Xtant Medical Holdings Inc. (NYSE:XTNT) Q3 2023 Results Conference Call November 9, 2023 9:00 AM ET Company Participants Matt Steinberg - Investor Relations Sean Browne - President, CEO and Director Scott Neils - Chief Financial Officer Conference Call Participants Chase Knickerbocker - Craig-Hallum Operator Greetings, and welcome to the Xtant Medical Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the c ...

Investor Presentation July 2023 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," "plans," "believes" "estimates" ...

Xtant Medical Holdings, Inc. (NYSE:XTNT) Q2 2023 Earnings Conference Call August 1, 2023 9:00 AM ET Company Participants Matt Steinberg - IR Sean Browne - CEO Scott Neils - CFO Conference Call Participants Chase Knickerbocker - Craig-Hallum Capital Group Operator Greetings. You're welcome Xtant Medical's Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As ...

[Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This statement warns that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements that are subject to various risks and uncertainties, potentially causing actual results to differ materially from projections[9](index=9&type=chunk)[11](index=11&type=chunk) - Key risks include potential delays or failure in completing the Surgalign acquisition, challenges in integrating acquired businesses, the impact of inflation and supply chain disruptions, global economic slowdown, rising interest rates, labor shortages, and the ability to service debt and maintain liquidity[10](index=10&type=chunk)[12](index=12&type=chunk) [Part I. Financial Information](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section provides the unaudited condensed consolidated financial statements and comprehensive notes for the periods ended June 30, 2023 and 2022 [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets (In thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,138 | $20,298 | | Restricted cash | $310 | $209 | | Trade accounts receivable, net | $13,744 | $10,853 | | Inventories | $20,364 | $17,285 | | Total current assets | $39,571 | $49,318 | | Total Assets | $65,218 | $60,229 | | Total current liabilities | $16,989 | $15,218 | | Long-term debt, plus premium and less issuance costs | $16,401 | $9,687 | | Total Liabilities | $34,259 | $26,058 | | Total Stockholders' Equity | $30,959 | $34,171 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Operations (In thousands, except per share amounts) | | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $20,232 | $15,277 | $38,176 | $28,236 | | Gross Profit | $12,459 | $8,374 | $22,995 | $15,934 | | Loss from Operations | $(1,391) | $(1,300) | $(2,967) | $(3,131) | | Net Loss | $(2,190) | $(1,710) | $(4,268) | $(3,923) | | Net Loss Per Share: Basic | $(0.02) | $(0.02) | $(0.04) | $(0.04) | | Net Loss Per Share: Dilutive | $(0.02) | $(0.02) | $(0.04) | $(0.04) | [Condensed Consolidated Statements of Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This statement outlines changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Equity (In thousands) | | Balance at Dec 31, 2022 | Stock-based Compensation | Net Loss | Balance at June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Common Stock Shares | 108,874,803 | — | — | 108,897,048 | | Additional Paid-In Capital | $277,841 | $1,056 | — | $278,897 | | Accumulated Deficit | $(243,670) | — | $(4,268) | $(247,938) | | Total Stockholders' Equity | $34,171 | $1,056 | $(4,268) | $30,959 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Cash Flows (In thousands) | | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,766) | $(989) | | Net cash used in investing activities | $(17,815) | $(645) | | Net cash provided by financing activities | $6,522 | $94 | | Net change in cash and cash equivalents and restricted cash | $(16,059) | $(1,540) | | Cash and cash equivalents and restricted cash at end of period | $4,448 | $16,847 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed information supporting the financial statements, covering business, accounting policies, acquisitions, and revenue recognition [(1) Business Description, Basis of Presentation and Summary of Significant Accounting Policies](index=11&type=section&id=(1)%20Business%20Description,%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Xtant's business, the basis of financial statement presentation, and significant accounting policies and estimates - Xtant is a global medical technology company specializing in orthobiologics and spinal implant systems for spinal fusion procedures[24](index=24&type=chunk) - The financial statements are prepared using GAAP, with significant estimates made for assets, liabilities, revenue, and expenses, including goodwill, intangible assets, and valuation allowances[25](index=25&type=chunk)[28](index=28&type=chunk) - Restricted cash includes lockbox deposits temporarily restricted due to timing, applied against the line of credit the next business day[29](index=29&type=chunk) [(2) Acquisition of Coflex and CoFix Product Lines](index=12&type=section&id=(2)%20Acquisition%20of%20Coflex%20and%20CoFix%20Product%20Lines) This note details the February 2023 acquisition of Surgalign SPV, Inc. for $17.0 million, adding Coflex and CoFix product lines and recognizing goodwill - Xtant acquired Surgalign SPV, Inc. on February 28, 2023, for **$17.0 million in cash**, adding the Coflex and CoFix product lines[35](index=35&type=chunk)[38](index=38&type=chunk) - The Coflex and CoFix products are FDA PMA-approved for treating moderate to severe lumbar spinal stenosis, enhancing Xtant's spine portfolio with minimally invasive, motion-preserving stabilization[36](index=36&type=chunk)[42](index=42&type=chunk) Preliminary Purchase Price Allocation (in thousands) | Acquired Assets | Amount | | :--- | :--- | | Inventories | $1,589 | | Equipment | $947 | | Intangible assets | $11,155 | | Net assets acquired | $13,691 | | Goodwill | $3,309 | | Total purchase consideration | $17,000 | Unaudited Pro Forma Combined Financial Information (Six Months Ended June 30, in thousands) | | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | $40,000 | $31,828 | | Net loss | $(3,745) | $(2,543) | [(3) Asset Purchase Agreement](index=14&type=section&id=(3)%20Asset%20Purchase%20Agreement) This note describes the June 2023 agreement to acquire Surgalign Holdings' assets for $5 million, pending Bankruptcy Court approval and expected to close by September 1, 2023 - On June 18, 2023, Xtant agreed to acquire specified assets and assume certain liabilities of Surgalign Holdings, Inc. for **$5 million in cash**[44](index=44&type=chunk) - The transaction is being conducted through a Bankruptcy Court-supervised process, with Xtant designated as the successful bidder in an auction on July 28, 2023[45](index=45&type=chunk) - Closing of the transaction is expected after the Bankruptcy Court sale hearing on August 8, 2023, but no later than September 1, 2023[45](index=45&type=chunk) [(4) Revenue](index=15&type=section&id=(4)%20Revenue) This note details revenue recognition policies for orthopedic product sales, primarily in the U.S., and presents revenue by product line - Revenue is primarily generated from independent commissioned sales agents in the U.S. and recognized upon product utilization by hospitals or transfer of control to stocking/private label resellers[46](index=46&type=chunk)[48](index=48&type=chunk) Revenue by Product Line (in thousands) | Product Line | Q2 2023 Revenue | Q2 2023 % of Total | Q2 2022 Revenue | Q2 2022 % of Total | | :--- | :--- | :--- | :--- | :--- | | Orthobiologics | $14,315 | 71% | $12,402 | 81% | | Spinal implant | $5,917 | 29% | $2,875 | 19% | | Other revenue | $— | 0% | $— | 0% | | Total revenue | $20,232 | 100% | $15,277 | 100% | | Product Line | H1 2023 Revenue | H1 2023 % of Total | H1 2022 Revenue | H1 2022 % of Total | | :--- | :--- | :--- | :--- | :--- | | Orthobiologics | $27,866 | 73% | $22,568 | 80% | | Spinal implant | $10,309 | 27% | $5,659 | 20% | | Other revenue | $1 | 0% | $9 | 0% | | Total revenue | $38,176 | 100% | $28,236 | 100% | [(5) Receivables](index=15&type=section&id=(5)%20Receivables) This note outlines the company's policy for the allowance for credit losses, based on historical experience and current economic conditions Allowance for Credit Losses Activity (in thousands) | | June 30, 2023 | June 30, 2022 | | :--- | :--- | :--- | | Balance at January 1 | $515 | $552 | | Provision for expected credit losses (Q1) | $106 | $191 | | Write-offs charged against allowance (Q1) | $— | $(173) | | Balance at March 31 | $621 | $570 | | Provision for expected credit losses (Q2) | $119 | $(49) | | Write-offs charged against allowance (Q2) | $— | $(11) | | Balance at June 30 | $740 | $510 | [(6) Inventories](index=16&type=section&id=(6)%20Inventories) This note provides a breakdown of the company's inventories, including raw materials, work in process, and finished goods Inventories (in thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Raw materials | $6,359 | $5,628 | | Work in process | $1,406 | $798 | | Finished goods | $12,599 | $10,859 | | Total | $20,364 | $17,285 | [(7) Property and Equipment, Net](index=16&type=section&id=(7)%20Property%20and%20Equipment,%20Net) This note details the composition of property and equipment, net, including depreciation expense, for the periods presented Property and Equipment, Net (in thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Equipment | $5,597 | $5,598 | | Computer equipment | $1,158 | $1,043 | | Computer software | $230 | $230 | | Leasehold improvements | $4,105 | $4,105 | | Surgical instruments | $12,209 | $11,266 | | Assets not yet in service | $2,079 | $1,507 | | Total cost | $25,378 | $23,749 | | Less: accumulated depreciation | $(18,503) | $(17,964) | | Property and equipment, net | $6,875 | $5,785 | - Depreciation expense for property and equipment was **$0.4 million for Q2 2023** (vs **$0.3 million in Q2 2022**) and **$0.7 million for H1 2023** (vs **$0.6 million in H1 2022**)[52](index=52&type=chunk) [(8) Intangible Assets](index=16&type=section&id=(8)%20Intangible%20Assets) This note details the company's intangible assets, including patents, customer relationships, and trade names, and their amortization Intangible Assets (in thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Patents | $2,617 | $807 | | Customer relationships | $8,100 | $— | | Trade names | $1,245 | $— | | Total cost | $11,962 | $807 | | Less: accumulated amortization | $(1,042) | $(463) | | Intangible assets, net | $10,920 | $344 | [(9) Accrued Liabilities](index=16&type=section&id=(9)%20Accrued%20Liabilities) This note provides a breakdown of accrued liabilities, primarily cash compensation/commissions payable and other accrued items Accrued Liabilities (in thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash compensation/commissions payable | $5,455 | $4,464 | | Other accrued liabilities | $800 | $1,032 | | Accrued liabilities | $6,255 | $5,496 | [(10) Debt](index=17&type=section&id=(10)%20Debt) This note details the company's long-term debt, including term loan amendments, increased borrowings, and effective interest rates as of June 30, 2023 Long-Term Debt (in thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Amounts due under the term loan | $17,000 | $12,000 | | Accrued end-of-term payments | $337 | $216 | | Less: unamortized debt issuance costs | $(228) | $(196) | | Less: current maturities | $(708) | $(2,333) | | Long-term debt, less issuance costs | $16,401 | $9,687 | - The term loan agreement was amended on February 28, 2023, to provide an additional **$5.0 million in funding** and increase the minimum interest rate from **1% to 2.5%**[55](index=55&type=chunk) - The interest-only period on the term loan was extended until June 2024, after which monthly principal payments of approximately **$0.7 million** will be required[56](index=56&type=chunk) - As of June 30, 2023, the effective rate of the term loan was **13.79%**, and the revolving credit agreement was **9.77%**; the company had **$3.0 million available** under the revolving credit agreement[57](index=57&type=chunk) [(11) Stock-Based Compensation](index=17&type=section&id=(11)%20Stock-Based%20Compensation) This note details stock option and restricted stock unit activity, unrecognized compensation expense, and the new 2023 Equity Incentive Plan Stock Option Activity (Six Months Ended June 30) | | 2023 Shares | 2023 Avg. Exercise Price | 2022 Shares | 2022 Avg. Exercise Price | | :--- | :--- | :--- | :--- | :--- | | Outstanding at January 1 | 3,360,664 | $1.51 | 3,201,666 | $1.80 | | Granted | 130,000 | $0.74 | 109,164 | $0.65 | | Cancelled or expired | (75,460) | $18.61 | (443,125) | $2.39 | | Outstanding at June 30 | 3,415,204 | $1.49 | 2,867,705 | $1.66 | | Exercisable at June 30 | 1,438,894 | $1.93 | 599,063 | $2.71 | Restricted Stock Unit Activity (Six Months Ended June 30) | | 2023 Shares | 2023 Avg. Fair Value | 2022 Shares | 2022 Avg. Fair Value | | :--- | :--- | :--- | :--- | :--- | | Outstanding at January 1 | 3,612,433 | $0.88 | 2,970,104 | $1.39 | | Granted | 186,831 | $0.71 | 88,983 | $0.65 | | Vested | (22,245) | $0.65 | (244,721) | $1.45 | | Cancelled | (494,121) | $0.54 | (318,807) | $1.32 | | Outstanding at June 30 | 3,282,898 | $0.92 | 2,495,559 | $1.36 | - As of June 30, 2023, total unrecognized compensation expense related to unvested stock options was approximately **$1.5 million**, and for restricted stock units, it was **$2.0 million**, both expected to be recognized over a weighted-average period of **2.0 years**[58](index=58&type=chunk)[61](index=61&type=chunk) - The 2023 Equity Incentive Plan was approved on July 26, 2023, replacing the 2018 Plan for future grants and making available up to **5,500,000 new shares**, plus remaining and forfeited shares from the 2018 Plan[62](index=62&type=chunk) [(12) Warrants](index=19&type=section&id=(12)%20Warrants) This note provides information on the company's outstanding and exercisable warrants, including exercise price and remaining term - As of June 30, 2023, there were **12,187,470 outstanding and exercisable warrants** to purchase common stock[63](index=63&type=chunk) - The warrants have a weighted average exercise price of **$1.53 per share** and a weighted average remaining contractual term of **3.3 years**[63](index=63&type=chunk) [(13) Commitments and Contingencies](index=19&type=section&id=(13)%20Commitments%20and%20Contingencies) This note details operating lease obligations, rent expense, and the company's assessment of potential liabilities from legal proceedings Future Minimum Operating Lease Payments (in thousands) | Period | Amount | | :--- | :--- | | Remainder of 2023 | $271 | | 2024 | $559 | | 2025 | $470 | | Total future minimum lease payments | $1,300 | | Less amount representing interest | $(92) | | Present value of obligations under operating leases | $1,208 | | Less current portion | $(488) | | Long-term operating lease obligations | $720 | - Rent expense was **$0.1 million** for the three months ended June 30, 2023 and 2022, and **$0.3 million** for the six months ended June 30, 2023 and 2022[65](index=65&type=chunk) - The company assesses potential liabilities from legal actions and accrues estimated losses when probable and reasonably estimable, believing current accruals are adequate[66](index=66&type=chunk) [(14) Income Taxes](index=20&type=section&id=(14)%20Income%20Taxes) This note explains the company's deferred tax assets and the establishment of a valuation allowance due to uncertainty of future profitability - A valuation allowance has been established against the entire deferred income tax asset balance due to uncertainty about the company's ability to generate future taxable income[69](index=69&type=chunk) - No interest or penalties related to income taxes were recognized for the three and six months ended June 30, 2023 and 2022[70](index=70&type=chunk) [(15) Supplemental Disclosure of Cash Flow Information](index=20&type=section&id=(15)%20Supplemental%20Disclosure%20of%20Cash%20Flow%20Information) This note provides supplemental cash flow information, including cash paid for interest and non-cash investing activities Supplemental Cash Flow Information (Six Months Ended June 30, in thousands) | | 2023 | 2022 | | :--- | :--- | :--- | | Cash paid during the period for: Interest | $1,171 | $667 | | Non-cash activities: Fixed assets acquired under finance lease | $— | $159 | [(16) Related Party Transactions](index=20&type=section&id=(16)%20Related%20Party%20Transactions) This note discloses related party transactions with OrbiMed-affiliated funds and the approval process by the Audit Committee - OrbiMed Royalty Opportunities II, LP and ROS Acquisition Offshore LP, funds affiliated with OrbiMed Advisors LLC, beneficially own **67% of the Company's common stock**[72](index=72&type=chunk) - All related party transactions are reviewed and approved by the Audit Committee or disinterested members of the Board of Directors[73](index=73&type=chunk) [(17) Segment and Geographic Information](index=20&type=section&id=(17)%20Segment%20and%20Geographic%20Information) This note confirms the company operates in a single segment, with revenue primarily generated in the United States - The company operates in a single operating segment: the development, manufacture, and marketing of orthopedic medical products and devices[74](index=74&type=chunk) Revenue by Major Geographic Area (in thousands) | Geographic Area | Q2 2023 Revenue | Q2 2022 Revenue | H1 2023 Revenue | H1 2022 Revenue | | :--- | :--- | :--- | :--- | :--- | | United States | $19,987 | $15,025 | $37,501 | $27,719 | | Rest of world | $245 | $252 | $675 | $517 | | Total revenue | $20,232 | $15,277 | $38,176 | $28,236 | - Approximately **99% of sales** for both the three and six months ended June 30, 2023 and 2022, were in the United States[75](index=75&type=chunk) [(18) Subsequent Event](index=21&type=section&id=(18)%20Subsequent%20Event) This note details a July 2023 private placement of 20 million common shares, raising $15.0 million for working capital - On July 3, 2023, Xtant entered into a securities purchase agreement for a private placement, issuing **20,000,000 shares of common stock at $0.75 per share**[77](index=77&type=chunk) - The private placement closed on July 6, 2023, generating gross proceeds of **$15.0 million**, which are expected to be used for working capital and general corporate purposes[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of financial condition, operational results, business overview, acquisitions, liquidity, and critical accounting estimates [Business Overview](index=22&type=section&id=Business%20Overview) Xtant develops and markets regenerative and stabilization medicine products for orthopedic and neurological surgeons, focusing on the U.S. market with key growth initiatives - Xtant develops, manufactures, and markets regenerative and stabilization medicine products and medical devices for orthopedic and neurological surgeons, including orthobiologics and spinal implant systems[79](index=79&type=chunk) - The company promotes products in the U.S. through independent distributors and stocking agents, with a national accounts program for IDNs and GPOs, and also sells internationally[80](index=80&type=chunk) - Key growth initiatives include introducing new products, expanding the distribution network, penetrating adjacent markets, and leveraging growth platforms with technology and strategic acquisitions[81](index=81&type=chunk) [Acquisition of Coflex and CoFix Product Lines](index=22&type=section&id=Acquisition%20of%20Coflex%20and%20CoFix%20Product%20Lines) This section reiterates the February 2023 acquisition of Surgalign SPV, Inc. for $17.0 million, adding FDA-approved Coflex and CoFix products - On February 28, 2023, Xtant acquired Surgalign SPV, Inc. for **$17.0 million**, gaining the Coflex and CoFix product lines[82](index=82&type=chunk) - The Coflex and CoFix products are FDA-approved for treating moderate to severe lumbar spinal stenosis, providing minimally invasive, motion-preserving stabilization[83](index=83&type=chunk) [Recent Development: Asset Purchase Agreement](index=22&type=section&id=Recent%20Development:%20Asset%20Purchase%20Agreement) This section details the June 2023 Asset Purchase Agreement to acquire Surgalign Holdings' assets for $5 million, pending bankruptcy court approval - On June 18, 2023, Xtant agreed to acquire specific assets and assume liabilities from Surgalign Holdings, Inc. for **$5 million**[85](index=85&type=chunk) - The acquisition is part of a Chapter 11 bankruptcy process, with Xtant designated as the successful bidder in an auction on July 28, 2023[87](index=87&type=chunk) - The closing of the transaction is anticipated after the Bankruptcy Court sale hearing on August 8, 2023, and no later than September 1, 2023[87](index=87&type=chunk) [Recent Development: July 2023 Private Placement](index=24&type=section&id=Recent%20Development:%20July%202023%20Private%20Placement) This section describes the July 2023 private placement of 20 million common shares, raising $15.0 million for working capital - On July 3, 2023, Xtant issued **20,000,000 shares of common stock** in a private placement at **$0.75 per share**[88](index=88&type=chunk) - The private placement generated **$15.0 million in gross proceeds**, intended for working capital and general corporate purposes[88](index=88&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenue, cost of sales, gross profit, and operating expenses [Revenue](index=24&type=section&id=Revenue) This subsection analyzes the company's revenue performance for the three and six months ended June 30, 2023, compared to the prior year - Total revenue for the three months ended June 30, 2023, increased by **32% to $20.2 million** (from **$15.3 million in 2022**)[89](index=89&type=chunk) - Total revenue for the six months ended June 30, 2023, increased by **35% to $38.2 million** (from **$28.2 million in 2022**)[89](index=89&type=chunk) - These increases are primarily attributed to greater independent agent sales, the contribution of Coflex and CoFix product sales, and opportunistic private label sales[89](index=89&type=chunk) [Cost of Sales and Gross Profit](index=24&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) This subsection analyzes changes in cost of sales and gross profit, including factors impacting gross profit percentage - Cost of sales increased by **12% to $7.7 million** for the three months ended June 30, 2023, and by **23% to $15.1 million** for the six months ended June 30, 2023, primarily due to higher sales volumes[90](index=90&type=chunk) - Gross profit as a percentage of revenue increased to **61.6% for Q2 2023** (from **54.8% in Q2 2022**) and to **60.2% for H1 2023** (from **56.4% in H1 2022**)[91](index=91&type=chunk) - The increase in gross profit percentage was driven by the impact of Coflex and CoFix products (**580 basis points for Q2, 550 for H1**) and decreased charges for excess and obsolete inventory, partially offset by higher product costs[91](index=91&type=chunk) [General and Administrative](index=25&type=section&id=General%20and%20Administrative) This subsection analyzes changes in general and administrative expenses, including contributing factors like amortization and compensation - General and administrative expenses increased by **31% to $5.0 million for Q2 2023** (from **$3.8 million in Q2 2022**) and by **27% to $9.8 million for H1 2023** (from **$7.8 million in H1 2022**)[93](index=93&type=chunk) - The increase was primarily due to amortization of intangible assets from Coflex/CoFix (**$0.4 million for Q2, $0.6 million for H1**), additional compensation expense related to headcount (**$0.4 million for Q2, $0.8 million for H1**), and acquisition-related professional fees (**$0.2 million for Q2, $0.3 million for H1**)[93](index=93&type=chunk) [Sales and Marketing](index=25&type=section&id=Sales%20and%20Marketing) This subsection analyzes changes in sales and marketing expenses, driven by commission and compensation increases - Sales and marketing expenses increased by **55% to $8.7 million for Q2 2023** (from **$5.6 million in Q2 2022**) and by **45% to $15.8 million for H1 2023** (from **$10.8 million in H1 2022**)[94](index=94&type=chunk) - The increase was primarily driven by additional commission expense due to revenue growth (**$1.7 million for Q2, $2.9 million for H1**) and additional compensation expense related to headcount (**$0.8 million for Q2, $1.1 million for H1**)[94](index=94&type=chunk) [Research and Development](index=25&type=section&id=Research%20and%20Development) This subsection analyzes changes in research and development expenses for the periods presented - Research and development expenses remained stable at **$0.2 million** for the three months ended June 30, 2023 and 2022[95](index=95&type=chunk) - For the six months ended June 30, 2023, R&D expense was **$0.4 million**, a decrease from **$0.5 million** in the same period of 2022[95](index=95&type=chunk) [Interest Expense](index=25&type=section&id=Interest%20Expense) This subsection analyzes changes in interest expense, primarily due to higher rates and increased term loan borrowings - Interest expense increased to **$0.8 million for Q2 2023** (from **$0.4 million in Q2 2022**) and to **$1.4 million for H1 2023** (from **$0.8 million in H1 2022**)[96](index=96&type=chunk) - The increase was primarily due to higher base interest rates on debt instruments and an additional **$5.0 million borrowing** under the term loan in February 2023[96](index=96&type=chunk) - Annualized interest expense is expected to increase by approximately **$0.1 million** for every **50 basis points** increase in the reference rate[96](index=96&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's working capital, cash flow activities, credit facilities, and future cash requirements, including the impact of acquisitions and financing [Working Capital](index=25&type=section&id=Working%20Capital) This subsection analyzes the company's working capital position, highlighting changes in cash, receivables, and inventory Working Capital (in thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,448 | $20,507 | | Accounts receivable, net | $13,744 | $10,853 | | Inventories | $20,364 | $17,285 | | Total current assets | $39,571 | $49,318 | | Total current liabilities | $16,989 | $15,218 | | Net working capital | $22,582 | $34,100 | - The decrease in cash and cash equivalents is primarily due to the acquisition of Surgalign SPV, Inc. and the net loss incurred during the first six months of 2023, along with increases in accounts receivable and inventory[98](index=98&type=chunk) - A private placement in July 2023 generated **$15.0 million in gross proceeds**, expected to be used for working capital and general corporate purposes[99](index=99&type=chunk) [Cash Flows](index=26&type=section&id=Cash%20Flows) This subsection analyzes the company's cash flows from operating, investing, and financing activities for the periods presented - Net cash used in operating activities increased to **$4.8 million for H1 2023** (from **$1.0 million in H1 2022**), mainly due to increases in accounts receivable and inventory[100](index=100&type=chunk) - Net cash used in investing activities significantly increased to **$17.8 million for H1 2023** (from **$0.6 million in H1 2022**), primarily due to the **$17.0 million acquisition** of Surgalign SPV, Inc[101](index=101&type=chunk) - Net cash provided by financing activities was **$6.5 million for H1 2023** (from **$94 thousand in H1 2022**), mainly from **$5.0 million in additional term loan borrowings**[102](index=102&type=chunk) [Current and Prior Credit Facilities](index=26&type=section&id=Current%20and%20Prior%20Credit%20Facilities) This subsection details the company's term loan and revolving credit facilities, including amendments and compliance with covenants - The company has a Term Credit Agreement for **$12.0 million** (plus an additional **$5.0 million tranche**) and a Revolving Credit Agreement for up to **$8.0 million**, both maturing on May 1, 2026[104](index=104&type=chunk)[107](index=107&type=chunk) - Amendments in February 2023 provided **$5.0 million** for the Surgalign SPV acquisition, reset prepayment fee dates, and increased the minimum interest rate from **1% to 2.5%** for both facilities[106](index=106&type=chunk) - As of June 30, 2023, the company had **$5.0 million outstanding** and **$3.0 million available** under the Revolving Facility, and was in compliance with all credit agreement covenants[108](index=108&type=chunk)[110](index=110&type=chunk) [Cash Requirements](index=28&type=section&id=Cash%20Requirements) This subsection discusses the company's projected liquidity, sufficiency of funds, and potential need for additional financing - The company believes its cash and cash equivalents (**$4.1 million as of June 30, 2023**), along with proceeds from the July 2023 private placement, available credit, and operating cash flows, will be sufficient through at least August 2024[111](index=111&type=chunk) - There is no assurance that additional financing will not be needed or that it will be available on acceptable terms, especially if market conditions deteriorate[112](index=112&type=chunk) - Raising additional capital through equity or convertible debt could dilute current stockholders, and debt financing may impose restrictive covenants[113](index=113&type=chunk) [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) This section discusses critical accounting estimates, particularly those related to business combinations and the valuation of acquired assets and liabilities [Business Combinations](index=29&type=section&id=Business%20Combinations) This subsection details the accounting for business combinations, emphasizing the significant estimates and judgments in fair value allocation - Business acquisitions are accounted for by allocating total consideration to acquired assets and assumed liabilities based on their estimated fair values, with goodwill representing the excess consideration[116](index=116&type=chunk) - Assigning fair values to acquired net assets, especially intangible assets, inventory, and property/equipment, requires significant estimates and judgments, often involving third-party valuation specialists and various valuation methods (income, market, cost approaches)[117](index=117&type=chunk)[118](index=118&type=chunk) - Estimates can be refined within one year of acquisition, and these judgments materially impact net earnings through depreciation, amortization, and potential impairment charges[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Xtant Medical Holdings, Inc. is exempt from providing market risk disclosures - As a smaller reporting company, Xtant Medical Holdings, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details management's evaluation of disclosure controls and procedures, concluding their effectiveness and noting integration changes [Limitations on Effectiveness of Controls and Procedures](index=30&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) This subsection acknowledges the inherent limitations of any control system, providing only reasonable assurance of achieving objectives - Management acknowledges that any controls and procedures, regardless of design, can only provide reasonable assurance of achieving desired control objectives due to inherent limitations and resource constraints[121](index=121&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=30&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This subsection states management's conclusion on the effectiveness of disclosure controls and procedures as of June 30, 2023 - As of June 30, 2023, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[122](index=122&type=chunk) [Changes in Internal Control over Financial Reporting](index=30&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This subsection reports on material changes in internal control over financial reporting, including those from the Surgalign SPV Inc. integration - There were no material changes in internal control over financial reporting during the three months ended June 30, 2023, other than those implemented to integrate the internal controls of Surgalign SPV Inc[123](index=123&type=chunk) [Part II. Other Information](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information, including legal proceedings, risk factors, and exhibits, not covered in the financial statements [Item 1. Legal Proceedings](index=31&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 13 for details on the company's legal proceedings and potential liabilities - Information regarding legal proceedings is discussed in Note 13 – Commitments and Contingencies in the notes to the condensed consolidated financial statements[125](index=125&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines new and revised risk factors, focusing on acquisition risks and the adverse effects of economic conditions on financial performance - Acquisitions and business combinations, including the pending Surgalign Holdings acquisition and completed Surgalign SPV acquisition, are inherently risky and may harm business, operating results, and financial condition due to integration difficulties, loss of key personnel, and unanticipated liabilities[126](index=126&type=chunk)[128](index=128&type=chunk) - Worldwide economic and market conditions, including global slowdown, inflation, rising interest rates, bank failures, and supply chain disruptions, could materially and adversely affect the company's revenue, liquidity, financial condition, and results of operations[130](index=130&type=chunk) - The company's operating results may differ significantly from its guidance, which is speculative and subject to uncertainties, potentially causing the market price of common stock to decline[131](index=131&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This item is not applicable to the registrant - This item is not applicable to the registrant[136](index=136&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable to the registrant - This item is not applicable to the registrant[137](index=137&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the registrant - This item is not applicable to the registrant[138](index=138&type=chunk) [Item 5. Other Information](index=34&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This item is not applicable to the registrant - This item is not applicable to the registrant[139](index=139&type=chunk) [Item 6. Exhibits](index=34&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed or furnished with the Quarterly Report on Form 10-Q, including agreements and certifications Selected Exhibits Filed with Form 10-Q | Exhibit No. | Description | | :--- | :--- | | 2.1 | Equity Purchase Agreement, dated February 28, 2023 | | 2.2 | Asset Purchase Agreement, dated June 18, 2023 | | 3.1-3.6 | Amended and Restated Certificate of Incorporation and Amendments | | 3.7 | Third Amended and Restated Bylaws | | 10.1 | Amendment No. 1 to Investor Rights Agreement | | 10.2 | Form of Indemnification Agreement for Directors and Officers | | 31.1-31.2 | Certification of Chief Executive Officer and Chief Financial Officer (Section 302) | | 32.1-32.2 | Certification of Chief Executive Officer and Chief Financial Officer (Section 906) | | 101 | Cover Page Interactive Data File (Inline XBRL) | [Signatures](index=36&type=section&id=SIGNATURES) This section contains the duly authorized signatures of the registrant's President, CEO, and CFO, affirming the report filing - The report is signed by Sean E. Browne, President and Chief Executive Officer, and Scott Neils, Chief Financial Officer, on August 1, 2023[145](index=145&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for Q1 2023 was $17.9 million, a 38% increase from $13 million in Q1 2022, driven by independent agent sales and contributions from the Coflex and Cofix product lines [23] - Gross margin improved to 58.7% in Q1 2023 from 58.3% in Q1 2022, primarily due to the contribution of Coflex and Cofix products [24] - Net loss for Q1 2023 was $2.1 million or $0.02 per share, compared to a net loss of $2.2 million or $0.03 per share in Q1 2022 [27] Business Line Data and Key Metrics Changes - The spinal fixation business experienced a 55% year-over-year revenue growth, significantly aided by the Coflex acquisition [10] - Biologics products saw a robust 33% organic growth compared to the same period last year, supported by a strong product pipeline [12] - Operating expenses increased to $12.1 million in Q1 2023 from $9.4 million in Q1 2022, but as a percentage of total revenue, they decreased to 68% from 72% [24] Market Data and Key Metrics Changes - The company reported strong growth across all market channels, including independent agents, OEM, DTH, and the ASC market, indicating effective execution of its strategic growth pillars [7] - The orthobiologics market is valued at $2.4 billion, and the company aims to capture a larger market share through its product offerings [12] Company Strategy and Development Direction - The company focuses on four key growth pillars: new product introductions, distribution network expansion, adjacent market penetration, and targeted strategic acquisitions [8] - The acquisition of Coflex is expected to enhance cash flow and profitability, while also expanding the non-acute care offering [9] - The company plans to continue expanding its board with independent members to enhance governance and attract long-term investors [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving annual revenue guidance of $73 million to $75 million for 2023, representing a growth of approximately 26% to 29% compared to 2022 [21] - The management highlighted the importance of focusing on operational efficiency and cost management to support profitability [15] - There is a cautious optimism regarding the Coflex product line, with plans to stabilize and grow it in the future [36][40] Other Important Information - The company announced the appointment of Jonn Beeson to the board as an independent member, enhancing the board's independence [16] - The integration of the Coflex acquisition is progressing smoothly, with plans for further tuck-in and transformational acquisitions [11] Q&A Session Summary Question: Dynamics behind hardware performance and future modeling - Management noted a shift in focus towards ASC and outpatient markets, indicating that the hardware business is positioned better than in previous years [30][31] Question: Breakdown of organic growth in ortho biologics - Management confirmed that independent agents were a significant driver of growth, with contributions from OEM opportunities as well [33][34] Question: Guidance for future quarters considering Coflex contributions - Management cautioned that while Coflex may not contribute significantly in the short term, the overall growth guidance remains strong [37] Question: Steps to stabilize and grow the Coflex product line - Management emphasized the need for focused sales and marketing efforts, along with improving reimbursement processes [39][41] Question: Opportunities for future acquisitions - Management indicated a full pipeline of potential acquisitions, focusing on both tuck-in deals and capacity-expanding opportunities [45][46] Question: Future gross margin expectations - Management projected gross margins to improve into the low- to mid-60s as the year progresses [47]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☐ 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. Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or (Exact name of registrant as specified in its charter) | Delaware | ...

Xtant Medical Holdings, Inc. (NYSE:XTNT) Q4 2022 Earnings Conference Call March 7, 2023 9:00 AM ET Company Participants Matt Steinberg - IR, FINN Partners Sean Browne - President and Chief Executive Officer Scott Niels - Chief Financial Officer Conference Call Participants Operator Greetings and welcome to the Xtant Medical Fourth Quarter and Full Year 2022 Financial Results Conference Call [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference ove ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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 20-5313323 ...

Xtant Medical Holdings, Inc. (NYSE:XTNT) Q3 2022 Results Conference Call November 3, 2022 9:00 AM ET Company Participants Matt Steinberg - IR, FINN Partners Sean Browne - President and Chief Executive Officer Scott Niels - Chief Financial Officer Operator Greetings, and welcome to the Xtant Medical Q3 2022 Financial Results Conference Call [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to Matt Steinberg of FINN Partners. Please go ahe ...

[Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines the nature of forward-looking statements within the report and the inherent risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements regarding future expectations, beliefs, intentions, or strategies, identified by words like 'anticipate,' 'believe,' 'expect,' 'intend,' 'may,' 'plan,' 'project,' and similar expressions[11](index=11&type=chunk) - These statements are subject to various risks and uncertainties, many beyond the company's control, which could cause actual results to differ materially. Key risks include labor shortages, inflation, increased interest rates, supply chain disruptions, the ongoing impact of COVID-19, ability to increase revenue, competition, reliance on third-party suppliers, and regulatory approvals[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) [Part I. Financial Information](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part encompasses the company's unaudited condensed consolidated financial statements, along with management's discussion and analysis of financial condition and results of operations [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 the balance sheets, statements of operations, statements of equity, and statements of cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | September 30, 2022 (Unaudited) | December 31, 2021 | | :--------------------------------- | :------------------------------ | :------------------ | | Total Assets | $56,049 | $54,692 | | Total Liabilities | $23,276 | $23,809 | | Total Stockholders' Equity | $32,773 | $30,883 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement reports the company's revenues, expenses, and net loss over specific periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Revenue | $14,462 | $13,777 | $42,699 | $41,293 | | Gross Profit | $7,896 | $7,191 | $23,831 | $24,795 | | Loss from Operations | $(1,900) | $(1,445) | $(5,031) | $(1,943) | | Net Loss | $(2,353) | $(1,804) | $(6,276) | $(2,566) | | Basic Net Loss Per Share | $(0.03) | $(0.02) | $(0.07) | $(0.03) | [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This statement details changes in the company's equity accounts over specific periods Condensed Consolidated Statements of Equity Highlights (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :------------------------- | :----------------- | :---------------- | | Total Stockholders' Equity | $32,773 | $30,883 | | Additional Paid-In Capital | $274,234 | $266,068 | | Accumulated Deficit | $(241,461) | $(235,185) | - Total Stockholders' Equity increased by **$1,890 thousand** from December 31, 2021, to September 30, 2022, primarily due to a private placement of common stock and warrants (**$5,225 thousand** and **$1,116 thousand**, respectively) and stock-based compensation (**$1,825 thousand**), partially offset by a net loss of **$(6,276) thousand**[20](index=20&type=chunk)[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended September 30, in thousands) | Activity | 2022 | 2021 | | :------------------------ | :-------- | :-------- | | Operating activities | $(3,053) | $16 | | Investing activities | $(1,137) | $(1,295) | | Financing activities | $3,406 | $17,552 | | Net change in cash | $(784) | $16,273 | | Cash at beginning of period | $18,387 | $2,341 | | Cash at end of period | $17,603 | $18,614 | [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 breakdowns of various financial statement line items, including revenue, receivables, inventories, debt, equity, and commitments, offering crucial context for the condensed consolidated financial statements [(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 business, the basis of financial statement presentation, and its key accounting policies - Xtant Medical Holdings, Inc. is a global medical technology company focused on designing, developing, and commercializing orthobiologics and spinal implant systems for spinal fusion procedures[24](index=24&type=chunk) - The COVID-19 pandemic has negatively impacted revenues due to deferred elective procedures, diverted hospital resources, and limited access for sales representatives, with potential for continued adverse effects on business and supply chain[25](index=25&type=chunk) - On August 25, 2022, the company closed the first tranche of a private placement, selling approximately **14.1 million shares** of common stock and warrants for ~**3.5 million shares**, generating net cash proceeds of approximately **$6.3 million**. A second tranche closed on October 7, 2022, raising an additional **$3.0 million**[29](index=29&type=chunk)[30](index=30&type=chunk) [(2) Revenue](index=12&type=section&id=(2)%20Revenue) This note details the company's revenue recognition policies and provides a breakdown of revenue by product line - The company generates most of its U.S. revenue from independent commissioned sales agents, consigning orthobiologics products to hospitals and spinal implant sets to agents. Revenue is recognized when control of goods is transferred to the customer, typically upon receipt of a hospital purchase order[39](index=39&type=chunk)[41](index=41&type=chunk) Revenue by Product Line (in thousands) | Product Line | Three Months Ended Sep 30, 2022 | Percentage of Total Revenue | Three Months Ended Sep 30, 2021 | Percentage of Total Revenue | | :-------------- | :------------------------------ | :-------------------------- | :------------------------------ | :-------------------------- | | Orthobiologics | $12,046 | 83% | $10,795 | 78% | | Spinal implant | $2,416 | 17% | $2,948 | 22% | | Other revenue | $— | 0% | $34 | 0% | | **Total revenue** | **$14,462** | **100%** | **$13,777** | **100%** | | Product Line | Nine Months Ended Sep 30, 2022 | Percentage of Total Revenue | Nine Months Ended Sep 30, 2021 | Percentage of Total Revenue | | :-------------- | :----------------------------- | :-------------------------- | :----------------------------- | :-------------------------- | | Orthobiologics | $34,614 | 81% | $31,264 | 76% | | Spinal implant | $8,075 | 19% | $9,929 | 24% | | Other revenue | $10 | 0% | $100 | 0% | | **Total revenue** | **$42,699** | **100%** | **$41,293** | **100%** | [(3) Receivables](index=13&type=section&id=(3)%20Receivables) This note provides information on the company's accounts receivable and the allowance for credit losses Allowance for Credit Losses Activity (in thousands) | Metric | September 30, 2022 | September 30, 2021 | | :------------------------------------ | :----------------- | :----------------- | | Balance at January 1 | $552 | $653 | | Provision for current expected credit losses | $191 | $(63) | | Write-offs charged against allowance | $(173) | $(36) | | Balance at March 31 | $570 | $554 | | Provision for current expected credit losses | $(49) | $(81) | | Write-offs charged against allowance | $(11) | $(3) | | Balance at June 30 | $510 | $470 | | Provision for current expected credit losses | $54 | $118 | | Write-offs charged against allowance | $(15) | $(12) | | Balance at September 30 | $549 | $576 | [(4) Inventories](index=13&type=section&id=(4)%20Inventories) This note details the composition of the company's inventories, including raw materials, work in process, and finished goods Inventories (in thousands) | Category | September 30, 2022 | December 31, 2021 | | :-------------- | :----------------- | :---------------- | | Raw materials | $5,121 | $5,613 | | Work in process | $957 | $571 | | Finished goods | $10,915 | $11,761 | | **Total** | **$16,993** | **$17,945** | [(5) Property and Equipment, Net](index=13&type=section&id=(5)%20Property%20and%20Equipment,%20Net) This note presents the company's property and equipment, net of accumulated depreciation Property and Equipment, Net (in thousands) | Category | September 30, 2022 | December 31, 2021 | | :------------------------ | :----------------- | :---------------- | | Total cost | $23,636 | $22,381 | | Less: accumulated depreciation | $(17,967) | $(17,169) | | **Property and equipment, net** | **$5,669** | **$5,212** | - Depreciation expense for property and equipment was **$0.4 million** for the three months ended September 30, 2022, compared to **$0.3 million** for the same period in 2021. For the nine months, it was **$1 million** for both 2022 and 2021[45](index=45&type=chunk) [(6) Intangible Assets](index=14&type=section&id=(6)%20Intangible%20Assets) This note details the company's intangible assets, net of accumulated amortization Intangible Assets (in thousands) | Category | September 30, 2022 | December 31, 2021 | | :------------------------ | :----------------- | :---------------- | | Patents | $807 | $847 | | Accumulated amortization | $(449) | $(447) | | **Intangible assets, net** | **$358** | **$400** | [(7) Accrued Liabilities](index=14&type=section&id=(7)%20Accrued%20Liabilities) This note provides a breakdown of the company's accrued liabilities Accrued Liabilities (in thousands) | Category | September 30, 2022 | December 31, 2021 | | :-------------------------------- | :----------------- | :---------------- | | Cash compensation/commissions payable | $3,844 | $3,184 | | Other accrued liabilities | $1,177 | $1,165 | | **Accrued liabilities** | **$5,021** | **$4,349** | [(8) Debt](index=14&type=section&id=(8)%20Debt) This note details the company's long-term debt, including terms, amendments, and effective interest rates Long-Term Debt (in thousands) | Category | September 30, 2022 | December 31, 2021 | | :---------------------------------------- | :----------------- | :---------------- | | Amounts due under the Term Facility | $12,000 | $12,000 | | Accrued end-of-term payments | $182 | $83 | | Less: unamortized debt issuance costs | $(221) | $(296) | | Less: current maturities | $(1,335) | $— | | **Long-term debt** | **$10,626** | **$11,787** | - The term loan agreement was amended on March 7, 2022, to waive the minimum adjusted EBITDA requirement if liquidity exceeds **$14 million** and to reset certain prepayment fees. The final payment fees were increased by **25 basis points**[48](index=48&type=chunk) - Effective rates as of September 30, 2022, were **11.53%** for the term loan and **7.07%** for the revolving credit agreement. The reference rate for credit agreements transitioned from LIBOR to term SOFR on October 27, 2022, effective November 1, 2022[49](index=49&type=chunk)[50](index=50&type=chunk) [(9) Stock-Based Compensation](index=15&type=section&id=(9)%20Stock-Based%20Compensation) This note describes the company's stock-based compensation plans and activity for stock options and restricted stock units Stock Option Activity (Nine Months Ended September 30) | Metric | 2022 Shares | 2022 Avg. Exercise Price | 2021 Shares | 2021 Avg. Exercise Price | | :------------------------- | :---------- | :----------------------- | :---------- | :----------------------- | | Outstanding at January 1 | 3,201,666 | $1.80 | 2,190,892 | $2.25 | | Granted | 109,164 | $0.65 | 1,012,083 | $1.27 | | Cancelled or expired | (443,125) | $2.39 | (269) | $314.19 | | Outstanding at September 30 | 2,867,705 | $1.66 | 3,202,706 | $1.92 | | Exercisable at September 30 | 828,978 | $2.37 | 210,028 | $9.02 | Restricted Stock Unit Activity (Nine Months Ended September 30) | Metric | 2022 Shares | 2022 Avg. Fair Value at Grant Date | 2021 Shares | 2021 Avg. Fair Value at Grant Date | | :------------------------- | :---------- | :--------------------------------- | :---------- | :--------------------------------- | | Outstanding at January 1 | 2,970,104 | $1.39 | 2,503,698 | $1.54 | | Granted | 1,898,808 | $0.53 | 1,249,002 | $1.27 | | Vested | (851,955) | $1.33 | (349,572) | $1.92 | | Cancelled | (318,805) | $1.38 | — | — | | Outstanding at September 30 | 3,698,152 | $0.96 | 3,403,128 | $1.40 | - Shareholders approved an amendment to the 2018 Equity Incentive Plan on October 26, 2022, increasing available common stock shares by **8,500,000**[51](index=51&type=chunk) [(10) Warrants](index=15&type=section&id=(10)%20Warrants) This note provides details on the company's outstanding warrants, including their terms and valuation - Warrants issued in the August 25, 2022 private placement have an exercise price of **$0.48 per share**, are immediately exercisable, and expire on the **five-year** anniversary of the First Closing. They include customary anti-dilution provisions and a buy-out right in certain acquisition scenarios[31](index=31&type=chunk)[52](index=52&type=chunk) - The fair value of the warrants was determined using a Black-Scholes model, with significant assumptions including a **5-year** contractual term and **107%** estimated stock volatility[53](index=53&type=chunk) Common Stock Warrant Activity (Nine Months Ended September 30, 2022) | Metric | Common Stock Warrants | Weighted Average Exercise Price | | :------------------------- | :-------------------- | :------------------------------ | | Outstanding at January 1, 2022 | 7,111,112 | $2.29 | | Issued | 3,515,079 | $0.48 | | Outstanding at September 30, 2022 | 10,626,191 | $1.69 | [(11) Commitments and Contingencies](index=16&type=section&id=(11)%20Commitments%20and%20Contingencies) This note outlines the company's lease commitments and potential legal contingencies - The company leases three office facilities in Belgrade, Montana, with lease terms extended through October 2025 for two facilities. The weighted-average remaining lease term as of September 30, 2022, was **3.1 years**[55](index=55&type=chunk) Present Value of Long-term Leases (in thousands) | Category | September 30, 2022 | | :-------------------------------- | :----------------- | | Right-of-use assets, net | $1,490 | | Current portion of lease liability | $443 | | Lease liability, less current portion | $1,094 | | **Total lease liability** | **$1,537** | - The company is subject to various claims and legal actions in the ordinary course of business but does not believe their ultimate resolution will have a material adverse effect on its financial position, results of operations, or cash flows[57](index=57&type=chunk) [(12) Income Taxes](index=17&type=section&id=(12)%20Income%20Taxes) This note discusses the company's income tax position, including deferred tax assets and valuation allowances - A valuation allowance has been established against the entire deferred income tax asset balance due to uncertainty regarding the company's ability to generate future taxable income[60](index=60&type=chunk) [(13) Supplemental Disclosure of Cash Flow Information](index=17&type=section&id=(13)%20Supplemental%20Disclosure%20of%20Cash%20Flow%20Information) This note provides additional details on cash paid for interest and non-cash investing and financing activities Supplemental Cash Flow Information (Nine Months Ended September 30, in thousands) | Category | 2022 | 2021 | | :-------------------------------------------- | :----- | :----- | | Cash paid during the period for: Interest | $1,022 | $485 | | Non-cash activities: Fixed assets acquired under finance lease | $159 | $163 | | Non-cash activities: Revaluation of lease liability and right of use asset | $234 | $— | [(14) Related Party Transactions](index=18&type=section&id=(14)%20Related%20Party%20Transactions) This note discloses transactions and relationships with related parties, including significant stockholders - OrbiMed Advisors LLC affiliated funds (Royalty Opportunities and ROS) beneficially own **72%** of the Company's common stock. All related party transactions are reviewed and approved by the Audit Committee or disinterested Board members[63](index=63&type=chunk)[64](index=64&type=chunk) [(15) Segment and Geographic Information](index=18&type=section&id=(15)%20Segment%20and%20Geographic%20Information) This note provides information on the company's operating segments and revenue breakdown by geographic area - The company operates in a single reportable segment: the development, manufacture, and marketing of orthopedic medical products and devices[65](index=65&type=chunk) Total Revenue by Major Geographic Area (in thousands) | Geographic Area | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :-------------- | :------------------------------ | :------------------------------ | | United States | $14,370 | $13,629 | | Rest of world | $92 | $148 | | **Total revenue** | **$14,462** | **$13,777** | | Geographic Area | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------- | :----------------------------- | :----------------------------- | | United States | $42,089 | $40,813 | | Rest of world | $610 | $480 | | **Total revenue** | **$42,699** | **$41,293** | - Approximately **99%** of sales for both the three and nine months ended September 30, 2022 and 2021, were in the United States[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&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 performance, condition, and future outlook, including operational highlights, financial trends, the impact of the COVID-19 pandemic, and a detailed discussion of liquidity and capital resources [Business Overview](index=19&type=section&id=Business%20Overview) This section provides an overview of Xtant Medical's business, products, sales channels, and key growth initiatives - Xtant develops, manufactures, and markets regenerative medicine products and medical devices for orthopedic and neurological surgeons, focusing on orthobiologics for bone healing and spinal implant systems[68](index=68&type=chunk) - The company's sales channel in the U.S. relies on independent commissioned agents and stocking distributors, supported by a national accounts program for GPOs and IDNs. International sales are through stocking distribution partners in Canada, Mexico, South America, Australia, and certain Pacific region countries[69](index=69&type=chunk) - Key growth initiatives include introducing new products (e.g., OsteoVive® Plus, OsteoFactor™), expanding the distribution network, penetrating adjacent markets, and leveraging technology and strategic acquisitions. Penetration into adjacent markets has slowed due to limited production labor[70](index=70&type=chunk)[77](index=77&type=chunk) [Recent Private Placement](index=19&type=section&id=Recent%20Private%20Placement) This section details the company's recent private placement of common stock and warrants, including proceeds and intended use - On August 25, 2022, the company completed the first tranche of a private placement, issuing approximately **14.1 million common shares** and warrants for **3.5 million shares** at **$0.48 per share**, yielding **$6.3 million** in net cash proceeds[71](index=71&type=chunk) - A second tranche closed on October 7, 2022, selling an additional **6.2 million common shares** and warrants for **1.6 million shares**, raising **$3.0 million**. Proceeds are intended for working capital and general corporate purposes[71](index=71&type=chunk)[85](index=85&type=chunk) [Impact of the COVID-19 Pandemic](index=20&type=section&id=Impact%20of%20the%20COVID-19%20Pandemic) This section discusses the negative impact of the COVID-19 pandemic on the company's revenues, supply chain, and operations - The COVID-19 pandemic has negatively impacted revenues due to cancellations/deferrals of elective procedures, diversion of hospital resources, and staffing shortages, particularly in Q1 2022[73](index=73&type=chunk)[74](index=74&type=chunk) - The pandemic has also disrupted the global economy and supply chain, affecting the company's ability to obtain raw materials and impacting distributors, sales representatives, customers, and suppliers[75](index=75&type=chunk) - The full extent of future impact remains uncertain, depending on new variants, vaccine effectiveness, government restrictions, and hospital capacity. Continued revenue decline could lead to impairment charges and inventory write-offs[76](index=76&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, cost of sales, gross profit, and operating expenses for the reported periods [Revenue](index=20&type=section&id=Revenue) This section analyzes the company's revenue performance and key drivers for the reported periods Total Revenue (in millions) | Period | 2022 | 2021 | Change (%) | | :----------------------------------- | :---- | :---- | :--------- | | Three Months Ended September 30 | $14.5 | $13.8 | +5% | | Nine Months Ended September 30 | $42.7 | $41.3 | +3% | - Revenue increases are primarily attributed to the introduction of new products, specifically OsteoVive® Plus and OsteoFactor™[77](index=77&type=chunk) [Cost of Sales and Gross Profit](index=20&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) This section analyzes the company's cost of sales and gross profit margins, identifying factors influencing changes Cost of Sales and Gross Profit (in millions, except percentages) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of Sales | $6.6 | $6.6 | $18.9 | $16.5 | | Gross Profit as a percentage of revenue | 54.6% | 52.2% | 55.8% | 60.0% | - Cost of sales for the nine months ended September 30, 2022, increased by **14%** (**$2.4 million**) primarily due to a **$1.0 million** increase in reserve expense for excess and obsolete inventory and **$0.6 million** in additional salaries and wages[78](index=78&type=chunk) - Gross profit percentage increased for the three-month comparison due to sales mix (higher margin independent agent sales) and better absorption of labor/overhead, but decreased for the nine-month comparison due to higher product costs and increased inventory reserve expense. Higher product costs are expected to continue impacting gross profit[79](index=79&type=chunk) [General and Administrative](index=21&type=section&id=General%20and%20Administrative) This section analyzes changes in general and administrative expenses and their underlying causes General and Administrative Expenses (in millions) | Period | 2022 | 2021 | Change ($M) | Change (%) | | :----------------------------------- | :---- | :---- | :---------- | :--------- | | Three Months Ended September 30 | $3.7 | $3.1 | +$0.6 | +20% | | Nine Months Ended September 30 | $11.5 | $10.3 | +$1.2 | +12% | - The three-month increase was mainly due to **$0.3 million** in product registrations and **$0.3 million** in employee compensation. The nine-month increase included **$0.3 million** in bad debt, **$0.3 million** in product registrations, **$0.3 million** in stock-based compensation, and **$0.5 million** for ERP system upgrades, partially offset by **$0.6 million** in legal settlement expenses in the prior year[80](index=80&type=chunk) [Sales and Marketing](index=21&type=section&id=Sales%20and%20Marketing) This section analyzes changes in sales and marketing expenses, primarily driven by commissions and incentives Sales and Marketing Expenses (in millions) | Period | 2022 | 2021 | Change ($M) | Change (%) | | :----------------------------------- | :---- | :---- | :---------- | :--------- | | Three Months Ended September 30 | $5.9 | $5.3 | +$0.6 | +11% | | Nine Months Ended September 30 | $16.7 | $15.7 | +$1.0 | +6% | - The increase for both periods was primarily driven by additional independent agent sales commissions and incentives due to higher revenues[81](index=81&type=chunk) [Research and Development](index=21&type=section&id=Research%20and%20Development) This section analyzes changes in research and development expenses Research and Development Expenses (in millions) | Period | 2022 | 2021 | Change ($M) | Change (%) | | :----------------------------------- | :---- | :---- | :---------- | :--------- | | Three Months Ended September 30 | $0.2 | $0.3 | -$0.1 | -13% | | Nine Months Ended September 30 | $0.7 | $0.7 | $0.0 | 0% | - The three-month decrease was primarily due to reduced equipment purchases[82](index=82&type=chunk) [Interest Expense](index=22&type=section&id=Interest%20Expense) This section analyzes changes in interest expense, attributing them to base interest rate increases and debt refinancing Interest Expense (in millions) | Period | 2022 | 2021 | Change ($M) | | :----------------------------------- | :---- | :---- | :---------- | | Three Months Ended September 30 | $0.4 | $0.3 | +$0.1 | | Nine Months Ended September 30 | $1.2 | $0.5 | +$0.7 | - The increase in interest expense for the three-month period was due to increases in the base interest rate. The nine-month increase resulted from debt refinancing in May 2021, as no interest expense related to debt instruments was incurred in 2021 prior to that[84](index=84&type=chunk) - Interest expense is expected to increase in future periods due to rising interest rates, with an estimated **$0.1 million** annual increase for every **75 basis points** rise in the reference rate[84](index=84&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's working capital, cash flows, credit facilities, and future capital requirements [Working Capital](index=22&type=section&id=Working%20Capital) This section analyzes the company's working capital position and changes in cash and cash equivalents Working Capital (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :------------------------ | :----------------- | :---------------- | | Cash and cash equivalents | $17,603 | $18,387 | | Total current assets | $45,108 | $44,330 | | Total current liabilities | $11,359 | $11,077 | | **Net working capital** | **$33,749** | **$33,253** | - The decrease in cash and cash equivalents was primarily due to net cash used in operations and reduced borrowing on the revolving line of credit, partially offset by net proceeds from the August 2022 private placement[85](index=85&type=chunk) [Cash Flows](index=22&type=section&id=Cash%20Flows) This section analyzes the company's cash flows from operating, investing, and financing activities Net Cash Flow Activities (Nine Months Ended September 30, in millions) | Activity | 2022 | 2021 | | :------------------------ | :---- | :---- | | Net cash used in operating activities | $(3.1) | $0.0 | | Net cash used in investing activities | $(1.1) | $(1.3) | | Net cash provided by financing activities | $3.4 | $17.6 | - The increase in net cash used in operating activities in 2022 was primarily due to an increased net loss. Financing activities in 2022 were driven by **$6.3 million** from the August private placement, while 2021 saw **$18.4 million** from a February private placement[86](index=86&type=chunk)[88](index=88&type=chunk) [Current and Prior Credit Facilities](index=23&type=section&id=Current%20and%20Prior%20Credit%20Facilities) This section details the company's term and revolving credit agreements, including terms, availability, and compliance with covenants - The company has a Term Credit Agreement for **$12.0 million** and a Revolving Credit Agreement for up to **$8.0 million** with MidCap Financial Trust, both maturing on May 1, 2026[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - As of September 30, 2022, **$0.7 million** was outstanding and **$7.3 million** was available under the Revolving Facility. The reference rate transitioned from LIBOR to term SOFR effective November 1, 2022[92](index=92&type=chunk) - The credit agreements contain customary affirmative and negative covenants, including minimum net product revenue, adjusted EBITDA, and liquidity levels. The company was in compliance with all covenants as of September 30, 2022[94](index=94&type=chunk) [Cash Requirements](index=24&type=section&id=Cash%20Requirements) This section outlines the company's anticipated cash requirements and potential needs for additional financing - The company believes its **$17.4 million** cash and cash equivalents (as of Sep 30, 2022), along with proceeds from the second tranche of the private placement and available credit, will be sufficient to meet anticipated cash requirements through at least **November 2023**[96](index=96&type=chunk) - Additional capital may be required or sought through equity/debt financings or strategic collaborations. Such financing could dilute current stockholders, and obtaining consent from existing lenders/investors may be required[97](index=97&type=chunk)[98](index=98&type=chunk) [Critical Accounting Estimates](index=25&type=section&id=Critical%20Accounting%20Estimates) This section highlights the significant accounting estimates and assumptions made 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. Actual results may differ materially from these estimates[100](index=100&type=chunk) - There have been no changes in critical accounting estimates for the three and nine months ended September 30, 2022, compared to those described in the Annual Report on Form 10-K for the year ended December 31, 2021[101](index=101&type=chunk) [Item 3. 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, Xtant Medical Holdings, Inc. is not required to provide the information typically mandated for this item - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[102](index=102&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section addresses the effectiveness of the company's disclosure controls and procedures, acknowledging their inherent limitations, and reports on any material changes in internal control over financial reporting, noting the implementation of a new ERP system [Limitations on Effectiveness of Controls and Procedures](index=25&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) This section acknowledges the inherent limitations of any control system in providing absolute assurance of achieving objectives - Management acknowledges that any controls and procedures, regardless of design, can only provide reasonable assurance of achieving desired control objectives due to inherent limitations and resource constraints[103](index=103&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=25&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures as assessed by management - As of September 30, 2022, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[104](index=104&type=chunk) [Changes in Internal Control over Financial Reporting](index=25&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the period - During the three months ended September 30, 2022, the company implemented a new enterprise resource planning (ERP) system. No other material changes in internal control over financial reporting occurred during this period[105](index=105&type=chunk) [Part II. Other Information](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers various other disclosures, including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=25&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section states that there are no legal proceedings applicable to the company for the reported period - Not applicable[106](index=106&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, Xtant Medical Holdings, Inc. is not required to provide the information typically mandated for this item - The company is a smaller reporting company and is not required to provide risk factors[107](index=107&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section confirms that no unregistered equity securities were sold during the quarter ended September 30, 2022, other than those issued in connection with the reported private placement - No unregistered equity securities were sold during the quarter ended September 30, 2022, other than the issuance of common stock and warrants in connection with the private placement, as reported in a Current Report on Form 8-K[108](index=108&type=chunk) [Item 3. Defaults Upon Senior Securities](index=26&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there are no defaults upon senior securities applicable to the company for the reported period - Not applicable[109](index=109&type=chunk) [Item 4. Mine Safety Disclosures](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section states that there are no mine safety disclosures applicable to the company for the reported period - Not applicable[110](index=110&type=chunk) [Item 5. Other Information](index=26&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section reports an amendment to the company's term loan and revolving credit agreements, transitioning the reference rate from LIBOR to term SOFR, effective November 1, 2022 - On October 27, 2022, the company's term loan and revolving credit agreements were amended to transition the reference rate from LIBOR to term SOFR, effective for amounts outstanding and draws on or after November 1, 2022[111](index=111&type=chunk) [Item 6. Exhibits](index=26&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed or furnished with the Quarterly Report on Form 10-Q, including corporate governance documents, private placement agreements, credit agreement amendments, and certifications - The report includes various exhibits such as Amended and Restated Certificate of Incorporation, Bylaws, Form of Warrant, Securities Purchase Agreement, Registration Rights Agreement, Letter Agreement, and Amendment No. 2 to both Term Loan and Revolving Loan Credit Agreements[113](index=113&type=chunk)[114](index=114&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer, pursuant to the Exchange Act and Sarbanes-Oxley Act, are also filed/furnished[117](index=117&type=chunk)