Tenon Medical Inc

The Reverse Stock Split Proposal asks stockholders to authorize an amendment to the Company’s Certificate of Incorporation that would permit the Board to combine outstanding shares of common stock at a ratio between 1-for-2 and 1-for-35, with the Board retaining discretion whether and when to effect the split and to select the exact ratio. Management seeks this authorization primarily to address a Nasdaq deficiency notice for failure to maintain the $1.00 minimum bid price and to provide the Board with a tool that could increase the per-share trading price, thereby reducing delisting risk. The proxy statement identifies potential benefits including improved market perception, greater institutional interest, facilitation of employee and service-provider recruitment, and potential reduction in the risk of future noncompliance with Nasdaq’s minimum bid requirement. The Board also discloses the risks and downsides of a reverse split: adverse investor perception, potential reduction in liquidity due to fewer shares outstanding, the possibility that price gains will not be sustained, and increased availability of authorized but unissued shares that could be dilutive if issued in the future. The proposal would not change authorized shares but would increase the proportion of authorized-but-unissued shares available for corporate purposes, which the Board notes could be issued without further stockholder approval in many circumstances; the filing expressly warns this could be dilutive and potentially used in a defensive manner. Management is candid that the reverse split may not achieve the desired outcomes and that the Board reserves the right not to effect the split even if approved. The Board recommends a vote FOR the proposal as a defensive and compliance-oriented measure to preserve the Company’s Nasdaq listing, while acknowledging uncertainty as to its efficacy and potential governance and liquidity trade-offs.

The Debt Financing Proposal seeks shareholder approval, for Nasdaq Rule 5635(d) purposes, of the potential issuance of shares upon conversion of $5.16 million principal of 20% OID senior convertible promissory notes issued on March 11, 2026. The Notes carry aggressive economic terms (20% OID, conversion starting after six months, a Floor Price of $0.15452 or 80% of a recent VWAP, extension/interest adjustments, mandatory prepayment percentages, and placement agent fees), and if converted at the Floor Price would result in a very large number of shares (the filing states conversion at the Floor Price would yield 33,393,735 shares against 11,572,606 outstanding as of March 11, 2026). Because such conversion could constitute a 20% Issuance at a price below the Minimum Price, Nasdaq requires shareholder approval or the issuance would violate Listing Rule 5635(d). Management is asking shareholders to pre-approve the issuance so the conversion mechanics agreed in the Purchase Agreements can operate and to give the Company access to the financing proceeds for working capital. The primary trade-offs for shareholders are significant potential dilution, downward pressure on the trading price, and broad issuance risk given the low Floor Price and large potential share count. The Board recommends approval on the grounds that the financing provided immediate needed capital and that pre-approval is necessary to comply with Nasdaq rules and permit the agreed conversion mechanics; however, investors should weigh the dilutive and market impacts against the Company’s near-term capital needs. The proxy directs readers to the full Purchase Agreements and Notes filed as exhibits for complete terms and cautions that the summary is qualified by those documents.

The Future Financings Proposal requests pre-approval under Nasdaq Rule 5635(d) for any future 20% Issuance that would be priced below the Minimum Price, provided that such issuances fall within explicitly stated parameters. Management is seeking flexibility to complete financings up to specified caps (250 million shares issuable, 250 million shares underlying warrants, aggregate proceeds up to $50 million, up to 80% discount to market) within a short timeframe (through October 23, 2026) for working capital, acquisitions, or debt repayment. Nasdaq requires that these parameters be disclosed and fixed for stockholder approval to be considered valid; without approval the Company would need individual shareholder votes for any such below‑market 20% issuance. The practical effect is that, if approved, the Company could quickly complete sizeable financings that may be heavily dilutive to existing holders, particularly given the 80% maximum discount and high share caps. Management frames the request as necessary to preserve operational flexibility and reduce execution risk for near-term capital needs, but the range of authorized dilution is material and could substantially reduce current ownership percentages and voting power. The board recommends FOR, emphasizing the need for prompt access to capital in current market conditions and to comply with Nasdaq listing rules, but shareholders should weigh the short-term capital benefits against the risk of significant dilution and potential downward pressure on share price. The limited time window and explicit caps provide some governance constraints, but the broad size and discount parameters may still raise investor governance and dilution concerns.

The Adjournment Proposal asks shareholders to authorize the Board to adjourn the Annual Meeting, if needed, to solicit additional proxies to obtain approval for any of Proposals 1–5 that do not receive sufficient votes at the scheduled meeting. Management seeks this procedural authority to permit the Company to continue proxy solicitation without calling a special meeting, thereby conserving resources and increasing the likelihood of obtaining approvals for critical corporate actions. The request is standard corporate practice and carries minimal substantive effect on corporate policy—rather, it facilitates completion of the meeting business if initial vote totals are insufficient. Shareholders should note the different vote threshold applicable to this proposal (a majority of votes cast) and that abstentions and broker non‑votes will not count as votes cast for this item. The Board recommends a vote FOR, as failing to grant adjournment authority could force the Company to accept a rejection of one or more important proposals or incur additional cost and delay to obtain approvals.