[Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines inherent risks and uncertainties that could cause actual results to differ materially from forward-looking statements - The report contains forward-looking statements based on current expectations and beliefs, which involve risks, uncertainties, or assumptions that could cause actual results to differ materially[10](index=10&type=chunk)[12](index=12&type=chunk) - Key risks include the impact of the COVID-19 pandemic (especially the Delta variant), labor shortages, ability to maintain revenue, product innovation, supply chain reliance, regulatory approvals, and financial stability (debt, liquidity, stock listing)[11](index=11&type=chunk)[14](index=14&type=chunk) [Part I. Financial Information](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's comprehensive financial statements and management's detailed analysis of its financial performance and condition [Item 1. Financial Statements](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for Xtant Medical Holdings, Inc. and its subsidiaries, including balance sheets, statements of operations, equity, and cash flows, along with detailed notes explaining significant accounting policies and specific financial line items [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (September 30, 2021 vs. December 31, 2020) | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | **ASSETS** | | | | Cash and cash equivalents | $18,175 | $2,341 | | Total current assets | $45,588 | $31,365 | | Total Assets | $55,791 | $41,466 | | **LIABILITIES & STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $10,404 | $25,649 | | Long-term debt, less issuance costs | $11,678 | $0 | | Total Liabilities | $23,154 | $26,952 | | Total Stockholders' Equity | $32,637 | $14,514 | | Total Liabilities & Stockholders' Equity | $55,791 | $41,466 | - Total assets increased by **$14.3 million**, primarily driven by a significant increase in cash and cash equivalents[16](index=16&type=chunk) - Total current liabilities decreased by **$15.2 million**, largely due to the reclassification of long-term debt[16](index=16&type=chunk) - Stockholders' Equity more than doubled, increasing by **$18.1 million**[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, costs, and net loss over specific three and nine-month periods Condensed Consolidated Statements of Operations (Three and Nine Months Ended September 30) | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenue | $13,777 | $14,016 | $41,293 | $39,322 | | Cost of sales | $6,586 | $4,768 | $16,498 | $13,913 | | Gross Profit | $7,191 | $9,248 | $24,795 | $25,409 | | Total Operating Expenses | $8,636 | $8,488 | $26,738 | $26,400 | | (Loss) Income from Operations | $(1,445) | $760 | $(1,943) | $(991) | | Interest expense | $(329) | $(2,097) | $(529) | $(5,258) | | Net Loss | $(1,804) | $(1,360) | $(2,566) | $(6,317) | | Net loss per share (Basic/Dilutive) | $(0.02) | $(0.10) | $(0.03) | $(0.48) | - Total revenue decreased by **1.7%** for the three months ended September 30, 2021, but increased by **5.0%** for the nine months ended September 30, 2021, compared to the prior year periods[18](index=18&type=chunk) - Net loss increased for the three-month period but significantly decreased for the nine-month period, primarily due to reduced interest expense[18](index=18&type=chunk) [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section details changes in the company's stockholders' equity, including common stock and accumulated deficit, over the reporting period Condensed Consolidated Statements of Equity (Nine Months Ended September 30, 2021) | Metric (in thousands) | Dec 31, 2020 | Sep 30, 2021 | | :-------------------- | :----------- | :----------- | | Common Stock Shares | 77,573,680 | 86,796,175 | | Additional Paid-In Capital | $244,850 | $265,539 | | Accumulated Deficit | $(230,336) | $(232,902) | | Total Stockholders' Equity | $14,514 | $32,637 | - Total stockholders' equity increased significantly from **$14.5 million** at December 31, 2020, to **$32.6 million** at September 30, 2021, primarily driven by a private placement of common stock and warrants, which added **$12.8 million** and **$5.2 million** to additional paid-in capital, respectively[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the reporting periods Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30) | Metric (in thousands) | 2021 | 2020 |\n| :-------------------- | :----------- | :----------- |\n| Net cash provided by (used in) operating activities | $16 | $(1,647) |\n| Net cash used in investing activities | $(1,295) | $(734) |\n| Net cash provided by (used in) financing activities | $17,552 | $(115) |\n| Net change in cash and cash equivalents | $16,273 | $(2,496) |\n| Cash and cash equivalents at end of period | $18,614 | $2,741 | - Operating activities generated **$16 thousand** in cash in 2021, a significant improvement from a **$1.6 million** use in 2020, driven by reductions in accounts receivable and inventories[22](index=22&type=chunk)[96](index=96&type=chunk) - Financing activities provided **$17.6 million** in cash in 2021, primarily from **$18.4 million** in net proceeds from a private placement of common stock and warrants[22](index=22&type=chunk)[97](index=97&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the Company's business, significant accounting policies, and specific financial statement line items, including revenue recognition, debt refinancing, equity transactions, and the impact of the COVID-19 pandemic [(1) Business Description, Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=(1)%20Business%20Description,%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the company's operations, basis of financial statement presentation, and key accounting policies - Xtant Medical Holdings, Inc. is a global medical technology company focused on orthobiologics and spinal implant systems for spinal fusion procedures[24](index=24&type=chunk) - The COVID-19 pandemic, particularly the Delta variant, negatively impacted Q3 2021 revenues due to deferred elective procedures, hospital staffing shortages, and limited sales access[25](index=25&type=chunk) - In February 2021, the Company completed a private placement, issuing **8,888,890 shares** of common stock and warrants, generating approximately **$18.4 million** in net cash proceeds[30](index=30&type=chunk) [(2) Revenue](index=12&type=section&id=(2)%20Revenue) This note details the company's revenue recognition practices and provides a breakdown of revenue by product line - The Company primarily generates revenue in the U.S. from independent commissioned sales agents, consigning orthobiologics to hospitals and spinal implant sets to agents[39](index=39&type=chunk) Revenue by Product Line (Three and Nine Months Ended September 30) | Product Line (in thousands) | 3 Months Ended Sep 30, 2021 | % of Total | 3 Months Ended Sep 30, 2020 | % of Total | | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :--------- | | Orthobiologics | $10,795 | 78% | $10,542 | 75% | | Spinal implant | $2,948 | 22% | $3,438 | 25% | | Other revenue | $34 | 0% | $36 | 0% | | Total revenue | $13,777 | 100% | $14,016 | 100% | | | | | | | | Product Line (in thousands) | 9 Months Ended Sep 30, 2021 | % of Total | 9 Months Ended Sep 30, 2020 | % of Total | | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :--------- | | Orthobiologics | $31,264 | 76% | $28,613 | 73% | | Spinal implant | $9,929 | 24% | $10,594 | 27% | | Other revenue | $100 | 0% | $115 | 0% | | Total revenue | $41,293 | 100% | $39,322 | 100% | - Orthobiologics revenue increased for both three-month (**2.4%**) and nine-month (**9.3%**) periods, while spinal implant revenue decreased for both periods[42](index=42&type=chunk) [(3) Receivables](index=13&type=section&id=(3)%20Receivables) This note outlines the company's accounts receivable and the activity in its allowance for credit losses Allowance for Credit Losses Activity (in thousands) | Metric | Sep 30, 2021 | Sep 30, 2020 | | :---------------------- | :----------- | :----------- | | Balance at January 1 | $653 | $547 | | Provision for current expected credit losses | $118 | $92 | | Write-offs charged against allowance | $(12) | $(74) | | Balance at September 30 | $576 | $746 | - The allowance for credit losses decreased from **$653 thousand** at January 1, 2021, to **$576 thousand** at September 30, 2021[43](index=43&type=chunk) [(4) Inventories](index=13&type=section&id=(4)%20Inventories) This note provides a detailed breakdown of the company's inventory by category and changes over time Inventories (in thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :------------ | :----------- | :----------- | | Raw materials | $5,927 | $3,757 | | Work in process | $674 | $1,733 | | Finished goods | $13,107 | $15,918 | | Total | $19,708 | $21,408 | - Total inventories decreased by **$1.7 million** from December 31, 2020, to September 30, 2021, primarily due to a reduction in finished goods and work in process, partially offset by an increase in raw materials[44](index=44&type=chunk) [(5) Property and Equipment, Net](index=13&type=section&id=(5)%20Property%20and%20Equipment,%20Net) This note details the company's fixed assets and depreciation Property and Equipment, Net (in thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Total cost | $22,024 | $21,447 | | Less: accumulated depreciation | $(17,053) | $(17,100) | | Property and equipment, net | $4,971 | $4,347 | - Net property and equipment increased by **$0.6 million**, with depreciation expense decreasing for both the three-month and nine-month periods compared to the prior year[45](index=45&type=chunk) [(6) Intangible Assets](index=14&type=section&id=(6)%20Intangible%20Assets) This note describes the company's intangible assets, primarily patents, and their accumulated amortization Intangible Assets (in thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Patents | $847 | $847 | | Accumulated amortization | $(433) | $(390) | | Intangible assets, net | $414 | $457 | - Net intangible assets, primarily patents, decreased slightly from **$457 thousand** to **$414 thousand** due to accumulated amortization[46](index=46&type=chunk) [(7) Accrued Liabilities](index=14&type=section&id=(7)%20Accrued%20Liabilities) This note provides a breakdown of the company's accrued liabilities, including compensation and other accrued expenses Accrued Liabilities (in thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :---------------------------- | :----------- | :----------- | | Cash compensation/commissions payable | $2,991 | $4,057 | | Other accrued liabilities | $1,088 | $1,405 | | Accrued liabilities | $4,079 | $5,462 | - Total accrued liabilities decreased by **$1.4 million**, mainly due to reductions in cash compensation/commissions payable and other accrued liabilities[47](index=47&type=chunk) [(8) Debt](index=14&type=section&id=(8)%20Debt) This note details the company's debt structure, including refinancing activities and new credit facilities - The Company refinanced its debt on May 6, 2021, replacing the Prior Credit Agreement with new Term and Revolving Credit Agreements with MidCap Financial Trust[48](index=48&type=chunk)[49](index=49&type=chunk) - The new facilities include a **$12.0 million** secured term loan and an **$8.0 million** secured revolving credit facility, both maturing on **May 1, 2026**[50](index=50&type=chunk)[53](index=53&type=chunk) - The refinancing resulted in a **$0.8 million** gain on extinguishment, recorded as an increase in additional paid-in capital due to related party affiliation[51](index=51&type=chunk) Long-term Debt (in thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :---------------------------- | :----------- | :----------- | | Amounts due under the Term Facility | $12,000 | $0 | | Amounts due under the Second Amended and Restated Credit Agreement | $0 | $15,556 | | Long-term debt | $11,678 | $0 | [(9) Stock-Based Compensation](index=15&type=section&id=(9)%20Stock-Based%20Compensation) This note outlines the company's stock option and restricted stock unit activity and related compensation expenses Stock Option Activity (Nine Months Ended September 30) | Metric | 2021 Shares | 2021 Avg Exercise Price | 2020 Shares | 2020 Avg Exercise Price | | :---------------------- | :---------- | :---------------------- | :---------- | :---------------------- | | Outstanding at January 1 | 2,190,892 | $2.25 | 602,966 | $6.07 | | Granted | 1,012,083 | $1.27 | 239,884 | $1.13 | | Outstanding at September 30 | 3,202,706 | $1.92 | 722,112 | $4.37 | Restricted Stock Unit Activity (Nine Months Ended September 30) | Metric | 2021 Shares | 2021 Avg Fair Value | 2020 Shares | 2020 Avg Fair Value | | :---------------------- | :---------- | :------------------ | :---------- | :------------------ | | Outstanding at January 1 | 2,503,698 | $1.54 | 499,914 | $2.93 | | Granted | 1,249,002 | $1.27 | 679,803 | $1.36 | | Vested | (349,572) | $1.92 | (79,069) | $2.37 | | Outstanding at September 30 | 3,403,128 | $1.40 | 1,100,648 | $2.00 | [(10) Warrants](index=16&type=section&id=(10)%20Warrants) This note describes the company's warrant issuances, their classification, and valuation methodologies - In February 2021, the Company issued Investor Warrants (to purchase **6,666,668 shares**) and Placement Agent Warrants (to purchase **444,444 shares**) in connection with a private placement[58](index=58&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk) - These warrants are classified as equity awards, with fair values determined using lattice and Black-Scholes models, respectively, based on a **5-year contractual term** and **61% estimated volatility**[59](index=59&type=chunk) Warrant Activity (Nine Months Ended September 30, 2021) | Metric | Common Stock Warrants | Weighted Average Exercise Price | | :---------------------- | :-------------------- | :------------------------------ | | Outstanding at January 1, 2021 | 421,278 | $10.80 | | Issued | 7,111,112 | $2.29 | | Outstanding at September 30, 2021 | 7,532,390 | $2.76 | [(11) Commitments and Contingencies](index=16&type=section&id=(11)%20Commitments%20and%20Contingencies) This note details the company's operating lease commitments and significant legal settlements - The Company leases three office facilities under non-cancelable operating lease agreements, with a weighted-average remaining lease term of **3.2 years** as of September 30, 2021[61](index=61&type=chunk) Present Value of Long-term Leases (in thousands) | Metric | Sep 30, 2021 | | :-------------------------- | :----------- | | Right-of-use assets, net | $1,369 | | Total lease liability | $1,412 | | Long-term operating lease obligations | $961 | - In July 2021, the Company settled a patent infringement claim for a one-time payment of **$550,000**, recorded as a special charge to general and administrative expense[63](index=63&type=chunk) [(12) Income Taxes](index=18&type=section&id=(12)%20Income%20Taxes) This note discusses the company's income tax provisions, deferred tax assets, and valuation allowance - A valuation allowance has been established against the entire deferred income tax asset balance due to uncertainty regarding future profitability[68](index=68&type=chunk) - No interest or penalties related to income taxes were recognized for the three and nine months ended September 30, 2021 and 2020[69](index=69&type=chunk) [(13) Supplemental Disclosure of Cash Flow Information](index=18&type=section&id=(13)%20Supplemental%20Disclosure%20of%20Cash%20Flow%20Information) This note provides additional details on non-cash investing and financing activities affecting cash flows Supplemental Cash Flow Information (Nine Months Ended September 30, in thousands) | Non-Cash Activities | 2021 | 2020 | | :------------------------------------------------------ | :----- | :----- | | Gain on extinguishment of Second A&R Credit Agreement | $786 | $0 | | Extinguishment of Second A&R Credit Agreement financed by line of credit | $3,755 | $0 | | Warrants issued in connection with the Private Placement to placement agents | $351 | $0 | [(14) Related Party Transactions](index=18&type=section&id=(14)%20Related%20Party%20Transactions) This note describes transactions and relationships with entities considered related parties to the company - Royalty Opportunities, which owns approximately **20%** of the Company's common stock, was the sole holder of the prior long-term debt, which was terminated in connection with the debt refinancing[71](index=71&type=chunk) - OrbiMed, an affiliate of Royalty Opportunities, beneficially owns **84%** of the Company's common stock[71](index=71&type=chunk) [(15) Segment and Geographic Information](index=18&type=section&id=(15)%20Segment%20and%20Geographic%20Information) This note outlines the company's single operating segment and provides a breakdown of revenue by geographic area - The Company operates in a single operating segment: the development, manufacture, and marketing of orthopedic medical products and devices[73](index=73&type=chunk) Revenue by Geographic Area (in thousands) | Geographic Area | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | | :-------------- | :-------------------------- | :-------------------------- | | United States | $13,629 | $13,773 | | Rest of world | $148 | $243 | | Total revenue | $13,777 | $14,016 | | | | | | Geographic Area | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------- | :-------------------------- | :-------------------------- | | United States | $40,813 | $38,340 | | Rest of world | $480 | $982 | | Total revenue | $41,293 | $39,322 | - Approximately **99%** of sales for both the three and nine months ended September 30, 2021, were in the United States[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial condition and results of operations, highlighting business overview, the impact of the COVID-19 pandemic, detailed analysis of revenue and expenses, liquidity, capital resources, and critical accounting estimates [Business Overview](index=20&type=section&id=Business%20Overview) This section provides an overview of the company's medical technology business, products, and strategic growth initiatives - Xtant Medical develops, manufactures, and markets regenerative medicine products and medical devices, including orthobiologics and spinal implant systems, primarily in the United States through independent distributors and stocking agents[77](index=77&type=chunk)[78](index=78&type=chunk) - Key growth initiatives for 2021 include introducing new products (**three launched**, **one bone marrow aspirate concentrate offering set for November**), expanding the distribution network (**over forty new agents**), penetrating adjacent markets (foot and ankle, cranio-maxillofacial, oncology, joint reconstruction, trauma), and leveraging growth platform with strategic acquisitions[79](index=79&type=chunk) [Impact of the COVID-19 Pandemic](index=21&type=section&id=Impact%20of%20the%20COVID-19%20Pandemic) This section discusses the significant adverse effects of the COVID-19 pandemic on the company's operations, revenue, and supply chain - The COVID-19 pandemic, particularly the Delta variant surge in Q3 2021, led to cancellations/deferrals of elective procedures, hospital staffing shortages, and limited sales access, negatively impacting Q3 2021 revenues[81](index=81&type=chunk)[82](index=82&type=chunk) - While revenues improved in the first nine months of 2021 compared to the prior year due to eased restrictions, the Q3 resurgence caused a decline compared to both Q3 2020 and Q2 2021[82](index=82&type=chunk) - The pandemic also disrupted the global supply chain, affecting raw material procurement and impacting distributors, sales representatives, and suppliers[83](index=83&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) The Company experienced a slight revenue decrease in Q3 2021 due to COVID-19's Delta variant, but a 5% increase for the nine-month period. Gross profit margins declined due to increased cost of sales, while operating expenses saw mixed changes, and interest expense significantly decreased due to debt restructuring [Revenue](index=22&type=section&id=Revenue) This section analyzes the company's total revenue performance for the three and nine-month periods, noting factors influencing changes Total Revenue (in millions) | Period | 2021 | 2020 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | Three Months Ended Sep 30 | $13.8 | $14.0 | -1.7% | | Nine Months Ended Sep 30 | $41.3 | $39.3 | +5.0% | - The three-month revenue decrease was attributed to reductions in elective procedures due to the Delta variant, while the nine-month increase was due to eased COVID-19 restrictions earlier in the year[87](index=87&type=chunk) [Cost of Sales and Gross Profit](index=22&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) This section examines the cost of sales and gross profit margins, identifying factors contributing to changes in profitability Cost of Sales and Gross Profit (in millions) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cost of Sales | $6.6 | $4.8 | $16.5 | $13.9 | | Gross Profit % | 52.2% | 66.0% | 60.0% | 64.6% | - Cost of sales increased by **38.1%** for the three-month period and **18.6%** for the nine-month period, primarily due to increased under-absorption of labor/overhead, higher reserve expense for excess/obsolete inventory, and sales mix shifts towards lower-margin products[88](index=88&type=chunk)[89](index=89&type=chunk) - Gross profit percentage decreased by **13.8%** for the three-month period and **4.6%** for the nine-month period[89](index=89&type=chunk) [General and Administrative](index=22&type=section&id=General%20and%20Administrative) This section details changes in general and administrative expenses, including salaries, legal settlements, and compensation costs General and Administrative Expenses (in millions) | Period | 2021 | 2020 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | Three Months Ended Sep 30 | $3.1 | $3.0 | +2.1% | | Nine Months Ended Sep 30 | $10.3 | $10.3 | 0.0% | - The three-month increase was due to higher salaries/wages and product registration write-offs, partially offset by reduced compensation plan expenses. The nine-month period was flat, with increased legal settlement and compensation plan expenses offset by reduced severance[90](index=90&type=chunk) [Sales and Marketing](index=23&type=section&id=Sales%20and%20Marketing) This section analyzes sales and marketing expenses, including commissions, salaries, and promotional activities Sales and Marketing Expenses (in millions) | Period | 2021 | 2020 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | Three Months Ended Sep 30 | $5.3 | $5.3 | 0.0% | | Nine Months Ended Sep 30 | $15.7 | $15.6 | +0.9% | - Three-month expenses were flat, with reduced commissions offset by increased salaries/wages and marketing/travel. Nine-month expenses increased slightly due to higher independent agent commissions[91](index=91&type=chunk) [Research and Development](index=23&type=section&id=Research%20and%20Development) This section reviews research and development expenses, primarily driven by increased headcount and related salaries Research and Development Expenses (in millions) | Period | 2021 | 2020 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | Three Months Ended Sep 30 | $0.3 | $0.2 | +49.6% | | Nine Months Ended Sep 30 | $0.7 | $0.5 | +36.0% | - R&D expenses increased for both periods due to additional salaries and wages associated with increased headcount[92](index=92&type=chunk) [Interest Expense](index=23&type=section&id=Interest%20Expense) This section details the significant reduction in interest expense due to the company's debt restructuring efforts Interest Expense (in millions) | Period | 2021 | 2020 | Change (%) | | :-------------------- | :----- | :----- | :--------- | | Three Months Ended Sep 30 | $0.3 | $2.1 | -85.7% | | Nine Months Ended Sep 30 | $0.5 | $5.3 | -90.6% | - Interest expense significantly decreased for both periods due to the October 2020 debt restructuring, which reduced outstanding principal and paid-in-kind interest[93](index=93&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's liquidity significantly improved due to a private placement and debt refinancing. Cash and cash equivalents increased substantially, and new credit facilities were secured. Management believes current resources are sufficient for the next year, but may seek additional financing [Working Capital](index=23&type=section&id=Working%20Capital) This section analyzes the company's working capital position, highlighting the impact of recent financing activities Working Capital (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $18,614 | $2,341 | | Total current assets | $45,588 | $31,365 | | Total current liabilities | $10,404 | $25,649 | | Total working capital | $35,184 | $5,716 | - Working capital increased significantly from **$5.7 million** at December 31, 2020, to **$35.2 million** at September 30, 2021, primarily driven by a private placement of common stock and warrants[94](index=94&type=chunk)[95](index=95&type=chunk) - The private placement generated approximately **$18.4 million** in net proceeds, intended for working capital and general corporate purposes[95](index=95&type=chunk) [Cash Flows](index=24&type=section&id=Cash%20Flows) This section details the company's cash flows from operating, investing, and financing activities for the reporting period - Net cash provided by operating activities was **$16 thousand** for the first nine months of 2021, a substantial improvement from **$1.6 million** used in the prior year, mainly due to reductions in accounts receivable and inventories[96](index=96&type=chunk) - Net cash provided by financing activities was **$17.6 million** for the first nine months of 2021, primarily from the **$18.4 million** private placement proceeds[97](index=97&type=chunk) [Current and Prior Credit Facilities](index=24&type=section&id=Current%20and%20Prior%20Credit%20Facilities) This section describes the company's debt refinancing, new credit agreements, and compliance with covenants - On May 6, 2021, the Company entered into new Term and Revolving Credit Agreements with MidCap Financial Trust, replacing a prior facility[98](index=98&type=chunk) - The new facilities include a **$12.0 million** term loan and an **$8.0 million** revolving credit facility, both secured by substantially all assets and maturing on **May 1, 2026**[99](index=99&type=chunk)[100](index=100&type=chunk) - The Company was in compliance with all covenants under the new Credit Agreements as of September 30, 2021[103](index=103&type=chunk) [Cash Requirements](index=25&type=section&id=Cash%20Requirements) This section discusses the company's anticipated cash needs and potential future financing strategies - Management believes current cash and available credit facilities will be sufficient to meet anticipated cash requirements through at least **November 2022**[105](index=105&type=chunk) - The Company may seek additional financing through equity, debt, or strategic collaborations, but there is no assurance of securing such funds on favorable terms or without dilution to current stockholders[106](index=106&type=chunk)[107](index=107&type=chunk) [Off Balance Sheet Arrangements](index=25&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements impacting the company's financial condition - The Company does not have any material off-balance sheet arrangements that would significantly affect its financial condition or results of operations[108](index=108&type=chunk) [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) This section highlights the significant judgments and assumptions management makes in preparing the financial statements - The preparation of financial statements requires management to make estimates and assumptions, which are based on historical experience and other reasonable factors[109](index=109&type=chunk) - There have been no changes in critical accounting estimates for the three and nine months ended September 30, 2021, compared to those described in the 2020 Annual Report on Form 10-K[110](index=110&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Xtant Medical Holdings, Inc. is not required to provide the information typically mandated by this item regarding quantitative and qualitative disclosures about market risk - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[111](index=111&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the principal executive and financial officers, evaluated the effectiveness of the Company's disclosure controls and procedures as of September 30, 2021, concluding they were effective. No material changes to internal control over financial reporting occurred during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of September 30, 2021[113](index=113&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2021[114](index=114&type=chunk) [Part II. Other Information](index=26&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional disclosures including legal proceedings, risk factors, equity sales, defaults, and other relevant corporate information [Item 1. Legal Proceedings](index=26&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section states that there are no legal proceedings applicable to report under this item - No legal proceedings are applicable to report under this item[115](index=115&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=ITEM%201A.%20RISK%20FACTORS) Despite being a smaller reporting company, Xtant Medical highlights the significant and ongoing adverse impact of the COVID-19 pandemic, particularly the Delta variant, on its business, operating results, and financial condition, including revenue declines, supply chain disruptions, and heightened credit risk - The COVID-19 pandemic, especially the Delta variant, has materially and adversely affected the Company's business, operating results, and financial condition[116](index=116&type=chunk) - The resurgence of cases in Q3 2021 led to reduced elective procedures, hospital staffing shortages, and limited sales access, negatively impacting revenues and potentially continuing into 2022[118](index=118&type=chunk) - The pandemic also disrupted the global supply chain, affecting raw material procurement and increasing credit risk with distributors, customers, and suppliers[119](index=119&type=chunk) - There is no assurance that revenues will return to pre-COVID-19 levels, and continued declines could lead to impairment charges on assets and inventory write-downs[123](index=123&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section indicates that there are no unregistered sales of equity securities or use of proceeds to report under this item - No unregistered sales of equity securities and use of proceeds are applicable to report under this item[125](index=125&type=chunk) [Item 3. Defaults Upon Senior Securities](index=29&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there are no defaults upon senior securities to report under this item - No defaults upon senior securities are applicable to report under this item[126](index=126&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that there are no mine safety disclosures to report under this item - No mine safety disclosures are applicable to report under this item[127](index=127&type=chunk) [Item 5. Other Information](index=29&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The Company announced the appointment of Broadridge Corporate Issuers Solutions, Inc. as its new transfer agent and registrar for common stock, effective November 5, 2021 - Broadridge Corporate Issuers Solutions, Inc. was appointed as the new transfer agent and registrar for the Company's common stock, effective **November 5, 2021**[128](index=128&type=chunk) [Item 6. Exhibits](index=29&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed or furnished with the Quarterly Report on Form 10-Q, including various corporate documents, certifications, and XBRL-formatted financial statements - The report includes certifications from the CEO and CFO (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act) and Inline XBRL formatted financial statements[130](index=130&type=chunk)

Investor Presentation September 2021 XTANT MEDICAL www.xtantmedical.com DISCLOSURE STATEMENTS Cautionary Statement Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "intends," "expects," "anticipates," "believes," "estimates," "co ...

Xtant Medical Holdings, Inc. (NYSE:XTNT) Q2 2021 Earnings Conference Call August 5, 2021 9:00 AM ET Company Participants Matt Steinberg - Lazar FINN Partners Sean Browne - President and CEO Greg Jensen - VP, Finance and CFO Conference Call Participants Operator Greetings and welcome to the Xtant Medical Second Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded. I would now lik ...

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's unaudited financial statements for Q2 2021 show increased cash and equity from a private placement, revenue growth, and a narrowed net loss due to debt restructuring and new credit facilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $20,312 | $2,341 | | Total current assets | $49,432 | $31,365 | | Total Assets | $59,676 | $41,466 | | **Liabilities & Equity** | | | | Total current liabilities | $12,915 | $25,649 | | Long-term debt, less issuance costs | $11,683 | $0 | | Total Liabilities | $25,792 | $26,952 | | Total Stockholders' Equity | $33,884 | $14,514 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $14,975 | $10,529 | $27,517 | $25,307 | | Gross Profit | $9,515 | $6,550 | $17,606 | $16,163 | | Loss from Operations | ($491) | ($387) | ($497) | ($1,749) | | Net Loss | ($733) | ($2,464) | ($762) | ($4,957) | | Net loss per share (Basic & Diluted) | ($0.01) | ($0.19) | ($0.01) | ($0.38) | - In February 2021, the company completed a private placement, issuing 8,888,890 shares of common stock and warrants, which resulted in net cash proceeds of approximately **$18.4 million**[31](index=31&type=chunk) - On May 6, 2021, the company entered into new credit agreements for a **$12 million** term loan and an **$8 million** revolving credit facility, using the proceeds to repay all outstanding debt under its previous credit agreement with OrbiMed[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - In July 2021, the company settled a patent infringement claim for a one-time payment of **$550,000**, accrued as a special charge in general and administrative expenses for the second quarter[64](index=64&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q2 2021 financial performance, noting a 42.2% revenue increase, improved liquidity from a private placement and new debt, and outlines growth initiatives, projecting sufficient cash through August 2022 [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q2 2021 revenue grew 42.2% to $15.0 million, driven by pandemic recovery, with gross profit margin improving to 63.5%, while operating expenses rose due to a legal settlement, and interest expense significantly decreased Revenue Comparison (in millions) | Period | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $15.0 | $10.5 | +42.2% | | Six Months Ended June 30 | $27.5 | $25.3 | +8.7% | - Gross profit as a percentage of revenue increased to **63.5%** for the three months ended June 30, 2021, from 62.2% in the prior-year period, primarily due to greater economies of scale[87](index=87&type=chunk) - General and administrative expenses for the three months ended June 30, 2021, increased by **$1.2 million**, primarily due to **$0.6 million** in legal settlement expenses and **$0.2 million** in additional stock-based compensation[88](index=88&type=chunk) - Interest expense for the six months ended June 30, 2021, was **$0.2 million**, a significant decrease from **$3.2 million** in the same period of 2020, resulting from the October 2020 debt restructuring[92](index=92&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital significantly increased to $36.5 million by June 2021 due to an $18.4 million private placement and new credit facilities, with operating cash flow turning positive at $0.9 million for the first half of 2021 Working Capital Summary (in thousands) | Component | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $49,432 | $31,365 | | Total current liabilities | $12,915 | $25,649 | | **Total working capital** | **$36,517** | **$5,716** | - Net cash provided by financing activities was **$18.2 million** for the first six months of 2021, primarily from the **$18.4 million** in net proceeds from the February 2021 private placement[95](index=95&type=chunk) - On May 6, 2021, the company entered into new credit agreements with MidCap Financial Trust, establishing a **$12.0 million** term loan and an **$8.0 million** revolving credit facility, which mature on May 1, 2026[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - The company's key growth initiatives for 2021 are: (1) introducing new products, (2) expanding its distribution network, (3) penetrating adjacent markets, and (4) leveraging its growth platform with technology and strategic acquisitions[80](index=80&type=chunk) - The company believes its cash and cash equivalents of **$20.5 million** as of June 30, 2021, along with available credit, will be sufficient to meet anticipated cash requirements through at least August 2022[104](index=104&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide information regarding quantitative and qualitative disclosures about market risk[111](index=111&type=chunk) [Controls and Procedures](index=25&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during Q2 2021 - Based on an evaluation as of June 30, 2021, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[113](index=113&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[114](index=114&type=chunk) [PART II. OTHER INFORMATION](index=26&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=26&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company faces various legal claims in the ordinary course of business, with details on a recent settlement available in Note 11 of the financial statements - The company is subject to potential liabilities from various claims and legal actions that arise in the ordinary course of business; for details on pending legal proceedings, refer to Note 11 in the condensed consolidated financial statements[115](index=115&type=chunk) [Risk Factors](index=26&type=page&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, the company is not required to provide risk factor disclosures in its Form 10-Q - The company is a smaller reporting company and is not required to provide information regarding risk factors in its Form 10-Q[116](index=116&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section is not applicable for the current reporting period [Exhibits](index=26&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, and CEO/CFO certifications

Xtant Medical Holdings, Inc. (NYSE:XTNT) Q1 2021 Earnings Conference Call May 11, 2021 9:00 AM ET Company Participants Matt Steinberg - Lazar FINN Partners Sean Browne - President and CEO Greg Jensen - VP, Finance and CFO Conference Call Participants Operator Greetings, and welcome to the Xtant Medical First Quarter 2021 Financial Results Conference Call. All participants are in a listen-only mode for today's presentation. [Operator Instructions] As a reminder, this conference call is being recorded. I'd no ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-34951 XTANT MEDICAL HOLDINGS, INC. (Exact name of registrant as specified in its charter) | Delawar ...

Xtant Medical Holdings, Inc. (NYSE:XTNT) Q4 2020 Earnings Conference Call February 24, 2020 9:00 AM ET Company Participants Matt Steinberg - Lazar FINN Partners Sean Browne - President and CEO Greg Jensen - VP Finance and CFO Conference Call Participants Operator Greetings, and welcome to the Xtant Medical Fourth Quarter and Full Year 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I'd ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 001-34951 Xtant Medical Holdings, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 20-531332 ...

Xtant Medical Holdings, Inc. (NYSE:XTNT) Q3 2020 Earnings Conference Call October 29, 2020 9:00 AM ET Company Participants David Carey - Lazar FINN Partners Sean Browne - President and CEO Greg Jensen - VP, Finance and CFO Conference Call Participants Operator Greetings, and welcome to the Xtant Medical's Q3 2020 Financial Results. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over t ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) | Delaware | 20-5313323 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization ...