# Xtant Medical Holdings (XTNT) 10-Q SEC filing - Q2 FY2026
- Filed: Aug 11, 2026, 7:15 AM EDT
- Fiscal quarter: Q2 FY2026
- Calendar quarter: Q2 2026
- Accession: 0001493152-26-036981
- OpenCapital page: https://www.opencapital.sh/filings/0001493152-26-036981
- Markdown URL: https://www.opencapital.sh/filings/0001493152-26-036981.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/0001493152-26-036981-index.htm
## Filing documents
- [10-Q (form10-q.htm)](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/form10-q.htm)
- [EX-10.1 (ex10-1.htm)](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex10-1.htm)
- [EX-10.2 (ex10-2.htm)](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex10-2.htm)
- [EX-31.1 (ex31-1.htm)](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex31-1.htm)
- [EX-31.2 (ex31-2.htm)](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex31-2.htm)
- [EX-32.1 (ex32-1.htm)](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex32-1.htm)
- [EX-32.2 (ex32-2.htm)](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex32-2.htm)
---
## 10-Q
SEC source: [form10-q.htm](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/form10-q.htm)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
**Washington,
D.C. 20549**
FORM10-Q
(Mark
One)
☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For
the quarterly period ended June 30, 2026**
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**
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
**664
Cruiser Lane**
**Belgrade, Montana 59714**
(Address of principal executive offices) (Zip Code)
**(406) 388-0480**
(Registrant’s telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, par value $0.000001 per share XTNT NYSE American LLC
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No **☐**
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No **☐**
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer **☐** Accelerated filer **☐**
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company **☐**
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. **☐**
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes **☐** No ☒
As
of August 7, 2026, there were 140,287,960 shares of common stock of the registrant outstanding.
**XTANT
MEDICAL HOLDINGS, INC.**
**FORM
10-Q**
**June
30, 2026**
**TABLE
OF CONTENTS**
| | | **Page** |
| --- | --- | --- |
| [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](#DA_001) | | ii |
| PART I. | [FINANCIAL INFORMATION](#DA_002) | 1 |
| ITEM 1. | [FINANCIAL STATEMENTS](#DA_003) | 1 |
| ITEM 2. | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#DA_004) | 18 |
| ITEM 3. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#DA_005) | 24 |
| ITEM 4. | [CONTROLS AND PROCEDURES](#DA_006) | 24 |
| PART II. | [OTHER INFORMATION](#DA_007) | 25 |
| ITEM 1. | [LEGAL PROCEEDINGS](#DA_008) | 25 |
| ITEM 1A. | [RISK FACTORS](#DA_009) | 25 |
| ITEM 2. | [UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](#DA_010) | 25 |
| ITEM 3. | [DEFAULTS UPON SENIOR SECURITIES](#DA_011) | 25 |
| ITEM 4. | [MINE SAFETY DISCLOSURES](#DA_012) | 25 |
| ITEM 5. | [OTHER INFORMATION](#DA_013) | 25 |
| ITEM 6. | [EXHIBITS](#DA_014) | 26 |
*This
Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by those
sections. For more information, see “Cautionary Statement Regarding Forward-Looking Statements.”*
*As
used in this report, unless the context indicates another meaning, the terms “we,” “us,” “our,” “Xtant,”
“Xtant Medical,” and the “Company” mean Xtant Medical Holdings, Inc. and its wholly owned subsidiaries, all of
which are consolidated on Xtant’s condensed consolidated financial statements. All intercompany balances and transactions have
been eliminated in consolidation.*
*We
own various unregistered trademarks and service marks, including our corporate logo. Solely for convenience, the trademarks and trade
names in this report are referred to without the ® and ™ symbols, but such references should not be construed as any indicator
that the owner of such trademarks and trade names will not assert, to the fullest extent under applicable law, their rights thereto.
We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement
or sponsorship of us by, any other companies.*
*We
include our website address throughout this report for reference only. The information contained on or connected to our website is not
incorporated by reference into this report.*
**CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**
The
statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements include, but are not limited to, statements regarding
our expectations, hopes, beliefs, intentions, or strategies regarding the future. In addition, any statements that refer to projections,
forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.
The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “possible,” “potential,” “predict,” “project,”
“should,” and “would,” as well as similar expressions, may identify forward-looking statements, but the absence
of these words does not mean that a statement is not forward looking. Forward-looking statements in this Form 10-Q may include, for example,
statements about the topics below and are subject to risks and uncertainties including, without limitation, those described below:
- our ability to maintain and increase revenue and improve our gross margins, our operating expenses as a percentage of revenue, and obtain and sustain profitability;
- our ability to execute our strategic priorities and become operationally self-sustaining by controlling our supply chain and becoming less reliant on production and manufacturing of our products outside of our control, which we believe will allow us to be a larger and more diverse producer of biologics;
- our ability and success in implementing key growth and process improvement initiatives designed to increase our production capacity, revenue, and scale and risks associated with such growth and process improvement initiatives;
- risks associated with strategic transactions, including our exclusive distribution agreement with Dilon Technologies, Inc. (“Dilon”), the sale of certain assets relating to our Coflex and CoFix products and our international hardware business to Companion Spine, LLC (“Companion Spine”), and prior acquisitions;
- our ability to sell successfully the HEMOBLAST® Bellows product that we distribute on an exclusive basis and the effect of this arrangement, including our hiring of approximately 20 additional sales personnel in connection therewith and future possible cross-selling opportunities, on our business, operating results and financial condition;
- the effect of global economic and geopolitical conditions, including economic uncertainty and a possible future recession, tariffs, inflation, rising interest rates, and supply chain disruptions on our business, operating results and financial position, which, among other effects, could result in delayed product launches, lost revenue, higher costs, decreased profit margins, and other adverse effects on our business and operating results;
- our dependence on and ability to retain and recruit qualified sales personnel, independent sales agents and distributors and motivate and incentivize them to engage with customers and sell our products, including in particular, our dependence on the sales personnel we recently hired in connection with our exclusive distribution agreement with Dilon and key independent agents, which account for a significant portion of our revenue;
- the ability of our sales personnel, independent sales agents and distributors to achieve expected results, including leveraging our additional sales personnel to sell other Xtant products, and the potential adverse effects on our business and operating results if anticipated sales are not achieved, including the possibility of future inventory impairment, restructuring, and other charges;
- our ability to innovate, develop, introduce, market and license new products and technologies and the success of such new products and technologies, including the HEMOBLAST® Bellows product that we recently began distributing on an exclusive basis; our recently launched nanOss Strata™, an advanced synthetic bone graft designed to closely resemble natural bone; CollagenX™, a bovine collagen particulate product for surgical wound closure; OsteoFactor Pro™, an allogenic growth factor solution; and Trivium™, a next-generation demineralized bone matrix;
- the effect of our private label and original equipment manufacturer (“OEM”) business on our business and operating results and risks associated therewith, including fluctuations in our operating results and decreased profit margins, and the possibility that we may become more active in the OEM business;
- our ability to retain and expand our agreements with group purchasing organizations (“GPOs”) and integrated delivery networks (“IDNs”) and sell products to members of such GPOs and IDNs;
- our ability to remain competitive;
- our ability to integrate acquired products with our existing product line and successfully transition our customers from legacy to new products and the anticipated adverse effect of these transitions on our organic revenue growth rate;
- our reliance on third party suppliers and manufacturers, including in particular Dilon and the manufacturing and supply of the HEMOBLAST® Bellows product;
- the effect of product liability claims and other litigation to which we may be subjected and product recalls and defects;
- our ability to obtain and maintain regulatory approvals in the United States and abroad and the effect of government regulations and our compliance with government regulations;
- our ability to remain accredited with the Association for Advancing Tissue and Biologics and continue to obtain a sufficient number of donor cadavers and placentas for our biologics products;
- our ability to obtain and maintain government and third-party coverage and reimbursement for our products and the amount of such reimbursement;
- our expectations regarding future financial performance, expense management and operating trends, and our estimates of future revenues, expenses, ongoing losses, gross margins, operating leverage, capital requirements and our need for, or ability to obtain, additional financing and the availability of our credit facilities;
- our ability to service our debt and comply with the covenants in our credit agreements and the effect of our significant indebtedness on our business, operating results, financial condition and prospects;
- our ability to obtain and protect our intellectual property and proprietary rights and operate without infringing the intellectual property rights of others; and
- the significant stock ownership of Nantahala Capital Management, LLC (“Nantahala”) and the impact of potential future sales of our common stock by Nantahala or other investors, or the perception that such sales may occur, on the market price of our common stock.
The
forward-looking statements contained in this Form 10-Q are based on our current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.
These forward-looking statements involve a number of risks, uncertainties, or assumptions, many of which are beyond our control, which
may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, those factors described in the “*Risk Factors*” section
of our Annual Report on Form 10-K for the year ended December 31, 2025 and this Form 10-Q, as well as our subsequent Securities and Exchange
Commission (“SEC”) filings.
Should
one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities
laws.
**PART I.** **FINANCIAL INFORMATION**
## ITEM 1. Item 1. FINANCIAL STATEMENTS FINANCIAL STATEMENTS
**XTANT MEDICAL HOLDINGS, INC.**
### Condensed Consolidated Balance Sheets
_(In thousands, except number of shares and par value)_
| Line item | As of June 30, 2026 | As of December 31, 2025 |
| --- | --- | --- |
| | (Unaudited) | |
| ASSETS | | |
| Current Assets: | | |
| Cash and cash equivalents | $9,870 | $17,053 |
| Restricted cash | 347 | 275 |
| Trade accounts receivable, net of allowance for credit losses and doubtful accounts of $2,234 and $2,165, respectively | 19,416 | 17,803 |
| Inventories | 33,287 | 30,263 |
| Note receivable | — | 10,462 |
| Prepaid and other current assets | 1,857 | 2,389 |
| Total current assets | 64,777 | 78,245 |
| Property and equipment, net | 5,542 | 6,202 |
| Right-of-use asset, net | 2,894 | 3,192 |
| Goodwill | 6,074 | 6,074 |
| Intangible assets, net | 252 | 299 |
| Other assets | 128 | 133 |
| Total Assets | $79,667 | $94,145 |
| LIABILITIES & STOCKHOLDERS’ EQUITY | | |
| Current Liabilities: | | |
| Accounts payable | $6,154 | $3,844 |
| Accrued liabilities | 7,481 | 10,626 |
| Current portion of long-term debt | 3,720 | 3,500 |
| Current portion of lease liability | 594 | 622 |
| Current portion of finance lease obligations | 29 | 35 |
| Line of credit | 11,985 | 10,857 |
| Total current liabilities | 29,963 | 29,484 |
| Long-term Liabilities: | | |
| Lease liability, less current portion | 2,397 | 2,665 |
| Finance lease obligation, less current portion | — | 12 |
| Long-term debt, plus premium and less issuance costs | 7,287 | 11,026 |
| Other liabilities | 5 | 5 |
| Total Liabilities | 39,652 | 43,192 |
| Commitments and Contingencies (note 13) | - | - |
| Stockholders’ Equity: | | |
| Preferred stock, $0.000001 par value; 10,000,000 shares authorized; no shares issued and outstanding | — | — |
| Common stock, $0.000001 par value; 300,000,000 shares authorized; 140,262,960 shares issued and outstanding as of June 30, 2026 and 140,039,557 shares issued and outstanding as of December 31, 2025 | — | — |
| Additional paid-in capital | 307,004 | 305,439 |
| Accumulated other comprehensive loss | (1) | — |
| Accumulated deficit | (266,988) | (254,486) |
| Total Stockholders’ Equity | 40,015 | 50,953 |
| Total Liabilities & Stockholders’ Equity | $79,667 | $94,145 |
See
notes to unaudited condensed consolidated financial statements.
**XTANT MEDICAL HOLDINGS, INC.**
### Condensed Consolidated Statements of Operations
_(Unaudited, in thousands, except number of shares and per share amounts)_
| Line item | 2026 / Three Months Ended June 30, | 2025 / Three Months Ended June 30, | 2026 / Six Months Ended June 30, | 2025 / Six Months Ended June 30, |
| --- | --- | --- | --- | --- |
| Revenue | | | | |
| Product revenue | $23,031 | $30,436 | $43,915 | $59,720 |
| License revenue | — | 4,975 | — | 8,595 |
| Total Revenue | 23,031 | 35,411 | 43,915 | 68,315 |
| Cost of Sales | 9,701 | 11,127 | 18,614 | 23,788 |
| Gross Profit | 13,330 | 24,284 | 25,301 | 44,527 |
| Operating Expenses | | | | |
| General and administrative | 6,436 | 7,478 | 12,709 | 15,011 |
| Sales and marketing | 10,368 | 11,616 | 18,554 | 22,820 |
| Research and development | 695 | 566 | 1,130 | 1,009 |
| Write-off of distribution agreement deposit | 5,000 | — | 5,000 | — |
| Total Operating Expenses | 22,499 | 19,660 | 37,393 | 38,840 |
| (Loss) Income from Operations | (9,169) | 4,624 | (12,092) | 5,687 |
| Other Expense | | | | |
| Interest expense | (542) | (1,004) | (1,141) | (2,049) |
| Interest income | 1 | — | 220 | — |
| Unrealized foreign currency translation gain | 23 | 178 | 22 | 202 |
| Other income (expense) | 347 | 7 | 589 | (2) |
| Total Other Expense | (171) | (819) | (310) | (1,849) |
| Net (Loss) Income from Operations Before Provision for Income Taxes | (9,340) | 3,805 | (12,402) | 3,838 |
| Provision for Income Taxes Current and Deferred | (73) | (255) | (100) | (230) |
| Net (Loss) Income | $(9,413) | $3,550 | $(12,502) | $3,608 |
| Net (Loss) Income Per Share: | | | | |
| Basic | $(0.07) | $0.03 | $(0.09) | $0.03 |
| Dilutive | $(0.07) | $0.02 | $(0.09) | $0.02 |
| Shares used in the computation: | | | | |
| Basic | 140,258,667 | 139,310,589 | 140,159,255 | 139,190,378 |
| Dilutive | 140,258,667 | 148,574,242 | 140,159,255 | 148,339,423 |
See
notes to unaudited condensed consolidated financial statements.
**XTANT MEDICAL HOLDINGS, INC.**
### Condensed Consolidated Statements of Comprehensive (Loss) Income
_(Unaudited, in thousands)_
| Line item | 2026 / Three Months Ended June 30, | 2025 / Three Months Ended June 30, | 2026 / Six Months Ended June 30, | 2025 / Six Months Ended June 30, |
| --- | --- | --- | --- | --- |
| Net (Loss) Income | $(9,413) | $3,550 | $(12,502) | $3,608 |
| Other Comprehensive (Loss) Income | | | | |
| Foreign currency translation adjustments | — | 361 | (1) | 468 |
| Comprehensive (Loss) Income | $(9,413) | $3,911 | $(12,503) | $4,076 |
See
notes to unaudited condensed consolidated financial statements.
**XTANT MEDICAL HOLDINGS, INC.**
### Condensed Consolidated Statements of Equity
_(Unaudited, in thousands, except number of shares)_
| Line item | Shares / Common Stock | Amount / Common Stock | Capital / Additional Paid-In- | Income (Loss) / Accumulated Other Comprehensive | Deficit / Accumulated | Equity / Total Stockholders’ |
| --- | --- | --- | --- | --- | --- | --- |
| Balance at December 31, 2024 | 139,045,664 | — | $302,738 | $(316) | $(259,459) | $42,963 |
| Common stock issued upon settlement of restricted stock units | 44,496 | — | — | — | — | — |
| Withholding of common stock upon settlement of restricted stock units | (7,986) | — | (9) | — | — | (9) |
| Stock-based compensation | — | — | 758 | — | — | 758 |
| Foreign currency translation adjustment | — | — | — | 107 | — | 107 |
| Net income | — | — | — | — | 58 | 58 |
| Balance at March 31, 2025 | 139,082,174 | — | 303,487 | (209) | (259,401) | 43,877 |
| Common stock issued upon settlement of restricted stock units | 342,128 | — | — | — | — | — |
| Withholding of common stock upon settlement of restricted stock units | (108,580) | — | (52) | — | — | (52) |
| Stock-based compensation | — | — | 766 | — | — | 766 |
| Foreign currency translation adjustment | — | — | — | 361 | — | 361 |
| Net income | — | — | — | — | 3,550 | 3,550 |
| Balance at June 30, 2025 | 139,315,722 | — | 304,201 | 152 | (255,851) | 48,502 |
| Balance at December 31, 2025 | 140,039,557 | — | $305,439 | — | $(254,486) | $50,953 |
| Common stock issued upon settlement of restricted stock units | 44,496 | — | — | — | — | — |
| Withholding of common stock upon settlement of restricted stock units | (15,793) | — | (10) | — | — | (10) |
| Stock-based compensation | — | — | 746 | — | — | 746 |
| Foreign currency translation adjustment | — | — | — | (1) | — | (1) |
| Net loss | — | — | — | — | (3,089) | (3,089) |
| Balance at March 31, 2026 | 140,068,260 | — | 306,175 | (1) | (257,575) | 48,599 |
| Balance | 140,068,260 | — | 306,175 | (1) | (257,575) | 48,599 |
| Common stock issued upon settlement of restricted stock units | 288,673 | — | — | — | — | — |
| Withholding of common stock upon settlement of restricted stock units | (93,973) | — | (46) | — | — | (46) |
| Stock-based compensation | — | — | 875 | — | — | 875 |
| Net loss | — | — | — | — | (9,413) | (9,413) |
| Net income (loss) | — | — | — | — | (9,413) | (9,413) |
| Balance at June 30, 2026 | 140,262,960 | — | 307,004 | (1) | (266,988) | 40,015 |
| Balance | 140,262,960 | — | 307,004 | (1) | (266,988) | 40,015 |
See
notes to unaudited condensed consolidated financial statements.
**XTANT MEDICAL HOLDINGS, INC.**
### Condensed Consolidated Statements of Cash Flows
_(Unaudited, in thousands)_
| Line item | 2026 / Six Months Ended June 30, | 2025 / Six Months Ended June 30, |
| --- | --- | --- |
| Operating activities: | | |
| Net (loss) income | $(12,502) | $3,608 |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | |
| Depreciation and amortization | 1,042 | 2,243 |
| Loss (gain) on sale of fixed assets | 5 | (49) |
| Non-cash interest | 251 | 289 |
| Stock-based compensation | 1,621 | 1,524 |
| Provision for reserve on accounts receivable | 463 | 395 |
| Provision for excess and obsolete inventory | 1,496 | 490 |
| Write-off of distribution agreement deposit | 5,000 | — |
| Other | 3 | 46 |
| Changes in operating assets and liabilities: | | |
| Accounts receivable | (2,076) | (6,873) |
| Inventories | (3,591) | (1,349) |
| Prepaid and other assets | (298) | 347 |
| Accounts payable | 2,309 | (880) |
| Accrued liabilities | (3,145) | 2,763 |
| Net cash (used in) provided by operating activities | (9,422) | 2,554 |
| Investing activities: | | |
| Purchases of property and equipment | (441) | (1,557) |
| Proceeds from sale of fixed assets | 102 | 97 |
| Distribution agreement deposit | (5,000) | — |
| Proceeds from divestitures | 10,368 | — |
| Net cash provided by (used in) investing activities | 5,029 | (1,460) |
| Financing activities: | | |
| Borrowings on line of credit | 27,895 | 51,812 |
| Repayments on line of credit | (26,767) | (51,925) |
| Payments on long-term debt | (3,771) | — |
| Debt issuance costs | — | (49) |
| Payments on financing leases | (18) | (34) |
| Payment of taxes from withholding of common stock on settlement of restricted stock units | (56) | (61) |
| Net cash used in financing activities | (2,717) | (257) |
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (1) | (21) |
| Net change in cash and cash equivalents and restricted cash | (7,111) | 816 |
| Cash and cash equivalents and restricted cash at beginning of period | 17,328 | 6,221 |
| Cash and cash equivalents and restricted cash at end of period | $10,217 | $7,037 |
| Reconciliation of cash and cash equivalents and restricted cash reported in the condensed consolidated balance sheets | | |
| Cash and cash equivalents | $9,870 | $6,923 |
| Restricted cash | 347 | 114 |
| Total cash and restricted cash reported in condensed consolidated balance sheets | $10,217 | $7,037 |
See
notes to unaudited condensed consolidated financial statements.
**Notes
to Unaudited Condensed Consolidated Financial Statements**
**(1)Business Description, Basis of Presentation and Summary of Significant Accounting Policies**
**Business
Description and Basis of Presentation**
The
accompanying condensed consolidated financial statements include the accounts of Xtant Medical Holdings, Inc. (“Xtant”),
a Delaware corporation, and its wholly owned subsidiaries, which are jointly referred to herein as “Xtant” or the “Company”.
The terms “we,” “us” and “our” also refer to Xtant. All intercompany balances and transactions have
been eliminated in consolidation.
Xtant
is a global medical technology company focused on the design, development, and commercialization of a comprehensive portfolio of orthobiologics
and spinal implant fixation systems to facilitate spinal fusion in complex spine, deformity, and degenerative procedures.
The
accompanying condensed consolidated balance sheet as of December 31, 2025, which has been derived from audited financial statements,
and the unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”). They do not include all disclosures required by generally accepted accounting
principles for annual consolidated financial statements, but in the opinion of management include all adjustments, consisting only of
normal recurring items, necessary for a fair presentation.
Interim
results are not necessarily indicative of results that may be achieved in the future for the full year ending December 31, 2026.
These
condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto,
which are included in Xtant’s Annual Report on Form 10-K for the year ended December 31, 2025. The accounting policies set forth
in those annual consolidated financial statements are the same as the accounting policies utilized in the preparation of these condensed
consolidated financial statements, except as modified for appropriate interim consolidated financial statement presentation.
**Use
of Estimates**
The
preparation of the condensed consolidated financial statements requires the Company’s management to make a number of estimates
and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at
the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period.
Significant estimates include the carrying amount of property and equipment; goodwill, intangible assets and liabilities; valuation
allowances for trade receivables, inventory, our deposit paid to Dilon Technologies, Inc. under our distribution agreement with
them, deferred income tax assets and liabilities; current and long-term lease obligations and corresponding
right-of-use asset; and estimates for the fair value of long-term debt, stock options and other equity awards upon which the Company
determines stock-based compensation expense. Actual results could differ from those estimates.
**Cash,
Cash Equivalents, and Restricted Cash**
The
Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents.
Cash equivalents are recorded at cost, which approximates market value. The Company maintains its cash balances primarily with two financial
institutions. These balances generally exceed federally insured limits. The Company has not experienced any losses in such accounts and
believes it is not exposed to any significant credit risk in cash and cash equivalents.
Cash
and cash equivalents classified as restricted cash on the Company’s condensed consolidated balance sheets are restricted as to
withdrawal or use under the terms of certain contractual agreements. The June 30, 2026 and December 31, 2025 balances included lockbox
deposits that are temporarily restricted due to timing at the period end. The lockbox deposits are applied against the Company’s
line of credit the next business day.
**Long-Lived
Assets**
The
Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recovered. No impairments of long-lived assets were recorded for the three and six months ended June 30, 2026 and
2025.
**Goodwill**
Goodwill
represents the excess of costs over fair value of assets of businesses acquired. Goodwill and intangible assets acquired in a purchase
business combination and determined to have indefinite useful lives are not amortized. Instead, they are tested for impairment at least
annually, and whenever events or circumstances indicate, the carrying amount of the asset may not be recoverable. No impairments of goodwill
were recorded for the three and six months ended June 30, 2026 and 2025.
**Stock-Based
Compensation**
The
Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards
Codification (“ASC”) 718, *Compensation-Stock Compensation*. ASC 718 requires the recognition of compensation expense,
using a fair-value based method, for costs related to all stock-based payments including stock options, restricted stock units, performance
stock units, and shares issued under its employee stock purchase plan. ASC 718 requires companies to estimate the fair value of all share-based
payment option awards on the date of grant using an option pricing model. The fair value of stock options is recognized over the period
during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually
the vesting period), on a straight-line basis. The Company accounts for option forfeitures as they occur.
The
Company accounts for stock-based compensation for restricted stock units and deferred stock units at their fair value, based on the closing
market price of the Company’s common stock on the date of grant. These costs are recognized on a straight-line basis over the requisite
service period, which is usually the vesting period.
The
Company accounts for stock-based compensation for performance stock units with market-based conditions at their fair value on the date
of the award using the Monte Carlo simulation model. These costs are recognized over the requisite service period, which is usually the
vesting period, regardless of the likelihood of achievement of the market-based performance criteria.
**Recently
Issued Accounting Pronouncements**
In
November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures (Subtopic 220-40). This ASU requires that public business entities disclose additional information about specific
expense categories in the notes to financial statements at interim and annual reporting periods. The prescribed categories include purchases
of inventory, employee compensation, depreciation, intangible asset amortization, and depletion. This authoritative guidance is effective
for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted.
The Company is currently evaluating the effect of this new guidance on its consolidated financial statements.
**Foreign
Currency**
The
Company generates revenues outside the United States in multiple foreign currencies including euros, Swiss francs, British pounds and
in U.S. dollar-denominated transactions conducted with customers who generate revenue in currencies other than the U.S. dollar. The Company
also incurs operating expenses in euros, Swiss francs and British pounds. All assets and liabilities of foreign subsidiaries which have
a functional currency other than the U.S. dollar are translated at the rate of exchange at period-end, while elements of the income statement
are translated at the average exchange rates in effect during the period. The net effect of these translation adjustments is shown as
a component of accumulated other comprehensive loss. Foreign currency transaction gains and losses are reported in unrealized foreign
currency translation gain.
**Fair
Value of Financial Instruments**
The
carrying values of financial instruments, including trade accounts receivable, note receivable, accounts payable, accrued liabilities
and long-term debt, approximate their fair values based on terms and related interest rates as of June 30, 2026 and December 31, 2025.
**(2)Dilon Distribution Agreement**
On
April 13, 2026, we announced that we entered into a Distribution Agreement (the “Distribution Agreement”) with Dilon Technologies,
Inc. pursuant to which we obtained the exclusive rights to import, market, distribute and sell the HEMOBLAST® Bellows
product in the United States. The HEMOBLAST® Bellows product is an FDA-approved powder-based, topical, surgical hemostatic
agent used to control bleeding during surgical procedures. In connection with the agreement, we hired approximately 20 Dilon sales personnel
to assist in selling the product in the United States. Under the Distribution Agreement, Dilon will continue to manufacture
the HEMOBLAST® Bellows product at its facility in France and supply it to us
at a specified transfer price, subject to adjustment in certain circumstances. The Distribution Agreement does not contain any minimum purchase requirements. Under the Distribution Agreement,
we paid Dilon a $5.0 million exclusivity fee upon execution of the
agreement. The fee is fully refundable to us in certain circumstances. Given the refundable nature of the payment, we initially recognized
the $5.0 million as a deposit asset on our consolidated balance sheet.
However, based on an assessment of facts and circumstances, including the uncertainty surrounding recovery of the payment and management’s
expectation that repayment was not probable despite contractual repayment provisions, we recognized a $5.0 million charge to operating expenses during the three and six
months ended June 30, 2026. Activity within the allowance for credit losses related to the Dilon deposit consists of the following (in
thousands):
Schedule
of Allowance for Credit Losses
| Balance at beginning of period | Three Months Ended June 30, 2026 / — | Three Months Ended June 30, 2025 / $ | Three Months Ended June 30, 2025 / — | Six Months Ended June 30, 2026 / — | Six Months Ended June 30, 2025 / $ | Six Months Ended June 30, 2025 / — |
| --- | --- | --- | --- | --- | --- | --- |
| Provision for current expected credit losses | 5,000 | | — | 5,000 | | — |
| Write-offs against allowance | $(5,000) | $ | — | $(5,000) | $ | — |
| Balance at June 30 | — | | — | — | | — |
(3) Sale of Coflex/CoFix Assets and International Hardware Business
On
December 1, 2025, we completed the sale of certain assets relating to our Coflex and CoFix products (the “Coflex/CoFix Divestiture”)
to Companion Spine, LLC and one of its affiliates, Companion Spine SAS (collectively, “Companion Spine”), pursuant to an
Asset Purchase Agreement dated July 7, 2025 (the “Coflex/CoFix Agreement”). The total purchase price of the Coflex/CoFix
Divestiture was $17.5 million (subject to a closing inventory valuation adjustment set forth in the Coflex/CoFix Agreement). Of the total
purchase price, an aggregate of $7.5 million was previously paid to us in cash as non-refundable deposits during third and fourth quarters
of 2025, $1.8 million was paid to us in cash at the closing, and $8.2 million was paid to us as an unsecured promissory note issued by
Companion Spine to us at the closing (the “Companion Spine Note”). Pursuant to subsequent amendments to the Coflex/CoFix
Agreement, the maturity date of the Companion Spine Note was extended to January 31, 2026. The outstanding principal balance of the Companion
Spine Note, together with the related accrued interest, totaling $8.5 million, was paid to us on February 27, 2026.
Also,
on December 1, 2025, we completed the sale of all of our shares of equity securities of Paradigm Spine GmbH, one of our then wholly owned
subsidiaries engaged in the operation of our hardware business outside of the United States (“Paradigm”), which constituted100% of the issued and outstanding shares of equity securities of Paradigm (the “Paradigm Divestiture” and together with
the Coflex/CoFix Divestiture, the “Divestitures”), to Companion Spine pursuant to an Equity Purchase Agreement dated July
7, 2025 between us, Paradigm and Companion Spine (the “Paradigm Agreement” and together with the Coflex/CoFix Agreement,
the “Divestiture Agreements”). The total purchase price of the Paradigm Divestiture was $3.9 million, $1.7 million of which
was paid to us in cash at the closing of the Paradigm Divestiture and $2.2 million of which was paid to us on February 27, 2026 in settlement
of the net working capital and other purchase price adjustments.
The
aggregate purchase price associated with the two Divestitures was $21.4 million.
We determined that the Divestitures do not meet the criteria for classification as discontinued operations for accounting purposes.
As a result, all historical operating results for the Coflex/CoFix assets and international hardware business are reflected within the
consolidated statements of operations in the consolidated financial statements.
**(4)Revenue**
In
the United States, the Company generates a substantial portion of its revenue from independent commissioned sales agents. The Company
consigns its orthobiologics products to hospitals and consigns or loans its spinal implant sets to independent sales agents. The spinal
implant sets typically contain the instruments, disposables, and spinal implants required to complete a surgery. Consigned sets are managed
by the sales agent to service hospitals that are high volume users for multiple procedures.
The
Company ships replacement inventory to independent sales agents to replace the consigned inventory used in surgeries. Loaned sets are
returned to the Company’s distribution center, replenished, and made available to sales agents for the next surgical procedure.
For
each surgical procedure, the sales agent reports use of the product by the hospital and, as soon as practicable thereafter, ensures that
the hospital provides a purchase order to the Company. Revenue is recognized upon utilization of product.
Additionally,
the Company sells product directly to domestic and international stocking resellers, original equipment manufacturer resellers and private
label resellers. Upon receipt and acceptance of a purchase order from a stocking reseller, the Company ships product and invoices the
reseller. The Company recognizes revenue when the control is transferred upon shipment or upon delivery, based on the contract terms
and legal requirements, and the transfer of title and risk of loss occurs. There is generally no customer acceptance or other condition
that prevents the Company from recognizing revenue in accordance with the delivery terms for these sales transactions. In the normal
course of business, the Company accepts returns of product that have not been implanted. Product returns are not material to the Company’s
consolidated statements of operations. The Company accounts for shipping and handling activities as a fulfillment cost rather than a
separate performance obligation. The Company’s policy is to record revenue net of any applicable sales, use, or excise taxes. Payment
terms are generally net 30 days from invoice date and some customers are offered discounts for early payment. The consideration for goods
or services reflects any fixed amount stated per the contract and estimates for any variable consideration, such as returns, discounts
or rebates, to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty
associated with the variable consideration is resolved. For certain sales transactions, we incur group purchasing organization fees that
are based on a contractual percentage of applicable sales and are treated as consideration payable to a customer and recorded as a reduction
of revenue.
The
Company recognizes revenue in certain circumstances before product delivery occurs (commonly referred to as bill-and-hold transactions).
When the Company enters into bill-and-hold arrangements, the Company determines if the customer obtains control of the product by determining
(a) the reason for the bill-and-hold arrangement; (b) whether the product was identified separately as belonging to the customer; (c)
whether the product was ready for physical transfer to the customer; and (d) whether the Company was unable to utilize the product or
direct it to another customer. For bill-and-hold arrangements, the associated product inventory is identified separately by the Company
as belonging to the customer and is ready for physical transfer. At June 30, 2026, $0.2 million was included in revenue for products
that had not shipped. Occasionally the Company will receive consideration in advance of transferring products to its customers and records
a contract liability. Contract liabilities are recognized as revenue in proportion to when control of the goods is transferred to the
customer.
The
Company distributes HEMOBLAST® Bellows product in the United States under the Distribution Agreement
as discussed above in Note 2. Under the terms of the agreement, Dilon fulfilled certain customer orders during a transitionary period during which
customer contracts were transitioned to the Company. We evaluated whether our performance obligation is a promise to transfer product
to a customer as the principal, or to arrange for a product to be provided by another party using a control model as the agent. This evaluation
determined that we are not in control of establishing the transaction price, managing all aspects of the shipment process and taking the
risk of loss for delivery, collection and returns. Based on our evaluation of the control model, we determined that our responsibility
under the Distribution Agreement during the transition period was an agent and not the principal. Correspondingly, during both the three and six months ended June 30, 2026, revenues recognized by the Company included $1.3 million recognized from purchase orders fulfilled by Dilon on behalf of the Company, recognized net of Dilon’s fulfillment costs.
*License
revenue*
License
revenue is recognized when control of the intellectual property (“IP”) rights is transferred to a customer in an amount that
reflects the consideration the Company expects to be entitled to in exchange for the licensing of the Company’s IP. Revenue for
IP rights is accounted for based on the nature of the promise to grant the license. In determining whether the Company’s promise
is to provide a right to access its IP or a right to use its IP, the Company considers the nature of the IP to which the customer will
have rights. IP is either functional IP which has significant standalone functionality or symbolic IP which does not have significant
standalone functionality. Revenue from functional IP is recognized at the point in time when control of the distinct license is transferred
to the customer. Revenue from symbolic IP is recognized over the access period to the Company’s IP.
Revenues
from sales-based royalties promised in exchange for a license of IP is recognized at the later of when the underlying sale occurs, or
the performance obligation to which some or all of the sales based royalty has been allocated is satisfied.
The
Company has a license agreement which grants an exclusive, nontransferable, non-sublicensable, royalty bearing right to manufacture and
commercialize one of our products in the United States. The Company concluded that this agreement represented one performance obligation
of transferring the IP rights to manufacture and commercialize the product. This was determined to be functional IP. The transaction
price included quarterly royalty payments based on the volume of product sold subject to guaranteed quarterly minimums. Due to policy
changes by the Centers for Medicare & Medicaid Services that went into effect on January 1, 2026, no revenue was recognized in connection
with the license agreement during the three and six months ended June 30, 2026.
*Disaggregation
of revenue*
The
Company operates in one reportable segment with its net revenue derived primarily from the sale of orthobiologics and spinal implant
products across North America, Europe, Asia Pacific, and Latin America. Sales are reported net of returns, discounts and rebates.
The
following table presents revenues from these product lines for the three and six months ended June 30, 2026 and 2025 (in thousands):
Summary of Revenues from Product Lines
| Line item | Three Months Ended June 30, 2026 | Three Months Ended June 30, / Percentage of / Total Revenue | Three Months Ended June 30, 2025 | Three Months Ended June 30, / Percentage of / Total Revenue |
| --- | --- | --- | --- | --- |
| Orthobiologics | $17,360 | 75% | $19,370 | 55% |
| Spinal implant | 5,671 | 25% | 11,066 | 31% |
| License revenue | — | — | 4,975 | 14% |
| Total revenue | $23,031 | 100% | $35,411 | 100% |
| Line item | Six Months Ended June 30, 2026 | Six Months Ended June 30, / Percentage of Total Revenue | Six Months Ended June 30, 2025 | Six Months Ended June 30, / Percentage of Total Revenue |
| --- | --- | --- | --- | --- |
| Orthobiologics | $32,969 | 75% | $37,444 | 55% |
| Spinal implant | 10,946 | 25% | 22,276 | 33% |
| License revenue | — | — | 8,595 | 12% |
| Total revenue | $43,915 | 100% | $68,315 | 100% |
**(5)Trade Accounts Receivable, Net**
Trade
accounts receivable is reduced by an estimated allowance for credit losses based on historical collection experience adjusted for current
economic conditions affecting collectability and reasonable and supportable forecasts concerning the future. Actual customer collections
could differ from estimates. Account balances are charged to the allowance after all means of collection have been exhausted and the
potential for recovery is considered remote. Provisions to the allowance for credit losses are charged to expense. Activity within the
allowance for credit losses consists of the following (in thousands):
Schedule of Allowance for Credit Losses
| Line item | Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
| --- | --- | --- | --- | --- |
| Balance at beginning of period | $2,115 | $1,705 | $2,165 | $1,437 |
| Provision for current expected credit losses | 283 | 147 | 463 | 390 |
| Write-offs against allowance | $(164) | $(57) | $(394) | $(32) |
| Balance at June 30 | 2,234 | 1,795 | 2,234 | 1,795 |
**(6)Inventories**
Inventories
consist of the following (in thousands):
Schedule of Inventories
| Line item | June 30, 2026 | December 31, 2025 |
| --- | --- | --- |
| Raw materials | $6,454 | $5,689 |
| Work in process | 5,338 | 4,799 |
| Finished goods | 21,495 | 19,775 |
| Total | $33,287 | $30,263 |
**(7)Property and Equipment, Net**
Property
and equipment, net are as follows (in thousands):
Schedule
of Property and Equipment, Net
| Line item | June 30, 2026 | December 31, 2025 |
| --- | --- | --- |
| Equipment | $7,597 | $7,346 |
| Computer equipment | 1,315 | 1,252 |
| Computer software | 361 | 361 |
| Leasehold improvements | 4,559 | 4,483 |
| Surgical instruments | 13,799 | 14,070 |
| Assets not yet in service | 744 | 897 |
| Total cost | 28,375 | 28,409 |
| Less: accumulated depreciation | (22,833) | (22,207) |
| Property and equipment, net | $5,542 | $6,202 |
Depreciation
expense related to property and equipment, including property under finance leases, for the three months ended June 30, 2026 and 2025
was $0.5 million and $0.8 million, respectively, and $1.0 million and $1.4 million for the six months ended June 30, 2026 and 2025, respectively.
**(8)Intangible Assets**
The
following table sets forth information regarding intangible assets (in thousands):
Schedule
of Intangible of Assets
| June 30, 2026: | Weighted Average Life | Cost | Accumulated Amortization | Net |
| --- | --- | --- | --- | --- |
| Patents | 13 years | $1,027 | $(775) | $252 |
| December 31, 2025: | Weighted Average Life | Cost | Accumulated Amortization | Net |
| --- | --- | --- | --- | --- |
| Patents | 13 years | $1,027 | $(728) | $299 |
Amortization
expense for the three months ended June 30, 2026 and 2025 was $0.0 million and $0.5 million, respectively, and $0.0 million and $0.9 million for the six months ended June 30, 2026 and 2025, respectively.
**(9)Accrued Liabilities**
Accrued
liabilities consist of the following (in thousands):
Schedule
of Accrued Liabilities
| Line item | June 30, 2026 | December 31, 2025 |
| --- | --- | --- |
| Wages/commissions payable | $6,910 | $6,726 |
| Taxes payable | 94 | 2,183 |
| Other accrued liabilities | 477 | 1,717 |
| Accrued liabilities | $7,481 | $10,626 |
**(10)Debt**
Long-term
debt consists of the following (in thousands):
Schedule
of Long-term Debt
| Line item | June 30, 2026 | December 31, 2025 |
| --- | --- | --- |
| Amounts due under term loan | $10,229 | $14,000 |
| Accrued end-of-term payments | 988 | 817 |
| Less: unamortized debt issuance costs | (210) | (291) |
| Less: current portion of long-term debt | (3,720) | (3,500) |
| Long-term debt, less issuance costs and current portion of long-term debt | $7,287 | $11,026 |
As
of June 30, 2026, scheduled principal payments for our term credit agreement are as follows (in thousands):
Schedule
of Principal Payments
| Period | Scheduled Quarterly Payments | Annually |
| --- | --- | --- |
| Remainder of 2026 | $930 | $1,860 |
| 2027 | 930 | 3,720 |
| 2028 | 930 | 3,720 |
| 2029 | 930 | 930 |
As
of June 30, 2026, the effective rate of the term loan under our term credit agreement, inclusive of amortization of debt issuance costs
and accretion of the final payment, was 14.74%, and the effective rate of the revolving loan under our revolving credit agreement was8.23%. As of June 30, 2026, we had $12.0 million outstanding and $0.7 million of availability under our revolving credit facility.
The
credit agreements contain affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants
that, among other things, limit or restrict the ability of certain subsidiaries of the Company, as borrowers (the “Borrowers”),
subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions
or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with
affiliated persons, make investments, and change the nature of their businesses. In addition, the credit agreements require the Borrowers
and the Company to maintain net product revenue at or above minimum levels and to maintain a certain minimum liquidity level, in each
case as specified in the credit agreements.
On
March 26, 2026, we entered into Amendment No. 4 to Amended and Restated Credit, Security and Guaranty Agreement (Term Loan) with MidCap
Financial Trust and Amendment No. 4 to Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan) with MidCap Funding
IV Trust pursuant to which we eliminated the requirement to comply with the minimum net revenue covenant for fourth quarter of 2025,
adjusted the amortization of the term loan to have amortization calculated off the amount of principal outstanding when amortization
payments start instead of the original principal amount of the term loan, and revised the minimum net revenue covenant to align solely
with revenue generated from the orthobiologics products and correspondingly adjust the minimum net revenue amounts.
On August 10, 2026,
we entered into Amendment No. 5 to Amended and Restated Credit, Security and Guaranty Agreement (Term Loan) with MidCap Financial Trust
and Amendment No. 5 to Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan) with MidCap Funding IV Trust (collectively,
the “Amendment No. 5s”) pursuant to which we eliminated the requirement to comply with the minimum net revenue covenant for
second quarter of 2026, adjusted the amortization of the term loan to increase quarterly principal payments by $0.15 million in the fourth
quarter of 2026 and increased quarterly principal payments by $0.3 million thereafter until the outstanding principal balance of the
Term Loan has been paid in full, and revised the minimum net revenue covenant to new minimum net revenue amounts.
As of June 30, 2026, the Company was in compliance with all
applicable covenants under the credit agreements. As of June 30, 2026, our credit agreements included a minimum net revenue covenant;
however, pursuant to the Amendment No. 5s executed in August 2026, we were not required to comply with the minimum net revenue covenant
for the quarter ended June 30, 2026. Under the covenant terms in effect prior to the Amendment No. 5s, we would not have been in compliance
with the minimum net revenue requirement for that quarter.
Each
of the Borrowers, and the Company, as guarantor, are jointly and severally liable for all of the obligations under the facilities on
the terms set forth in the credit agreements. The Borrowers’ obligations, and the Company’s obligations as a guarantor, under
the credit agreements are secured by first-priority liens on substantially all of their assets, including, without limitation, all inventory,
equipment, accounts, intellectual property and other assets of the Company and the Borrowers.
**(11)Stock-Based Compensation**
On
July 26, 2023, our stockholders approved and adopted the Xtant Medical Holdings, Inc. 2023 Equity Incentive Plan (the “2023 Plan”),
which replaced the Xtant Medical Holdings, Inc. 2018 Equity Incentive Plan (as amended and restated, the “2018 Plan”) with
respect to future grants of equity awards, although the 2018 Plan continues to govern equity awards granted under the 2018 Plan. The
2023 Plan permits the Board of Directors, or a committee thereof, to grant to eligible employees, non-employee directors, and consultants
of the Company non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units,
deferred stock units, performance awards, non-employee director awards, and other stock-based awards. The 2023 Plan is administered by
the Compensation Committee of the Board of Directors. The Compensation Committee or the Board of Directors may select 2023 Plan participants
and determine the nature and amount of awards to be granted. The maximum number of shares of our common stock available for issuance
under the 2023 Plan, subject to adjustment pursuant to the terms of the 2023 Plan, as increased by an amendment approved by our stockholders
on November 7, 2025, is (i) 17,800,000 shares of common stock; (ii) 7,695,812 shares of common stock remaining available for issuance
under the 2018 Plan but not subject to outstanding awards under the 2018 Plan as of July 26, 2023; and (iii) up to 6,686,090 shares of
common stock subject to awards outstanding under the 2018 Plan as of July 26, 2023 but only to the extent such awards are subsequently
forfeited, cancelled, expire, or otherwise terminate without the issuance of such shares of common stock after such date.
Total
stock-based compensation expense recognized for employees and directors was $0.9 million and $0.8 million for the three months
ended June 30, 2026 and 2025, respectively, and $1.6 million and $1.5 million for the six months ended June 30, 2026 and 2025, respectively,
and was recognized as general and administrative expense.
**Stock
Options**
Stock
option activity was as follows for the six months ended June 30, 2026 and 2025:
Schedule
of Stock Options Activity
| Line item | 2026 / Shares | 2026 / Weighted Average Exercise Price | 2026 / Weighted Average Remaining Contract Term (years) | 2025 / Shares | 2025 / Weighted Average Exercise Price | 2025 / Weighted Average Remaining Contract Term (years) |
| --- | --- | --- | --- | --- | --- | --- |
| Outstanding at January 1 | 3,760,472 | 1.30 | | 3,925,403 | $1.29 | |
| Cancelled or expired | (125,000) | 1.08 | | (164,931) | 1.19 | |
| Outstanding at June 30 | 3,635,472 | 1.30 | 5.30 | 3,760,472 | 1.30 | 6.43 |
| Exercisable at June 30 | 3,301,650 | 1.32 | 5.12 | 3,006,140 | 1.35 | 6.06 |
As
of June 30, 2026, there was approximately $0.3 million of total unrecognized compensation expense related to unvested stock options.
These costs are expected to be recognized over a weighted-average period of 1.1 years.
**Restricted
Stock Units and Deferred Stock Units**
Restricted
stock unit and deferred stock unit activity was as follows for the six months ended June 30, 2026 and 2025:
Schedule
of Restricted Stock Activity
| Line item | 2026 / Shares | 2026 / Weighted Average Fair Value at Grant Date Per Share | 2025 / Shares | 2025 / Weighted Average Fair Value at Grant Date Per Share |
| --- | --- | --- | --- | --- |
| Outstanding at January 1 | 7,669,141 | $0.79 | 5,455,472 | $0.90 |
| Vested | (333,169) | 0.93 | (386,624) | 0.91 |
| Cancelled | (114,486) | 0.67 | (34,197) | 0.98 |
| Outstanding at June 30 | 7,221,486 | $0.79 | 5,034,651 | $0.90 |
Total
stock-based compensation expense related to unvested restricted stock units and deferred stock units not yet recognized was $2.8 million
as of June 30, 2026, which is expected to be allocated to expenses over a weighted-average period of 2.3 years.
**Performance
Stock Units**
During
2024, the Company awarded performance stock units (“PSUs”) under the 2023 Plan to certain executive officers and key employees.
The Company has awarded an aggregate of 1,894,985 PSUs, assuming target performance, and each PSU award can be earned and vested
at the end of a three-year performance period based on the total stockholder return, or TSR, of the Company’s common stock price
relative to a group of peer companies and subject to continued service to the Company. The number of shares of the Company’s common
stock to be issued upon vesting and settlement of the PSUs range from 0% to 200% of the target number of shares underlying
the award, depending on the Company’s performance against the group of peer companies.
During
2025, the Company awarded PSUs under the 2023 Plan to certain executive officers and key employees. The Company awarded 1,699,402 PSUs,
assuming target performance, and each PSU award can be earned at the end of each of the three one-year performance periods based on stock
appreciation goals and subject to continued service to the Company. After each one-year performance period, the amount earned in that
period will vest equally over the remaining service periods. The number of shares of the Company’s common stock or deferred stock
units to be issued upon vesting and settlement of the PSUs ranges from 0% to 200% of the target number of shares underlying the award,
depending on the Company’s performance against the stock appreciation goals set forth in the awards.
Activity
for PSU awards granted under the 2023 Plan, assuming target performance, was as follows for the six months ended June 30, 2026 and 2025:
Schedule
of PSU Awards Activity
| Line item | 2026 / Shares | 2026 / Weighted Average Fair Value | 2025 / Shares | 2025 / Weighted Average Fair Value |
| --- | --- | --- | --- | --- |
| Outstanding at January 1 | 3,340,111 | 1.16 | 1,640,709 | 1.49 |
| Forfeited | (122,768) | 1.49 | — | — |
| Outstanding at June 30 | 3,217,343 | 1.15 | 1,640,709 | 1.49 |
The
total stock-based compensation cost related to unvested PSUs not yet recognized was $1.7 million as of June 30, 2026, which is expected
to be allocated to expenses over a weighted-average period of 1.8 years.
**(12)Warrants**
Warrant
activity was as follows for the six months ended June 30, 2026 and 2025:
Schedule of Warrant Activity
| Line item | 2026 / Shares | 2026 / Weighted Average Exercise Price | 2026 / Weighted Average Remaining Contract Term (years) | 2025 / Shares | 2025 / Weighted Average Exercise Price | 2025 / Weighted Average Remaining Contract Term (years) |
| --- | --- | --- | --- | --- | --- | --- |
| Outstanding at January 1 | 12,237,470 | 1.53 | | 12,237,470 | 1.53 | 1.8 |
| Cancelled or expired | (7,111,112) | 2.29 | | — | — | |
| Outstanding at June 30 | 5,126,358 | 0.48 | 1.17 | 12,237,470 | 1.53 | 1.3 |
| Exercisable at June 30 | 5,126,358 | 0.48 | 1.17 | 12,237,470 | 1.53 | 1.3 |
**(13)Commitments and Contingencies**
*Litigation*
We
may be subject to potential liabilities under government regulations and various claims and legal actions that are pending but we believe
are immaterial at this time or may be asserted in the future from time to time.
These
matters arise in the ordinary course and conduct of our business and may include, for example, commercial, product liability, intellectual
property, and employment matters. We intend to continue to defend the Company vigorously in such matters and when warranted, take legal
action against others. Furthermore, we regularly assess contingencies to determine the degree of probability and range of possible loss
for potential accrual in our financial statements. An estimated loss contingency is accrued in our financial statements if it is probable
that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on our assessment, we have adequately
accrued an amount for contingent liabilities currently in existence. We do not accrue amounts for liabilities that we do not believe
are probable or that we consider immaterial to our overall financial position. Litigation is inherently unpredictable, and unfavorable
resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount
of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could
be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.
*Indemnification
Arrangements*
Our
indemnification arrangements generally include limited warranties and certain provisions for indemnifying customers against liabilities
if our products or services infringe a third-party’s intellectual property rights. To date, we have not incurred any material costs
as a result of such warranties or indemnification provisions and have not accrued any liabilities related to such obligations in the
accompanying consolidated financial statements.
We
have also agreed to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines, and
settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to
be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s
services as our director or officer or that person’s services provided to any other company or enterprise at our request.
**(14)Income Taxes**
Information
on the Company’s income taxes for the periods reported is as follows:
Schedule
of Income Taxes
| Line item | 2026 / Three Months Ended June 30, | 2025 / Three Months Ended June 30, | 2026 / Six Months Ended June 30, | 2025 / Six Months Ended June 30, |
| --- | --- | --- | --- | --- |
| Income tax expense from continuing operations | $73 | $255 | $100 | $230 |
| (Loss) income from continuing operations before income taxes | $(9,340) | $3,805 | $(12,402) | $3,838 |
| Effective income tax rate | -0.8% | 6.7% | -0.8% | 6.0% |
Our
effective tax rate for the three and six months ended June 30, 2026 differs from the statutory rate due to a valuation allowance against
deferred tax assets, offset by the impact of cash state taxes.
Our
effective tax rate for the three and six months ended June 30, 2025 differs from the statutory rate due to a valuation allowance against
deferred tax assets, offset by the impact of cash state and foreign taxes.
As
of June 30, 2026, the Company is not currently under examination by tax authorities.
**(15)Net Income (Loss) Per Share**
Basic
net (loss) income per share is computed by dividing net (loss) income by the weighted average number of shares of common stock outstanding.
Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding.
Diluted net (loss) income per share is computed in a manner consistent with that of basic earnings per share while giving effect to all
potentially dilutive shares of common stock outstanding during the period, which include the assumed exercise of stock options and warrants
using the treasury stock method. Diluted net (loss) income per share was the same as basic net (loss) income per share for the three
and six months ended June 30, 2026, as shares issuable upon the exercise of stock options and warrants were anti-dilutive as a result
of the net losses incurred for the periods.
The
table below sets forth the computation of basic and diluted (loss) earnings per share (in thousands, except per share data):
Schedule of Basic and Diluted Earnings Per Share
| Line item | 2026 / Three Months Ended June 30, | 2025 / Three Months Ended June 30, | 2026 / Six Months Ended June 30, | 2025 / Six Months Ended June 30, |
| --- | --- | --- | --- | --- |
| Numerator: | | | | |
| Net (loss) income | $(9,413) | $3,550 | $(12,502) | $3,608 |
| Denominator: | | | | |
| Basic – weighted average shares outstanding | 140,258,667 | 139,310,589 | 140,159,255 | 139,190,378 |
| Effect of dilutive securities: | | | | |
| Employee restricted stock units and deferred stock units | — | 4,011,541 | — | 3,896,933 |
| Warrants | — | 5,252,112 | — | 5,252,112 |
| Diluted – weighted average shares outstanding | 140,258,667 | 148,574,242 | 140,159,255 | 148,339,423 |
| Basic (loss) earnings per share | (0.07) | 0.03 | (0.09) | 0.03 |
| Diluted (loss) earnings per share | (0.07) | 0.02 | (0.09) | 0.02 |
For
the three months ended June 30, 2026 and 2025, an aggregate of 19,200,659 and 13,410,148 shares, respectively, underlying outstanding
stock options, restricted stock units, deferred stock units, performance stock units and warrants were excluded for the diluted (loss)
earnings per share calculation as they were anti-dilutive. For the six months ended June 30, 2026 and 2025, an aggregate of 19,200,659 and 13,524,756 shares, respectively, underlying outstanding stock options, restricted stock units, deferred stock units, performance
stock units and warrants were excluded for the diluted (loss) earnings per share calculation as they were anti-dilutive.
**(16)Supplemental Disclosure of Cash Flow Information**
Supplemental
cash flow information is as follows (in thousands):
Schedule of Supplemental Cash Flow Information
| Line item | 2026 / Six Months Ended / June 30, | 2025 / Six Months Ended / June 30, |
| --- | --- | --- |
| Cash paid during the period for: | | |
| Interest | $890 | $1,760 |
| Income taxes | 2,607 | 52 |
| Non-cash activities: | | |
| Increase in right of use assets and lease liability | — | $2,107 |
**(17)Segment and Geographic Information**
The
Company operates as one reportable and operating segment based upon the Company’s organization structure and the way in which the
operations and investments are managed and evaluated by the chief operating decision maker (“CODM”), who is the Company’s
Chief Executive Officer. The CODM uses consolidated net (loss) income as the primary measure of segment profit or loss to monitor performance
and allocate resources.
The
measure of segment assets is reported on the balance sheet as total assets. The CODM does not review segment assets at a level other
than that presented in the Company’s consolidated balance sheets.
The
table below provides the calculation of consolidated net (loss) income, which is the performance measure that is most consistent with
GAAP, and the significant operating expenses included in this performance measure (in thousands):
Schedule of Calculation of Consolidated Net (Loss) Income
| Line item | 2026 / Three Months Ended June 30, | 2025 / Three Months Ended June 30, | 2026 / Six Months Ended June 30, | 2025 / Six Months Ended June 30, |
| --- | --- | --- | --- | --- |
| Revenue | $23,031 | $35,411 | $43,915 | $68,315 |
| Less cost of sales | 9,701 | 11,127 | 18,614 | 23,788 |
| Gross Profit | 13,330 | 24,284 | 25,301 | 44,527 |
| Gross Margin | 57.9% | 68.6% | 57.6% | 65.2% |
| Less: | | | | |
| General and administrative | 6,436 | 7,478 | 12,709 | 15,011 |
| Sales and marketing | 10,368 | 11,616 | 18,554 | 22,820 |
| Research and development | 695 | 566 | 1,130 | 1,009 |
| Write-off of distribution agreement deposit | 5,000 | — | 5,000 | — |
| Interest expense | 542 | 1,004 | 1,141 | 2,049 |
| Interest income | (1) | — | (220) | — |
| Unrealized foreign currency translation gain | (23) | (178) | (22) | (202) |
| Other (income) expense | (347) | (7) | (589) | 2 |
| Provision for income taxes | 73 | 255 | 100 | 230 |
| Net (Loss) Income | $(9,413) | $3,550 | $(12,502) | $3,608 |
The
Company attributes revenues to geographic areas based on the location of the customer. Total revenue by major geographic area is as follows
(in thousands):
Schedule of Revenues by Geographic Region
| Line item | Three Months Ended / June 30, 2026 | Percentage of / Total Revenue | Three Months Ended / June 30, 2025 | Percentage of / Total Revenue |
| --- | --- | --- | --- | --- |
| United States | $22,462 | 98% | $32,133 | 91% |
| Rest of world | 569 | 2% | 3,278 | 9% |
| Total revenue | $23,031 | 100% | $35,411 | 100% |
| Line item | Six Months Ended / June 30, 2026 | Percentage of / Total Revenue | Six Months Ended / June 30, 2025 | Percentage of / Total Revenue |
| --- | --- | --- | --- | --- |
| United States | $43,169 | 98% | $62,250 | 91% |
| Rest of world | 746 | 2% | 6,065 | 9% |
| Total revenue | $43,915 | 100% | $68,315 | 100% |
## ITEM 2. Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This
Management’s Discussion and Analysis provides material historical and prospective disclosures intended to enable investors and
other users to assess our financial condition and results of operations. The following discussion should be read in conjunction with
our condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the audited
consolidated financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition
and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. In addition to historical
financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and
assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ
materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed above in
“Cautionary Statement Regarding Forward-Looking Statements” and elsewhere in this Form 10-Q.
**Business
Overview**
We
develop, manufacture and market regenerative medicine products and medical devices for domestic and international markets. Our
products serve the specialized needs of orthopedic and neurological surgeons, as well as trauma, foot and ankle, sports medicine,
and wound care surgeons including orthobiologics for the promotion of bone healing, amniotic tissue and collagen for both surgical
repair and chronic wound care, and implants and instrumentation for the treatment of spinal disease. We promote our products
primarily in the United States through a direct sales force, independent distributors and stocking agents.
We
have an extensive sales channel of direct and independent commissioned agents and stocking distributors in the United States representing
some or all of our products. We also maintain a national accounts program to enable our agents to gain access to integrated delivery
network hospitals and through group purchasing organizations. We have biologics contracts with major GPOs, as well as extensive access
to IDNs across the United States for both biologics and spine hardware systems. While our focus is the United States market, we promote
and sell our products internationally through stocking distribution partners in Europe, Canada, Mexico, South America, and certain Pacific
region countries. We have recently made and intend to continue to make measured investments in the expansion of our commercial team to
support our new products and maximize the reach of our broad portfolio of orthobiologics solutions. In April 2026, we hired approximately
20 sales personnel in connection with our exclusive distribution arrangement with Dilon Technologies, Inc. (“Dilon”).
As
previously disclosed, on December 1, 2025, we completed the sale of certain non-core assets relating to our Coflex and CoFix
products and our international hardware business to Companion Spine, LLC (“Companion Spine”) for an aggregate purchase
price of $21.4 million (the “Coflex/CoFix and Paradigm Divestitures”). Of the $10.7 million of proceeds received
(including $0.3 million of interest accrued on the note receivable balance) during the first quarter of 2026, $2.8 million was used
to repay a portion of our term debt. To assist in the transition of this business to Companion Spine, we agreed to provide certain
transition services to Companion Spine for a limited period of time. In 2025, we recognized $20.3 million in revenue from sales of
our Coflex and CoFix products and international hardware products prior to the Coflex/CoFix and Paradigm Divestitures. As anticipated, the loss of this
revenue has adversely affected and will continue to adversely affect our 2026 revenue.
In
addition, as previously disclosed, we recognized $18.7 million in license revenue in 2025 that we indicated likely will not repeat
in 2026 due primarily to changes in the reimbursement environment for our SimpliMax™ product effective January 1, 2026. As
previously disclosed, this loss in license revenue has also adversely affected and will continue to adversely affect a portion
of our product revenue in 2026. Specifically, we experienced $5.0 million and $8.6 million decreases in license revenue during the
three and six months ended June 30, 2026, respectively, and $2.9 million and $4.9 million decreases in product revenue related
primarily to skin substitute products during the three and six months ended June 30, 2026, respectively, in each case as compared to
the respective prior year period. The loss of this license and product revenue will continue to adversely impact our
revenues and other operating results, including our gross margins, during the remainder of 2026 as compared to 2025.
**Recent
Developments**
On
April 13, 2026, we announced that we entered into a Distribution Agreement (the “Distribution Agreement”) with Dilon
Technologies, Inc. pursuant to which we obtained the exclusive rights to import, market, distribute and sell the
HEMOBLAST® Bellows product in the United States. The HEMOBLAST® Bellows product is an
FDA-approved powder-based, topical, surgical hemostatic agent used to control bleeding during surgical procedures. In connection
with the agreement, we hired approximately 20 Dilon sales personnel to assist in selling product in the United States. Under the
Distribution Agreement, Dilon will continue to manufacture the HEMOBLAST® Bellows product at its facility in France and supply it to us at a specified transfer price, which price is subject to
adjustment in certain circumstances. The Distribution Agreement does not contain any minimum purchase requirements. We rely on Dilon, as the sole manufacturer, to produce the product for us and in sufficient quantities and at an
appropriate transfer price. There are no other suppliers of the HEMOBLAST® Bellows product. Accordingly, this arrangement involves
risk since we do not control the manufacturing process and Dilon is responsible for all manufacturing decisions, as well as compliance
with all applicable rules and regulations in connection therewith. We believe we will
have a sufficient supply of the HEMOBLAST® Bellows product to support our anticipated sales through the end of third quarter
2026. We are uncertain that supply will be available to us thereafter. If Dilon is unable to manufacture and supply us the
HEMOBLAST® Bellows product in sufficient quantities or at all, then we will be unable to sell the product and recognize revenue
in connection therewith, as discussed later in this report under the heading “Part II. Other Information – Item 1A. Risk Factors.”
Under the Distribution Agreement, we paid Dilon a $5.0 million exclusivity fee upon execution of the agreement. The fee is fully
refundable to us in certain circumstances. Given the refundable nature of the payment, we initially recognized the
$5.0 million as a deposit asset on our consolidated balance sheet. However, based on an assessment of facts and circumstances, including the uncertainty
surrounding recovery of the payment and management’s expectation that repayment was not probable despite contractual repayment
provisions, we recognized a $5.0 million charge to operating expenses during the second quarter of 2026, which adversely affected our operating results for the second quarter of 2026.
**Results
of Operations**
***Comparison
of Three and Six Months Ended June 30, 2026 and 2025***
*Revenue*
Total
revenue for the three and six months ended June 30, 2026 was $23.0 million and $43.9 million, respectively, which represent decreases
of 35% and 36%, respectively, compared to $35.4 million and $68.3 million for the three and six months ended June 30, 2025, respectively.
These decreases are attributed primarily to: (i) $5.6 million and $11.0 million of revenues associated with the Coflex/CoFix and Paradigm
Divestitures recognized during the three and six months ended June 30, 2025, respectively; (ii) $5.0 million and $8.6 million of licensing
revenue recognized during the three and six months ended June 30, 2025, respectively; and (iii) decreases in orthobiologics sales during
the current year periods compared to the prior year periods.
*Cost
of Sales*
Cost
of sales consists primarily of manufacturing cost, product purchase costs, and depreciation of surgical instruments. Cost of sales also
includes reserves for estimated excess inventory and inventory on consignment that may be missing and not returned. Cost of sales decreased
by $1.4 million to $9.7 million for the three months ended June 30, 2026 from $11.1 million for the three months ended June 30, 2025.
Cost of sales decreased by $5.2 million to $18.6 million for the six months ended June 30, 2026 from $23.8 million for the six months
ended June 30, 2025. The decrease associated with the three-month comparison was due primarily to the non-recurrence of costs of sales
in the current year period associated with the Coflex/CoFix and Paradigm Divestitures in the prior year period. The decrease associated
with the six-month comparison was due primarily to the non-recurrence of costs of sales in the current year period associated with the
Coflex/CoFix and Paradigm Divestitures and decreases in orthobiologics sales during the current year period.
*Gross
Profit*
Gross
profit as a percentage of revenue, decreased to 57.9% for the three months ended June 30, 2026 compared to 68.6% for the same period
in 2025 and decreased to 57.6% for the six months ended June 30, 2026 compared to 65.2% for the same period in 2025. Of the decrease
for the three-month comparison, 450 basis points related to the reduction in license revenue and 390 basis points resulted from reduced
production efficiencies and increased charges for excess and obsolete inventory. Of the decrease for the six-month comparison, 450 basis
points related to the reduction in license revenue and 230 basis points resulted from reduced production efficiencies.
*General
and Administrative*
General
and administrative expenses consist primarily of personnel costs for corporate employees, cash-based and stock-based compensation related
costs, amortization, and corporate expenses for legal, accounting and other professional fees, as well as occupancy costs. General and
administrative expenses decreased 14%, or $1.0 million, to $6.4 million for the three months ended June 30, 2026, compared to $7.5 million
for the same period in 2025. General and administrative expenses decreased 15%, or $2.3 million, to $12.7 million for the six months
ended June 30, 2026, compared to $15.0 million for the same period in 2025. Of these decreases, $1.4 million and $3.0 million for the
three-month and six-month periods are due to the Coflex/CoFix and Paradigm Divestitures. The decrease for the three-month comparison
was partially offset by $0.1 million in additional stock-based compensation expense incurred in the current year period. The decrease
for the six-month comparison was partially offset by $0.2 million of additional computer and software costs and $0.2 million in additional
accounting and consulting fees incurred in the current year period.
*Sales
and Marketing*
Sales
and marketing expenses consist primarily of sales commissions; personnel costs for sales and marketing employees; costs for trade shows,
sales conventions and meetings; travel expenses; advertising; and other sales and marketing related costs. Sales and marketing expenses
decreased 11%, or $1.2 million, to $10.4 million for the three months ended June 30, 2026, compared to $11.6 million for the same period
in 2025. Sales and marketing expenses decreased 19%, or $4.2 million, to $18.6 million for the six months ended June 30, 2026, compared
to $22.8 million for the same period in 2025. Of these decreases, $2.4 million and $4.9 million for the three-month and six-month periods
are due to the Coflex/CoFix and Paradigm Divestitures. The remaining increase for the three-month comparison is primarily due to increased
compensation expenses of $1.2 million related to increased headcount; an increase in independent agent commission expense of $0.3 million
resulting from revenue mix; and a $0.3 million increase in travel-related expenses, partially offset by a $0.9 million reduction in consulting
fees. The remaining increase for the six-month comparison is primarily due to increased compensation expenses of $1.4 million related
to increased sales personnel headcount and $0.4 million increase in travel-related expenses, partially offset by a $1.5 million reduction
in consulting fees.
*Research
and Development*
Research
and development expenses consist primarily of internal costs for the development of new technologies. Research and development expenses
increased 23%, or $0.1 million, to $0.7 million for the three months ended June 30, 2026, compared to $0.6 million for the same period
in 2025. Research and development expenses increased 12%, or $0.1 million, to $1.1 million for the six months ended June 30, 2026, compared
to $1.0 million for the same period in 2025.
*Write-off
of Distribution Agreement Deposit*
The
three and six months ended June 30, 2026 include expense of $5.0 million for the exclusivity fee we paid Dilon upon execution of the
Distribution Agreement, which although refundable in certain circumstances, we do not expect to collect.
*Interest
Expense*
Interest
expense decreased 46%, or $0.5 million, to $0.5 million for the three months ended June 30, 2026, compared to $1.0 million for the same
period in 2025. Interest expense decreased 44%, or $0.9 million, to $1.1 million for the six months ended June 30, 2026, compared to
$2.0 million for the same period in 2025. These decreases resulted primarily from reduced borrowings under our revolving line of credit
and repayments totaling $0.9 million and $3.8 million on our term loan during the three and six months ended June 30, 2026, respectively.
*Other
Income (Expense)*
We
recognized $0.3 million and $0.6 million, respectively, of other income for the three and six months ended June 30, 2026 primarily related
to certain transition services provided to Companion Spine. We expect such other income to continue for approximately one month
through the remaining term of the transition services agreement with Companion Spine.
*Provision
for Income Taxes – Current and Deferred*
The
decrease in income tax expense for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025
was primarily due to a decrease in cash state taxes attributable to tax year 2026 as compared to 2025.
**Liquidity
and Capital Resources**
***Working
Capital***
Since
our inception, we have financed our operations primarily through operating cash flows, private placements of equity securities and convertible
debt, debt facilities, common stock rights offerings, and other debt transactions.
The
following table summarizes our working capital as of June 30, 2026 and December 31, 2025 (in thousands):
| Line item | June 30, 2026 | December 31, 2025 |
| --- | --- | --- |
| Cash, cash equivalents and restricted cash | $10,217 | $17,328 |
| Accounts receivable, net | 19,416 | 17,803 |
| Inventories | 33,287 | 30,263 |
| Note receivable | — | 10,462 |
| Total current assets | 64,777 | 78,245 |
| Accounts payable | 6,154 | 3,844 |
| Accrued liabilities | 7,481 | 10,626 |
| Current portion of long-term debt | 3,720 | 3,500 |
| Line of credit | 11,985 | 10,857 |
| Total current liabilities | 29,963 | 29,484 |
| Net working capital | 34,814 | 48,761 |
While
our working capital decreased by $13.9 million as of June 30, 2026 as compared to December 31, 2025, we used cash received from the Coflex/CoFix
and Paradigm Divestitures and the repayment by Companion Spine of the note receivable that existed as of December 31, 2025 in connection
therewith to repay some of our long-term debt, resulting in our long-term debt, less the current portion and plus premium and less issuance
costs, being $7.3 million as of June 30, 2026, compared to $11.0 million as of December 31, 2025.
During
the second quarter of 2026, we used $5.0 million of cash to pay the exclusivity fee to Dilon under the Distribution Agreement. While
this fee is subject to repayment by Dilon under certain circumstances, including upon termination of the Distribution Agreement for
any reason, we recorded a $5.0 million charge to operating expenses during the second quarter of 2026. This charge is based on an
assessment of facts and circumstances, including the uncertainty surrounding recovery of the payment and management’s
expectation that repayment was not probable despite the contractual repayment provisions.
***Cash
Flows***
Net
cash used in operating activities for the first six months of 2026 was $9.4 million compared to net cash provided by operating activities
of $2.6 million for the first six months of 2025. This change relates primarily to the net loss in the first six months of 2026 compared
to net income in the comparable prior year period, exclusive of the $5.0 million Dilon distribution expense associated with the Distribution
Agreement.
Net
cash provided by investing activities for the first six months of 2026 was $5.0 million compared to net cash used in investing activities
of $1.5 million for the first six months of 2025. This
change relates primarily to $10.4 million of cash received from Companion Spine in connection with the Coflex/Cofix and Paradigm Divestitures
in the current year period, partially offset by $5.0 million paid to Dilon in connection with the Distribution Agreement in the current
year period.
Net
cash used in financing activities for the first six months of 2026 was $2.7 million compared to $0.3 million for the first six months
of 2025. This increase relates primarily to $3.8 million of increased repayments on the term loan during the current year period compared
to the prior year period, partially offset by $1.2 million of reduced borrowings under our revolving credit facility, net of repayments.
***Term
Loan and Revolving Credit Facilities***
Xtant,
as guarantor, and certain of our subsidiaries, as borrowers (collectively, the “Borrowers”), are parties to a term loan credit
agreement (the “Term Credit Agreement”) and revolving loan credit agreement (the “Revolving Credit Agreement”
and together with the Term Loan Credit Agreement, the “Loan Agreements”) with MidCap Financial Trust and MidCap Funding IV
Trust, respectively and each in its respective capacity as agent, and lenders from time to time party thereto. As of June 30, 2026, $10.2
million was outstanding under the term loan facility under the Term Credit Agreement (the “Term Facility”), reduced from
$14.0 million as of December 31, 2025. This reduction was due to the final purchase price payment of $2.8 million by Companion Spine
to us during the current year period in connection with the sale of certain assets relating to our Coflex and CoFix products and international
hardware business to Companion Spine and $0.9 million of principal repayments under the Term Loan Credit Agreement.
The
Revolving Credit Agreement provides for a secured revolving credit facility (the “Revolving Facility,” and, together with
the secured term credit facility under the Term Credit Agreement, the “Facilities”) under which the Borrowers may borrow
up to $17.0 million at any one time, the availability of which is determined based on a borrowing base equal to percentages of certain
accounts receivable and inventory of the Borrowers in accordance with a formula set forth in the Revolving Credit Agreement. All borrowings
under the Revolving Facility are subject to the satisfaction of customary conditions, including the absence of default, the accuracy
of representations and warranties in all material respects, and the delivery of an updated borrowing base certificate.
The
Facilities have a maturity date of March 1, 2029. Each of the Borrowers, and Xtant, as guarantor, are jointly and severally liable for
all of the obligations under the Facilities on the terms set forth in the Credit Agreements. The Borrowers’ obligations, and Xtant’s
obligations as a guarantor, under the Credit Agreements are secured by first-priority liens on substantially all of their assets, including,
without limitation, all inventory, equipment, accounts, intellectual property and other assets of Xtant and the Borrowers. As of June
30, 2026, we had $12.0 million outstanding and $0.7 million of availability under the Revolving Credit Facility.
The
loans and other obligations pursuant to the Credit Agreements bear interest at a per annum rate equal to the sum of the SOFR Interest
Rate, as such term is defined in the Credit Agreements, plus the applicable margin of 6.50% in the case of the Term Credit Agreement,
and an applicable margin of 4.50% in the case of the Revolving Credit Agreement, subject in each case to a floor of 2.50%. As of June
30, 2026, the effective rate of the Term Credit Agreement, inclusive of amortization of debt issuance costs and accretion of the final
payment, was 14.74%, and the effective rate of the Revolving Credit Agreement was 8.23%.
The
Credit Agreements contain affirmative and negative covenants customarily applicable to senior secured credit facilities, including
covenants that, among other things, limit or restrict the ability of the Borrowers, subject to negotiated exceptions, to incur
additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends
or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make
investments, undergo a change in control and change the nature of their businesses. In addition, the Credit Agreements require us to
maintain net product revenue at or above certain minimum levels and to maintain a certain minimum liquidity level, in each case as
specified in the Credit Agreements.
On August 10, 2026, we entered into Amendment No. 5 to Amended and Restated Credit, Security
and Guaranty Agreement (Term Loan) with MidCap Financial Trust and Amendment No. 5 to Amended and Restated Credit, Security and
Guaranty Agreement (Revolving Loan) with MidCap Funding IV Trust pursuant to which we eliminated the requirement to comply with the
minimum net revenue covenant for second quarter of 2026, adjusted the amortization of the term loan to increase quarterly principal
payments by $0.15 million in the fourth quarter of 2026 and increase quarterly principal payments by $0.3 million thereafter until
the outstanding principal balance of the term loan has been paid in full, and revised the minimum net revenue covenant to minimum
net revenue amounts. As of June 30, 2026, our credit agreements included a minimum net revenue covenant, however, pursuant to the Amendment No. 5s
executed in August 2026, we were not required to comply with the minimum net revenue covenant for the quarter ended June
30, 2026. Under the covenant terms in effect prior to the Amendment No. 5s, we would not have been in compliance with the
minimum net revenue requirement for that quarter.
***Cash
Requirements***
We
believe that our $10.2 million of cash and cash equivalents as of June 30, 2026, together with our anticipated operating cash flows and
amounts available under the Facilities, will be sufficient to meet our anticipated cash requirements through at least August 2027. However,
we may require or seek additional capital to fund our future operations and business strategy prior to August 2027. Accordingly, there
is no assurance that we will not need or seek additional financing prior to such time.
We
may elect to raise additional financing even before we need it if market conditions for raising additional capital are favorable. We
may seek to raise additional financing through various sources, such as equity and debt financings, debt restructurings or refinancings
or through strategic transactions, dispositions, collaborations or license agreements. We can give no assurances that we will be able
to secure additional sources of funds to support our operations, or if such funds are available to us, that such additional financing
will be sufficient to meet our needs or on terms acceptable to us. This is particularly true if economic and market conditions deteriorate
or our business, financial performance or prospects deteriorate.
To
the extent that we raise additional capital through the sale of equity or convertible debt securities or the restructuring or refinancing
of our debt, the interests of our current stockholders may be diluted, and the terms may include discounted equity purchase prices, warrant
coverage, liquidation or other preferences or rights that would adversely affect the rights of our current stockholders. If we issue
common stock, we may do so at purchase prices that represent a discount to our trading price and/or we may issue warrants to the purchasers,
which could further dilute our current stockholders. If we issue preferred stock, it could adversely affect the rights of our stockholders
or reduce the value of our common stock. In particular, specific rights or preferences granted to future holders of preferred stock may
include voting rights, preferences as to dividends and liquidation, conversion and redemption rights, sinking fund provisions, and restrictions
on our ability to merge with or sell our assets to a third party. Additional debt financing, if available, may involve agreements that
include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures
or declaring dividends. Prior to raising additional equity or debt financing, we may be required to obtain the consent of MidCap Financial
Trust and MidCap Funding IV Trust under our Credit Agreements, and no assurance can be provided that they would provide such consent,
which could limit our ability to raise additional financing and the terms thereof.
***Critical
Accounting Estimates***
Management’s
discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared
in accordance with U.S. GAAP. There have been no changes in our critical accounting estimates for the six months ended June 30, 2026
as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
## ITEM 3. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As
a smaller reporting company, we are not required to provide the information required by this Item.
## item 4. Item 4. CONTROLS AND PROCEDURES controls and procedures
**Limitations
on Effectiveness of Controls and Procedures**
In
designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design
of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply
judgment in evaluating the benefits of possible controls and procedures relative to their costs.
**Evaluation
of Effectiveness of Disclosure Controls and Procedures**
Our
management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) as of June 30, 2026. Based upon that evaluation, and as a result of the material weakness in our internal control over financial
reporting discussed below, our principal executive officer and principal financial officer concluded that as of June 30, 2026, our disclosure
controls and procedures were not effective.
**Previously
Reported Material Weakness in Internal Control over Financial Reporting**
As
previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, in connection with the audit of our
consolidated financial statements for the fiscal year ended December 31, 2025, we identified certain control deficiencies in the design
and implementation of our internal control over financial reporting, which constituted a material weakness. A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
More specifically,
our controls surrounding our evaluation of inventory net realizable value were insufficient and did not operate at an appropriate level
of precision. Our review and evaluation of inventory failed to identify specific items not assessed for net realizable value under our
existing control, which constitutes a material weakness as of December 31, 2025. This material weakness, if not remediated, could result
in a material misstatement in our annual or interim consolidated financial statements that would not be prevented or detected in a timely
manner.
Our
management, under the oversight of the Audit Committee of the Board of Directors, is continuing to implement measures designed to improve
our internal control over financial reporting to remediate the identified material weakness. The remediation actions we are taking, and
expect to take, include evaluating inventory balances outside of the scope of our current process for estimating net realizable value
to determine if there are other inventory items that need to be assessed for a specific reserve.
As
management continues to evaluate and work to remediate the material weakness, we may determine to take additional measures to address
the material weakness. However, we cannot provide assurance that the measures we have taken to date, or that we may take in the future,
will be sufficient to remediate the material weakness or avoid potential future material weaknesses.
**Changes
in Internal Control over Financial Reporting**
Other
than the remediation steps described above, there were no changes in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2026, that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
**PART II.** **OTHER INFORMATION**
## item 1. Item 1. LEGAL PROCEEDINGS legal proceedings
Our
legal proceedings are discussed in Note 13, “*Commitments and Contingencies,*” in the notes to our condensed consolidated
financial statements in this Form 10-Q.
## item 1a. Item 1A. RISK FACTORS risk factors
Although
as a smaller reporting company, we are not required to provide the information required by this Item 1A, we hereby disclose the following
new risk factor:
***In
April 2026, we entered into a Distribution Agreement with Dilon Technologies, Inc. and hired sales personnel in connection therewith,
which will result in increased sales and marketing costs and involves other risks, which could adversely affect our business, operating
results, and financial condition.***
In
April 2026, we entered into a Distribution Agreement with Dilon Technologies, Inc. pursuant to which we obtained the exclusive
rights to import, market, distribute and sell the HEMOBLAST® Bellows product in the United States, and Dilon agreed to
transition its existing U.S. customer base for the product to us. In connection with the agreement, we hired approximately 20 Dilon
sales personnel to assist in selling the HEMOBLAST® Bellows product in the United States. While the agreement expands our
portfolio and bolsters our commercial capabilities through the integration of Dilon’s former U.S. sales team, we cannot assure
that we will successfully sell the HEMOBLAST® Bellows product or integrate it with our portfolio. In addition, while we believe
we can leverage new cross-selling opportunities between the HEMOBLAST® Bellows product and our existing products, we cannot
assure that we will be effective in doing so or otherwise realize the anticipated benefits of this distribution arrangement. We
expect our sales and marketing expenses to increase substantially compared to prior periods as a result of the additional sales
personnel. While we anticipate that additional revenue from HEMOBLAST® Bellows sales, cross-selling opportunities, and utilizing
Dilon’s former U.S. sales team to sell our other products will eventually offset these additional expenses, we cannot assure that they will or that the transition to us of Dilon’s existing U.S. customer base will be
successful.
Under
the Distribution Agreement, Dilon will continue to manufacture the HEMOBLAST® Bellows product at its facility in France and
supply it to us at a specified transfer price, which price is subject to adjustment in certain circumstances. We rely on Dilon as
the sole manufacturer to produce the product in sufficient quantities and at an appropriate transfer price; there are no alternative
suppliers. This arrangement involves risk because we do not control the manufacturing process and Dilon is responsible for all
manufacturing decisions and related regulatory compliance. We believe we will have sufficient supply of the HEMOBLAST® Bellows
product to support our anticipated sales through the end of third quarter 2026, we are uncertain that supply will be available thereafter. If Dilon is unable to manufacture and supply the product in sufficient quantities or at
all, we will be unable to sell it or recognize related revenue. In addition, because the product is
manufactured in France, we are subject to risks associated with international operations, including supply chain disruptions,
foreign currency exchange fluctuations, and additional regulatory requirements.
We
paid Dilon a $5.0 million exclusivity fee upon execution of the Distribution Agreement. This fee is subject to repayment by Dilon
under certain circumstances, including upon termination of the Distribution Agreement for any reason. Because either party may
terminate the Distribution Agreement upon certain specified events, we cannot assure that the agreement will remain in effect, and
any such termination would result in the loss of our distribution rights for the product. In addition, given the refundable nature
of the$5.0 million exclusivity payment, we initially recognized the payment as a deposit asset on our consolidated balance sheet.
However, based on an assessment of facts and circumstances, including the uncertainty surrounding recovery of the payment and
management’s expectation that repayment was not probable despite contractual repayment provisions, we recognized a $5.0
million charge to operating expenses during the second quarter of 2026, which adversely affected our operating results for that
period. Although Dilon currently has the right to terminate the Distribution Agreement upon 30 days’ notice, it has
not done so through the date of this report. If the Distribution Agreement terminates, we would need to reassign or terminate the sales personnel we hired to sell the HEMOBLAST® Bellows product.
## item 2. Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not
applicable.
## item 3. Item 3. DEFAULTS UPON SENIOR SECURITIES DEFAULTS UPON SENIOR SECURITIES
Not
applicable.
## item 4. Item 4. MINE SAFETY DISCLOSURES MINE SAFETY DISCLOSURES
Not
applicable.
## item 5. Item 5. OTHER INFORMATION OTHER INFORMATION
**Credit Agreement Amendments**
On April
10, 2026, Xtant Medical Holdings, Inc., as guarantor, and its subsidiaries, Xtant Medical, Inc., Bacterin International, Inc., X-spine
Systems, Inc. and Surgalign SPV, Inc., as borrowers (collectively, the “Borrowers”), entered into (i) Amendment No. 5 (the
“Term Loan Amendment”) to Amended and Restated Credit, Security and Guaranty Agreement (Term Loan) (the “Term Credit
Agreement”) with MidCap Financial Trust, in its capacity as agent (the “Agent”), and a lender and the additional lenders
from time to time party thereto and (ii) Amendment No. 5 (the “Revolving Loan Amendment” and collectively, with the Term Loan
Amendment, the “Amendments”) to Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan) (the “Revolving
Credit Agreement” and, together with the Term Credit Agreement, the “Credit Agreements”), with MidCap Funding IV Trust,
in its capacity as agent, and the lenders from time to time party thereto.
The Amendments
eliminated the requirement to comply with the minimum net revenue covenant for second quarter of 2026, adjusted the amortization of the
term loan to increase quarterly principal payments by $0.15 million in the fourth quarter of 2026 and increased quarterly principal payments
by $0.3 million thereafter until the outstanding principal balance of the Term Loan has been paid in full, and revised the minimum net
revenue covenant to new minimum net revenue amounts.
The foregoing description
of the Amendments is only a summary of their material terms and do not purport to be complete and is qualified in their entirety by reference
to the full text of the Term Loan Amendment and the Revolving Loan Amendment, which are filed as Exhibit 10.1 and 10.2, respectively,
to this Quarterly Report on Form 10-Q:and incorporated herein by reference.
**Rule
10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications**
During
the three months ended June 30, 2026, none of our directors or “officers” (as defined in Rule 16a-1(f) under the Exchange
Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each
term is defined in Item 408 of SEC Regulation S-K.
## item 6. Item 6. EXHIBITS EXHIBITS
The
following exhibits are being filed or furnished with this Quarterly Report on Form 10-Q:
| Exhibit No. | Description |
| --- | --- |
| 2.1† | Asset Purchase Agreement, dated July 7, 2025, among Xtant Medical Holdings, Inc., Surgalign SPV, Inc., and Companion Spine, LLC, or its Affiliate designee (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 8, 2025 (SEC File No. 001-34951) and incorporated by reference herein) |
| 2.2† | Amendment to Asset Purchase Agreement, dated as November 30, 2025, between Xtant Medical Holdings, Inc., Surgalign SPV, Inc., and Companion Spine, LLC or its Affiliate designee (filed as Exhibit 2.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 3, 2025 (SEC File No. 001-34951) and incorporated by reference herein) |
| 2.3† | Equity Purchase Agreement, dated July 7, 2025, among Xtant Medical Holdings, Inc., Paradigm Spine GmbH, and Companion Spine, LLC (filed as Exhibit 2.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 8, 2025 (SEC File No. 001-34951) and incorporated by reference herein) |
| 2.4 | Amendment to and Assignment of Equity Purchase Agreement, dated November 30, 2025, among Xtant Medical Holdings, Inc., Paradigm Spine GmbH, Companion Spine, LLC and Companion Spine France SAS (filed as Exhibit 2.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 3, 2025 (SEC File No. 001-34951) and incorporated by reference herein) |
| 2.5 | Second Amendment to Equity Purchase Agreement, dated January 14, 2026, between Xtant Medical Holdings, Inc. and Companion Spine France SAS (filed as Exhibit 2.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 (SEC File No. 001-34951) and incorporated by reference herein) |
| 3.1 | Restated Certificate of Incorporation of Xtant Medical Holdings, Inc. (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 (SEC File No. 001-34951) and incorporated by reference herein). |
| 3.2 | Third Amended and Restated Bylaws of Xtant Medical Holdings, Inc. (Effective as of June 1, 2023) (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 19, 2023 (SEC File No. 001-34951) and incorporated by reference herein). |
| 10.1 | Amendment No. 5 to Amended and Restated Credit, Security and Guaranty Agreement (Term Loan), dated as of August 10, 2026, among Xtant Medical, Inc., Bacterin International, Inc., X-spine Systems, Inc., Surgalign SPV, Inc., and any additional borrower that hereafter becomes party thereto, Xtant Medical Holdings, Inc., as a guarantor, MidCap Financial Trust, as agent, and the other financial institutions or other entities from time to time parties thereto (filed herewith) |
| 10.2 | Amendment No. 5 to Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan), dated as of August 10, 2026, among Xtant Medical, Inc., Bacterin International, Inc., X-spine Systems, Inc., Surgalign SPV, Inc., and any additional borrower that hereafter becomes party thereto, Xtant Medical Holdings, Inc., as a guarantor, MidCap Funding IV Trust, as agent, and the other financial institutions or other entities from time to time parties thereto (filed herewith) |
| 31.1 | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
| 31.2 | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). |
| 101 | The following materials from Xtant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2026, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the unaudited Condensed Consolidated Balance Sheets, (ii) the unaudited Condensed Consolidated Statements of Operations, (iii) the unaudited Condensed Consolidated Statements of Equity, (iv) the unaudited Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements (filed herewith). |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
† All exhibits and schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish the omitted exhibits and schedules to the SEC upon request by the SEC.
**SIGNATURES**
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
**XTANT MEDICAL HOLDINGS, INC.**
Date: August 11, 2026 By: */s/ Sean E. Browne*
Name: Sean E. Browne
Title: President and Chief Executive Officer
(Principal Executive Officer)
Date: August 11, 2026 By: */s/ Scott C. Neils*
Name: Scott C. Neils
Title: Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
---
## EX-10.1
SEC source: [ex10-1.htm](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex10-1.htm)
Exhibit 10.1
amendment
No. 5 to AMENDED AND RESTATED CREDIT, SECURITY
AND GUARANTY AGREEMENT (TERM LOAN)
This
AMENDMENT NO. 5 TO AMENDED AND RESTATED CREDIT, SECURITY AND GUARANTY AGREEMENT (TERM LOAN) (this “**Agreement**”) is
made as of August 10, 2026, by and among **XTANT MEDICAL, INC.**, a Delaware corporation (“**Xtant**”), **BACTERIN
INTERNATIONAL, INC.**, a Nevada corporation, **X-SPINE SYSTEMS, INC.**, an Ohio corporation, **SURGALIGN SPV, INC.**, a Delaware
corporation, and any additional borrower that may hereafter be added to this Agreement (each individually as a “**Borrower**”,
and collectively with any entities that become party hereto as Borrower and each of their successors and permitted assigns, the “**Borrowers**”), **XTANT MEDICAL HOLDINGS, INC.**, a Delaware corporation (“**Holdings**”), as a Guarantor, **MidCap
Financial Trust**, a Delaware statutory trust, as Agent (in such capacity, together with its successors and assigns, “**Agent**”)
and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below, each as a
Lender.
**RECITALS**
A.
Agent, Lenders, and the Credit Parties have entered into that certain Amended and Restated Credit, Security and Guaranty Agreement (Term
Loan), dated as of March 7, 2024 (as amended, restated, supplemented or otherwise modified at any time prior to the date hereof, the
“**Existing A&R Credit Agreement**” and as amended hereby and as it may be further amended, modified, supplemented
and restated from time to time, the “**Credit Agreement**”), pursuant to which the Lenders have agreed to make certain
advances of money and to extend certain financial accommodations to Borrowers in the amounts and manner set forth in the Credit Agreement.
B.
The Credit Parties have requested, and Agent and Lenders have agreed, on and subject to the terms and conditions set forth in this Agreement,
to amend certain provisions of the Existing A&R Credit Agreement, all in accordance with the terms and subject to the conditions
set forth herein.
**AGREEMENT**
NOW,
THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and the Credit Parties hereby agree as follows:
1. **Recitals**. This Agreement shall constitute a Financing Document and the Recitals and each reference to the Credit Agreement,
unless otherwise expressly noted, will be deemed to reference the Credit Agreement as amended hereby. The Recitals set forth above shall
be construed as part of this Agreement as if set forth fully in the body of this Agreement and capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Credit Agreement (including those capitalized terms used in the Recitals
hereto).
2. **Amendments to Existing A&R Credit Agreement**. Subject to the terms and conditions of this Agreement, including, without
limitation, the conditions to effectiveness set forth in Section 4 below, the Existing A&R Credit Agreement is hereby amended
as follows:
(a)
Schedule 2.1 attached to the Existing Credit Agreement is hereby replaced by the Schedule 2.1 attached hereto as Exhibit A.
(b)
Schedule 6.1 attached to the Existing Credit Agreement is hereby replaced by the Schedule 6.1 attached hereto as Exhibit B.
3. **Representations and Warranties; Reaffirmation of Security Interest.** Each Credit Party hereby confirms that all of the representations
and warranties set forth in the Credit Agreement are true and correct in all material respects (without duplication of any materiality
qualifier in the text of such representation or warranty) with respect to such Credit Party as of the date hereof except to the extent
that any such representation or warranty relates to a specific date in which case such representation or warranty shall be true and correct
as of such earlier date. Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security interests
in and Liens on the Collateral. Each Credit Party acknowledges and agrees that the Credit Agreement, the other Financing Documents and
this Agreement constitute the legal, valid and binding obligation of such Credit Party, and are enforceable against such Credit Party
in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating
to the enforcement of creditors’ rights generally and by general equitable principles.
4. **Conditions to Effectiveness.** This Agreement shall become effective as of the date on which each of the following conditions
have been satisfied, as determined by Agent in its sole discretion:
(a)
the Agent shall have received (including by way of facsimile or other electronic transmission) a duly authorized, executed and delivered
counterpart of the signature page to this Agreement from each Credit Party, the Agent and the Lenders;
(b)
the Agent shall have received a duly executed copy of Amendment No. 5 to Amended and Restated Credit, Security and Guaranty Agreement
(Revolving Loan);
(c)
all representations and warranties set forth in the Credit Agreement shall be true and correct in all material respects (without duplication
of any materiality qualifier in the text of such representation or warranty) as of the date hereof, except to the extent that any such
representation or warranty relates to a specific date in which case such representation or warranty shall be true and correct in all
material respects as of such earlier date (without duplication of any materiality qualifier in the text of such representation or warranty)
(and Borrower’s delivery of its signature hereto shall be deemed to be its certification thereof); and
(d)
immediately prior to and after giving effect to this Agreement, no Default or Event of Default exists under any of the Financing Documents.
5. **Costs and Fees.** Borrower shall be responsible for the payment of all reasonable, documented and invoiced out-of-pocket
costs and fees of Agent’s counsel incurred in connection with the preparation, negotiation, execution and delivery of this Agreement
and any related Financing Documents.
6. **Release.** In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Credit Party, voluntarily, knowingly, unconditionally and irrevocably, with
specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers,
predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and
employees, and each of their respective predecessors, successors, heirs, and assigns (individually and collectively, the “**Releasing
Parties**”) does hereby fully and completely release, acquit and forever discharge each of Agent, Lenders, and each their respective
parents, subsidiaries, affiliates, members, managers, shareholders, directors, officers and employees, and each of their respective predecessors,
successors, heirs, and assigns (individually and collectively, the “**Released Parties**”), of and from any and all actions,
causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever,
at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown
that the Releasing Parties (or any of them) has against the Released Parties or any of them (whether directly or indirectly). Each Credit
Party acknowledges that the foregoing release is a material inducement to Agent’s and each Lender’s decision to enter into
this Agreement and agree to the modifications contemplated hereunder, and has been relied upon by Agent and Lenders in connection therewith.
7. **No Waiver or Novation.** The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided
in this Agreement, operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit
Agreement, the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of
the foregoing. Nothing herein is intended or shall be construed as a waiver of any existing Defaults or Events of Default under the Credit
Agreement or the other Financing Documents or any of Agent’s rights and remedies in respect of such Defaults or Events of Default.
This Agreement (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as,
a novation of the Credit Agreement.
8. **Affirmation.** Except as specifically amended pursuant to the terms hereof, each Credit Party hereby acknowledges and agrees
that the Credit Agreement and all other Financing Documents (and all covenants, terms, conditions and agreements therein) shall remain
in full force and effect, and are hereby ratified and confirmed in all respects by such Credit Party. Each Credit Party covenants and
agrees to comply with all of the terms, covenants and conditions of the Credit Agreement and the Financing Documents, notwithstanding
any prior course of conduct, waivers, releases or other actions or inactions on Agent’s or any Lender’s part which might
otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.
9. **Miscellaneous**.
(a) Reference to the Effect on the Credit Agreement. Upon the effectiveness of this Agreement, each reference in the Credit Agreement
to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall
mean and be a reference to the Credit Agreement, as amended by this Agreement. Except as specifically amended above, the Credit Agreement,
and all other Financing Documents (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect,
and are hereby ratified and confirmed in all respects by each Credit Party.
(b) Governing Law. THIS AGREEMENT AND ALL DISPUTES AND OTHER MATTERS RELATING HERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT
LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(c) Incorporation of Credit Agreement Provisions. The provisions contained in Section 11.6 (Indemnification), Section 13.8(b) (Submission to Jurisdiction) and Section 13.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference
to the same extent as if reproduced herein in their entirety.
(d) Headings. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
(e) Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be deemed an original and all of
which when taken together shall constitute one and the same instrument. Signatures by facsimile or by electronic mail delivery of an
electronic version of any executed signature page shall bind the parties hereto. In furtherance
of the foregoing, the words “execution”, “signed”, “signature”, “delivery” and words
of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby
or thereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall
be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based
on the Uniform Electronic Transactions Act. As used herein, “**Electronic Signature**” means an electronic sound, symbol,
or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate
or accept such contract or other record.
(f) Entire Agreement. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any
and all prior agreements and understandings, oral or written, relating to the subject matter hereof.
(g) Severability. In case any provision of or obligation under this Agreement shall be invalid, illegal or unenforceable in any applicable
jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
(h) Successors/Assigns. This Agreement shall bind, and the rights hereunder shall inure to, the respective successors and assigns
of the parties hereto, subject to the provisions of the Credit Agreement and the other Financing Documents.
[SIGNATURES
APPEAR ON FOLLOWING PAGES]
IN
WITNESS WHEREOF, intending to be legally bound, the undersigned have executed this Agreement as of the day and year first hereinabove
set forth.
- **AGENT:** **MIDCAP
FINANCIAL TRUST,**
- as
Agent
- By: Apollo
Capital Management, L.P.,
- its
investment manager
- By: Apollo
Capital Management GP, LLC,
- its
general partner
- By: */s/
Maurice Amsellem*
- Name: Maurice
Amsellem
- Title: Authorized
Signatory
[Signatures
Continue on Following Page]
- **LENDER:** **APOLLO
ALSTER LENDING FUND (LUX) SCSp,** an alternative investment fund in the form of a Luxembourg special limited partnership (societe
en commandite speciale), acting through its managing general partner Alster Lending GP (Lux) S.ar.l. and represented by its delegate
portfolio manager Apollo Alster Management, LLC
- By: Apollo Alster Management, LLC, acting through its sole member
- By: Apollo Capital Management, L.P., acting through its general
partner
- By: Apollo Capital Management GP, LLC
- By: */s/
William Kuesel*
- Name: William
Kuesel
- Title: Vice
President
[Signatures
Continue on Following Page]
- **LENDER:** **MIDCAP
FUNDING XIII TRUST**
- By: Apollo
Capital Management, L.P.,
- its
investment manager
- By: Apollo
Capital Management GP, LLC,
- its
general partner
- By: */s/
Maurice Amsellem*
- Name: Maurice
Amsellem
- Title: Authorized
Signatory
- **LENDER:** **MIDCAP
FINANCIAL TRUST**
- By: Apollo
Capital Management, L.P.,
- its investment manager
- By: Apollo
Capital Management GP, LLC,
- its general partner
- By: */s/
Maurice Amsellem*
- Name: Maurice
Amsellem
- Title: Authorized
Signatory
- **BORROWERS:** **XTANT
MEDICAL, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
- **BACTERIN
INTERNATIONAL, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
- **X-SPINE
SYSTEMS, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
- **SURGALIGN
SPV, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
- **GUARANTOR:**
- **XTANT
MEDICAL HOLDINGS, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
**EXHIBIT
A**
**Schedule
2.1 - Amortization**
Commencing
on April 1, 2026 and continuing on the first day of each calendar month thereafter through and including September 30, 2026, Borrower
shall pay to Agent, as a principal payment on the Term Loans, an amount equal to $309,973.03.
Commencing
on October 1, 2026 and continuing on the first day of each calendar month thereafter through and including December 31, 2026, Borrower
shall pay to Agent, as a principal payment on the Term Loans, an amount equal to $360,000.00.
Commencing
on January 1, 2027 and continuing on the first day of each calendar month thereafter, Borrower shall pay to Agent, as a principal payment
on the Term Loans, an amount equal to $410,000.00.
Notwithstanding
anything to the contrary contained in the foregoing, the entire remaining outstanding principal balance under the Term Loans shall mature
and be due and payable upon the Termination Date.
**EXHIBIT
B**
**Schedule
6.1 – Minimum Net Revenue**
| Defined Period Ending / December 31, 2025 | Minimum Net Revenue Amount / N/A |
| --- | --- |
| March 31, 2026 | $69,000,000 |
| June 30, 2026 | $68,000,000 |
| September 30, 2026 | $68,418,000 |
| December 31, 2026 | $68,418,000 |
| March 31, 2027 | $71,839,000 |
| June 30, 2027 | $75,431,000 |
| September 30, 2027 | $79,000,000 |
| December 31, 2027 | $80,000,000 |
| March 31, 2028 | $81,000,000 |
| June 30, 2028 | $82,000,000 |
| September 30, 2028 | $83,000,000 |
| December 31, 2028 | $84,000,000 |
---
## EX-10.2
SEC source: [ex10-2.htm](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex10-2.htm)
Exhibit
10.2
amendment
No. 5 to AMENDED AND RESTATED CREDIT, SECURITY
AND GUARANTY AGREEMENT (REVOLVING LOAN)
This
AMENDMENT NO. 5 TO AMENDED AND RESTATED CREDIT, SECURITY AND GUARANTY AGREEMENT (REVOLVING LOAN) (this “**Agreement**”)
is made as of August 10, 2026, by and among **XTANT MEDICAL, INC.**, a Delaware corporation (“**Xtant**”), **BACTERIN
INTERNATIONAL, INC.**, a Nevada corporation, **X-SPINE SYSTEMS, INC.**, an Ohio corporation, **SURGALIGN SPV, INC.**, a Delaware
corporation, and any additional borrower that may hereafter be added to this Agreement (each individually as a “**Borrower**”,
and collectively with any entities that become party hereto as Borrower and each of their successors and permitted assigns, the “**Borrowers**”), **XTANT MEDICAL HOLDINGS, INC.**, a Delaware corporation (“**Holdings**”), as a Guarantor, **MidCap
funding iv Trust**, a Delaware statutory trust, as Agent (in such capacity, together with its successors and assigns, “**Agent**”)
and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below, each as a
Lender.
**RECITALS**
A.
Agent, Lenders, and the Credit Parties have entered into that certain Amended and Restated Credit, Security and Guaranty Agreement (Revolving
Loan), dated as of March 7, 2024 (as amended, restated, supplemented or otherwise modified at any time prior to the date hereof, the
“**Existing A&R Credit Agreement**” and as amended hereby and as it may be further amended, modified, supplemented
and restated from time to time, the “**Credit Agreement**”), pursuant to which the Lenders have agreed to make certain
advances of money and to extend certain financial accommodations to Borrowers in the amounts and manner set forth in the Credit Agreement.
B.
The Credit Parties have requested, and Agent and Lenders have agreed, on and subject to the terms and conditions set forth in this Agreement,
to amend certain provisions of the Existing A&R Credit Agreement, all in accordance with the terms and subject to the conditions
set forth herein.
**AGREEMENT**
NOW,
THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and the Credit Parties hereby agree as follows:
1. **Recitals**. This Agreement shall constitute a Financing Document and the Recitals and each reference to the Credit Agreement,
unless otherwise expressly noted, will be deemed to reference the Credit Agreement as amended hereby. The Recitals set forth above shall
be construed as part of this Agreement as if set forth fully in the body of this Agreement and capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Credit Agreement (including those capitalized terms used in the Recitals
hereto).
2. **Amendments to Existing A&R Credit Agreement**. Subject to the terms and conditions of this Agreement, including, without
limitation, the conditions to effectiveness set forth in Section 4 below, the Existing A&R Credit Agreement is hereby amended
as follows:
(a)
Schedule 6.1 attached to the Existing Credit Agreement is hereby replaced by the Schedule 6.1 attached hereto as Exhibit A.
3. **Representations and Warranties; Reaffirmation of Security Interest.** Each Credit Party hereby confirms that all of the representations
and warranties set forth in the Credit Agreement are true and correct in all material respects (without duplication of any materiality
qualifier in the text of such representation or warranty) with respect to such Credit Party as of the date hereof except to the extent
that any such representation or warranty relates to a specific date in which case such representation or warranty shall be true and correct
as of such earlier date. Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security interests
in and Liens on the Collateral. Each Credit Party acknowledges and agrees that the Credit Agreement, the other Financing Documents and
this Agreement constitute the legal, valid and binding obligation of such Credit Party, and are enforceable against such Credit Party
in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating
to the enforcement of creditors’ rights generally and by general equitable principles.
4. **Conditions to Effectiveness.** This Agreement shall become effective as of the date on which each of the following conditions
have been satisfied, as determined by Agent in its sole discretion:
(a)
the Agent shall have received (including by way of facsimile or other electronic transmission) a duly authorized, executed and delivered
counterpart of the signature page to this Agreement from each Credit Party, the Agent and the Lenders;
(b)
the Agent shall have received a duly executed copy of Amendment No. 5 to Amended and Restated Credit, Security and Guaranty Agreement
(Term Loan);
(c)
all representations and warranties set forth in the Credit Agreement shall be true and correct in all material respects (without duplication
of any materiality qualifier in the text of such representation or warranty) as of the date hereof, except to the extent that any such
representation or warranty relates to a specific date in which case such representation or warranty shall be true and correct in all
material respects as of such earlier date (without duplication of any materiality qualifier in the text of such representation or warranty)
(and Borrower’s delivery of its signature hereto shall be deemed to be its certification thereof); and
(d)
immediately prior to and after giving effect to this Agreement, no Default or Event of Default exists under any of the Financing Documents.
5. **Costs and Fees.** Borrower shall be responsible for the payment of all reasonable, documented and invoiced out-of-pocket
costs and fees of Agent’s counsel incurred in connection with the preparation, negotiation, execution and delivery of this Agreement
and any related Financing Documents.
6. **Release.** In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Credit Party, voluntarily, knowingly, unconditionally and irrevocably, with
specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers,
predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and
employees, and each of their respective predecessors, successors, heirs, and assigns (individually and collectively, the “**Releasing
Parties**”) does hereby fully and completely release, acquit and forever discharge each of Agent, Lenders, and each their respective
parents, subsidiaries, affiliates, members, managers, shareholders, directors, officers and employees, and each of their respective predecessors,
successors, heirs, and assigns (individually and collectively, the “**Released Parties**”), of and from any and all actions,
causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever,
at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown
that the Releasing Parties (or any of them) has against the Released Parties or any of them (whether directly or indirectly). Each Credit
Party acknowledges that the foregoing release is a material inducement to Agent’s and each Lender’s decision to enter into
this Agreement and agree to the modifications contemplated hereunder, and has been relied upon by Agent and Lenders in connection therewith.
7. **No Waiver or Novation.** The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided
in this Agreement, operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit
Agreement, the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of
the foregoing. Nothing herein is intended or shall be construed as a waiver of any existing Defaults or Events of Default under the Credit
Agreement or the other Financing Documents or any of Agent’s rights and remedies in respect of such Defaults or Events of Default.
This Agreement (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as,
a novation of the Credit Agreement.
8. **Affirmation.** Except as specifically amended pursuant to the terms hereof, each Credit Party hereby acknowledges and agrees
that the Credit Agreement and all other Financing Documents (and all covenants, terms, conditions and agreements therein) shall remain
in full force and effect, and are hereby ratified and confirmed in all respects by such Credit Party. Each Credit Party covenants and
agrees to comply with all of the terms, covenants and conditions of the Credit Agreement and the Financing Documents, notwithstanding
any prior course of conduct, waivers, releases or other actions or inactions on Agent’s or any Lender’s part which might
otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.
9. **Miscellaneous**.
(a) Reference to the Effect on the Credit Agreement. Upon the effectiveness of this Agreement, each reference in the Credit Agreement
to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall
mean and be a reference to the Credit Agreement, as amended by this Agreement. Except as specifically amended above, the Credit Agreement,
and all other Financing Documents (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect,
and are hereby ratified and confirmed in all respects by each Credit Party.
(b) Governing Law. THIS AGREEMENT AND ALL DISPUTES AND OTHER MATTERS RELATING HERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT
LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(c) Incorporation of Credit Agreement Provisions. The provisions contained in Section 11.6 (Indemnification), Section 13.8(b) (Submission to Jurisdiction) and Section 13.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference
to the same extent as if reproduced herein in their entirety.
(d) Headings. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
(e) Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be deemed an original and all of
which when taken together shall constitute one and the same instrument. Signatures by facsimile or by electronic mail delivery of an
electronic version of any executed signature page shall bind the parties hereto. In furtherance
of the foregoing, the words “execution”, “signed”, “signature”, “delivery” and words
of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby
or thereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall
be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based
on the Uniform Electronic Transactions Act. As used herein, “**Electronic Signature**” means an electronic sound, symbol,
or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate
or accept such contract or other record.
(f) Entire Agreement. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any
and all prior agreements and understandings, oral or written, relating to the subject matter hereof.
(g) Severability. In case any provision of or obligation under this Agreement shall be invalid, illegal or unenforceable in any applicable
jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
(h) Successors/Assigns. This Agreement shall bind, and the rights hereunder shall inure to, the respective successors and assigns
of the parties hereto, subject to the provisions of the Credit Agreement and the other Financing Documents.
[SIGNATURES
APPEAR ON FOLLOWING PAGES]
IN
WITNESS WHEREOF, intending to be legally bound, the undersigned have executed this Agreement as of the day and year first hereinabove
set forth.
- **AGENT:** **MIDCAP
FUNDING IV TRUST,**
- as
Agent
- By: Apollo
Capital Management, L.P.,
- its
investment manager
- By: Apollo
Capital Management GP, LLC,
- its
general partner
- By: */s/
Maurice Amsellem*
- Name: Maurice
Amsellem
- Title: Authorized
Signatory
[Signatures
Continue on Following Page]
- **LENDER:** **MIDCAP
FUNDING IV TRUST**
- By: Apollo
Capital Management, L.P.,
- its
investment manager
- By: Apollo
Capital Management GP, LLC,
- its
general partner
- By: */s/
Maurice Amsellem*
- Name: Maurice
Amsellem
- Title: Authorized
Signatory
- **BORROWERS:** **XTANT
MEDICAL, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
- **BACTERIN
INTERNATIONAL, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
- **X-SPINE
SYSTEMS, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
- **SURGALIGN
SPV, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
- **GUARANTOR:**
- **XTANT
MEDICAL HOLDINGS, INC.**
- By: */s/
Sean Browne*
- Name Sean
Browne
- Title: Chief
Executive Officer
**EXHIBIT
A**
**Schedule
6.1 – Minimum Net Revenue**
| Defined Period Ending / December 31, 2025 | Minimum Net Revenue Amount / N/A |
| --- | --- |
| March 31, 2026 | $69,000,000 |
| June 30, 2026 | $68,000,000 |
| September 30, 2026 | $68,418,000 |
| December 31, 2026 | $68,418,000 |
| March 31, 2027 | $71,839,000 |
| June 30, 2027 | $75,431,000 |
| September 30, 2027 | $79,000,000 |
| December 31, 2027 | $80,000,000 |
| March 31, 2028 | $81,000,000 |
| June 30, 2028 | $82,000,000 |
| September 30, 2028 | $83,000,000 |
| December 31, 2028 | $84,000,000 |
---
## EX-31.1
SEC source: [ex31-1.htm](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex31-1.htm)
**Exhibit
31.1**
**Certification
of Chief Executive Officer**
**pursuant
to Exchange Act Rules** **13a-14(a)/15d-14(a), as
adopted pursuant to**
**Section
302 of the Sarbanes-Oxley Act of 2002**
I,
Sean E. Browne, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Xtant Medical Holdings, Inc.; |
| --- | --- |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 11, 2026 By: */s/ Sean E. Browne*
Sean E. Browne
President and Chief Executive Officer
(Principal Executive Officer)
---
## EX-31.2
SEC source: [ex31-2.htm](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex31-2.htm)
**Exhibit
31.2**
**Certification
of Chief FINANCIAL Officer**
**pursuant
to Exchange Act Rules** **13a-14(a)/15d-14(a), as
adopted pursuant to**
**Section
302 of the Sarbanes-Oxley Act of 2002**
I,
Scott C. Neils, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Xtant Medical Holdings, Inc.; |
| --- | --- |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 11, 2026 By: */s/ Scott C. Neils*
Scott C. Neils
Chief Financial Officer
(Principal Financial Officer)
---
## EX-32.1
SEC source: [ex32-1.htm](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex32-1.htm)
**Exhibit
32.1**
**CERTIFICATION of Chief Executive Officer PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**
In
connection with the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 of Xtant Medical Holdings, Inc. (the “Company”),
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sean E. Browne, President and
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 11, 2026 */s/ Sean E. Browne*
Sean E. Browne
President and Chief Executive Officer
(Principal Executive Officer)
---
## EX-32.2
SEC source: [ex32-2.htm](https://www.sec.gov/Archives/edgar/data/1453593/000149315226036981/ex32-2.htm)
**Exhibit
32.2**
**CERTIFICATION of Chief FINANCIAL Officer PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**
In
connection with the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 of Xtant Medical Holdings, Inc. (the “Company”),
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott C. Neils, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 11, 2026 */s/ Scott C. Neils*
Scott C. Neils
Chief Financial Officer
(Principal Financial Officer)