Risk Factors Update Summary

• Failure to develop and retain effective sales teams may impact sales and profitability significantly.
• Adoption of Policy for Recovery of Erroneously Awarded Compensation effective October 2, 2023.
• The Company acquired RPM-3D for $20.0 million with additional payments of up to $10.0 million based on milestones.
• Added detailed cybersecurity risk management strategy and framework, including CIS, NIST, and ISO 27000. This enhances data protection.
• A new five-year $150.0 million loan arrangement was entered into in April 2022.
• Accumulated deficit increased from $84 million to $134 million as of December 31, 2023.
• Changes in Non-Employee Director Compensation Program with annual cash retainers and additional compensation.
• Potential dilution risk due to a significant portion of outstanding shares being sold into the market.
• Increased the number of direct sales representatives from 168 to 227, a 34.5% increase. This may boost sales effectiveness.
• Identified intangible assets from the acquisition include developed technology valued at $9.5 million.
• Net cash used in operating activities increased from $30.6 million in 2022 to $34.6 million in 2023.
• The company completed a follow-on offering of 5,476,190 shares at $21.00 per share, resulting in net proceeds of $107.5 million.
• Average debt balance decreased by $4.5 million in 2023 compared to 2022.
• Expanded product offerings with Hammertoe PEEK Fixation System and SpeedPlate Rapid Compression Implant System. This broadens market reach.
• Marketable securities increased from $61 million to $110 million as of December 31, 2023.
• Net proceeds from a public offering in 2023 were approximately $107.5 million.
• Amendments to the Non-Employee Director Compensation Program effective January 17, 2024, with specific compensation details.
• Number of U.S. patents owned increased from 39 to 52, pending U.S. patent applications increased from 10 to 15.
• The company adjusted the useful life of its capitalized instruments from 18 months to 36 months, reducing depreciation expense by $0.32 million.
• Became a large accelerated filer as of December 31, 2023, no longer an emerging growth or smaller reporting company.
• Goodwill from the acquisition of RPM-3D amounts to $12.8 million, attributable to expected synergies.
• Total assets increased from $159.0 million to $251.9 million as of December 31, 2023.
• Increased costs and demands on management due to no longer providing scaled disclosures.
• The company recorded provisions for bad debts of $0.4 million in 2023, $0.14 million in 2022, and $0.21 million in 2021.
• Outstanding common stock shares increased from 55 million to 61 million as of December 31, 2023.
• As of December 31, 2023, cash and cash equivalents decreased from $19 million to $13 million.
• Increased revenue by $45.3 million, a 31.9% rise, driven by a 20% increase in Lapiplasty Procedure Kits sold. This indicates growing demand.
• The Company's intangible amortization for 2023 was $0.5 million, compared to $0 in 2022.
• Research and development expenses rose by $14.9 million, a 13.7% increase, showing a commitment to innovation.
• The company incurred advertising costs of approximately $16.1 million in 2023, $15.0 million in 2022, and $13.0 million in 2021.
• The goodwill balance as of December 31, 2023, is $12.8 million, up from $0 in 2022.
• The company recognized comprehensive loss of $49.3 million in 2023 and $42.8 million in 2022.
• The Company's long-term debt increased to $54.0 million, with a net balance of $53.0 million.
• General and administrative expenses surged by $14.6 million, a 42.0% increase, mainly due to increased professional services and legal expenses.
• Interest income increased by $0.59 million, showing improved investment returns and financial management.
• The Company's total long-term debt, net, increased to $53.0 million, up from $29.4 million in 2022.
• The company adopted ASU 2019-10 on January 1, 2023, with no material impact on financial statements.
• The company adopted ASU 2023-07, Segment Reporting, effective for fiscal years beginning after December 15, 2023.