Tenon Medical Inc

This management proposal asks shareholders to authorize an amendment to the Company’s certificate of incorporation enabling the Board to effect a reverse stock split at any whole-number ratio between 1-for-2 and 1-for-35, with the Board retaining sole discretion whether and when to file the amendment and which ratio to choose. Management is seeking this authorization principally to address a Nasdaq deficiency: the Company received notice that its common stock had failed to meet Nasdaq’s $1.00 minimum bid requirement and has a defined compliance period, so the Board wants the flexibility to consolidate shares if necessary to meet listing standards. The proposal would not immediately change the number of issued shares; rather it grants the Board authority to effect the split at an appropriate time if it determines the split is in shareholders’ best interests. The proxy discloses key consequences: a reverse split would proportionally reduce outstanding shares, increase per-share price in theory, not change authorized shares (thereby increasing authorized-but-unissued shares), and adjust outstanding options, RSUs, warrants and convertible securities (shares covered divided by the split ratio and exercise/conversion prices multiplied by the ratio). The Board candidly discusses risks including negative investor perception of reverse splits, potential adverse effects on liquidity from fewer outstanding shares, the possibility that the post-split price will not reach or sustain the $1.00 threshold, and dilution risk from the increased pool of authorized shares that could be issued without further shareholder action. The proposal notes procedural mechanics (no fractional shares issued; rounding up to whole shares; tax and accounting impacts summarized) and that approval requires a majority of outstanding shares. The Board recommends approval because management believes a reverse split is the most likely available corrective step to preserve Nasdaq listing and avoid delisting consequences (trading on OTC markets, potential penny stock classification). In evaluating the measure, a sophisticated investor should weigh the short-term objective of listing compliance and perceived marketability against the long-term risks of reduced liquidity, potential signaling effects to the market, and the increased capacity for future dilution inherent in the unchanged authorized share count.

This proposal requests shareholder approval under Nasdaq Rule 5635(d) to permit the conversion of March 11, 2026 convertible promissory notes even if conversion would result in issuance of common stock equal to or exceeding 20% of then-outstanding shares — a threshold that triggers Nasdaq shareholder-approval requirements if the issuance price is below the Minimum Price. The disclosed financing raised approximately $4.3 million net (from $5.16 million principal of 20% OID notes) and contains a Floor Price of $0.15452 and a conversion feature tied to 80% of the lowest three-day VWAP, which could generate a very large issuance: the company reports that conversion at the Floor Price would yield 33,393,735 shares on a base of 11,572,606 outstanding as of March 11, 2026. Management seeks pre-approval to avoid a conversion being invalidated under Nasdaq rules and to preserve the company’s ability to access the financing. Key investor considerations include substantial dilution risk if conversion occurs at or near the Floor Price, possible downward pressure on the market price from such conversion, and the timing/maturity mechanics (notes mature September 11, 2026 with optional extension and prepayment provisions, and prepayment penalties and placement agent fees). The Board frames the approval as necessary to comply with Nasdaq listing rules and to fulfill contractual obligations to purchasers; it notes that this is a non-routine matter where brokers cannot vote without instructions, so shareholder support is required. A sophisticated assessment should balance the company’s near-term liquidity needs (working capital uses) against the large potential dilution, the asymmetric conversion pricing methodology, and the market implications of a large share issuance tied to a low Floor Price. The Board recommends approval as the most pragmatic route to preserve financing certainty and Nasdaq compliance, but shareholders should be mindful of the magnitude of potential dilution and the conversion mechanics that could convert debt into a controlling number of shares under adverse pricing scenarios.

This management proposal seeks advance shareholder approval under Nasdaq Rule 5635(d) for potential future financings that could individually or collectively constitute a 20% Issuance at a price below the Minimum Price, provided such issuances adhere to explicit transaction parameters disclosed to Nasdaq and stockholders. The Nasdaq Parameters set firm caps: up to 250,000,000 shares issuable, up to 250,000,000 shares issuable upon warrants, a maximum aggregate dollar amount of $50,000,000, a maximum discount of 80% to market, defined permitted purposes (working capital, acquisitions, or debt repayment), and a limited time frame to complete such issuances (through October 23, 2026). Management is pursuing this pre-approval to retain flexibility to raise capital quickly during a period when the company’s stock price may be depressed, while remaining within the boundaries Nasdaq requires for such pre-approvals. For investors, the key tradeoffs are: the efficiency and certainty of being able to close financings under tight timelines versus the substantial dilutive capacity being authorized (large share and warrant caps and deep potential discounts). The proposal mitigates some concerns by imposing specific numeric caps and a short time window, but still contemplates material dilution and downward price pressure if exercised. Because the proposal is non-routine, brokers cannot vote uninstructed shares, making shareholder participation important. The Board recommends a vote FOR to preserve financing optionality and to avoid repeated costly and time-consuming separate shareholder approvals, but sophisticated investors should weigh the immediate capital needs and potential anti-dilution protections (or lack thereof) against long-term equity value and governance considerations.

This procedural proposal asks shareholders to grant the Board the authority to adjourn the Annual Meeting, if needed, to allow additional time to solicit proxies and gather sufficient votes to approve one or more of Proposals 1 through 5. Adjournment authority is a common corporate governance mechanism that allows management to continue soliciting support without reconvening a new meeting and is generally used when an item requires a greater level of shareholder participation or when additional outreach may change the vote outcome. The proxy statement explains the voting standard (affirmative majority of votes cast for adjournment) and that abstentions and broker non-votes will not be counted as votes cast on this proposal, making shareholder participation determinative. The Board recommends approval because adjournment flexibility reduces the risk that critical financing- or governance-related proposals cannot be enacted due to temporary shortfalls in votes, which could harm the company’s operations or listing status. From an investor perspective, while adjournment can be seen as a reasonable administrative tool, it also permits further solicitation efforts that could involve incremental outreach costs and shareholder persuasion; repeated adjournments could delay resolution of contested issues. Shareholders should consider that approving adjournment does not itself change any substantive rights but can materially affect timing and the Company’s ability to close financings or implement the reverse split if votes are initially insufficient. Overall, the proposal is routine procedural relief that supports the Board’s ability to manage the meeting efficiently in the event of insufficient initial support for key proposals.