NASDAQ: TNONW

Recent
Developments

March
2026 Financing

On
March 11, 2026, we entered into securities purchase agreements with certain accredited investors pursuant to which we issued and sold
in a private placement 20% original issue discount senior convertible promissory notes (the “Convertible Promissory Notes”)
in an aggregate principal amount of approximately $5.2 million for aggregate gross proceeds of approximately $4.3 million. The Convertible Promissory
Notes have a maturity date of September 11, 2026, which, at our option, can be extended to December 11, 2026. Following the 6-month anniversary
of the issuance date, the Convertible Promissory Notes will be convertible at any time at the option of the holder into shares of our
common stock at a conversion price per share equal to the greater of 80% of the VWAP for the three trading days immediately prior to
the date of conversion and $0.1567, subject to adjustment for stock splits and pro rata distributions as provided in the Convertible
Promissory Notes. If the maturity date of the Convertible Promissory Notes is extended, their outstanding principal amount will be increased
by 5%. Any prepayment of the Convertible Promissory Notes will be paid at 102.5% of the principal amount being prepaid. In addition,
we are required to prepay the Convertible Promissory Notes from 15% of the net proceeds we may receive from future securities financing
transactions less certain amounts attributable to the original issue discount.

WallachBeth
Capital LLC acted as our placement agent in connection with this offering and received a cash fee equal to 7.0% of the aggregate gross
proceeds raised in the offering and reimbursement of certain expenses in the amount of $65,000.

Nasdaq
Notice

On
February 25, 2026, we received a letter from the Nasdaq Listing Qualifications Department notifying us that, for the 30 consecutive business
day period between January 9, 2026 through February 24, 2026, our common stock had not maintained a minimum closing bid price of $1.00
per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price
Rule”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until August
24, 2026 (the “Compliance Period”), to regain compliance with the Bid Price Rule. In order to regain compliance with the
Bid Price Rule, our common stock is required to maintain a minimum closing bid price of $1.00 for a minimum of ten consecutive business
days during the Compliance Period prior to August 24, 2026. If we do not regain compliance with the Bid Price Rule by August 24, 2026,
we may be eligible for an additional 180-day period to regain compliance.

As
of the date of this report, our common stock has not regained compliance with the Bid Price Rule. If we cannot regain compliance during
the Compliance Period or any subsequently granted compliance period, our common stock will be subject to delisting. At that time, we
may appeal the delisting determination to a Nasdaq hearings panel.

The
notice from Nasdaq has no immediate effect on the listing of our common stock, which will continue to be listed on The Nasdaq Capital
Market under the symbol “TNON.” We are currently evaluating our options for regaining compliance with the Bid Price Rule.

1

November
2025 PIPE Financing

On
November 10, 2025, we entered into securities purchase agreements with certain accredited investors in an at-the-market private investment
in public equity financing (the “PIPE Financing”) pursuant to which we agreed to issue and sell an aggregate of 2,217,904
shares of common stock and/or pre-funded common stock purchase warrants, and common stock purchase warrants, each exercisable for one
share of our common stock, at a combined offering price of $1.285 per share and warrant to purchase one share of common stock. The warrants
have an exercise price of $1.16 per share and expire 3 years from the date of issuance. The PIPE Financing closed on November 14, 2025,
and we issued to the investors 2,217,904 shares of common stock and 2,217,904 common stock purchase warrants. Pursuant to the purchase
agreements, we received proceeds, net of transaction expenses, of approximately $2.7 million. Steven Foster, the Company’s Chief
Executive Officer and Director, Nathaniel Grawey, the Company’s Chief Commercial Officer, and Wyatt Geist, the Company’s
Chief Innovation Officer, participated in the PIPE Financing as investors. The shares of our common stock and the shares underlying warrants
issued in the PIPE Financing are entitled to customary resale registration rights.

The
Opportunity

We
estimate that over 30 million American adults have chronic lower back pain. Published clinical studies have shown that 15% to 30% of
all chronic lower back pain is associated with the SI Joint. For patients whose chronic lower back pain stems from the SI Joint, our
experience in both clinical trials and commercial settings indicates the system to be introduced by Tenon could be beneficial for patients
who are properly diagnosed and screened for surgery by trained healthcare providers.

In
2019, approximately 475,000 patients in the United States were estimated to have received an aesthetic injection to temporarily alleviate
pain emanating from the SI Joint and/or to diagnose SI Joint pain. Additionally, several non-surgical technologies have been introduced
in the past 10 years to address patients who do not respond to conservative options, including systemic oral medications, opioids, physical
therapy and injection therapy.

To
date, the penetration of a surgical solution for this market has been relatively low (5-7%). We believe this is due to complex surgical
approaches and suboptimal implant design of existing options. The penetration of this market with an optimized surgical solution is Tenon’s
focus.

We
believe the SI Joint is the last major joint to be successfully addressed by the spine implant industry. Studies have shown that disability
resulting from disease of the SI Joint is comparable to the disability associated with a number of other serious spine conditions, such
as knee and hip arthritis and degenerative disc disease, each of which has surgical solutions where an implant is used, and a multi-billion-dollar
market exists.

The SI
Joint

2

The
SI Joint is a strong weight bearing synovial joint situated between the lumbar spine and the pelvis and is aligned along the longitudinal
load bearing axis of the human spine when in an upright posture. It functions as a force transfer conduit where it transfers axial loads
bi-directionally from the spine to the pelvis and lower extremities and allows forces to be transmitted from the extremities to the spine.
It also provides load sharing between the hip and spine to contribute towards attenuation of impact shock and stress from activities
of daily living.

The
SI Joint is a relatively immobile joint that connects the sacrum (the spinal segment that is attached to the base of the lumbar spine
at the L5 vertebra) and the ilium of the pelvis. Each SI Joint is approximately 2-4mm wide and irregularly shaped.

Motion
of the SI Joint features vertical shear and rotation. Although the rotational forces about the SI Joint are relatively low, repetitive
motions created by daily activities such as walking, jogging, twisting at the hips, and jumping can increase the stresses on the SI Joint.
If the SI Joint is compromised through injury or degeneration, the load bearing and motion restraints from the surrounding anatomical
structures of the SI Joint will be compromised resulting in abnormal stress transfers across the joint to these structures, thereby further
augmenting the degenerative cascade of the SI Joint. Eventual pain and cessation of an individual’s normal activities due to a
painful and unstable SI Joint have led to an increase in the recent development of SI Joint stabilization devices.

Non-Surgical Treatment
of Sacroiliac Joint Disease

Several non-surgical treatments
exist for suspected sacroiliac joint pain. These conservative steps often provide desired relief for the patient. Non-surgical treatments
include:

●Physical
Therapy.

●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.

When
conservative steps fail to deliver sustained pain relief and return to quality of life, specific diagnostic protocols are utilized to
explore if a surgical option should be considered.

Diagnosis

Historically,
diagnosing pain from the SI Joint was not routinely a focus of orthopedic or neurosurgery training during medical school or residency
programs. Due to its invasiveness, post-operative pain, and muscle disruption along with a difficult procedure overall, the open SI Joint
fusion procedure was rarely taught in these settings.

The
emergence of various less invasive SI Joint surgical technologies has generated a renewed discussion of SI Joint issues. Of particular
focus is the diagnostic protocol utilized to properly select patients for SI Joint surgery. Patients with low back pain typically start
with primary care physicians who often refer to pain specialists. Here, the patient will undergo traditional physical therapy combined
with oral medications (anti-inflammatory, narcotic, etc.). If the patient fails to respond to these steps the pain specialist may move
to therapeutic injections of the SI Joint. These injections may serve to lessen inflammation to the point that the patient is satisfied.
However, the impact from these injections is often transient. In this case the patient is often referred to a clinician to determine
if the patient may be a candidate for surgical intervention. A series of provocative tests in clinic, combined with a specific injection
protocol to isolate the SI Joint as the pain generator is then utilized to confirm the need for surgical intervention. Published literature
has shown this technique to be a very effective step to determine the best treatment to alleviate pain.

Limitations
of Existing Treatment Options

Surgical
fixation and fusion of the SI Joint with an open surgical technique was first reported in 1908, with further reports in the 1920s. The
open procedure uses plates and screws, requires a 6 to 12-inch incision and is extremely invasive. Due to the high
invasiveness and associated morbidity, the use of this procedure is limited to cases involving significant trauma, tumor, etc.

Less
invasive surgical options along with implant design began to emerge over the past 15 years. These options feature a variety of approaches
and implant designs and have been met with varying degrees of adoption. Lack of a standard and accepted diagnostic approach, complexity
of approach, high morbidity of approach, abnormally high complication rates and inability to radiographically confirm fusion have all
been cited as reasons for low adoption of these technologies.

Commercialization

Tenon’s
Catamaran and SImmetery+ Systems make up the Company’s growing portfolio of advanced SI Joint technologies. Together,
these platforms uniquely position Tenon with multiple surgical approaches – lateral and inferior-posterior – both designed
to be minimally invasive, enable authentic arthrodesis and supported by robust clinical evidence, including the published prospective
Mainsail™ and EVoluSIon™ SI Joint fusion studies. We anticipate that these differentiated technologies will enable physicians
to customize treatment plans for their patients with an innovative portfolio that spans SI Joint, spinal fusion, and deformity adjuncts
— each solution engineered to deliver fusion outcomes more reliably. We believe that this multi-platform, multi-approach strategy
strengthens Tenon’s competitive advantage in the expanding SI Joint fusion market and underscores the Company’s commitment
to delivering effective, durable outcomes for physicians and patients.

3

The
Catamaran System

Tenon
initiated its national commercial launch of The Catamaran System in October 2022 to address what we believe is a large market opportunity.
The Catamaran System includes instruments and implants designed to prepare and fixate the SI Joint for fusion. The Catamaran System is
distinct from other competitive offerings in the following ways:

●Trans-articular
placement across the SI Joint

●Inferior-posterior
sacroiliac fusion approach

●Reduced
approach morbidity

●Direct
visualization to the SI Joint

●Single
implant technique

●Insertion
trajectory away from the neural foramen

●Insertion
trajectory away from major lateral 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

●
Robust single titanium
implant

●
Incorporates fusion principles
to facilitate long-term fixation

●
Immediate stabilization
along the long axis of the joint.

●
Fenestrated pontoons designed
to facilitate bony in-growth.

●
“Pontoons and Bridge
window” filled with autologous bone from drilling process

●
Proprietary osteotome bridge
designed to disrupt the joint in preparation for fusion

The
Catamaran System represents a novel less invasive approach to treat SI Joint dysfunction. Its trans-articular placement, combined with
a design rooted in fusion principles, ensures immediate fixation and stabilization supported by peer reviewed clinical and radiographic
evidence of fusion with a compelling safety profile. The Catamaran System is a singular implant designed with several proprietary components
which allow for it to be explicitly formatted to address the SI Joint with a single, less invasive approach and implant. 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 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 transfix the SI Joint and facilitate
an inferior-posterior approach that is unique to the system.

Tenon
also has developed a proprietary 2D radiographic 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 and ease of the procedure and encourage more physicians
to adopt the procedure.

In
October 2022, we received Institutional Review Board (“IRB”) approval from WCG IRB for two separate Tenon-sponsored post
market clinical studies of The Catamaran System. The approval by WCG allows designated Catamaran study centers to begin recruiting and
enrolling patients into the clinical studies. 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. The second prospective, multi-center, Catamaran study will evaluate 6-to-12-month radiographic outcomes to assess
fusion of patients that have already undergone treatment with The Catamaran System. In addition, retrospective and prospective clinical
outcomes will be evaluated.

4

The
SImmetry+ System

In
August 2025, we acquired The SImmetry+ System, which affords an efficient and effective minimally invasive technique to effect
a true arthrodesis of the SI Joint in the following way:

●Minimally
invasive lateral access for safety and control

●System
designed with well-established orthopedic fusion principles

●New
3D printed titanium implants and proprietary instrumentation provides rigid fixation

●Joint
preparation with the proprietary SImmetry Decorticator removes cartilage and decorticates
opposing joint surfaces

●Bone
graft delivery to the prepared joint to facilitate fusion

The
Market

Based
on market research and internal estimates, Tenon believes the potential market for surgical intervention of SI Joint dysfunction to be
270,000 procedures annually in the U.S. alone, for a potential annual market of approximately $2.1 billion. 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. The other competitive devices that are offered are all products generally part of much
larger companies with a variety of orthopedic devices and as such do not specifically call out the number of specific SI Joint procedures
performed with their products. It is our belief that all other competitive devices represent approximately another 5,000 potential SI
Joint procedures.

Based
on this analysis we believe the market is vastly underserved and only penetrated 5-7%, leaving tremendous upside for a next generation
device that meets the needs of this market.

Competitive
Landscape

By
expanding the Tenon portfolio to include both the Catamaran and SImmetry+ systems, we have created a differentiated market position with
multiple approaches to SI Joint fusion backed by clinical outcomes including:

●Pain
reduction,

●Patient
satisfaction, and

●Independent
confirmation of bridging bone fusion across the joint.

In
our view, this differentiated market position strengthens our ability to drive adoption, increase procedure volumes, and capture a larger
share of this rapidly expanding market

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;

●product
innovation and the speed of innovation;

●intellectual
property;

5

●accountability
and responsiveness to customers’ demands;

●pricing
and reimbursement;

●scientific
(biomechanics) data; and

●attracting
and retaining key personnel.

Tenon
believes providing physicians innovative SI Joint system choices, backed by clinical outcomes, will open the door to enhanced adoption
and further penetration of this important market.

The
Catamaran®™ SI Joint Fusion System Solution

Until
October 2022, Tenon sold The Catamaran System to a limited number of clinician advisors to refine the product for a full commercial launch.
In October 2022, Tenon initiated a full commercial launch at the NASS meeting in Chicago. The Catamaran System includes instruments and
implants designed to prepare and fixate the SI Joint for fusion. 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:

●Trans-articular
placement across the SI Joint

●Inferior-posterior
sacroiliac fusion approach

●Less
invasive surgical approach

●Direct
visualization 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
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. 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 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.

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.

The
Procedure

We
believe The Catamaran System and its differentiated characteristics allow for an efficient and effective procedure designed to deliver
short-term stabilization and long-term fusion that can be confirmed radiographically. Shown below is an illustration demonstrating the
unique placement of The Catamaran System inserted Inferior-Posterior and coming directly down to and transfixing the joint.

The
Catamaran System procedure is typically performed under general anesthesia using a specially designed instrument set we provide to prepare
for the Inferior-Posterior access to the SI Joint. Specially designed imaging and navigation protocols are designed to ensure the clinician
has the proper entry point, trajectory, angle and depth so that the pontoons of The Catamaran System are placed for maximum fixation.
The Catamaran System incorporates two pontoons and is designed so that when the system is impacted into the bone one pontoon is on the
Illum side and the other is in the Sacrum side with the bridge spanning the joint, preventing shear and rotation of the joint. The device
also features an open cell design where the patient’s own (autologous) bone is packed into the pontoons and the bridge to facilitate
fusion across the joint. The leading edge of the bridge is designed to act as an osteotome, providing a self-created deficit upon insertion.
These features are designed to create an ideal environment for bone ingrowth and fusion. Below is a fluoroscopic image of an implanted
Catamaran Fixation Device spanning the SI Joint.

6

Tenon
believes the surgical approach and implant design it has developed, along with the 2D and 3D protocols for proper implantation will be
received well by the clinician community who have been looking for a next generation device. Our initial clinical results indicate that
The Catamaran System is promoting fusion across the joint as evidenced by post-op CT scans (the recognized gold standard widely accepted
by the Clinical community).

A
preliminary 18 case series (Michael Joseph Chaparro, MD, F.A.A.N.S., F.A.C.S.) has documented that The Catamaran System does in fact
promote fusion across the SI Joint, which many of our competitors have not been able to demonstrate. While products from some of our
competitors use screws and triangular wedges to treat the SI Joint, most do not effectively resist the vertical shear and twisting within
the joint. This 18 patient series was presented at the North American Spine Society Annual Meeting in Chicago, IL in October 2022.

An
independent biomechanical study (Lisa Ferrara, Ph.D. OrthoKinetic Technologies, LLC now part of Element) demonstrated that a single Catamaran
SIJ Fixation Device was superior to predicate device in the areas of Fixation Strength, Shear Stiffness, Dynamic Endurance and Pullout
Strength. We hold issued patents on The Catamaran System and its unique features including the dual pontoons and the open cell structure
for bone graft packing. 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. We believe that
this beneficial advantage along with a simpler, safer, and less painful procedure will make this the procedure of choice for most physicians.
Tenon has initiated a post market, IRB controlled clinical trial to demonstrate this technology delivers on these advantages. The Mainsail™
Study is an ongoing prospective, single-arm, multi-center, post-market study evaluating clinical and radiographic outcomes of adult patients
with sacroiliac joint disruptions or degenerative sacroiliitis treated with the Catamaran SI Joint Fusion System. The target enrollment
for this study is up to 50 patients with up to 24-month follow-up. There have been two published interim analysis of the study with robust
and sustainable clinical outcomes out to 12 months. These outcomes include the following:

●Statistically
significant reduction in SI Joint pain at 12 months

●Robust
safety profile

●High
patient satisfaction throughout all follow-up timepoints

●Continued
definitive evidence of fusion response at 12 months

●Efficient
surgical technique and procedural workflow

The
SImmetry+ SI Joint Fusion System Solution

In
August 2025, we acquired The SImmetry+ System, which affords an efficient and effective minimally invasive technique to effect
a true arthrodesis of the SI Joint in the following way:

●Minimally
invasive lateral access for safety and control

●Joint
preparation with the proprietary SImmetry Decorticator removes cartilage and decorticates
opposing joint surfaces

●Bone
graft delivery to the prepared joint to facilitate fusion

●Joint
fixation with threaded 3D printed titanium implants

The
Procedure

The
SImmetry+ procedure is designed to:

●Stabilize
the SI Joint

●Promote
true bony fusion

●Reduce
pain and improve function in appropriately selected patients

This
approach combines immediate fixation with biologically driven fusion, aligning with long-standing orthopedic fusion principles while
utilizing a minimally invasive surgical technique.

7

The
Simmetry+ System procedure is typically performed under general anesthesia using a specially designed instrument set we provide
to prepare for lateral access to the SI Joint. Specially designed imaging and navigation protocols are designed to ensure the clinician
has the proper entry point, trajectory, angle and depth of the implant for maximum fixation. The SImmetry+ SI Joint Fusion
procedure is a minimally invasive surgical technique designed to achieve true bony fusion of the sacroiliac joint. Through a small lateral
incision and fluoroscopic guidance, the joint is accessed and prepared using specialized decortication instruments to expose bleeding
bone surfaces. Bone graft material is then placed within the joint to promote biological fusion, followed by placement of titanium implants
across the ilium and sacrum to provide immediate mechanical stabilization. This combination of joint preparation, bone grafting, and
fixation is intended to support durable fusion while minimizing surgical disruption.

The
SImmetry+ System was part of the EVoluSIon study which was a prospective, multi-center clinical study evaluating up to 250
patients treated with The SImmetry+ System. At 12 months, patients demonstrated statistically significant reductions in pain
and disability, meaningful reductions in opioid use, and approximately 69% showed radiographic evidence of fusion on CT. As one of the
largest clinical datasets in minimally invasive SI Joint fusion, EVoluSIon supports the safety, effectiveness, and true fusion approach
of the SImmetry+ platform.

Coverage
and Reimbursement

When
a Tenon procedure utilizing The Catamaran System or The SImmetry+ System is performed, the healthcare facility, either
a hospital (inpatient or outpatient clinic), and the clinician submit claims for reimbursement to the patient’s insurer. Generally,
the facility obtains a lump sum payment, or facility fee, for SI Joint fusions. Our products are purchased by the facility, along with
other supplies used in the procedure. The facility must also pay for its own fixed costs of operation, including certain operating room
personnel involved in the procedure, ICD and other medical services care. If these costs exceed the facility reimbursement, the facility’s
managers may discourage or restrict clinicians from performing the procedure in the facility or using certain technologies, such as The
Catamaran System or The SImmetry+ System, to perform the procedure.

The
Medicare 2025 national average hospital outpatient clinic payment was $17,914. We believe that insurer payments to facilities are generally
adequate for these facilities to offer The Catamaran System and The SImmetry+ System procedures.

Physicians
are reimbursed separately for their professional time and effort to perform a surgical procedure. Depending on the surgical approach,
the incision size, type and extent of imaging guidance, indication for procedure, and the insurer, The Catamaran System and The SImmetry+
System procedures may be reported by the physician using CPT® codes 27279 and 27280. The Medicare 2026 payment rates for CPT®
codes 27279 and 27280 are $759 and $1,284, respectively.

For
some governmental programs, such as Medicaid, coverage and reimbursement differ from state to state, and some state Medicaid programs
may not pay an adequate amount for the procedures performed with our products, if any payment is made at all. Similar to Medicaid, many
private payors’ coverage and payment may differ from one payer to another.

We
believe that some clinicians view the current Medicare reimbursement amount as insufficient for current SI Joint procedures, 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. 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.

Sales
and Marketing

We
market and sell The Catamaran System and The SImmetry+ System primarily through independent distributors and sales representatives
specializing in orthopedics and spine sales. Our target customer base includes approximately 12,000 physicians who perform spine and/or
pelvic surgical procedures.

We
provide general sales and marketing training to our independent sales representative along with comprehensive, hands-on cadaveric and
dry-lab training sessions focusing on the clinical benefits of The Catamaran System and The SImmetry+ System and the importance
of using the 2D and 3D protocols we have developed. We believe many clinicians have already been trained using one of the alternative
products but have not been satisfied with the approach, outcomes, and technology. This provides us with an opportunity to demonstrate
to an already-trained-clinician the unique attributes of The Catamaran System and The SImmetry+ System.

8

Our
business objective is to introduce the next generation of implants for SI Joint fixation and fusion. The past 10 years have seen an acceleration
in recognition and discussion of the SI Joint as a cause of pain that can be treated. However, adoption has been hindered by complexity
of the procedure as evidenced by the significant number of reported Medical Device Records (MDR’s). The need for multiple implants
and resulting post-op pain has also contributed to low adoption numbers. Our strategy is to provide a safer, faster, and better surgical
experience and a significant pain reduction benefit for the patient. Our goals are simple but impactful and as such we plan on the following:

●Educate
and inform physicians and other healthcare providers, payors, and patients about the growing
body of evidence supporting what we believe is the safety, durable clinical effectiveness,
economic benefit, and reduction in opioid use associated with SI Joint fixation and The Catamaran
System and The SImmetry+ System procedures.

●Utilize
the most effective means of training via video and in-person labs demonstrating the ease
of use with 2D and 3D navigation. Since many physicians have already been trained but have
not incorporated SI Joint fixation into their practices we will work with these physicians
to reengage and train them on the next generation of SI Joint implants which incorporate
a safer and simpler approach.

●Utilize
the best approaches of direct-to-consumer outreach to educate patients that there is a safe
solution to help them improve their quality of life. 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 LinkedIn, 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.

Regulatory
Status

We
have received FDA 510(k) clearance to market and sell both The Catamaran System and The SImmentry+ System for sacroiliac joint
fusion for conditions including sacroiliac joint disruptions and degenerative sacroiliitis. Additionally, The Catamaran System received
an expanded indication from the FDA in March 2025 to augment immobilization and stabilization of the SI Joint in patients undergoing
sacropelvic fixation as part of a lumbar fusion procedure.

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. To our knowledge, no other competitive product incorporates the following
next generation features:

●Dual
Pontoon implant that trans-articulates across the targeted joint;

●Open
cell design designed for utilizing the patient’s own autologous bone for promotion
of fusion;

●Bridge
design between the dual pontoons for enhanced strength;

●Leading
edge of the implant designed to function as an osteotome providing a self-creating defect
feature not available with competitive systems;

●Single
implant designed with varying pontoon sizes to ensure a robust fixation based on anatomy;
and

●Additional
smaller Catamaran designed for smaller anatomy and/or revision surgery.

Our
development plan is to expand The Catamaran System offering by introducing various sizes in length and width 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 believe, based on literature searches of
prior SI Joint fixation technologies, that adverse event incidence where the implant has loosened or been mal-placed thereby requiring
a revision surgery could reach 20%. We believe that our ability to offer The Catamaran System implants in various sizes will benefit
many patients requiring a revision surgery and thus reduce the associated challenges and variability found in this type of procedure.
The Catamaran System’s 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.

Our
mission continues to be developing enhancements to The Catamaran System and its instrument 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.

9

Additionally,
we 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. Tenon has received IRB approval for two post-market trials, including a 50 patient, 10 center multi-center trial and a
prospective CT trial (the Mainsail Study) to demonstrate fusion in patients who have been treated with The Catamaran System. Clinical
study endpoints may include but are not limited to; pain scoring, length of surgical procedure, blood loss, post-op pain, length of stay,
duration of non-weight-bearing post-op, radiographic confirmation of fusion and surgical complication rates. Statistical analysis plans
may be designed to demonstrate non-inferiority to historical control, as reported in published literature, which may be used for submission
to peer reviewed articles, posters and presentations, etc.

We
believe that our 2025 acquisition of the strategic assets of SiVantage provides a robust pipeline of innovative technologies designed
to further strengthen and expand our portfolio for the treatment of SI Joint disease. Ongoing enhancements to the SImmetry+
Instrument System are expected to improve procedural efficiency and streamline surgical workflow. In addition, we expect that The SImmetry+
System will broaden its implant portfolio with expanded length and diameter options to better accommodate varying patient anatomies.
In addition to enhancements to The SImmetry+ System, we are advancing novel and potentially disruptive technology platforms
that introduce additional approaches to treating the SI Joint, while remaining firmly grounded in the orthopedic principles of fusion
that underpin each new platform.

Intellectual
Property

Developing
and maintaining a strong intellectual property position is an important element of our business. We maintain the intellectual property
through a combination of patent protection, trademarks, and trade secrets. We have sought, and will continue to seek, patent protection
for our technology, for improvements to our technology, as well as for any of our other technologies where we believe such protection
will be advantageous.

As
of March 27, 2026, we own 31 issued U.S. utility patents, 13 pending U.S. utility patent applications, 9 issued foreign utility patents
in Australia, Canada, Japan and Israel, and 19 pending foreign utility patent applications in the European Community, Brazil and Japan.
We have 1 licensed U.S. patent. We also have 14 registered U.S. trademarks and 6 foreign trademarks and 1 pending trademark application
in the U.S.

Our
utility patents and patent applications are directed to several different aspects of our SI Joint stabilization technology and related
patent platform. By way of example, our granted patents and pending patent applications cover various structural features of our unique
Catamaran SI Joint prosthesis and means for employing same to stabilize a dysfunctional SI Joint.

The
term of individual patents depends on the legal term for patents in the countries in which they are granted. In most countries, including
the United States, the patent term for a utility patent is generally 20 years from the earliest claimed filing date of a nonprovisional
patent application in the applicable country. Our issued U.S. and foreign utility patents are anticipated to naturally expire around
2031, and our U.S. pending utility patent applications, if issued into patents, are similarly anticipated to naturally expire around
2031, excluding any additional patent term adjustment(s) or extension(s), and assuming payment of all applicable maintenance or annuity
fees. 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. Notwithstanding the scope of the patent protection available to us,
a competitor could develop methods or devices that are not covered by our patents or circumvent these patents. Furthermore, although,
at present, we are unaware of any patent applications that may result in one or more issued patents that our existing products or technologies
may be alleged to infringe, since U.S. and foreign applications can take many months to publish, there may be applications unknown to
us that may result in one or more issued patents that our existing products or technologies may be alleged to infringe.

As
of March 27, 2026, 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. Our research, development and clinical programs, as well as our manufacturing and marketing
operations, are subject to extensive regulation in the United States and other countries. Most notably, all of our products sold in the
United States are subject to the federal Food, Drug and Cosmetic Act (the “FDCA”), as implemented and enforced by the FDA.
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;

10

●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.

There
are numerous FDA regulatory requirements governing the clearance or approval and marketing of our products. 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.

The
FDA has broad post-market and regulatory enforcement powers. We and our contract manufacturers are subject to announced and unannounced
inspections by the FDA to determine our compliance with the QSR and other regulations and these inspections may include the manufacturing
facilities of our suppliers. Tenon has a robust Supplier Qualification and Audit process as part of our quality system that ensures contract
manufacturers, and their suppliers meet all requirements.

An
FDA pre-approval inspection is not required for The Catamaran System or The SImmetry+ System due to its lower device classification,
class II versus the higher class III. As is the case for most medical device firms, Tenon is subject to routine and “for cause”
FDA inspections. Routine inspections are mandated by law every 2 years for class II and class III device manufacturers and
make up the majority of FDA’s inspections. If a serious public health risk is identified during a routine inspection, the inspection
may convert to a “for cause” inspection. In the current environment, FDA has limited compliance resources and has not
been able to perform routine inspections in accordance with the 2-year mandate. Therefore, FDA uses a risk-based approach when deciding
which firms should be selected for a routine inspection. Using the Establishment Registration and Device Listing databases, FDA identifies
who manufactures and/or distributes which devices. The firms are then prioritized by risk, class III > class II > class I. Firms
that have recently introduced a new device to the market also are given higher priority, as well as those that have had significant prior
violations and complaints. At present, Tenon has not been selected for an FDA inspection. Tenon uses best practices to secure
and maintain regulatory compliance by engaging with suppliers and contract manufacturing firms that are ISO 13485 (or equivalent) compliant
and by periodically performing internal, external, and third-party inspections and audits of the facilities and systems to assess compliance.

11

FDA
Premarket Clearance and Approval Requirements. Unless an exemption applies, each medical device we wish to commercially distribute
in the United States will require either premarket notification, or 510(k), clearance or approval of a PMA from the FDA. The FDA classifies
medical devices into one of three classes. Devices deemed to pose lower risks are placed in either Class I or II, which typically
requires the manufacturer to submit to the FDA a premarket notification requesting permission to commercially distribute the device.
This process is generally known as 510(k) clearance. Some low-risk devices are exempted from this requirement. Devices deemed by the
FDA to pose the greatest risks, such as life-sustaining, life- supporting or implantable devices, or devices deemed not substantially
equivalent to a previously cleared 510(k) device, are placed in Class III, requiring a PMA. If the FDA agrees that the device is
substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device.
If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically
designated as a Class III device. The device sponsor must then fulfill more rigorous PMA requirements or can request a risk-based
classification determination for the device in accordance with the “de novo” process, which is a route to market for novel
medical devices that are low to moderate risk and are not substantially equivalent to a predicate device. 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. The determination as to whether or not a modification could significantly affect the device’s safety or effectiveness
is initially left to the manufacturer using available FDA guidance. Many minor modifications today are accomplished by a “letter
to file” in which the manufacture documents the rationale for the change and why a new 510(k) is not required. However, the FDA
may review such letters to file to evaluate the regulatory status of the modified product at any time and may require the manufacturer
to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained. The manufacturer may also be subject
to significant regulatory fines or penalties.

Clinical
Trials. Clinical trials are generally required to support a PMA application and are sometimes required for 510(k) clearance.
Such trials for implanted devices such as devices included in The Catamaran System and The SImmetry+ System generally require an investigational
device exemption application, or IDE, approved in advance by the FDA for a specified number of subjects and study sites, unless the product
is deemed a nonsignificant risk device eligible for more abbreviated IDE requirements. Clinical trials are subject to extensive monitoring,
recordkeeping, and reporting requirements. Clinical trials must be conducted under the oversight of an institutional review board, or
IRB, for the relevant clinical trial sites and must comply with FDA regulations, including but not limited to those relating to good
clinical practices. To conduct a clinical trial, we also are required to obtain the subjects’ informed consent in form and substance
that complies with both FDA requirements and state and federal privacy and human subject protection regulations. We, the FDA, or the
institutional review board, or IRB, could suspend a clinical trial at any time for various reasons, including a belief that the risks
to study subjects outweigh the anticipated benefits. 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. These
include:

●Product
listing and establishment registration, which helps facilitate FDA inspections and other
regulatory action;

●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;

●post-approval
restrictions or condition, 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.

The
FDA has broad post-market and regulatory enforcement powers. We are subject to unannounced inspections by the FDA to determine our compliance
with the QSR and other regulations, and these inspections may include the manufacturing facilities of some of our subcontractors. 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.

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. If the FDA determines
that our promotional materials or training constitutes promotion of an unapproved use, it could request that we modify our training or
promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter,
injunction, seizure, civil fine, or criminal penalties. It is also possible that other federal, state, or foreign enforcement authorities
might take action if they consider our promotional or training 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 claims for reimbursement. In that
event, our reputation could be damaged, and adoption of the products would be impaired.

In
addition, under the federal Lanham Act and similar state laws, competitors, and others can initiate litigation relating to advertising
claims.

Healthcare
Fraud and Abuse

Federal
and state governmental agencies and equivalent foreign authorities subject the healthcare industry to intense regulatory scrutiny, including
heightened civil and criminal enforcement efforts. These laws constrain the sales, marketing and other promotional activities of medical
device manufacturers by limiting the kinds of financial arrangements we may have with hospitals, physicians and other potential purchases
of our products. Federal healthcare fraud and abuse laws apply to our business when a customer submits a claim for an item or service
that is reimbursed under Medicare, Medicaid, or other federally funded healthcare programs. Descriptions of some of the laws and regulations
that may affect our ability to operate follows.

The
federal Anti-Kickback Statute prohibits, among other things, persons from 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. The term “remuneration” has been broadly interpreted to include anything of value, and the government can establish
a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of, or a specific intent to violate,
the law. The Anti-Kickback Statute is subject to evolving interpretations and has been applied by government enforcement officials to
a number of common business arrangements in the medical device industry. There are a number of statutory exceptions and regulatory safe
harbors protecting some common activities from prosecution; however, those exceptions and safe harbors are drawn narrowly, and there
is no exception or safe harbor for many common business activities. Failure to meet all of the requirements of a particular statutory
exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute, but the legality of the
arrangement will be evaluated on a case-by-case basis based on the totality of the facts and circumstances. A number of states also have
anti-kickback laws that establish similar prohibitions that may apply to items or services reimbursed by government programs, as well
as by any third-party payors, including commercial payors.

The
civil False Claims Act prohibits, among other things, knowingly presenting or causing the presentation of a false or fraudulent claim
for payment of federal funds, or knowingly making, or causing to be made, a false record or statement material to a false or fraudulent
claim to avoid, decrease or conceal an obligation to pay money to the federal government. A claim including items or services resulting
from a violation of the Anti- Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Actions
under the False Claims Act may be brought by the government or as a qui tam action by a private individual in the name of the
government. Qui tam actions are filed under seal and impose a mandatory duty on the U.S. Department of Justice to investigate
such allegations. Most private citizen actions are declined by the Department of Justice or dismissed by federal courts. However, the
investigation costs for a company can be significant and material even if the allegations are without merit. 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). Because of the potential for large monetary exposure, healthcare
companies often resolve allegations without admissions of liability for significant and sometimes material amounts to avoid the uncertainty
of treble damages and per claim penalties that may awarded in litigation proceedings. Moreover, to avoid the risk of exclusion from federal
healthcare programs as a result of a False Claims Act settlement, companies may enter into corporate integrity agreements with the government,
which may impose substantial costs on companies to ensure compliance.

In
addition, HIPAA created federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting
to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling
or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly
and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement
in connection with the delivery of or payment for healthcare benefits, items or services.

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.

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
Foreign Corrupt Practices Act and similar anti-bribery laws in other countries, such as the UK Bribery Act, generally prohibit companies
and their intermediaries from making improper payments to government officials and/or other persons for the purpose of obtaining or retaining
business. Our policies mandate compliance with these anti-bribery laws.

Violations
of these federal and state fraud abuse laws can subject us to administrative, civil, and criminal penalties, including imprisonment,
substantial fines, penalties, damages, and exclusion from participation in federal healthcare programs, including Medicare and Medicaid.

Data
Privacy and Security Laws

HIPAA
requires the notification of patients, and other compliance actions, in the event of a breach of unsecured PHI. If notification to patients
of a breach is required, such notification must be provided without unreasonable delay and in no event later than 60 calendar days after
discovery of the breach. In addition, if the PHI of 500 or more individuals is improperly used or disclosed, we could be required to
report the improper use or disclosure to the U.S. Department of Health and Human Services, or HHS, which would post the violation on
its website, and to the media. Failure to comply with the HIPAA privacy and security standards can result in civil monetary penalties
up to $55,910 per violation, not to exceed $1.68 million per calendar year for non-compliance of an identical provision, and, in
certain circumstances, criminal penalties with fines up to $250,000 per violation and/or imprisonment.

In
addition, even when HIPAA does not apply, according to the FTC, failing to take appropriate steps to keep consumers’ personal information
secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTCA, 15 U.S.C § 45(a).
The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer
information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
Medical data is considered sensitive data that merits stronger safeguards. The FTC’s guidance for appropriately securing consumers’
personal information is similar to what is required by the HIPAA Security Rule.

We
are subject to the supervision of local data protection authorities in those jurisdictions where we are established or otherwise subject
to applicable law. We depend on a number of third parties in relation to our provision of our services, a number of which process personal
data on our behalf. With each such provider we enter into contractual arrangements to ensure that they only process personal data according
to our instructions, and that they have sufficient technical and organizational security measures in place. 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.

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. Our contract manufacturers source and purchase all raw materials used in
the manufacture of The Catamaran System and The SImmetry+ System which includes mainly stainless steel and aluminum for our
instruments and sterilization cases and titanium for our implants.

14

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.

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. 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. In addition, the cost and availability of certain of these items can
be subject to shifting trade policies around the world, including tariffs and trade protectionism measures that can impact the cost and/or
availability of components. Prices of oil and gas also affect our costs for freight and utilities and have an indirect impact on the
cost of other purchased materials and components.

In
the United States, the products we sell are 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. 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. Compliance with applicable regulatory
requirements is subject to continual review and is monitored rigorously through periodic inspections. If we or our manufacturers fail
to adhere to current good manufacturing practice requirements, this could delay production of our products and lead to fines, difficulties
in obtaining regulatory approvals, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences,
which could, in turn, have a material adverse effect on our financial condition or results of operations.

Product
Liability and Insurance

The
manufacture and sale of our products subject us to the risk of financial exposure to product liability claims. Our products are used
in situations in which there is a risk of serious injury or death. We carry insurance policies which we believe to be customary for similar
companies in our industry. We cannot assure you that these policies will be sufficient to cover all or substantially all losses that
we experience.

We
endeavor to maintain executive and organization liability insurance in a form and with aggregate coverage limits that we believe are
adequate for our business purposes.

Human
Capital Resources

As
of March 27, 2026, we have a total of 26 employees, all of whom are full-time, and nine senior consulting advisors of various specialty
including product development, general administrative and quality control. None of our employees is subject to a collective bargaining agreement,
and we consider our relationship with our employees to be good.

Our
human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing
and new employees, advisors and consultants. The principal purposes of our equity and cash incentive plans are to attract, retain and
reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the
success of our Company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

Corporate
Information

We
were incorporated on June 6, 2012, in Delaware. Our principal executive offices are located at 104 Cooper Court, Los Gatos, CA 95032
and our telephone number is (408) 649-5760. Our website address is www.tenonmed.com. The information on, or that can be
accessed through, our website is not part of this report. We have included our website address as an inactive textual reference only.

15