Tenon Medical, Inc 10-Q for FY2023 Q1

Tenon Medical, Inc. (TNON)

10-Q 2023-05-09 For: 2023-03-31

Added on April 12, 2026

About this 10-Q

Tenon Medical, Inc filed this 10-Q on May 9, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $433K; up 509.9% from $71K a year earlier
Net loss: $4.83M; compared with a net loss of $2.35M a year earlier
Diluted EPS: -$0.43; compared with -$2.38 a year earlier

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


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

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

Large accelerated filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	
		Emerging growth company	

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	21
SIGNATURES		23

		Our ability to effectively operate our business segments;

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

	March 31,			December 31,
	2023			2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,179		$	2,129
Short-term investments		1,737			6,441
Accounts receivable		316			228
Inventory		416			415
Prepaid expenses		193			134
Total current assets		5,841			9,347
Fixed assets, net		852			793
Deposits		51			51
Operating lease right-of-use asset		818			873
Deferred offering costs		67			25
TOTAL ASSETS	$	7,629		$	11,089

Liabilities and Stockholders’ EQUITY
Current liabilities:
Accounts payable	$	928		$	550
Accrued expenses		530			717
Current portion of accrued commissions		1,059			1,035
Current portion of operating lease liability		235			228
Total current liabilities		2,752			2,530
Accrued commissions, net of current portion		1,781			1,624
Operating lease liability, net of current portion		622			683
Total liabilities		5,155			4,837

Commitments and contingencies (Note 8)
Stockholders’ equity (deficit):
Common stock, $0.001 par value; 130,000,000 shares authorized at March 31, 2023 and December 31, 2022; 11,251,299 and 11,236,801 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		11			11
Additional paid-in capital		46,873			45,833
Accumulated deficit		(44,322	)		(39,492	)
Accumulated other comprehensive loss		(88	)		(100	)
Total stockholders’ equity		2,474			6,252
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,629		$	11,089

	Three Months Ended March 31,
	2023			2022
Revenue	$	433		$	71
Cost of revenue		480			275
Gross Loss		(47	)		(204	)

Operating Expenses
Research and development		834			562
Sales and marketing		2,026			276
General and administrative		1,979			1,037
Total Operating Expenses		4,839			1,875

Loss from Operations		(4,886	)		(2,079	)

Other Income (Expense)
Gain on investments		56			1
Interest expense		—			(274	)
Other income (expense)		—			(1	)
Total Other Income (Expense), net		56			(274	)
Net Loss	$	(4,830	)	$	(2,353	)
Net Loss Per Share of Common Stock
Basic and diluted	$	(0.43	)	$	(2.38	)

Weighted Average Shares of Common Stock Outstanding
Basic and diluted		11,242			990

Consolidated Statements of Comprehensive Loss:
Net loss	$	(4,830	)	$	(2,353	)
Unrealized gain on investments		13			—
Foreign currency translation adjustment		(1	)		—
Total Comprehensive Loss	$	(4,818	)	$	(2,353	)

	Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Total
Balance at January 1, 2023		—	$	—		—	$	—		11,236,801	$	11	$	45,833	$	(39,492	)	$	(100	)	$	6,252
Stock-based compensation expense		—		—		—		—		—		—		1,040		—			—			1,040
Release of restricted stock units		—		—		—		—		14,498		—		—		—			—			—
Other comprehensive income		—		—		—		—		—		—		—		—			12			12
Net loss		—		—		—		—		—		—		—		(4,830	)		—			(4,830	)
Balance at March 31, 2023		—	$	—		—	$	—		11,251,299	$	11	$	46,873	$	(44,322	)	$	(88	)	$	2,474


Balance at January 1, 2022		2,550,763	$	12,367		491,222	$	1,272		989,954	$	1	$	113	$	(20,575	)	$	(91	)	$	(20,552	)
Stock-based compensation expense		—		—		—		—		—		—		169		—			—			169
Net loss		—		—		—		—		—		—		—		(2,353	)		—			(2,353	)
Balance at March 31, 2022		2,550,763	$	12,367		491,222	$	1,272		989,954	$	1	$	282	$	(22,928	)	$	(91	)	$	(22,736	)

	Three Months Ended March 31,
	2023			2022
Cash Flows from Operating Activities
Net loss	$	(4,830	)	$	(2,353	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest expense		—			274
Stock-based compensation expense		1,040			169
Depreciation and amortization		25			10
Amortization of operating right-of-use asset		55			51
Increase (decrease) in cash resulting from changes in:
Accounts receivable		(88	)		11
Inventory		(1	)		(414	)
Prepaid expenses and other assets		(95	)		5
Accounts payable		378			(51	)
Accrued expenses		(6	)		(118	)
Operating lease liability		(54	)		(48	)
Net cash used in operating activities		(3,576	)		(2,464	)

Cash Flows from Investing Activities
Sales of short-term investments		4,753			4,404
Purchases of short-term investments		—			—
Purchases of property and equipment		(84	)		(128	)
Net cash provided by investing activities		4,669			4,276

Cash Flows from Financing Activities
Deferred offering costs		(42	)		(54	)
Net cash used in financing activities		(42	)		(54	)

Effect of foreign currency translation on cash flow		(1	)		2
Net Increase in Cash and Cash Equivalents		1,050			1,760

Cash and Cash Equivalents at Beginning of Period		2,129			2,917
Cash and Cash Equivalents at End of Period	$	3,179		$	4,677

	March 31, 2023		March 31, 2022
Outstanding restricted stock units		1,304,032		—
Outstanding stock options		974,344		727,394
Outstanding warrants		96,000		25,000
Common shares convertible from notes payable		—		2,118,591
Common shares convertible from preferred stock		—		1,520,996
Total		2,374,376		4,391,981

	Level 2
Corporate debt securities:
March 31, 2023	$	1,737
December 31, 2022	$	6,441

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate debt securities:
March 31, 2023	$	1,740	$	—	$	(3	)	$	1,737
December 31, 2022	$	6,457	$	—	$	(16	)	$	6,441

	March 31, 2023			December 31, 2022
Construction in progress	$	530		$	601
Catamaran t ray s ets		348			193
IT e quipment		556			56
Lab e quipment		14			14
Office f urniture		9			9
Fixed assets, gross		957			873
Less: accumulated depreciation		(105	)		(80	)
Fixed assets, net	$	852		$	793

	March 31, 2023		December 31, 2022
Accrued compensation	$	321	$	452
Other accrued expenses		209		265
Total accrued expenses	$	530	$	717

2023	$	221
2024		301
2025		310
2026		144
Total lease payments		976
Less: imputed interest		(119	)
Present value of operating lease liabilities	$	857

Cash paid for operating leases for the three months ended March 31, 2023	$	72
Cash paid for operating leases for the three months ended March 31, 2022	$	70
Remaining lease term - operating leases (in years)		3.25
Average discount rate - operating leases		8.0	%

	Number of Shares Subject to Outstanding Stock Options		Weighted Average Exercise Price p er Share		Number of Outstanding Restricted Stock Units			Weighted A verage Grant Date Fair Value per Share
Outstanding at December 31, 2022		898,844	$	4.74		1,318,530		$	7.93
Granted		75,500	$	2.32		—			—
Released		—		—		(14,498	)	$	2.75
Forfeited		—		—		—			—
Outstanding at March 31, 2023		974,344	$	4.55		1,304,032		$	7.99

	2023
Balance at December 3 1, 2022	$	2,560
Amounts paid during 2023		(77	)
Accretion		204
Balance at March 31, 2023	$	2,687

	Three Months Ended March 31,
Consolidated Statements of Operations Data:	2023			2022
Revenue	$	433		$	71
Cost of goods sold		480			275
Gross (loss) profit		(47	)		(204	)
Operating expenses:
Research and development		834			562
Sales and marketing		2,026			276
General and administrative		1,979			1,037
Total operating expenses		4,839			1,875
Loss from operations		(4,886	)		(2,079	)
Interest and other income (expense), net:
Gain on investments		56			1
Interest expense		—			(274	)
Other income (expense)		—			(1	)
Net loss	$	(4,830	)	$	(2,353	)

	Payments Due By Period (In thousands)
			Less than						More than
	Total		1 year		1-3 years		4-5 years		5 years
Operating leases	$	976	$	221	$	611	$	144	$	—
Purchase obligations		—		—		—		—		—
Total	$	976	$	221	$	611	$	144	$	—

Exhibit Number		Description

3.1#		Amended and Restated Certificate of Incorporation of the Registrant.

3.2#		Amended and Restated Bylaws of the Registrant.

3.3#		Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant.

3.4#		Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant.

3.5#		Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant.

3.6#		Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant.

3.7#		Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant.

3.8#		Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant.

31.1*		Rule 13a-14(a)/15d-14(a) Certification of the President and Chief Executive Officer of Tenon Medical, Inc.

31.2*		Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of Tenon Medical, Inc.

32.1**		Section 1350 Certification of the President and Chief Executive Officer of Tenon Medical, Inc.

32.2**		Section 1350 Certification of the Chief Financial Officer of Tenon Medical, Inc.

101.INS***		Inline XBRL Instance Document

101.SCH***		Inline XBRL Taxonomy Extension Schema Document

101.CAL***		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF***		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB***		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE***		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	TENON MEDICAL, INC.

Dated: May 9, 2023	/s/ Steven M. Foster
	Steven M. Foster
	Chief Executive Officer and President, Director (Principal Executive Officer)

Dated: May 9, 2023	/s/ Steven Van Dick
	Steven Van Dick
	Chief Financial Officer (Principal Financial and Accounting Officer)

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2023	By:	/s/ Steven Foster
	Name:	Steven Foster
	Title:	Chief Executive Officer and President
		(Principal Executive Officer)

Date: May 9, 2023	By:	/s/ Steven Van Dick
	Name:	Steven Van Dick
	Title:	Chief Financial Officer
		(Principal Financial Officer)
		(Principal Accounting Officer)