturing practices requirements; ● recalls and field safety corrective actions; ● post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; ● post-market approval studies; and ● product import and export.
The FDA and other U.S. and foreign governmental agencies regulate, among other things, with respect to medical devices: ● design, development, and manufacturing; ● testing, labeling, content, and language of instructions for use and storage; ● clinical trials; ● product safety; ● marketing, sales, and distribution; ● premarket clearance and approval; ● conformity assessment procedures; ● record keeping procedures; ● advertising and promotion; ● compliance with good manufacturing practices requirements; ● recalls and field safety corrective actions; ● post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; ● post-market approval studies; and ● product import and export.
If we are unable to successfully integrate any acquired businesses, products, or technologies effectively, our business, results of operations, and financial condition will be materially adversely affected. 26 We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships with third-parties that may not result in the development of commercially viable products or the generation of significant future revenue.
If we are unable to successfully integrate any acquired businesses, products, or technologies effectively, our business, results of operations, and financial condition will be materially adversely affected. We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships with third-parties that may not result in the development of commercially viable products or the generation of significant future revenue.
The FDA can delay, limit or deny clearance or approval of a device for many reasons, including: ● we may not be able to demonstrate to the FDA’s satisfaction that our product is safe and effective for their intended users; 29 ● the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required; and ● the manufacturing process or facilities we use may not meet applicable requirements.
The FDA can delay, limit or deny clearance or approval of a device for many reasons, including: ● we may not be able to demonstrate to the FDA’s satisfaction that our product is safe and effective for their intended users; ● the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required; and ● the manufacturing process or facilities we use may not meet applicable requirements.
Even the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of our product. Even if our product is approved by regulatory authorities if our contract manufacturers fail to comply with ongoing FDA, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market.
Even the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of our product. 31 Even if our product is approved by regulatory authorities if our contract manufacturers fail to comply with ongoing FDA, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market.
If any of our trade secrets, know-how or other technologies not protected by a patent were to be disclosed to or independently developed by a competitor, our business, financial condition, and results of operations could be materially adversely affected. In the future, we may enter into licensing agreements to maintain our competitive position.
If any of our trade secrets, know-how or other technologies not protected by a patent were to be disclosed to or independently developed by a competitor, our business, financial condition, and results of operations could be materially adversely affected. 36 In the future, we may enter into licensing agreements to maintain our competitive position.
In addition, our anticipated growth could strain the ability of our contract manufacturers to deliver an increasingly large supply of product. Contract manufacturers often experience difficulties in scaling up production, including financial issues, or problems with production yields and quality control and assurance. 23 We use a small number of contract manufacturers for our instruments.
In addition, our anticipated growth could strain the ability of our contract manufacturers to deliver an increasingly large supply of product. Contract manufacturers often experience difficulties in scaling up production, including financial issues, or problems with production yields and quality control and assurance. We use a small number of contract manufacturers for our instruments.
If a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition or results of operations. 45
If a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition or results of operations.
We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits. 35 The FDA requires that certain classifications of recalls be reported to FDA within 10 working days after the recall is initiated.
We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits. The FDA requires that certain classifications of recalls be reported to FDA within 10 working days after the recall is initiated.
This assessment must be based on clinical data, which can be obtained from (i) clinical studies conducted on the devices being assessed; (ii) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated; or (iii) both clinical studies and scientific literature. The FDA and other regulatory authorities have broad enforcement powers.
This assessment must be based on clinical data, which can be obtained from (i) clinical studies conducted on the devices being assessed; (ii) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated; or (iii) both clinical studies and scientific literature. 28 The FDA and other regulatory authorities have broad enforcement powers.
We continue to work with our tax advisors and auditors to determine the full impact that the recent tax legislation as a whole will have on us. We urge our investors to consult with their legal and tax advisors with respect to such legislation and its potential effect on an investment in our common stock.
We continue to work with our tax advisors to determine the full impact that the recent tax legislation as a whole will have on us. We urge our investors to consult with their legal and tax advisors with respect to such legislation and its potential effect on an investment in our common stock.
Our contract manufacturers may encounter several difficulties in increasing this capacity, including: ● managing production yields; ● maintaining quality control and assurance; ● providing component and service availability; ● maintaining adequate control policies and procedures; ● hiring and retaining qualified personnel; and ● complying with state, federal, and foreign regulations.
Our contract manufacturers may encounter several difficulties in increasing this capacity, including: ● managing production yields; ● maintaining quality control and assurance; ● providing component and service availability; 23 ● maintaining adequate control policies and procedures; ● hiring and retaining qualified personnel; and ● complying with state, federal, and foreign regulations.
These products may compete with our product and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 39 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products may compete with our product and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
The trading price of our common stock may fluctuate substantially. The market price of our common stock may fluctuate higher or lower, depending on many factors, some of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock.
The market price of our common stock may fluctuate higher or lower, depending on many factors, some of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock.
The outcome of the Russia-Ukraine war and conflicts in the Middle East remain uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.
The outcome of the Russia-Ukraine war and conflicts in the Middle East remain uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations. 26 Inflation may adversely affect our operations and financial results.
As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements for the fiscal year ended, December 31, 2023, describing the existence of substantial doubt about our ability to continue as a going concern.
As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements for the fiscal year ended, December 31, 2024, describing the existence of substantial doubt about our ability to continue as a going concern.
Our sales and results of operations will be affected by numerous factors, including, among other things: ● payor coverage and reimbursement; ● maintaining our training schedule with clinicians; ● the number of procedures performed in the quarter and our ability to drive increased sales of our product; ● our ability to identify and sign-up independent sales representatives and their performance; ● pricing pressure applicable to our product, including adverse third-party coverage and reimbursement outcomes; ● timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; ● our ability to find and develop relationships with contract manufacturers and their ability to timely provide us with an adequate supply of products; ● the evolving product offerings of our competitors; ● the demand for, and pricing of, our product and the products of our competitors; ● factors that may affect the sale of our product, including seasonality and budgets of our customers; ● ability of clinicians to do our procedure given possible COVID restrictions; ● interruption in the manufacturing or distribution of our product; ● the effect of competing technological, industry and market developments; ● our ability to expand the geographic reach of our sales and marketing efforts; ● the costs of maintaining adequate insurance coverage, including product liability insurance; ● the availability and cost of components and materials needed by our contract manufacturers; ● the number of selling days in the quarter; and ● impairment and other special charges.
Our sales and results of operations will be affected by numerous factors, including, among other things: ● payor coverage and reimbursement; ● maintaining our training schedule with clinicians; ● the number of procedures performed in the quarter and our ability to drive increased sales of our product; ● our ability to identify and sign-up independent sales representatives and their performance; ● pricing pressure applicable to our product, including adverse third-party coverage and reimbursement outcomes; ● timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; ● our ability to find and develop relationships with contract manufacturers and their ability to timely provide us with an adequate supply of products; ● the evolving product offerings of our competitors; ● the demand for, and pricing of, our product and the products of our competitors; ● factors that may affect the sale of our product, including seasonality and budgets of our customers; ● interruption in the manufacturing or distribution of our product; ● the effect of competing technological, industry and market developments; ● our ability to expand the geographic reach of our sales and marketing efforts; ● the costs of maintaining adequate insurance coverage, including product liability insurance; ● the availability and cost of components and materials needed by our contract manufacturers; ● the number of selling days in the quarter; and ● impairment and other special charges.
There are also criminal penalties for making or presenting a false or fictitious or fraudulent claim to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996, which imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program including private third-party payors, or knowingly and willfully falsifying, concealing, or covering up a material fact or making a materially false, fictitious, or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services; ● the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the Centers for Medicare & Medicaid Services information related to payments or other “transfers of value” made to physicians and teaching hospitals, and requires applicable manufacturers to report annually to CMS ownership and investment interests held by physicians and their immediate family members and payments or other “transfers of value” to such physician owners; and ● analogous state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state beneficiary inducement laws, and state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. 31 If we or our employees are found to have violated any of the above laws we may be subjected to administrative, civil and criminal penalties, including imprisonment, exclusion from participation in federal healthcare programs, such as Medicare and Medicaid, and significant fines, monetary penalties and damages, and damage to our reputation.
There are also criminal penalties for making or presenting a false or fictitious or fraudulent claim to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996, which imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program including private third-party payors, or knowingly and willfully falsifying, concealing, or covering up a material fact or making a materially false, fictitious, or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services; ● the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the Centers for Medicare & Medicaid Services information related to payments or other “transfers of value” made to physicians and teaching hospitals, and requires applicable manufacturers to report annually to CMS ownership and investment interests held by physicians and their immediate family members and payments or other “transfers of value” to such physician owners; and ● analogous state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state beneficiary inducement laws, and state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, our ability to pay dividends on our common stock may be limited by Delaware state law. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common stock.
In addition, our ability to pay dividends on our common stock may be limited by Delaware state law. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment.
These risks include our inability to: ● obtain coverage by third-party, private, and government payors; ● establish and increase awareness of our brand and strengthen customer loyalty; ● attract and retain qualified personnel; ● find and develop relationships with contract manufacturers that can manufacture the necessary volume of product; ● manage our independent sales representatives to achieve our sales growth objectives; ● commercialize new products and enhance our existing product; ● manage rapidly changing and expanding operations; ● implement and successfully execute our business and marketing strategy; ● respond effectively to competitive pressures and developments. 21 We can also be negatively affected by general economic conditions.
These risks include our inability to: ● obtain coverage by third-party, private, and government payors; ● establish and increase awareness of our brand and strengthen customer loyalty; ● attract and retain qualified personnel; ● find and develop relationships with contract manufacturers that can manufacture the necessary volume of product; ● manage our independent sales representatives to achieve our sales growth objectives; ● commercialize new products and enhance our existing product; ● manage rapidly changing and expanding operations; ● implement and successfully execute our business and marketing strategy; ● respond effectively to competitive pressures and developments.
These competitors may enjoy several competitive advantages over us, including: ● greater financial, human, and other resources for product research and development, sales and marketing, and legal matters; 20 ● significantly greater name recognition; ● established relationships with clinicians, hospitals, and other healthcare providers; ● large and established sales and marketing and distribution networks; ● greater experience in obtaining and maintaining domestic and international regulatory clearances or approvals, or CE Certificates of Conformity for products and product enhancements; ● more expansive portfolios of intellectual property rights; and ● greater ability to cross-sell their products or to incentivize hospitals or clinicians to use their products.
These competitors may enjoy several competitive advantages over us, including: ● greater financial, human, and other resources for product research and development, sales and marketing, and legal matters; ● significantly greater name recognition; ● established relationships with clinicians, hospitals, and other healthcare providers; ● large and established sales and marketing and distribution networks; ● greater experience in obtaining and maintaining domestic and international regulatory clearances or approvals, or CE Certificates of Conformity for products and product enhancements; ● more expansive portfolios of intellectual property rights; and ● greater ability to cross-sell their products or to incentivize hospitals or clinicians to use their products. 19 New participants have increasingly entered the medical device industry.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal, and administrative penalties, including, without limitation, damages, fines, disgorgement of profits, imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. 34 We may be subject to enforcement action, including fines, penalties or injunctions, if we are determined to be engaging in the off-label promotion of our product.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal, and administrative penalties, including, without limitation, damages, fines, disgorgement of profits, imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.
We have never paid cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. We currently intend to retain any future earnings to support the development of our business and do not anticipate paying cash dividends in the foreseeable future.
We currently intend to retain any future earnings to support the development of our business and do not anticipate paying cash dividends in the foreseeable future.
Moreover, we may decide to alter or discontinue aspects of our business strategy and may adopt different strategies due to business or competitive factors not currently foreseen, such as new medical technologies that would make our product obsolete. Any failure to implement our business strategy may adversely affect our business, results of operations, and financial condition.
Moreover, we may decide to alter or discontinue aspects of our business strategy and may adopt different strategies due to business or competitive factors not currently foreseen, such as new medical technologies that would make our product obsolete.
As of March 29, 2024, we owned eight issued patents (four domestic and four foreign), eighteen pending patent applications (sixteen domestic and two foreign), thirteen registered trademarks (seven domestic and six foreign) and twelve pending domestic trademark applications. 37 We have applied for patent protection relating to certain existing and proposed products and processes.
As of March 26, 2025, we owned 12 issued patents (eight domestic and four foreign), 23 pending patent applications (21 domestic and two foreign), thirteen registered trademarks (seven domestic and six foreign) and twelve pending domestic trademark applications. We have applied for patent protection relating to certain existing and proposed products and processes.
Management has taken initial steps to remedy this weakness by hiring a Chief Financial Officer, a director of SEC reporting and compliance, and a senior accountant, and engaging a cost accounting consultant and external financial consultants, and plans to continue to add additional resources, technology and headcount as warranted by the growth of the Company.
Management has taken steps to remedy this deficiency by its hiring of a Chief Financial Officer, a director of SEC reporting and compliance, a senior accountant, a cost accountant and external financial consultants, and plans to continue to add additional resources, technology and headcount as warranted by our growth.
New participants have increasingly entered the medical device industry. Many of these new competitors specialize in a specific product or focus on a particular market segment, making it more difficult for us to increase our overall market position.
Many of these new competitors specialize in a specific product or focus on a particular market segment, making it more difficult for us to increase our overall market position.
Federal and state authorities also pursue actions for false claims based upon improper billing and coding advice or recommendations, as well as decisions related to the medical necessity of procedures, including the site-of-service where procedures are performed. Actions under the federal False Claims Act may also be brought by whistleblowers under its qui tam provisions.
Federal and state authorities also pursue actions for false claims based upon improper billing and coding advice or recommendations, as well as decisions related to the medical necessity of procedures, including the site-of-service where procedures are performed.
Our business could suffer if we lose the services of key members of our senior management, key advisors or personnel. We are dependent upon the continued services of key members of our senior management and a number of key advisors and personnel.
We are dependent upon the continued services of key members of our senior management and a number of key advisors and personnel.
If we are unable to complete the required assessment as to the adequacy of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act or if we fail to establish and maintain internal control over financial reporting, our ability to produce timely, accurate and reliable periodic financial statements could be impaired.
If we are unable to complete the required assessment as to the adequacy of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act or if we fail to establish and maintain internal control over financial reporting, our ability to produce timely, accurate and reliable periodic financial statements could be impaired. 42 If we do not establish and maintain adequate internal control over financial reporting, investors could lose confidence in the accuracy of our periodic reports filed under the Exchange Act.
Further, any such interruption, security breach, loss or disclosure of confidential information could result in financial, legal, business and reputational harm to us and could have a material adverse effect on our business, financial position, results of operations and/or cash flow. 27 Geopolitical conditions, including trade disputes and direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financial results.
Further, any such interruption, security breach, loss or disclosure of confidential information could result in financial, legal, business and reputational harm to us and could have a material adverse effect on our business, financial position, results of operations and/or cash flow.
In addition, regardless of the level of insurance coverage, damage to our or our contract manufacturers’ facilities could harm our business, financial condition, and operating results. 24 As our sales grow, our contract manufacturers may encounter problems or delays in the manufacturing of our product or fail to meet certain regulatory requirements which could result in an adverse effect on our business and financial results.
As our sales grow, our contract manufacturers may encounter problems or delays in the manufacturing of our product or fail to meet certain regulatory requirements which could result in an adverse effect on our business and financial results.
FDA’s ongoing review of the 510(k) programs may make it more difficult for us to make modifications to our previously cleared products, either by imposing more strict requirements on when a new 510(k) for a modification to a previously cleared product must be submitted or applying more onerous review criteria to such submissions.
FDA’s ongoing review of the 510(k) programs may make it more difficult for us to make modifications to our previously cleared products, either by imposing more strict requirements on when a new 510(k) for a modification to a previously cleared product must be submitted or applying more onerous review criteria to such submissions. 34 Clinical trials necessary to support a 510(k) or reimbursement may require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.
The perception by physicians that the reimbursement for SI-Joint fusion is insufficient to compensate them for the work required, including diagnosis, documentation, obtaining payor approval for the procedure, and burden on their office staff, may negatively affect the number of procedures performed and may therefore impede the growth of our revenues or cause them to decline.
The perception by physicians that the reimbursement for SI-Joint fusion is insufficient to compensate them for the work required, including diagnosis, documentation, obtaining payor approval for the procedure, and burden on their office staff, may negatively affect the number of procedures performed and may therefore impede the growth of our revenues or cause them to decline. 17 We may not be able to convince physicians that The Catamaran System is an attractive alternative to our competitors’ products and that our procedure is an attractive alternative to existing surgical and non-surgical treatments of the SI-Joint.
Additionally, we may not be able to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our future collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals.
These collaborations may not result in the development of products that achieve commercial success or result in significant revenue and could be terminated prior to developing any products. 25 Additionally, we may not be able to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our future collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Risks Related to the Ownership of our Common Stock The market for our common stock is new and may not develop to provide investors with adequate liquidity.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Risks Related to the Ownership of our Common Stock and Warrants An active trading market for our shares may not be sustained.
The Medicare 2022 national average hospital inpatient payment ranges from approximately $25,000 to approximately $59,000 depending on the procedural approach and the presence of Complication and Comorbidity (CC)/Major Complication and Comorbidity ( MCC ) . The Medicare 2022 national average hospital outpatient clinic payment is $21,897.
The Medicare 2023 national average hospital inpatient payment ranges from approximately $25,661 to approximately $46,437 depending on the procedural approach and the presence of Complication and Comorbidity (CC)/Major Complication and Comorbidity ( MCC ) . The Medicare 2023 national average hospital outpatient clinic payment is $17,756.
Additionally, our ability to obtain additional financing could be impaired or a lack of investor confidence in the reliability and accuracy of our public reporting could cause our stock price to decline.
Additionally, our ability to obtain additional financing could be impaired or a lack of investor confidence in the reliability and accuracy of our public reporting could cause our stock price to decline. We may be subject to securities litigation, which is expensive and could divert our management’s attention.
We may collect this kind of information during the course of future clinical trials and for possible post-marketing safety vigilance, helping enable clinicians and their patients to pursue claims for reimbursement for procedures using the Catamaran System and servicing potential warranty claims. 32 There are a number of state, federal, and international laws protecting the privacy and security of health information and personal data.
We may collect this kind of information during the course of future clinical trials and for possible post-marketing safety vigilance, helping enable clinicians and their patients to pursue claims for reimbursement for procedures using The Catamaran System and servicing potential warranty claims.
The elimination of personal liability against our directors and officers under Delaware law and the existence of indemnification rights held by our directors, officers and employees may result in substantial expenses.
Investors seeking cash dividends should not purchase our common stock. 43 The elimination of personal liability against our directors and officers under Delaware law and the existence of indemnification rights held by our directors, officers and employees may result in substantial expenses.
Our operations could be disrupted by geopolitical conditions, political and social instability, acts of war, terrorist activity or other similar events. In February 2022, Russia initiated significant military action against Ukraine.
Geopolitical conditions, including trade disputes and direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financial results. Our operations could be disrupted by geopolitical conditions, political and social instability, acts of war, terrorist activity or other similar events. In February 2022, Russia initiated significant military action against Ukraine.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our stock could decrease, which might cause the price of our stock and trading volume to decline. 40 The price of our common stock may be volatile, and you may be unable to resell your shares at or above the price paid.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our stock could decrease, which might cause the price of our stock and trading volume to decline.
The Tax Cuts and Jobs Act (the “Tax Act”) has significantly changed the U.S. federal income taxation of U.S. businesses, including by reducing the U.S. corporate income tax rate, limiting interest deductions, permitting immediate expensing of certain capital expenditures, modifying or repealing many business deductions and credits.
The Tax Cuts and Jobs Act (the “Tax Act”) has significantly changed the U.S. federal income taxation of U.S. businesses, including by reducing the U.S. corporate income tax rate, limiting interest deductions, permitting immediate expensing of certain capital expenditures, modifying or repealing many business deductions and credits. 35 The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) modifies certain provisions of the Tax Act, including increasing the amount of interest expense that may be deducted.
If our stock price is volatile, we may become the target of securities litigation. Securities litigation could result in substantial costs and divert our management’s attention and resources from our business.
If our stock price is volatile, we may become the target of securities litigation. Securities litigation could result in substantial costs and divert our management’s attention and resources from our business. This could have a material adverse effect on our business, results of operations, and financial condition.
It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our training or other promotional materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false or fraudulent claims for payment of government funds.
It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our training or other promotional materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false or fraudulent claims for payment of government funds. 32 If any of these actions were to occur it would harm our reputation and cause our product sales and profitability to suffer and may prevent us from generating revenue.
We may be subject to securities litigation, which is expensive and could divert our management’s attention. The market price of our securities may be volatile, and in the past companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation.
The market price of our securities may be volatile, and in the past companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit could divert managerial and financial resources, impair our ability to manufacture our product in a cost-effective and timely manner, and have an adverse effect on our reputation, results of operations, and financial condition.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit could divert managerial and financial resources, impair our ability to manufacture our product in a cost-effective and timely manner, and have an adverse effect on our reputation, results of operations, and financial condition. 33 Any adverse event involving our product in the United States could result in future voluntary corrective actions, such as recalls, including corrections, or customer notifications, or agency action, such as inspection or enforcement actions.
Before we can market or sell a new regulated product or make a significant modification to an existing product in the United States, with very limited exception, we must obtain either clearance under Section 510(k) of the FDCA for Class II devices or approval of a premarket approval application from the FDA for a Class III device.
Regulatory changes could result in restrictions on our ability to carry on or expand our operations, difficulties achieving new product clearances, higher than anticipated costs or lower than anticipated sales. 27 Before we can market or sell a new regulated product or make a significant modification to an existing product in the United States, with very limited exception, we must obtain either clearance under Section 510(k) of the FDCA for Class II devices or approval of a premarket approval application from the FDA for a Class III device.
Adverse action by an applicable regulatory agency the FDA could result in inability to produce our product in a cost-effective and timely manner, or at all, decreased sales, higher prices, lower margins, additional unplanned costs or actions, damage to our reputation, and could have material adverse effect on our reputation, business, results of operations, and financial condition. 30 We and our independent sales representatives must comply with U.S. federal and state fraud and abuse laws, including those relating to physician kickbacks and false claims for reimbursement.
Adverse action by an applicable regulatory agency the FDA could result in inability to produce our product in a cost-effective and timely manner, or at all, decreased sales, higher prices, lower margins, additional unplanned costs or actions, damage to our reputation, and could have material adverse effect on our reputation, business, results of operations, and financial condition.
Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock. 42 A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to our report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.
We are an “emerging growth company” under the JOBS Act of 2012 and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns. We are an “emerging growth company” under the JOBS Act of 2012 and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
Even to the extent our product and procedures using our product are currently covered and reimbursed by third-party private and public payors, adverse changes in coverage and reimbursement policies that affect our product, discounts, and number of implants used may also drive our prices down and harm our ability to market and sell our product.
As a result of this increased competition, we believe there will be continued and increased pricing pressure, resulting in lower gross margins, with respect to our product. 18 Even to the extent our product and procedures using our product are currently covered and reimbursed by third-party private and public payors, adverse changes in coverage and reimbursement policies that affect our product, discounts, and number of implants used may also drive our prices down and harm our ability to market and sell our product.
Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls. 43 If we fail to have effective controls and procedures for financial reporting in place, we could be unable to provide timely and accurate financial information and be subject to investigation by the SEC and civil or criminal sanctions.
If we fail to have effective controls and procedures for financial reporting in place, we could be unable to provide timely and accurate financial information and be subject to investigation by the SEC and civil or criminal sanctions.
Quarterly comparisons of our financial results may not always be meaningful and should not be relied upon as an indication of our future performance. 22 If we do not successfully implement our business strategy, our business and results of operations will be adversely affected. Our business strategy was based on assumptions about the market that might prove wrong.
If we do not successfully implement our business strategy, our business and results of operations will be adversely affected. Our business strategy was based on assumptions about the market that might prove wrong.
Because of our limited operating history, we may not have insight into trends that could emerge and negatively affect our business. As a result of these or other risks, our business strategy might not be successful. Our sales volumes and our operating results may fluctuate over the course of the year.
As a result of these or other risks, our business strategy might not be successful. 20 Our sales volumes and our operating results may fluctuate over the course of the year.
An accelerated shift of procedures using our products to ASCs as a result of the COVID-19 pandemic could adversely impact the average selling prices of our products and our revenues could suffer as a result. 17 If hospitals, clinicians, and other healthcare providers are unable to obtain coverage and reimbursement from third-party payors for procedures performed using our products, adoption of our products may be delayed, and it is unlikely that they will gain further acceptance.
If hospitals, clinicians, and other healthcare providers are unable to obtain coverage and reimbursement from third-party payors for procedures performed using our products, adoption of our products may be delayed, and it is unlikely that they will gain further acceptance.
In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our business and competitive position could be harmed.
If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our business and competitive position could be harmed. 38 Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement. These collaborations may not result in the development of products that achieve commercial success or result in significant revenue and could be terminated prior to developing any products.
We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement.
If passed into law, patent reform legislation currently pending in the U.S. Congress could significantly change the risks associated with bringing or defending a patent infringement lawsuit. For example, fee shifting legislation could require a non-prevailing party to pay the attorney fees of the prevailing party in some circumstances.
If passed into law, patent reform legislation currently pending in the U.S. Congress could significantly change the risks associated with bringing or defending a patent infringement lawsuit.
We may be unable to sell our products on a profitable basis if third-party payors deny coverage, continue to deny coverage or reduce their current levels of payment, or if our costs for the product increase faster than increases in reimbursement levels.
We may be unable to sell our products on a profitable basis if third-party payors deny coverage, continue to deny coverage or reduce their current levels of payment, or if our costs for the product increase faster than increases in reimbursement levels. 16 Many private payors refer to coverage decisions and payment amounts determined by the Centers for Medicare and Medicaid Services, or CMS, which administers the Medicare program, as guidelines for setting their coverage and reimbursement policies.
A loss of key personnel or their work product could hamper or prevent our ability to commercialize product candidates, which could have an adverse effect on our business, results of operations, and financial condition. 38 The medical device industry is characterized by patent litigation, and we could become subject to litigation that could be costly, result in the diversion of management’s time and efforts, require us to pay damages, and/or prevent us from developing or marketing our existing or future products.
The medical device industry is characterized by patent litigation, and we could become subject to litigation that could be costly, result in the diversion of management’s time and efforts, require us to pay damages, and/or prevent us from developing or marketing our existing or future products.
Our information technology systems are vulnerable to damage or interruption from: ● earthquakes, fires, floods, and other natural disasters; ● terrorist attacks and attacks by computer viruses or hackers; ● power losses; and ● computer systems, or Internet, telecommunications, or data network failures.
We will rely on our information technology systems to effectively manage: ● sales and marketing, accounting, and financial functions; ● inventory management; ● engineering and product development tasks; and ● our research and development data. 24 Our information technology systems are vulnerable to damage or interruption from: ● earthquakes, fires, floods, and other natural disasters; ● terrorist attacks and attacks by computer viruses or hackers; ● power losses; and ● computer systems, or Internet, telecommunications, or data network failures.
Additionally, if a healthcare company settles an investigation with the Department of Justice or other law enforcement agencies, it may need to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
Dealing with investigations can be time and resource consuming and can divert management’s attention from the business. Additionally, if a healthcare company settles an investigation with the Department of Justice or other law enforcement agencies, it may need to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be relative to their costs.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be relative to their costs.
Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of off-label use. Physicians may use our product off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.
Physicians may use our product off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.
Similar to Medicaid, many private payors’ coverage and payment may differ from one payer to another as well. We believe that some clinicians view the current Medicare reimbursement amount as insufficient for the procedure, given the work effort involved with the procedure, including the time to diagnose the patient and obtain prior authorization from the patient’s health insurer when necessary.
We believe that some clinicians view the current Medicare reimbursement amount as insufficient for the procedure, given the work effort involved with the procedure, including the time to diagnose the patient and obtain prior authorization from the patient’s health insurer when necessary. Many private payors require extensive documentation of a multi-step diagnosis before authorizing SI-Joint fusion for a patient.
Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry.
Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. At present, management has identified a material weakness due to lack of segregation of duties.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. 41 At present, management has identified a material weakness due to lack of segregation of duties. The lack of segregation of duties existed as a result of our having no employees until June 2021.
Furthermore, any quarterly or annual fluctuations in our operating results may, in turn, cause the price of our common stock to fluctuate substantially.
Furthermore, any quarterly or annual fluctuations in our operating results may, in turn, cause the price of our common stock to fluctuate substantially. Quarterly comparisons of our financial results may not always be meaningful and should not be relied upon as an indication of our future performance.
Many private payors require extensive documentation of a multi-step diagnosis before authorizing SI-Joint fusion for a patient. We believe that some private payors apply their own coverage policies and criteria inconsistently, and clinicians may experience difficulties in securing approval and coverage for sacroiliac fusion procedures.
We believe that some private payors apply their own coverage policies and criteria inconsistently, and clinicians may experience difficulties in securing approval and coverage for sacroiliac fusion procedures. Additionally, many private payors limit coverage for open SI-Joint fusion to trauma, tumors or extensive spine fusion procedures involving multiple levels.
To enforce compliance with the federal laws, the U.S. Department of Justice has increased its scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations can be time and resource consuming and can divert management’s attention from the business.
Actions under the federal False Claims Act may also be brought by whistleblowers under its qui tam provisions. 30 To enforce compliance with the federal laws, the U.S. Department of Justice has increased its scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.
Product liability lawsuits and claims, safety alerts, or product recalls, regardless of their ultimate outcome, could have a material adverse effect on our business and reputation, our ability to attract and retain customers and our results of operations or financial condition. 36 Although we maintain third-party product liability insurance coverage, it is possible that claims against us may exceed the coverage limits of our insurance policies or cause us to record a self-insured loss.
Product liability lawsuits and claims, safety alerts, or product recalls, regardless of their ultimate outcome, could have a material adverse effect on our business and reputation, our ability to attract and retain customers and our results of operations or financial condition.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 2012 Plan terminated in April 2022. There are 727,394 options issued and outstanding under the 2012 Plan that have not been exercised. These options are administered under the 2022 Plan. In January and February of 2022 our board of directors and our shareholders approved our 2022 Equity Incentive Plan (the “2022 Plan,” together with the 2012 Plan, the “Plans”).
Biggest change(b) Option Grants. None. (c) Warrants. None. (d) Issuance of Notes. None. 46 Securities Authorized for Issuance under Equity Compensation Plans In January and February 2022, our Board and our shareholders approved our 2022 Equity Incentive Plan (the “2022 Plan,” together with the 2012 Plan, the “Plans”).
We do not expect to pay cash dividends in the foreseeable future. Recent Sales of Unregistered Securities Set forth below is information as to all of our equity securities sold by us during our fiscal year ended December 31, 2023, which was not registered under the Securities Act of 1933, as amended. (a) Issuance of Capital Stock. None.
We do not expect to pay cash dividends in the foreseeable future. Recent Sales of Unregistered Securities Set forth below is information as to all of our equity securities sold by us during our fiscal year ended December 31, 2024, which was not registered under the Securities Act of 1933, as amended. (a) Issuance of Capital Stock. None.
The Board of Directors has the power to amend, suspend or terminate the Plans without stockholder approval or ratification at any time or from time to time.
The Board has the power to amend, suspend or terminate the Plans without stockholder approval or ratification at any time or from time to time.
Initially, the maximum number of shares of our common stock that may be subject to awards under the 2022 Plan are equal to (i) 1,600,000 plus (ii) the lesser of (a) 750,000 shares of our common stock and (b) the number of shares of our common stock subject to awards granted under the 2012 Plan that after the 2012 Plan is terminated are cancelled, expired or otherwise terminated without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest.
Initially, the maximum number of shares of our common stock that may be subject to awards under the 2022 Plan is equal to (i) 20,000 plus (ii) the lesser of (a) 75,000 shares of our common stock and (b) the number of shares of our common stock subject to awards granted under the 2012 Plan that after the 2012 Plan is terminated are canceled, expired or otherwise terminated without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest.
The maximum number of shares that are subject to awards under the 2022 is subject to an annual increase equal to the lesser of (i) 1,100,000 shares of our common stock; (ii) a number of shares of our common stock equal to 4% of the prior year’s maximum number or (iii) such number of shares of our common stock as determined by the 2022 Plan administrator.
The maximum number of shares that are subject to awards under the 2022 Plan is subject to an annual increase equal to the lesser of (i) 13,750 shares of our common stock, (ii) a number of shares of our common stock equal to 4% of the prior year’s maximum number and (iii) such number of shares of our common stock as determined by the 2022 Plan administrator.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 179,005 $ 42.54 37,486 Equity compensation plans not approved by security holders — $ — — Total 179,005 $ 42.54 37,486 Use of Proceeds from our Initial Public Offering of Common Stock Not applicable.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 31,546 $ 20.79 135,971 Equity compensation plans not approved by security holders — $ — — Total 31,546 $ 20.79 135,971 Use of Proceeds from our Initial Public Offering of Common Stock Not applicable.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is trading on the Nasdaq Capital Market under the symbol “TNON.” Holders As of March 29, 2024, we have issued and outstanding 3,726,974 shares of common stock issued and outstanding held by 64 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is trading on the Nasdaq Capital Market under the symbol “TNON.” Holders As of March 26, 2025, we have issued and outstanding 5,584,965 shares of common stock issued and outstanding held by 61 stockholders of record.
No change may be made that increases the total number of shares of our common stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year. 48 Equity Compensation Plan Information The table below sets forth information as of December 31, 2023.
No change may be made that increases the total number of shares of our common stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year.
Removed
We also have outstanding as of March 29, 2024: ● Warrants to purchase up to 9,600 shares of our common stock at an exercise price of $50.00 per share issued to our underwriters in our initial public offering; ● Warrants to purchase up to 1,918,000 shares of our common stock at an exercise price of $5.60 per share; ● Warrants to purchase up to 45,000 shares of our common stock at an exercise price of $1.94 per share: ● Warrants to purchase up to 415,468 shares of our common stock at an exercise price of $1.2705 per share; ● 256,968 shares of Series A Preferred Stock which are convertible into 2,569,680 shares of our common stock at a conversion price of $1.5125 per share; and ● Options and restricted stock units related to 228,684 shares of our common stock, 70,634 shares of which are vested as of December 31, 2023.
Added
We also have outstanding as of March 26, 2025: ● 2,445,700 shares of our common stock issuable pursuant to the exercise of our Series C-1 Warrants at $1.25 per share; ● 1,222,850 shares of our common stock issuable pursuant to the exercise of our Series C-2 Warrants at $1.25 per share; ● 788,587 shares of our common stock issuable pursuant to conversion of our Series A Preferred Stock; ● 108,074 shares of our common stock issuable pursuant to conversion of our Series B Preferred Stock; ● 48,187 shares of our common stock issuable upon the exercise of warrants issued to investors of our Series A Preferred Stock at $4.28 per share; ● 16,214 shares of our common stock issuable upon the exercise of warrants issued to investors of our Series B Preferred Stock at $4.28 per share; ● 5,625 shares of our common stock issuable upon the exercise of warrants issued to investors in our November 2023 private placement at $15.52 per share; ● 207,484 shares of our common stock issuable upon the exercise of warrants issued to investors in our June 2023 public offering at $25.168 per share; ● 1,200 shares of our common stock issuable upon the exercise of warrants issued to the underwriters in our initial public offering that closed on April 29, 2022 at $400.00 per share; and ● 31,546 shares of our common stock issuable pursuant to options and restricted stock units granted pursuant to our equity incentive plan.
Removed
(b) Option Grants. None. (c) Warrants. On November 21, 2023 we issued the Note Purchasers (as defined below) warrants to purchase 45,000 shares of our common stock at $1.94 per share. 47 (d) Issuance of Notes.
Added
On July 23, 2024, at our annual meeting, our stockholders voted to amend the 2022 Plan to increase the number of shares reserved for issuance under the 2022 Plan by 137,500 shares.
Removed
On November 21, 2023, we entered into a Securities Purchase Agreement (the “Secured Note Purchase Agreements”) with Ascent Special Ventures LLC and WZC Ascent Family Trust (together, the “Note Purchasers”), pursuant to which the Company agreed to sell, issue and deliver to the Note Purchasers, in a private placement offering, a total of $1,250,000 in secured notes (the “Secured Notes”) and warrants to purchase 45,000 shares of our common stock at an exercise price equal to $1.94 per share.
Added
Equity Compensation Plan Information The table below sets forth information as of December 31, 2024.
Removed
The Secured Notes accrued interest at 10% per annum and had a maturity date of November 21, 2024.
Removed
The Secured Notes were prepayable in cash or in exchange for Series A Preferred Stock having a stated value equal to the sum of the outstanding principal amount of the Secured Notes plus accrued and unpaid interest thereon so long as certain conditions were met including the Company receiving commitments from investors other than the Note Purchasers to purchase shares of Series A Preferred Stock having a stated value of at least $3,750,000.
Removed
On February 20, 2024, the Note Purchasers agreed with the Company to a complete prepayment of the Company’s obligations under the Secured Notes in exchange for Series A Preferred Stock and warrants prior to the Company receiving $3,750,000 in commitments to purchase shares of Series A Preferred Stock in exchange for the Note Purchasers receiving an additional 30,000 warrants.
Removed
Pursuant to this agreement the Note Purchasers received 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 Secured Notes were cancelled. Securities Authorized for Issuance under Equity Compensation Plans On October 1, 2012, the Board of Directors of the Company adopted the 2012 Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther Income (Expense), Net Other income and expenses have not been significant to date. 54 Results of Operations (in thousands, except percentages) Years Ended December 31, Consolidated Statements of Operations Data in Dollars: 2023 2022 Revenue $ 2,928 $ 691 Cost of goods sold 1,687 1,332 Gross profit (loss) 1,241 (641 ) Operating expenses: Research and development 3,163 2,828 Sales and marketing 6,778 7,833 General and administrative 7,027 7,423 Total operating expenses 16,968 18,084 Loss from operations (15,727 ) (18,725 ) Interest and other income (expense), net: Gain on investments 167 180 Interest expense (21 ) (354 ) Other expense — (18 ) Net loss $ (15,581 ) $ (18,917 ) Years Ended December 31, Consolidated Statements of Operations Data as a Percent of Revenue: 2023 2022 Revenue 100 % 100 % Cost of goods sold 58 193 Gross profit (loss) 42 (93 ) Operating expenses: Research and development 108 409 Sales and marketing 231 1,134 General and administrative 240 1,074 Total operating expenses 580 2,617 Loss from operations (537 ) (2,710 ) Interest and other income (expense), net: Gain on investments 6 26 Interest expense (1 ) (51 ) Other expense — (3 ) Net loss (532 )% (2,738 )% Comparison of the years ended December 31, 2023 and 2022 (in thousands, except percentages) Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin Years Ended December 31, 2023 2022 $ Change % Change Revenue $ 2,928 $ 691 $ 2,237 324 % Cost of goods sold 1,687 1,332 355 27 % Gross profit (loss) $ 1,241 $ (641 ) $ 1,882 (294 )% Gross profit (loss) percentage 42 % (93 )% Revenue.
Biggest changeOther Income (Expense), Net Other income and expenses have not been significant to date. 51 Results of Operations (in thousands, except percentages) Years Ended December 31, Consolidated Statements of Operations Data in Dollars: 2024 2023 Revenue $ 3,277 $ 2,928 Cost of goods sold 1,566 1,687 Gross profit 1,711 1,241 Operating expenses: Research and development 2,603 3,163 Sales and marketing 5,109 6,778 General and administrative 7,765 7,027 Total operating expenses 15,477 16,968 Loss from operations (13,766 ) (15,727 ) Interest and other income (expense), net: Gain on investments 183 167 Interest expense (34 ) (21 ) Other expense (56 ) — Net loss $ (13,673 ) $ (15,581 ) Years Ended December 31, Consolidated Statements of Operations Data as a Percent of Revenue: 2024 2023 Revenue 100 % 100 % Cost of goods sold 48 58 Gross profit 52 42 Operating expenses: Research and development 79 108 Sales and marketing 156 231 General and administrative 237 240 Total operating expenses 472 580 Loss from operations (420 ) (537 ) Interest and other income (expense), net: Gain on investments 6 6 Interest expense (1 ) (1 ) Other expense (2 ) — Net loss (417 )% (532 )% Comparison of the years ended December 31, 2024 and 2023 (in thousands, except percentages) Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin Years Ended December 31, 2024 2023 $ Change % Change Revenue $ 3,277 $ 2,928 $ 349 12 % Cost of goods sold 1,566 1,687 (121 ) (7 )% Gross profit $ 1,711 $ 1,241 $ 470 38 % Gross profit percentage 52 % 42 % Revenue.
Revenue from sales of The Catamaran System fluctuates based on volume of cases (procedures performed), discounts, and the number of implants used for a particular patient. Similar to other orthopedic companies, our revenue can also fluctuate from quarter to quarter due to a variety of factors, including reimbursement, changes in independent sales representatives and physician activities.
Revenue from sales of The Catamaran System fluctuates based on volume of cases (procedures performed), discounts, rebates, and the number of implants used for a particular patient. Similar to other orthopedic companies, our revenue can also fluctuate from quarter to quarter due to a variety of factors, including reimbursement, changes in independent sales representatives and physician activities.
Off-Balance Sheet Arrangements As of December 31, 2023 and 2022, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Off-Balance Sheet Arrangements As of December 31, 2024 and 2023, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
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. 51 The Black-Scholes option-pricing model requires the use of subjective assumptions to determine the fair value of stock-based awards.
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. 49 The Black-Scholes option-pricing model requires the use of subjective assumptions to determine the fair value of stock-based awards.
Research and Development Expenses Our research and development expenses primarily consist of engineering, product development, regulatory expenses, and consulting services, outside prototyping services, outside research activities, materials, and other costs associated with development of our product. Research and development expenses also include related personnel and consultants’ compensation and stock-based compensation expense.
Research and Development Expenses Our research and development expenses primarily consist of engineering, product development, regulatory expenses, and consulting services, outside prototyping services, outside research activities, materials, and other costs associated with the development and refinement of our product. Research and development expenses also include related personnel and consultants’ compensation and stock-based compensation expense.
The authorized number of shares and the par value per share of the Company’s common stock were not affected by the 2022 Reverse Stock Split or the 2023 Reverse Stock Split. 50 Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our audited consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles (“U.S.
The authorized number of shares and the par value per share of our common stock were not affected by the 2023 Reverse Stock Split or the 2024 Reverse Stock Split. 48 Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our audited consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles (“U.S.
All historical share and per share amounts reflected throughout this document have been adjusted to reflect the 2022 Reverse Stock Split and the 2023 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.
Our sales and marketing expenses may fluctuate from period to period due to timing of sales and marketing activities related to the commercial launch of our product.
Our sales and marketing expenses may fluctuate from period to period due to the timing of sales and marketing activities related to the commercial activity of our product.
The performance obligation is the delivery of the products along with the completion of the surgery and therefore, revenue is recognized upon delivery to the customers and completion of the surgery, net of rebates and price discounts. We account for rebates and price discounts as a reduction to revenue, calculated based on the terms agreed to with the customer.
The performance obligation is the delivery of the products along with the completion of the surgery and therefore, revenue is recognized upon delivery to the customers and completion of the surgery, net of rebates and price discounts. We account for rebates and price discounts as a reduction to revenue.
Our warranty provides that our 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.
We do not sell any warranties on a standalone basis. Our warranty provides that our 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.
We expect our sales and marketing expenses to increase in absolute dollars with the commercial launch of The Catamaran System resulting in higher commissions and salaries, increased clinician and sales representative training, and the start of clinical studies to gain wider clinician adoption of The Catamaran System.
We expect our sales and marketing expenses to increase in absolute dollars with the increased sales of The Catamaran System resulting in higher commissions and salaries, increased clinician and sales representative training, and the cost to complete our clinical study to gain wider clinician adoption of The Catamaran System.
Cash provided by investing activities for the year ended December 31, 2023 consisted primarily of the net sales of short-term investments of approximately $6.5 million as used those amounts to fund operations, partially offset by purchases of property and equipment of $0.4 million as we acquired the components for our surgical tray sets.
Cash provided by investing activities for the year ended December 31, 2023 consisted primarily of the net sales of short-term investments ($6,503) to fund operations, partially offset by purchases of property and equipment ($361) as we acquired the components for our surgical tray sets.
As of December 31, 2023, we had an accumulated deficit of approximately $55.1 million. To date, we have financed our operations primarily through an initial public offering, private placements of equity securities, certain debt-related financing arrangements, and sales of our product.
As of December 31, 2024, we had an accumulated deficit of approximately $68.7 million. To date, we have financed our operations primarily through public equity offerings, private placements of equity securities, certain debt-related financing arrangements, and sales of our product.
The increase in revenue for the year ended December 31, 2023 as compared to 2022 was primarily due to an increase of 312% in the number of surgical procedures in which the Catamaran System was used. Cost of Goods Sold, Gross Profit, and Gross Margin.
The increase in revenue for the year ended December 31, 2024 as compared to 2023 was primarily due to an increase in revenue per surgical procedure on a 0% change in the number of surgical procedures in which The Catamaran System was used. Cost of Goods Sold, Gross Profit, and Gross Margin.
Cash provided by financing activities for the year ended December 31, 2023 consisted of the $5.3 million, net of relevant expenses, received from our offerings of stock in 2023 in addition to $1.2 million from the issuance of the Convertible Notes.
Cash provided by financing activities for the year ended December 31, 2023 consisted of the net proceeds received from our offerings of stock in 2023 ($5,303) in addition to proceeds from the issuance of the Convertible Notes ($1,250).
Gain on investments for the year ended December 31, 2023 decreased as compared to 2022 due to interest on our lower amounts of investments in money market and corporate debt securities. Interest Expense.
Gain on investments for the year ended December 31, 2024 increased as compared to 2023 due to interest on our higher amounts of investments in money market and corporate debt securities. Interest Expense. Interest expense for the year ended December 31, 2024 increased as compared to 2023 primarily due to the convertible debt. Other Expense, Net .
Reverse Stock Splits On April 6, 2022, the Company effected a 1-for-2 reverse stock split (the “2022 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.
On September 6, 2024, we effected a 1-for-8 reverse stock split (the “2024 Reverse Stock Split”) by filing an amendment to the our Amended and Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State.
The 2022 Reverse Stock Split combined every two shares of our common stock issued and outstanding immediately prior to effecting the 2022 Reverse Stock Split into one share of common stock.
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.
Our 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.
Our 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. Common Stock Warrants We account for warrants for shares of common stock as equity or liabilities in accordance with the accounting guidance for derivatives.
We recognize compensation costs related to stock-based awards granted to employees, directors, and consultants including stock options, based on the estimated fair value of the awards on the date of grant. We estimate the grant date fair value, and the resulting stock-based compensation, using the Black-Scholes option-pricing model.
We recognize 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, we estimate grant date fair value based on the closing market price on the date of grant.
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.
We have devoted substantially all of our resources to research and development, regulatory matters and sales and marketing of our product. Reverse Stock Splits On November 2, 2023, we effected a 1-for-10 reverse stock split (the “2023 Reverse Stock Split”) by filing an amendment to our Amended and Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State.
Cost of Goods Sold, Gross Profit, and Gross Margin We utilize contract manufacturers for production of The Catamaran System implants and Catamaran Tray Sets. Cost of goods sold consists primarily of costs of the components of The Catamaran System implants and instruments, quality inspection, packaging, scrap and inventory obsolescence, as well as distribution-related expenses such as logistics and shipping costs.
Cost of goods sold consists primarily of costs of the components of The Catamaran System implants and instruments, overhead related to operation personnel and facility costs, quality inspection, packaging, scrap and inventory obsolescence, as well as distribution-related expenses such as logistics and shipping costs.
Cash Flows (in thousands, except percentages) The following table sets forth the primary sources and uses of cash for each of the periods presented below: Years Ended December 31, 2023 2022 $ Change % Change Net cash (used in) provided by: Operating activities $ (12,183 ) $ (12,025 ) $ (158 ) 1 % Investing activities 6,142 (2,884 ) 9,026 (313 )% Financing activities 6,302 14,114 (7,812 ) (55 )% Effect of foreign currency translation on cash flow 38 7 31 (443 )% Net increase (decrease) in cash and cash equivalents $ 299 $ (788 ) $ 1,087 (138 )% 57 The increase in net cash used in operating activities for the year ended December 31, 2023 as compared to 2022 was primarily attributable to decreases in our accrued expenses ($2,387) and accounts payable ($189) and increases in prepaid expenses ($244) and accounts receivable ($138), partially offset by our decreased net loss ($3,336), adjusted for increases in non-cash stock-based compensation expenses ($1,248) and a decrease in common stock issued for services ($1,561).
Cash Flows (in thousands, except percentages) The following table sets forth the primary sources and uses of cash for each of the periods presented below: Years Ended December 31, 2024 2023 $ Change % Change Net cash (used in) provided by: Operating activities $ (9,878 ) $ (12,183 ) $ 2,305 19 % Investing activities (186 ) 6,142 (6,328 ) (103 )% Financing activities 14,125 6,302 7,823 124 % Effect of foreign currency translation on cash flow 46 38 8 21 % Net increase in cash and cash equivalents $ 4,107 $ 299 $ 3,808 1274 % The decrease in net cash used in operating activities for the year ended December 31, 2024 as compared to 2023 was primarily attributable to our decreased net loss ($1,908) and decreased prepaid expenses ($484) and increased depreciation and amortization ($209), partially offset increases in accounts receivable ($96) and decreases in non-cash stock-based compensation expenses ($300).
Our gross margins have been and will continue to be affected by a variety of factors, including the cost to have our product manufactured for us, pricing pressure from increasing competition, and the factors described above impacting our revenue. 53 Operating Expenses Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses.
We anticipate that certain of our cost of goods sold will increase in absolute dollars as case levels increase. Our gross margins have been and will continue to be affected by a variety of factors, including the cost to have our product manufactured for us, pricing pressure from increasing competition, and the factors described above impacting our revenue.
Revenue Recognition Our revenue is derived from the sale of our products to medical groups and hospitals in the United States.
For more detail on our critical accounting policies, see Note 2 to our consolidated financial statements. Revenue Recognition Our revenue is derived from the sale of our products to medical groups and hospitals in the United States.
Personnel costs are the most significant component of operating expenses and consist of consulting expenses, salaries, sales commissions and other cash and stock-based compensation related expenses. We expect operating expenses to increase in absolute dollars as we continue to invest and grow our business.
Operating Expenses Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of consulting expenses, salaries, sales commissions and other cash and stock-based compensation related expenses.
Research and development expenses for the year ended December 31, 2023 increased as compared to 2022 primarily due to increased stock-based compensation ($509) and payroll expenses ($49), partially offset by decreased professional fees ($137). Sales and Marketing Expenses.
Research and development expenses for the year ended December 31, 2024 decreased as compared to 2023 primarily due to decreased professional fees ($528), stock-based compensation ($73) and payroll expenses ($39) as we move our focus from research to sustaining our Catamaran portfolio. Sales and Marketing Expenses.
General and administrative expenses for the year ended December 31, 2023 decreased as compared to 2022 primarily due to a legal settlement accrual in 2022 ($574) and decreased professional service fees ($852), partially offset by increased stock-based compensation ($639) and payroll expenses ($271).
General and administrative expenses for the year ended December 31, 2024 increased as compared to 2023 primarily due to increased insurance costs ($331), legal and professional service fees ($289), payroll and employee expenses ($146), and bad debt expense ($41), partially offset by decreases in stock-based compensation ($147) due to continued operating expenses.
Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $2.4 million. Since inception, we have financed our operations through private placements of preferred stock, debt financing arrangements, our initial public offering and the sale of our products. As of December 31, 2023, we had outstanding debt of $1.2 million.
Since inception, we have financed our operations through private placements of preferred stock, debt financing arrangements, our initial public offering, additional stock offerings and the sale of our products. As of December 31, 2024, we had no outstanding debt. In March 2025, we raised net proceeds of $2.7 million from the exercise of warrants under an inducement agreement.
Gain (Loss) on Investments, Interest Expense and Other Income (Expense), Net Years Ended December 31, 2023 2022 $ Change % Change Gain on investments $ 167 $ 180 $ (13 ) 7 % Interest expense (21 ) (354 ) 333 (94 )% Other expense, net — (18 ) 18 100 % Total operating expenses $ 146 $ (192 ) $ 338 Gain on Investments.
Gain on Investments, Interest Expense and Other Expense, Net Years Ended December 31, 2024 2023 $ Change % Change Gain on investments $ 183 $ 167 $ 16 10 % Interest expense (34 ) (21 ) (13 ) 62 % Other expense, net (56 ) — (56 ) Total operating expenses $ 93 $ 146 $ (53 ) Gain on Investments.
As of December 31, 2023, we had an accumulated deficit of $55.1 million. During the years ended December 31, 2023 and 2022, we incurred net losses of $15.6 million and $18.9 million, respectively, and expect to incur additional losses in the future. We have not achieved positive cash flow from operations to date.
Pursuant to the agreements, we received proceeds, net of financial advisor fees and other transaction expenses, of $2,290. 53 As of December 31, 2024, we had an accumulated deficit of $68.7 million and we expect to incur additional losses in the future. We have not achieved positive cash flow from operations to date.
We estimate the fair value of our warrants for shares of common stock by using the Black-Scholes option pricing model. Warrants classified as equity are recorded as additional paid-in capital on the consolidated balance sheet and no further adjustments to their valuation are made after the issuance of the warrants.
Warrants classified as equity are recorded as additional paid-in capital on the consolidated balance sheet and no further adjustments to their valuation are made after the issuance of the warrants. 50 Financial Operations Overview Revenue We derive substantially all our revenue from sales of The Catamaran System to a limited number of clinicians.
Historically, there have been no significant rebates or price discounts. 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.
Sales prices are specified prior to the transfer of control to the customer, via either the customer contract, agreed price list, purchase order, or written communication with the customer. For direct sales to end-user customers, our standard payment terms are generally net 30 days. We offer our standard warranty to all customers.
Gross profit (loss) and gross margin percentage improved due to higher revenue associated with the increase in the number of surgical procedures, operating leverage created due to lower relative fixed costs and the absorption of more overhead into our standard cost. 55 Operating Expenses Years Ended December 31, 2023 2022 $ Change % Change Research and development $ 3,163 $ 2,828 $ 335 12 % Sales and marketing 6,778 7,833 (1,055 ) (13 )% General and administrative 7,027 7,423 (396 ) (5 )% Total operating expenses $ 16,968 $ 18,084 $ (1,116 ) Research and Development Expenses.
The change in cost of goods sold for the year ended December 31, 2024 as compared to 2023 was due to the absorption of production overhead costs into our standard cost and operating leverage created due to lower relative fixed costs. 52 Operating Expenses Years Ended December 31, 2024 2023 $ Change % Change Research and development $ 2,603 $ 3,163 $ (560 ) (18 )% Sales and marketing 5,109 6,778 (1,669 ) (25 )% General and administrative 7,765 7,027 738 11 % Total operating expenses $ 15,477 $ 16,968 $ (1,491 ) (9 )% Research and Development Expenses.
Sales and marketing expenses for the year ended December 31, 2023 decreased as compared to 2022 primarily due to payments in 2022 in association with the termination of the SpineSource sales agreement ($3,611) and decreased consulting and professional fees ($1,190), partially offset by increased payroll expenses ($2,388), sales commissions ($1,388) and stock-based compensation ($100).
Sales and marketing expenses for the year ended December 31, 2024 decreased as compared to 2023 primarily due to SpineSource transition fees in 2023 ($932), decreased payroll and employee expenses ($499), and consulting and professional fees ($178), partially offset by increased commission expense ($21) due to restructuring of our sales operations. General and Administrative Expenses .
Cash used in investing activities for the year ended December 31, 2022 consisted primarily of the net purchase of short-term investments of approximately $2.0 million as we invested a portion of our IPO proceeds, in addition to purchases of property and equipment of $0.8 million as we acquired the components for our surgical tray sets.
Cash used in investing activities for the year ended December 31, 2024 related to purchases of property and equipment ($186).
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We have devoted substantially all of our resources to research and development, regulatory matters and sales and marketing of our product.
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For stock options, we estimate the grant date fair value using the Black-Scholes option-pricing model.
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Similarly, shares of Series A and Series B Preferred Stock became convertible into common stock at a conversion rate of one-to-0.5, subject to adjustments for stock dividends, splits, combinations, and similar events. No fractional shares were issued in connection with the 2022 Reverse Stock Split.
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We estimate the fair value of our warrants for shares of common stock by using the Black-Scholes option pricing model.
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For more detail on our critical accounting policies, see Note 2 to our consolidated financial statements. Investments We classify our investments in marketable debt securities as available-for-sale and record them at fair value in our consolidated balance sheets. Net unrealized gains and losses are recorded as a separate component of stockholders’ equity.
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Cost of Goods Sold, Gross Profit, and Gross Margin We utilize contract manufacturers for production of The Catamaran System implants and Catamaran Tray Sets.
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Realized gains and losses are recorded in the consolidated statements of operations and comprehensive loss. We determine realized gains or losses on the sale of marketable debt securities on a specific identification method and record such gains and losses as a component of other income (expense), net.
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We expect operating expenses to increase in absolute dollars as we continue to invest and grow our business. Sales and Marketing Expenses Sales and marketing expenses primarily consist of salaries, commissions, stock-based compensation expense and travel and entertainment expenses of our sales and market personnel along with commissions paid to our independent distributors.
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Prior to October 2022, we had an agreement in place with a national distributor, which included standard terms that did not allow for payment contingent on resale of the product, obtaining financing, or other terms that could impact the distributor’s payment obligation. We billed and collected directly with the end-user customers and recognized revenue based on the gross sales price.
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Other expense, net for the year ended December 31, 2024 was related to foreign exchange losses on the liquidation of our Swiss subsidiary. Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $6.5 million.
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For direct sales to end-user customers, our standard payment terms are generally net 30 days. We offer our standard warranty to all customers. We do not sell any warranties on a standalone basis.
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Under the inducement agreement, the holder of the existing warrants to purchase an aggregate of 2,445,700 agreed to exercise the warrants at a reduced exercise price of $1.25 per share in consideration for our agreement to issue new unregistered five-year 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 to purchase up to an aggregate of 1,222,850 shares of common stock at an exercise price of $1.25 per share.
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Prior to our initial public offering, the estimated fair value of our common stock was determined at each valuation date by a third-party independent valuation firm in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.
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On March 25, 2025, we entered into a securities purchase agreement for the issuance of 733,500 shares of our common stock (or common stock equivalents in lieu thereof) in a registered direct offering at a purchase price of $2.00 per share.
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These valuations took into account numerous factors, including developments at our company and market conditions. The May 21, 2021 valuation used a hybrid method which combines the Probability Weighted Expected Return Method (“PWERM”) with the OPM.
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In a concurrent private placement, we also agreed to issue to the same investor warrants to purchase up to 733,500 shares of our 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.
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The PWERM considers a set of discrete potential liquidity scenarios for the Company, the value common stock would receive in each scenario, and the time required and risk inherent in achieving those values. The May 21, 2021 valuation examined the following scenarios for the Company: (i) an IPO; (ii) remaining private and raising capital; and (iii) dissolution.
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Pursuant to the agreements, we received proceeds, net of financial advisor fees and other transaction expenses, of $1,234. Also on March 25, 2025, we entered into a securities purchase agreement for the issuance of 1,271,500 shares of our common stock (or common stock equivalents in lieu thereof) in a registered direct offering at a purchase price of $2.00 per share.
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Within the IPO scenario, 100% weighting was placed on the Market Approach for determining the enterprise value. The Market Approach assumes that businesses operating in the same industry will share similar characteristics, and therefore a comparison of the business to similar businesses whose financial information is publicly available may provide a reasonable basis to estimate a subject business’s value.
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In a concurrent private placement, we also agreed to issue to the same investor warrants to purchase up to 1,271,500 shares of our 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.
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The equity value in the IPO scenario was estimated considering guideline IPOs, the anticipated size of the Company’s offering, and forecasted cash and debt. The estimated common stock value as of the IPO was present valued using a discount rate of 22.4% based on Company’s WACC, less an adjustment of 2.0% to reflect the risk reduction of an IPO event.
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As we attempt to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all.
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The August 31, 2021 valuation used a hybrid method which combines the Probability Weighted Expected Return Method (“PWERM”) with the OPM. The PWERM considers a set of discrete potential liquidity scenarios for the Company, the value common stock would receive in each scenario, and the time required and risk inherent in achieving those values.
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Cash provided by financing activities for the year ended December 31, 2024 consisted primarily of net proceeds from the issuance of common stock and warrants ($3,846), the exercise of warrants under the inducement agreement ($4,306), the issuance of Series A Convertible Preferred Stock ($2,567) and Series B Convertible Preferred Stock ($489) and from issuances of common stock ($2,105).
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The August 31, 2021 valuation examined the following scenarios for the Company: (i) an IPO; (ii) remaining private and raising capital; and (iii) dissolution. Within the IPO scenario, 100% weighting was placed on the Market Approach for determining the enterprise value.
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The Market Approach assumes that businesses operating in the same industry will share similar characteristics, and therefore a comparison of the business to similar businesses whose financial information is publicly available may provide a reasonable basis to estimate a subject business’s value.
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The equity value in the IPO scenario was estimated considering guideline IPOs, the anticipated size of the Company’s offering, and forecasted cash and debt. The estimated common stock value as of the IPO was present valued using a discount rate of 32.0% based on Company’s WACC, less an adjustment of 5.0% to reflect the risk reduction of an IPO event.
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The October 28, 2021 valuation used a hybrid method which combines the Probability Weighted Expected Return Method (“PWERM”) with the OPM. The PWERM considers a set of discrete potential liquidity scenarios for the Company, the value common stock would receive in each scenario, and the time required and risk inherent in achieving those values.
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The October 28, 2021 valuation examined the following scenarios for the Company: (i) an IPO; (ii) remaining private and raising capital; and (iii) dissolution. Within the IPO scenario, 100% weighting was placed on the Market Approach for determining the enterprise value.
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The Market Approach assumes that businesses operating in the same industry will share similar characteristics, and therefore a comparison of the business to similar businesses whose financial information is publicly available may provide a reasonable basis to estimate a subject business’s value.
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The equity value in the IPO scenario was estimated considering guideline IPOs, the anticipated size of the Company’s offering, and forecasted cash and debt.
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The estimated common stock value as of the IPO was present valued using a discount rate of 27.2% based on Company’s WACC, less an adjustment of 5.0% to reflect the risk reduction of an IPO event. 52 In determining the enterprise value within the remain private scenario, 100% weighting was applied to the DCF Method under the income approach, in the same manner as in the December 31, 2018, 2019, and 2020 valuations.
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The discount rate in this scenario was determined to be 22.4% based on Company’s WACC. Adjustments were made to the enterprise value for the Company’s cash and debt as of the valuation date to determine the equity value in this scenario. The OPM was used to allocate the equity value to our common stock.
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The equity volatility rate was determined to be 70.0% based on the volatility rate of certain comparable public companies. DLOMs of (i) 10.0% in the IPO scenario and (ii) 30.0% in the remaining private scenario were applied to the common stock.
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Following the closing of the initial public offering, the fair value of our common stock was determined based on the closing price of our common stock on the Nasdaq Capital Market. Common Stock Warrants We account for warrants for shares of common stock as equity or liabilities in accordance with the accounting guidance for derivatives.
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Income Taxes We account for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income.
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We assess the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. We did not record a provision or benefit for income taxes during the twelve months ended December 31, 2023 or 2022.
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We continue to maintain a full valuation allowance against our net deferred tax assets. We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities.
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Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.
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As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment.
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Judgments concerning the recognition and measurement of a tax benefit may change as new information becomes available. The Tax Reform Act of 1986 limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company.
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We have not completed a study to determine whether any ownership changes per the provisions of Section 382 of the Tax Reform Act of 1986, as amended, as well as similar state provisions, have occurred. Financial Operations Overview Revenue We derive substantially all our revenue from sales of The Catamaran System to a limited number of clinicians.
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We anticipate that our cost of goods sold will increase in absolute dollars as case levels increase.
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Sales and Marketing Expenses Sales and marketing expenses primarily consist of independent sales representative training and commissions in addition to salaries and stock-based compensation expense. Starting in May 2021, commissions to our national distributor have been based on a percentage of sales and we anticipate that these commissions will make up a significant portion of our sales and marketing expenses.

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