0001493152-23-041077 | 10-Q | XBRL Viewer | Xtant Medical Holdings INC

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Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Cash compensation/commissions payable	$ 7,412	$ 4,464
Other accrued liabilities	1,522	1,032
Accrued liabilities	$ 8,934	$ 5,496

Income Taxes	9 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	(14) Income Taxes Our effective tax rates for the three and nine months ended September 30, 2023 were (33.2%) and (84.7%), respectively, and differ from the statutory rate primarily due to the tax benefit associated with release of valuation allowance resulting from recognition of deferred tax liabilities in purchase accounting, and cash state taxes. Our effective tax rates for the three and nine months ended September 30, 2022 were (0.6%) and (0.8%), respectively, and differ from the statutory rate due to the valuation allowance against all deferred tax assets, and cash state taxes. Purchase accounting for the Transaction is recorded on a preliminary basis and includes the deferred tax liability recorded. Accordingly, the benefit associated with the release of the valuation allowance from the recognition of the deferred tax liability is subject to change, refer to Note 3 – Acquisition of Surgalign Holdings, Inc.’s Hardware and Biologics Business for additional information. In evaluating the realizability of the net deferred tax assets, we take into account a number of factors, primarily relating to the ability to generate taxable income. Where it is determined that it is likely that we will be unable to realize deferred tax assets, a valuation allowance is established against the portion of the deferred tax asset. Because it cannot be accurately determined when or if we will become profitable, a valuation allowance was provided against the entire deferred income tax asset balance. The Company did not recognize any interest or penalties related to income taxes for the three and nine months ended September 30, 2023 and 2022.

Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

(14) Income Taxes

Our effective tax rates for the three and nine months ended September 30, 2023 were (33.2%) and (84.7%), respectively, and differ from the statutory rate primarily due to the tax benefit associated with release of valuation allowance resulting from recognition of deferred tax liabilities in purchase accounting, and cash state taxes. Our effective tax rates for the three and nine months ended September 30, 2022 were (0.6%) and (0.8%), respectively, and differ from the statutory rate due to the valuation allowance against all deferred tax assets, and cash state taxes. Purchase accounting for the Transaction is recorded on a preliminary basis and includes the deferred tax liability recorded. Accordingly, the benefit associated with the release of the valuation allowance from the recognition of the deferred tax liability is subject to change, refer to Note 3 – Acquisition of Surgalign Holdings, Inc.’s Hardware and Biologics Business for additional information.

In evaluating the realizability of the net deferred tax assets, we take into account a number of factors, primarily relating to the ability to generate taxable income. Where it is determined that it is likely that we will be unable to realize deferred tax assets, a valuation allowance is established against the portion of the deferred tax asset. Because it cannot be accurately determined when or if we will become profitable, a valuation allowance was provided against the entire deferred income tax asset balance.

The Company did not recognize any interest or penalties related to income taxes for the three and nine months ended September 30, 2023 and 2022.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 28,112	$ 23,749
Less: accumulated depreciation	(19,015)	(17,964)
Property and equipment, net	9,097	5,785
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	6,469	5,598
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,258	1,043
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	230	230
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	4,325	4,105
Surgical Instruments [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	14,750	11,266
Assets Not Yet in Service [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,080	$ 1,507

Schedule of Restricted Stock Activity (Details) - Restricted Stock Units (RSUs) [Member] - 2018 Equity Incentive Plan [Member] - $ / shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares Outstanding, Balance	3,612,433	2,970,104
Weighted Average Fair Value at Grant Date Per Share, Outstanding Balance	$ 0.88	$ 1.39
Shares Granted	1,942,614	1,898,808
Weighted Average Fair Value at Grant Date Per Share, Granted	$ 1.15	$ 0.53
Shares Vested	(1,014,532)	(851,955)
Weighted Average Fair Value at Grant Date Per Share, Vested	$ 0.68	$ 1.33
Shares Cancelled	(494,121)	(318,805)
Weighted Average Fair Value at Grant Date Per Share, Cancelled	$ 0.54	$ 1.38
Shares Outstanding, Balance	4,046,394	3,698,152
Weighted Average Fair Value at Grant Date Per Share, Outstanding Balance	$ 1.10	$ 0.96

Inventories

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Inventories

(6) Inventories

Inventories consist of the following (in thousands):

Schedule of Inventories

	September 30, 2023		December 31, 2022
Raw materials	$	6,439	$	5,628
Work in process		1,547		798
Finished goods		26,348		10,859
Total	$	34,334	$	17,285

Debt (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Long-term Debt

Long-term debt consists of the following (in thousands):

Schedule of Long-term Debt

	September 30, 2023			December 31, 2022
Amounts due under the term loan	$	17,000		$	12,000
Accrued end-of-term payments		399			216
Less: unamortized debt issuance costs		(214	)		(196	)
Less: current maturities		(2,833	)		(2,333	)
Long-term debt, less issuance costs	$	14,352		$	9,687

Debt (Details Narrative) - USD ($) $ in Millions		1 Months Ended
Debt (Details Narrative) - USD ($) $ in Millions	Feb. 28, 2023	May 31, 2023	Sep. 30, 2023
Line of Credit Facility [Line Items]
Debt instrument interest rate			14.43%
Term Loan And Revolving Credit Facility [Member] \| Minimum [Member]
Line of Credit Facility [Line Items]
Line of credit, interest rate	1.00%
Term Loan And Revolving Credit Facility [Member] \| Maximum [Member]
Line of Credit Facility [Line Items]
Line of credit, interest rate	2.50%
Term Loan Agreement [Member]
Line of Credit Facility [Line Items]
Indebtedness incurred	$ 5.0
Monthly periodic payment		$ 0.7
Revolving Credit Agreement [Member]
Line of Credit Facility [Line Items]
Debt instrument interest rate			9.94%
Line of credit			$ 3.3

Net Income (Loss) Per Share (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options	13,856,656	17,192,048	12,658,083	17,192,048

Receivables

9 Months Ended

Sep. 30, 2023

Credit Loss [Abstract]

Receivables

(5) Receivables

The Company’s provision for current expected credit loss is determined based on historical collection experience adjusted for current economic conditions affecting collectability. 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.

Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended	9 Months Ended
	Jul. 26, 2023	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted average granted date fair value		$ 1.20
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested employee stock options not yet recognized		$ 3.6	$ 3.6
Stock option vested weighted average period			2 years 3 months 18 days
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested employee stock options not yet recognized		$ 2.6	$ 2.6
Stock option vested weighted average period			2 years 10 months 24 days
2023 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation, description	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, is (i) 5,500,000 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.
Share based compensation, grant	5,500,000
2018 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation, grant	7,695,812
Share based compensation, award outstanding	6,686,090
2018 Equity Incentive Plan [Member] \| Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation, award outstanding		4,875,828	4,875,828	3,360,664	2,867,705	3,201,666

Condensed Consolidated Statements of Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Statement of Cash Flows [Abstract]
Payments of stock issuance costs	$ 175	$ 409

Accrued Liabilities

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Accrued Liabilities

(9) Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

Schedule of Accrued Liabilities

	September 30, 2023		December 31, 2022
Cash compensation/commissions payable	$	7,412	$	4,464
Other accrued liabilities		1,522		1,032
Accrued liabilities	$	8,934	$	5,496

Revenue (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Summary of Revenues from Product Lines

	Three Months Ended					Three Months Ended
	September 30, 2023		Percentage of Total Revenue			September 30, 2022		Percentage of Total Revenue
Orthobiologics	$	15,665		63	%	$	12,046		83	%
Spinal implant		9,354		37	%		2,416		17	%
Total revenue	$	25,019		100	%	$	14,462		100	%

	Nine Months Ended					Nine Months Ended
	September 30, 2023		Percentage of Total Revenue			September 30, 2022		Percentage of Total Revenue
Orthobiologics	$	43,531		69	%	$	34,624		81	%
Spinal implant		19,664		31	%		8,075		19	%
Total revenue	$	63,195		100	%	$	42,699		100	%

Acquisition of Surgalign Holdings, Inc.’s Hardware and Biologics Business

9 Months Ended

Sep. 30, 2023

Acquisition Of Surgalign Holdings Inc.s Hardware And Biologics Business

Acquisition of Surgalign Holdings, Inc.’s Hardware and Biologics Business

(3) Acquisition of Surgalign Holdings, Inc.’s Hardware and Biologics Business

On August 10, 2023, we completed the acquisition (the “Transaction”) of the assets of Surgalign Holdings, Inc. ( “Surgalign Holdings”), and its subsidiaries used in Surgalign Holding’s hardware and biologics business. The acquired assets included specified inventory, intellectual property and intellectual property rights, contracts, equipment and other personal property, records, the outstanding equity securities of Surgalign Holdings’s international subsidiaries, and intangibles that were related to Surgalign Holding’s hardware and biologics business (collectively, the “Assets”) As part of the Transaction, we assumed and certain specified liabilities of Surgalign Holdings (collectively, the “Liabilities”), all pursuant to the Asset Purchase Agreement, dated June 18, 2023, between Surgalign Holdings and us (as amended, the “Asset Purchase Agreement”).

The Transaction was conducted through a process supervised by the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) in connection with Surgalign Holdings’ bankruptcy proceedings; and therefore, we acquired the Assets with limited representations and warranties. The Bankruptcy Court issued a Sale Order on August 9, 2023 approving and authorizing the Transaction. We funded the purchase price of $5 million, plus Liabilities, with cash on hand.

We recorded the purchase of the Transaction using the acquisition method of accounting and, accordingly, recognized the assets acquired at their fair values as of the date of acquisition. Due to the proximity of the acquisition date to the balance sheet date of September 30, 2023, the initial accounting and the third-party valuation is incomplete. The primary areas of purchase price allocation that are not yet finalized are the determination of overall enterprise value and the value of its inventory and equipment. In addition, depending on the value associated with these areas, the gain on bargain purchase as well as the deferred tax liability for the difference between book and tax bases are also subject to change. The table below represents the preliminary allocation of the total consideration for Surgalign Holdings’ assets and liabilities based on management’s preliminary estimate of their respective fair values as of August 10, 2023 (in thousands):

Schedule of Business Acquisitions


Cash	$	1,142
Accounts receivable		1,627
Inventories		14,300
Prepaids and other current assets		1,252
Equipment		2,391
Right-of-use asset		554
Accounts payable		(530	)
Accrued liabilities		(1,170	)
Current portion of lease liability		(229	)
Lease liability, less current portion		(325	)
Net assets acquired		19,012
Bargain purchase gain		(11,028	)
Deferred tax liability		(2,394	)

Total purchase consideration	$	5,590

The Transaction was recorded by allocating the costs of the net assets acquired based on their estimated fair values at the acquisition date. The fair values were based on management’s analysis, including work performed by third-party valuation specialists. Managements estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date) as we finalize our valuations of assets acquired and liabilities assumed in connection with the Transaction.

Accounting Standards Codification (“ASC”) 805, Business Combinations, requires that any excess of purchase price over the fair value of assets acquired, including identifiable intangibles and liabilities assumed, be recognized as goodwill and any excess of fair value of acquired net assets, including identifiable intangible assets over the acquisition consideration, results in a gain from bargain purchase. Prior to recording a gain, the acquiring entity must reassess whether all assets acquired and assumed liabilities have been identified and recognized and perform re-measurements to verify that the consideration paid, assets acquired and liabilities assumed have been properly valued. The Transaction resulted in a gain on bargain purchase due to the estimated fair value of the identifiable net assets acquired exceeding the purchase consideration transferred by $11.0 million and is shown as a gain on bargain purchase on our condensed consolidated statement of operations. Upon completion of our assessment, we concluded that recording a gain on bargain purchase was appropriate and required under ASC 805. The bargain purchase was primarily attributable to the Transaction occurring as part of bankruptcy proceedings.

We believe that the Transaction will strengthen our growing orthobiologics and spinal fusion device portfolio, while expanding our commercial footprint with new contracts and distributors.

The following unaudited pro forma combined financial information summarizes the results of operations for the periods indicated as if the Transaction, and the acquisition of Surgalign SPV, Inc., had been completed as of January 1, 2022 (in thousands):

Schedule of Pro Forma Combination

	2023			2022
	Nine Months Ended
	September 30,
	2023			2022
Revenues	$	94,065		$	104,011
Net (loss) income		(5,608	)		2,068

Pro forma information reflects adjustments that are expected to have a continuing impact on our results of operations and are directly attributable to the Transaction, and the acquisition of Surgalign SPV, Inc. The unaudited pro forma results include adjustments to reflect the amortization of the inventory step-up and the incremental intangible asset amortization to be incurred based on the preliminary values of each identifiable intangible asset. The pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the Transaction had occurred as of January 1, 2022 or that may be obtained in the future, and do not reflect future synergies, integration costs, or other such costs or savings.

Income Taxes (Details Narrative)	3 Months Ended		9 Months Ended
Income Taxes (Details Narrative)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Effective Income Tax Rate Reconciliation, Percent	(33.20%)	(0.60%)	(84.70%)	(0.80%)

Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]
Balance at Dec. 31, 2021	$ 30,883		$ 266,068		$ (235,185)
Balance, shares at Dec. 31, 2021		87,068,980
Common stock issued on vesting of restricted stock units
Common stock issued on vesting of restricted stock units, shares		244,721
Stock-based compensation	613		613
Net income (loss)	(2,213)				(2,213)
Balance at Mar. 31, 2022	29,283		266,681		(237,398)
Balance, shares at Mar. 31, 2022		87,313,701
Balance at Dec. 31, 2021	30,883		266,068		(235,185)
Balance, shares at Dec. 31, 2021		87,068,980
Net income (loss)	(6,276)
Foreign currency translation adjustment
Balance at Sep. 30, 2022	32,773		274,234		(241,461)
Balance, shares at Sep. 30, 2022		101,981,250
Balance at Mar. 31, 2022	29,283		266,681		(237,398)
Balance, shares at Mar. 31, 2022		87,313,701
Stock-based compensation	571		571
Net income (loss)	(1,710)				(1,710)
Balance at Jun. 30, 2022	28,144		267,252		(239,108)
Balance, shares at Jun. 30, 2022		87,313,701
Common stock issued on vesting of restricted stock units
Common stock issued on vesting of restricted stock units, shares		607,234
Stock-based compensation	641		641
Net income (loss)	(2,353)				(2,353)
Private placement of common stock, net of issuance costs	5,225		5,225
Private placement of common stock, net of issuance costs, shares		14,060,315
Foreign currency translation adjustment
Balance at Sep. 30, 2022	32,773		274,234		(241,461)
Balance, shares at Sep. 30, 2022		101,981,250
Warrants issued in connection with the private placement	1,116		1,116
Balance at Dec. 31, 2022	34,171		277,841		(243,670)
Balance, shares at Dec. 31, 2022		108,874,803
Common stock issued on vesting of restricted stock units
Common stock issued on vesting of restricted stock units, shares		22,245
Stock-based compensation	617		617
Net income (loss)	(2,078)				(2,078)
Balance at Mar. 31, 2023	32,710		278,458		(245,748)
Balance, shares at Mar. 31, 2023		108,897,048
Balance at Dec. 31, 2022	34,171		277,841		(243,670)
Balance, shares at Dec. 31, 2022		108,874,803
Net income (loss)	4,963
Foreign currency translation adjustment	(146)
Balance at Sep. 30, 2023	54,681		293,534	(146)	(238,707)
Balance, shares at Sep. 30, 2023		129,788,947
Balance at Mar. 31, 2023	32,710		278,458		(245,748)
Balance, shares at Mar. 31, 2023		108,897,048
Stock-based compensation	439		439
Net income (loss)	(2,190)				(2,190)
Balance at Jun. 30, 2023	30,959		278,897		(247,938)
Balance, shares at Jun. 30, 2023		108,897,048
Common stock issued on vesting of restricted stock units
Common stock issued on vesting of restricted stock units, shares		992,287
Stock-based compensation	745		745
Net income (loss)	9,231				9,231
Private placement of common stock, net of issuance costs	14,011		14,011
Private placement of common stock, net of issuance costs, shares		20,000,000
Withholding of common stock upon vesting of restricted stock units	(119)		(119)
Withholding of common stock upon vesting of restricted stock units, shares		(100,388)
Foreign currency translation adjustment	(146)			(146)
Balance at Sep. 30, 2023	$ 54,681		$ 293,534	$ (146)	$ (238,707)
Balance, shares at Sep. 30, 2023		129,788,947

Supplemental Disclosure of Cash Flow Information

9 Months Ended

Sep. 30, 2023

Supplemental Cash Flow Elements [Abstract]

Supplemental Disclosure of Cash Flow Information

(16) Supplemental Disclosure of Cash Flow Information

Supplemental cash flow information is as follows (in thousands):

	2023		2022
	Nine Months Ended
	September 30,
	2023		2022
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest	$	1,854	$	1,022
Non-cash activities:
Fixed assets acquired under finance lease	$	—	$	159
Revaluation of lease liability and right of use asset	$	—	$	234

Schedule of Business Acquisitions (Details) - Surgalign Holdings Inc [Member] $ in Thousands	1 Months Ended
	Feb. 28, 2023 USD ($)
Restructuring Cost and Reserve [Line Items]
Cash	$ 1,142
Accounts receivable	1,627
Inventories	14,300
Prepaids and other current assets	1,252
Equipment	2,391
Right-of-use asset	554
Accounts payable	(530)
Accrued liabilities	(1,170)
Current portion of lease liability	(229)
Lease liability, less current portion	(325)
Net assets acquired	19,012
Bargain purchase gain	(11,028)
Deferred tax liability	(2,394)
Total purchase consideration	$ 5,590

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating activities:
Net income (loss)	$ 4,963	$ (6,276)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	2,157	971
Gain on disposal of fixed assets	(104)	(91)
Non-cash interest	266	175
Non-cash rent	5	2
Stock-based compensation	1,801	1,825
Provision for expected credit losses	316	277
Provision for excess and obsolete inventory	398	1,568
Release of valuation allowance	(2,394)
Gain on bargain purchase	(11,028)
Changes in operating assets and liabilities, net of acquisition effects:
Accounts receivable	(7,047)	(2,962)
Inventories	(1,669)	(616)
Prepaid and other assets	69	239
Accounts payable	1,298	1,164
Accrued liabilities	2,369	671
Net cash used in operating activities	(8,600)	(3,053)
Investing activities:
Purchases of property and equipment	(1,093)	(1,321)
Proceeds from sale of fixed assets	70	184
Acquisition of Surgalign SPV, Inc.	(17,000)
Acquisition of Surgalign Holdings, Inc.’s hardware and biologics business, net of cash acquired	(4,448)
Net cash used in investing activities	(22,471)	(1,137)
Financing activities:
Payments on financing leases	(46)	(35)
Borrowings on line of credit	55,345	36,680
Repayments on line of credit	(54,724)	(39,580)
Proceeds from private placement, net of cash issuance costs	14,011	6,341
Net proceeds from issuance of long-term debt, net of issuance costs	4,899
Payments of taxes from withholding of common stock on vesting of restricted stock units	(119)
Net cash provided by financing activities	19,366	3,406
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(53)
Net change in cash and cash equivalents and restricted cash	(11,758)	(784)
Cash and cash equivalents and restricted cash at beginning of period	20,507	18,387
Cash and cash equivalents and restricted cash at end of period	8,749	17,603
Reconciliation of cash and cash equivalents and restricted cash reported in the condensed consolidated balance sheets
Cash and cash equivalents	8,664	17,363
Restricted cash	85	240
Total cash and restricted cash reported in condensed consolidated balance sheets	$ 8,749	$ 17,603

Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

Schedule of Accrued Liabilities

	September 30, 2023		December 31, 2022
Cash compensation/commissions payable	$	7,412	$	4,464
Other accrued liabilities		1,522		1,032
Accrued liabilities	$	8,934	$	5,496

Supplemental Disclosure of Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2023

Supplemental Cash Flow Elements [Abstract]

Schedule of Supplemental Cash Flow Information

Supplemental cash flow information is as follows (in thousands):

	2023		2022
	Nine Months Ended
	September 30,
	2023		2022
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest	$	1,854	$	1,022
Non-cash activities:
Fixed assets acquired under finance lease	$	—	$	159
Revaluation of lease liability and right of use asset	$	—	$	234

Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

(8) Intangible Assets

The following table sets forth information regarding intangible assets (in thousands):

Schedule of Intangible of Assets

	September 30, 2023					December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Patents	$	2,617	$	(609	)	$	807	$	(463	)
Customer relationships		8,100		(788	)		—		—
Trade names		1,245		(73	)		—		—
Total cost	$	11,962	$	(1,470	)	$	807	$	(463	)

Property and Equipment, Net (Details Narrative) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expenses	$ 0.5	$ 0.4	$ 1.2	$ 1.0

Acquisition of Coflex and CoFix Product Lines (Details Narrative) - USD ($) $ in Thousands	Feb. 28, 2023	Sep. 30, 2023	Dec. 31, 2022
Business Acquisition [Line Items]
Goodwill		$ 6,514	$ 3,205
Surgalign SPV, Inc. [Member]
Business Acquisition [Line Items]
Goodwill	$ 3,309
Equity Purchase Agreement [Member] \| Surgalign SPV, Inc. [Member]
Business Acquisition [Line Items]
Aggregate purchase price in cash	17,000
Purchase price in hand	$ 5,000

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Business Description, Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Description and Basis of Presentation

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, 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 systems to facilitate spinal fusion in complex spine, deformity, and degenerative procedures.

The accompanying condensed consolidated balance sheet as of December 31, 2022, 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. 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, 2023.

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, 2022. 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.

Private Placement

Private Placement

On July 3, 2023, we entered into a securities purchase agreement pursuant to which we issued an aggregate of 20,000,000 shares of common stock to accredited investors in a private placement at a per share purchase price of $0.75 at a closing held on July 6, 2023. The gross proceeds to us from the private placement were $15.0 million, before deducting estimated offering fees and expenses payable by us. We expect to use the net proceeds from the private placement for working capital and other general corporate purposes.

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements requires management of the Company 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, deferred income tax assets and liabilities; current and long-term lease obligations and corresponding right-of-use asset; estimates for the fair value of assets acquired as part of business combinations; 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.

Restricted Cash

Restricted Cash

Cash and cash equivalents classified as restricted cash on our condensed consolidated balance sheets are restricted as to withdrawal or use under the terms of certain contractual agreements. The September 30, 2023 and December 31, 2022 balances included lockbox deposits that are temporarily restricted due to timing at the period end. The lockbox deposits are applied against our line of credit the next business day.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash, cash equivalents and restricted cash. 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.

Long-Lived Assets

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 nine months ended September 30, 2023 and 2022.

Goodwill

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 nine months ended September 30, 2023 and 2022.

The following table presents the changes in the carrying amount of goodwill:

Schedule of Goodwill


Balance at January 1, 2023	$	3,205
Goodwill resulting from acquisition of Surgalign SPV, Inc.		3,309
Balance at September 30, 2023	$	6,514

Foreign Currency

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 income. Foreign currency transaction gains and losses are reported in other income, net.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying values of financial instruments, including trade accounts receivable, accounts payable, accrued liabilities, and long-term debt, approximate their fair values based on terms and related interest rates as of September 30, 2023 and December 31, 2022.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Net Income (Loss)	$ 9,231	$ (2,353)	$ 4,963	$ (6,276)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments	(146)		(146)
Comprehensive Income (Loss)	$ 9,085	$ (2,353)	$ 4,817	$ (6,276)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
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-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 28: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Acquisition of Surgalign Holdings, Inc.’s Hardware and Biologics Business (Details Narrative) - USD ($) $ in Millions	Aug. 09, 2023	Sep. 30, 2023
Restructuring Cost and Reserve [Line Items]
Purchase consideration		$ 11.0
Surgalign Holdings [Member]
Restructuring Cost and Reserve [Line Items]
Purchase price consideration	$ 5.0

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current Assets:
Cash and cash equivalents	$ 8,664	$ 20,298
Restricted cash	85	209
Trade accounts receivable, net of allowance for credit losses and doubtful accounts of $820 and $515, respectively	19,150	10,853
Inventories	34,334	17,285
Prepaid and other current assets	1,874	673
Total current assets	64,107	49,318
Property and equipment, net	9,097	5,785
Right-of-use asset, net	1,594	1,380
Goodwill	6,514	3,205
Intangible assets, net	10,492	344
Other assets	199	197
Total Assets	92,003	60,229
Current Liabilities:
Accounts payable	5,358	3,490
Accrued liabilities	8,934	5,496
Current portion of lease liability	733	458
Current portion of finance lease obligations	64	62
Line of credit	3,999	3,379
Current portion of long-term debt	2,833	2,333
Total current liabilities	21,921	15,218
Long-term Liabilities:
Lease liability, less current portion	916	972
Finance lease obligation, less current portion	133	181
Long-term debt, plus premium and less issuance costs	14,352	9,687
Total Liabilities	37,322	26,058
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; 129,788,947 shares issued and outstanding as of September 30, 2023 and 108,874,803 shares issued and outstanding as of December 31, 2022
Additional paid-in capital	293,534	277,841
Accumulated other comprehensive loss	(146)
Accumulated deficit	(238,707)	(243,670)
Total Stockholders’ Equity	54,681	34,171
Total Liabilities & Stockholders’ Equity	$ 92,003	$ 60,229

Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net are as follows (in thousands):

Schedule of Property and Equipment, Net

	September 30, 2023			December 31, 2022
Equipment	$	6,469		$	5,598
Computer equipment		1,258			1,043
Computer software		230			230
Leasehold improvements		4,325			4,105
Surgical instruments		14,750			11,266
Assets not yet in service		1,080			1,507
Total cost		28,112			23,749
Property and equipment, gross		28,112			23,749
Less: accumulated depreciation		(19,015	)		(17,964	)
Property and equipment, net	$	9,097		$	5,785

Schedule of Intangible of Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 11,962	$ 807
Accumulated amortization	(1,470)	(463)
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	2,617	807
Accumulated amortization	(609)	(463)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	8,100
Accumulated amortization	(788)
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	1,245
Accumulated amortization	$ (73)

Schedule of Share-based Compensation, Stock Options Activity (Details) - Equity Option [Member] - 2018 Equity Incentive Plan [Member] - $ / shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares, Outstanding, Balance	3,360,664	3,201,666
Weighted Average Exercise Price Per Share, Outstanding Balance	$ 1.51	$ 1.80
Shares, Granted	1,602,013	109,164
Weighted Average Exercise Price Per Share, Granted	$ 1.16	$ 0.65
Shares, Cancelled or expired	(86,849)	(443,125)
Weighted Average Exercise Price Per Share, Cancelled or expired	$ 6.58	$ 2.39
Shares, Outstanding, Balance	4,875,828	2,867,705
Weighted Average Exercise Price Per Share, Outstanding Balance	$ 1.31	$ 1.66
Weighted Average Remaining Contractual Term (Years) Outstanding	8 years 2 months 12 days	8 years 1 month 6 days
Shares, Exercisable, Ending Balance	1,519,973	828,978
Weighted Average Exercise Price Per Share, Exercisable Ending Balance	$ 1.59	$ 2.37
Weighted Average Remaining Contractual Term (Years) Exercisable	7 years 1 month 6 days	7 years 9 months 18 days

Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Supplemental Cash Flow Elements [Abstract]
Interest	$ 1,854	$ 1,022
Fixed assets acquired under finance lease		159
Revaluation of lease liability and right of use asset		$ 234

Schedule of Pro Forma Combination (Details) - Surgalign Holdings Inc [Member] - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Revenues	$ 94,065	$ 104,011
Net (loss) income	$ (5,608)	$ 2,068

Business Description, Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Description, Basis of Presentation and Summary of Significant Accounting Policies

(1) Business Description, Basis of Presentation and Summary of Significant Accounting Policies

Business Description and Basis of Presentation

All intercompany balances and transactions have been eliminated in consolidation.

Interim results are not necessarily indicative of results that may be achieved in the future for the full year ending December 31, 2023.

Private Placement

Use of Estimates

Restricted Cash

Concentration of Credit Risk

Long-Lived Assets

Goodwill

The following table presents the changes in the carrying amount of goodwill:

Schedule of Goodwill


Balance at January 1, 2023	$	3,205
Goodwill resulting from acquisition of Surgalign SPV, Inc.		3,309
Balance at September 30, 2023	$	6,514

Foreign Currency

Fair Value of Financial Instruments

Summary of Revenues from Product Lines (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 25,019	$ 14,462	$ 63,195	$ 42,699
Percentage of total revenue	100.00%	100.00%	100.00%	100.00%
Orthobiologics [Member]
Disaggregation of Revenue [Line Items]
Total revenue	$ 15,665	$ 12,046	$ 43,531	$ 34,624
Percentage of total revenue	63.00%	83.00%	69.00%	81.00%
Spinal Implant [Member]
Disaggregation of Revenue [Line Items]
Total revenue	$ 9,354	$ 2,416	$ 19,664	$ 8,075
Percentage of total revenue	37.00%	17.00%	31.00%	19.00%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Revenue

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue

(4) Revenue

In the United States, we generate most of our revenue from independent commissioned sales agents. We consign our orthobiologics products to hospitals and consign or loan our spinal implant sets to the 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.

We ship replacement inventory to independent sales agents to replace the consigned inventory used in surgeries. Loaned sets are returned to the Company’s distribution centers, 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 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 control of the promised goods is transferred to the customer, in an amount that reflects the consideration the Company expects to collect in exchange for those goods or services. 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.

The Company operates in one reportable segment with our 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. The following table presents revenues from these product lines for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Summary of Revenues from Product Lines

	Three Months Ended					Three Months Ended
	September 30, 2023		Percentage of Total Revenue			September 30, 2022		Percentage of Total Revenue
Orthobiologics	$	15,665		63	%	$	12,046		83	%
Spinal implant		9,354		37	%		2,416		17	%
Total revenue	$	25,019		100	%	$	14,462		100	%

	Nine Months Ended					Nine Months Ended
	September 30, 2023		Percentage of Total Revenue			September 30, 2022		Percentage of Total Revenue
Orthobiologics	$	43,531		69	%	$	34,624		81	%
Spinal implant		19,664		31	%		8,075		19	%
Total revenue	$	63,195		100	%	$	42,699		100	%

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//606/tableOfContent

+ Details

Acquisition of Coflex and CoFix Product Lines (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed


Inventories	$	1,589
Equipment		947
Intangible assets		11,155
Net assets acquired		13,691

Goodwill		3,309

Total purchase consideration	$	17,000

Schedule of Goodwill (Details) $ in Thousands	9 Months Ended
Schedule of Goodwill (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Balance at January 1, 2023	$ 3,205
Goodwill resulting from acquisition of Surgalign SPV, Inc.	3,309
Balance at September 30, 2023	$ 6,514

- Definition

+ References + Details

Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

(10) Debt

Long-term debt consists of the following (in thousands):

Schedule of Long-term Debt

	September 30, 2023			December 31, 2022
Amounts due under the term loan	$	17,000		$	12,000
Accrued end-of-term payments		399			216
Less: unamortized debt issuance costs		(214	)		(196	)
Less: current maturities		(2,833	)		(2,333	)
Long-term debt, less issuance costs	$	14,352		$	9,687

On February 28, 2023, the Company’s term loan agreement was amended to provide an additional $5.0 million of funding. Additionally, the Company’s term loan agreement and revolving credit facility were amended on February 28, 2023 to (i) re-set the date certain fees payable in connection with optional prepayments are determined to the date the amendment was executed and consequently extend such fees’ original expiration and (ii) increase the minimum amount of interest payable under the term loan and the revolving credit facility from 1% to 2.5%.

In May 2023, the Company extended its interest only period on the term loan until June 2024 when the Company is required to make monthly principal payments of approximately $0.7 million on the term loan through the May 2026.

On August 10, 2023, the Company’s term loan agreement and revolving credit facility were amended to permit the Transaction and provide the Company with additional flexibility with respect to holding foreign subsidiaries. The amendment contains standard covenants regarding holding foreign subsidiaries. The terms of the borrowing under these agreements otherwise remain unchanged.

The effective rate of the term loan, inclusive of amortization of debt issuance costs and accretion of the final payment, was 14.43% as of September 30, 2023. The effective rate of the revolving credit agreement was 9.94% as of September 30, 2023. As of September 30, 2023, the Company had $3.3 million available under the revolving credit agreement.

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, 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 minimum adjusted EBITDA and a minimum liquidity, in each case at levels specified in the Credit Agreements. As of September 30, 2023, we were in compliance with all covenants under the Credit Agreements.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Acquisition of Surgalign Holdings, Inc.’s Hardware and Biologics Business (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Business Acquisitions


Cash	$	1,142
Accounts receivable		1,627
Inventories		14,300
Prepaids and other current assets		1,252
Equipment		2,391
Right-of-use asset		554
Accounts payable		(530	)
Accrued liabilities		(1,170	)
Current portion of lease liability		(229	)
Lease liability, less current portion		(325	)
Net assets acquired		19,012
Bargain purchase gain		(11,028	)
Deferred tax liability		(2,394	)

Total purchase consideration	$	5,590

Surgalign Holdings Inc [Member]

Schedule of Pro Forma Combination

	2023			2022
	Nine Months Ended
	September 30,
	2023			2022
Revenues	$	94,065		$	104,011
Net (loss) income		(5,608	)		2,068

Subsequent Event

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

Subsequent Event

(19) Subsequent Event

On October 23, 2023, the Company acquired the nanOss production operations from RTI Surgical, Inc. (“RTI”) pursuant to an Asset Purchase Agreement dated October 23, 2023 between the Company and RTI (the “Asset Purchase Agreement”). Under the terms of the Asset Purchase Agreement, the Company acquired certain assets, including equipment and inventory, used in RTI’s synthetic bone graft business and assumed from RTI the lease for the nanOss production facility located in Greenville, North Carolina. The purchase price for the assets was $2 million in cash plus contingent payments based on future sales of next generation nanOss products. The Company previously acquired nanOss distribution rights and nanOss intellectual property with the acquisition of assets related to the biologics and spinal fixation business of Surgalign Holdings, Inc. in August 2023.

We recorded the purchase of this acquisition using the acquisition method of accounting and, accordingly, recognized the assets acquired at their fair values as of the date of acquisition. No liabilities were assumed in connection with the acquisition. Because the closing occurred on October 23, 2023, information necessary to complete the purchase accounting is not yet available.

Inventories (Tables)

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consist of the following (in thousands):

Schedule of Inventories

	September 30, 2023		December 31, 2022
Raw materials	$	6,439	$	5,628
Work in process		1,547		798
Finished goods		26,348		10,859
Total	$	34,334	$	17,285

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance of accounts receivable, net	$ 820	$ 515
Preferred stock, par value	$ 0.000001	$ 0.000001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	129,788,947	108,874,803
Common stock, shares outstanding	129,788,947	108,874,803

Related Party Transactions

9 Months Ended

Sep. 30, 2023

Related Party Transactions

(17) Related Party Transactions

As described in more detail under Note 1 – Business Description and Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and Item 5 of Part II of this Quarterly Report on Form 10-Q, we are party to an Investor Rights Agreement, Registration Rights Agreements and certain other agreements with OrbiMed Royalty Opportunities II, LP (“Royalty Opportunities”) and ROS Acquisition Offshore LP (“ROS”), which are funds affiliated with OrbiMed Advisors LLC (“OrbiMed”). OrbiMed beneficially owns 67% of the Company’s common stock.

All related party transactions are reviewed and approved by the Audit Committee or the disinterested members of the full Board of Directors.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

Schedule of Revenues by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 25,019	$ 14,462	$ 63,195	$ 42,699
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	23,433	14,370	60,932	42,089
Rest Of World [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 1,586	$ 92	$ 2,263	$ 610

- Definition

+ References

+ Details

Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible of Assets

The following table sets forth information regarding intangible assets (in thousands):

Schedule of Intangible of Assets

	September 30, 2023					December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Patents	$	2,617	$	(609	)	$	807	$	(463	)
Customer relationships		8,100		(788	)		—		—
Trade names		1,245		(73	)		—		—
Total cost	$	11,962	$	(1,470	)	$	807	$	(463	)

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

(13) Commitments and Contingencies

Litigation

We are subject to potential liabilities under government regulations and various claims and legal actions that are pending or may be asserted 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. While we do not believe that the ultimate resolution of any claims and lawsuits will have a material adverse effect upon our consolidated financial position, results of operations or cash flows, it is possible that the amount of ultimate loss may exceed our current accruals and that our 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 condensed 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.

Business Description, Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 03, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Number of issuance, value		$ 14,011,000	$ 5,225,000
Impairments of long-lived assets		0	0	$ 0	$ 0
Impairments of goodwill		$ 0	$ 0	$ 0	$ 0
Investor [Member] \| Private Placement [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Number of issuance, shares	20,000,000
Shares issued price per share	$ 0.75
Number of issuance, value	$ 15,000,000.0

- Definition

Equity impact of the value of new stock issued during the period. Includes shares issued in an initial public offering or a secondary public offering.

+ References + Details

Segment and Geographic Information

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment and Geographic Information

(18) Segment and Geographic Information

The Company operates in one segment based upon the Company’s organizational structure, the way in which the operations and investments are managed and evaluated by the chief operating decision maker (“CODM”). The Company shares common, centralized support functions which report directly to the CODM and decision-making regarding the Company’s overall operating performance and allocation of Company resources is assessed on a consolidated basis. Net revenue by geographic region are as follows:

	2023		2022
	Three Months Ended September 30,
	2023		2022
United States	$	23,433	$	14,370
Rest of world		1,586		92
Total revenue	$	25,019	$	14,462

	2023		2022
	Nine Months Ended September 30,
	2023		2022
United States	$	60,932	$	42,089
Rest of world		2,263		610
Total revenue	$	63,195	$	42,699

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Property and Equipment, Net

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

(7) Property and Equipment, Net

Property and equipment, net are as follows (in thousands):

Schedule of Property and Equipment, Net

	September 30, 2023			December 31, 2022
Equipment	$	6,469		$	5,598
Computer equipment		1,258			1,043
Computer software		230			230
Leasehold improvements		4,325			4,105
Surgical instruments		14,750			11,266
Assets not yet in service		1,080			1,507
Total cost		28,112			23,749
Property and equipment, gross		28,112			23,749
Less: accumulated depreciation		(19,015	)		(17,964	)
Property and equipment, net	$	9,097		$	5,785

Depreciation expense related to property and equipment, including property under finance leases, for the three months ended September 30, 2023 and 2022 was $0.5 million and $0.4 million, respectively, and $1.2 million and $1 million for the nine months ended September 30, 2023 and 2022, respectively.

Warrants

9 Months Ended

Sep. 30, 2023

Warrants

Warrants

(12) Warrants

As of September 30, 2023 and December 31, 2022, there were outstanding and exercisable warrants to purchase 12,187,470 shares of our common stock at a weighted average exercise price of $1.53 per share with a weighted average remaining contractual term of 3 years.

Warrants (Details Narrative) - Warrant [Member] - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Outstanding and exercisable warrants to purchase	12,187,470	12,187,470
Weighted average exercise price	$ 1.53	$ 1.53
Warrants contractual term	3 years	3 years

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Feb. 28, 2023	Dec. 31, 2022
Business Acquisition [Line Items]
Net assets acquired	$ 11,000
Goodwill	$ 6,514		$ 3,205
Surgalign SPV, Inc. [Member]
Business Acquisition [Line Items]
Inventories		$ 1,589
Equipment		947
Intangible assets		11,155
Net assets acquired		13,691
Goodwill		3,309
Total purchase consideration		$ 17,000

- Definition

+ References + Details

Acquisition of Coflex and CoFix Product Lines

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisition of Coflex and CoFix Product Lines

(2) Acquisition of Coflex and CoFix Product Lines

On February 28, 2023, we entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Surgalign SPV, Inc. (“Surgalign SPV”), a wholly owned subsidiary of Surgalign Spine Technologies, Inc., (“Seller”), Seller and Surgalign Holdings, Inc. , pursuant to which we purchased all of the issued and outstanding shares of common stock of Surgalign SPV, which shares constituted all of the outstanding equity of Surgalign SPV, for an aggregate purchase price of $17.0 million in cash (the “Purchase Price”). The closing contemplated by the Equity Purchase Agreement occurred on February 28, 2023 (the “Closing”).

Immediately prior to the Closing, Seller and its affiliates transferred and assigned to Surgalign SPV, a newly formed entity wholly owned by Seller, certain intellectual property, contractual rights and other assets related to the design, manufacture, sale and distribution of Seller’s Coflex and CoFix products in the United States (the “Coflex Business”). The Coflex and CoFix products have been approved by the U.S. Food and Drug Administration for the treatment of moderate to severe lumbar spinal stenosis in conjunction with decompression and provide minimally invasive, motion preserving stabilization.

In conjunction with the Equity Purchase Agreement, on February 28, 2023, we entered into a Transition Services Agreement with Surgalign SVP and Seller, whereby Seller agreed to provide, or cause to be provided, to us on and after the effective date of the Equity Purchase Agreement, after giving effect to the Closing, certain transitional services related to the transition of the Coflex Business.

We funded the Purchase Price with cash on hand and approximately $5.0 million of indebtedness incurred under our term loan, refer to Note 10 – Debt for additional information.

We recorded the purchase of this acquisition using the acquisition method of accounting and, accordingly, recognized the assets acquired at their fair values as of the date of acquisition. The table below represents the allocation of the total consideration for Surgalign SPV’s assets and liabilities based on management’s estimates of their respective fair values as of February 28, 2023 (in thousands):


Inventories	$	1,589
Equipment		947
Intangible assets		11,155
Net assets acquired		13,691

Goodwill		3,309

Total purchase consideration	$	17,000

The acquisition was recorded by allocating the costs of the net assets acquired based on their estimated fair values at the acquisition date. The fair values were based on management’s analysis, including work performed by third-party valuation specialists.

The acquisition strengthened the Company’s spine portfolio with the addition of the Coflex Business. Coflex is a differentiated and minimally invasive motion preserving stabilization implant that is FDA PMA-approved for the treatment of moderate to severe lumbar spinal stenosis in conjunction with decompression. This potential benefit resulted in the Company paying a premium for the acquisition resulting in the recognition of $3.3 million in goodwill. For tax purposes, goodwill is deductible.

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Share-based Compensation, Stock Options Activity

Stock option activity, including options granted under the 2023 Plan and 2018 Plan was as follows for the nine months ended September 30, 2023 and 2022:

	2023							2022
	Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)		Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)
Outstanding at January 1		3,360,664		$	1.51				3,201,666		$	1.80
Granted		1,602,013			1.16				109,164			0.65
Cancelled or expired		(86,849	)	$	6.58				(443,125	)	$	2.39
Outstanding at September 30		4,875,828		$	1.31		8.2		2,867,705		$	1.66		8.1
Exercisable at September 30		1,519,973		$	1.59		7.1		828,978		$	2.37		7.8

Schedule of Restricted Stock Activity

Restricted stock unit activity for awards granted under the 2023 Plan and 2018 Plan was as follows for the nine months ended September 30, 2023 and 2022:

Schedule of Restricted Stock Activity

	2023					2022
	Shares			Weighted Average Fair Value at Grant Date Per Share		Shares			Weighted Average Fair Value at Grant Date Per Share
Outstanding at January 1		3,612,433		$	0.88		2,970,104		$	1.39
Granted		1,942,614		$	1.15		1,898,808		$	0.53
Vested		(1,014,532	)	$	0.68		(851,955	)	$	1.33
Cancelled		(494,121	)	$	0.54		(318,805	)	$	1.38
Outstanding at September 30		4,046,394		$	1.10		3,698,152		$	0.96

Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Amounts due under the term loan	$ 17,000	$ 12,000
Accrued end-of-term payments	399	216
Less: unamortized debt issuance costs	(214)	(196)
Less: current maturities	(2,833)	(2,333)
Long-term debt, less issuance costs	$ 14,352	$ 9,687

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

- Definition

The carrying value as of the balance sheet date of the noncurrent portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Nov. 13, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-34951
Entity Registrant Name	XTANT MEDICAL HOLDINGS, INC.
Entity Central Index Key	0001453593
Entity Tax Identification Number	20-5313323
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	664 Cruiser Lane
Entity Address, City or Town	Belgrade
Entity Address, State or Province	MT
Entity Address, Postal Zip Code	59714
City Area Code	(406)
Local Phone Number	388-0480
Title of 12(b) Security	Common stock, par value $0.000001 per share
Trading Symbol	XTNT
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		130,110,250

Subsequent Event (Details Narrative) $ in Millions	Oct. 23, 2023 USD ($)
Subsequent Event [Member] \| RTI Surgical, Inc. [Member]
Subsequent Event [Line Items]
Purchase price of asset	$ 2

Business Description, Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Goodwill

The following table presents the changes in the carrying amount of goodwill:

Schedule of Goodwill


Balance at January 1, 2023	$	3,205
Goodwill resulting from acquisition of Surgalign SPV, Inc.		3,309
Balance at September 30, 2023	$	6,514

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Net Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Net Income (Loss) Per Share:

Schedule of Basic and Diluted Earnings Per Share

The table below sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	2023		2022			2023		2022
	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022			2023		2022
Numerator:
Net income (loss)	$	9,231	$	(2,353	)	$	4,963	$	(6,276	)
Denominator:
Basic – weighted average shares outstanding		128,140,238		93,278,610			115,380,792		89,236,832
Effect of dilutive securities:
Employee restricted stock units		2,270,924		—			3,199,497		—
Warrants		5,252,112		—			5,252,112		—
Diluted – weighted average shares outstanding		135,663,274		93,278,610			123,832,401		89,236,832
Basic earnings per share		0.07		(0.03	)		0.04		(0.07	)
Diluted earnings per share		0.07		(0.03	)		0.04		(0.07	)

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

(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 (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 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, is (i) 5,500,000 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.

Stock option activity, including options granted under the 2023 Plan and 2018 Plan was as follows for the nine months ended September 30, 2023 and 2022:

	2023							2022
	Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)		Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)
Outstanding at January 1		3,360,664		$	1.51				3,201,666		$	1.80
Granted		1,602,013			1.16				109,164			0.65
Cancelled or expired		(86,849	)	$	6.58				(443,125	)	$	2.39
Outstanding at September 30		4,875,828		$	1.31		8.2		2,867,705		$	1.66		8.1
Exercisable at September 30		1,519,973		$	1.59		7.1		828,978		$	2.37		7.8

As of September 30, 2023, there was approximately $2.6 million of total unrecognized compensation expense related to unvested stock options. These costs are expected to be recognized over a weighted-average period of 2.9 years. The weighted average grant date fair value of options granted during the three months ended September 30, 2023 was $1.20.

Restricted stock unit activity for awards granted under the 2023 Plan and 2018 Plan was as follows for the nine months ended September 30, 2023 and 2022:

Schedule of Restricted Stock Activity

	2023					2022
	Shares			Weighted Average Fair Value at Grant Date Per Share		Shares			Weighted Average Fair Value at Grant Date Per Share
Outstanding at January 1		3,612,433		$	0.88		2,970,104		$	1.39
Granted		1,942,614		$	1.15		1,898,808		$	0.53
Vested		(1,014,532	)	$	0.68		(851,955	)	$	1.33
Cancelled		(494,121	)	$	0.54		(318,805	)	$	1.38
Outstanding at September 30		4,046,394		$	1.10		3,698,152		$	0.96

Total compensation expense related to unvested restricted stock units not yet recognized was $3.6 million as of September 30, 2023, which is expected to be allocated to expenses over a weighted-average period of 2.3 years.

Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2023

Net Income (Loss) Per Share:

Net Income (Loss) Per Share

(15) Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) 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 income (loss) 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 income (loss) per share was the same as basic net income (loss) per share for the three and nine months ended September 30, 2022, as shares issuable upon the exercise of stock options and warrants were anti-dilutive as a result of the net losses incurred for those periods.

The table below sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	2023		2022			2023		2022
	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022			2023		2022
Numerator:
Net income (loss)	$	9,231	$	(2,353	)	$	4,963	$	(6,276	)
Denominator:
Basic – weighted average shares outstanding		128,140,238		93,278,610			115,380,792		89,236,832
Effect of dilutive securities:
Employee restricted stock units		2,270,924		—			3,199,497		—
Warrants		5,252,112		—			5,252,112		—
Diluted – weighted average shares outstanding		135,663,274		93,278,610			123,832,401		89,236,832
Basic earnings per share		0.07		(0.03	)		0.04		(0.07	)
Diluted earnings per share		0.07		(0.03	)		0.04		(0.07	)

For the three months ended September 30, 2023 and 2022, 13,856,656 and 17,192,048 stock options, restricted stock units and warrants were excluded for the diluted earnings per share calculation as they were anti-dilutive. For the nine months ended September 30, 2023 and 2022, 12,658,083 and 17,192,048 stock options, restricted stock units and warrants were excluded for the diluted earnings per share calculation as they were anti-dilutive.

Segment and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Schedule of Revenues by Geographic Region

	2023		2022
	Three Months Ended September 30,
	2023		2022
United States	$	23,433	$	14,370
Rest of world		1,586		92
Total revenue	$	25,019	$	14,462

	2023		2022
	Nine Months Ended September 30,
	2023		2022
United States	$	60,932	$	42,089
Rest of world		2,263		610
Total revenue	$	63,195	$	42,699

Schedule of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 6,439	$ 5,628
Work in process	1,547	798
Finished goods	26,348	10,859
Total	$ 34,334	$ 17,285

Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Net Income (Loss) Per Share:
Net income (loss)	$ 9,231	$ (2,190)	$ (2,078)	$ (2,353)	$ (1,710)	$ (2,213)	$ 4,963	$ (6,276)
Basic – weighted average shares outstanding	128,140,238			93,278,610			115,380,792	89,236,832
Employee restricted stock units	2,270,924,000						3,199,497,000
Warrants	5,252,112,000						5,252,112,000
Diluted – weighted average shares outstanding	135,663,274			93,278,610			123,832,401	89,236,832
Basic earnings per share	$ 0.07			$ (0.03)			$ 0.04	$ (0.07)
Diluted earnings per share	$ 0.07			$ (0.03)			$ 0.04	$ (0.07)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Total Revenue	$ 25,019	$ 14,462	$ 63,195	$ 42,699
Cost of Sales	9,685	6,566	24,865	18,868
Gross Profit	15,334	7,896	38,330	23,831
Operating Expenses
General and administrative	7,144	3,729	16,983	11,496
Sales and marketing	11,085	5,838	26,855	16,683
Research and development	490	229	844	683
Total Operating Expenses	18,719	9,796	44,682	28,862
Loss from Operations	(3,385)	(1,900)	(6,352)	(5,031)
Other Income (Expense)
Interest expense	(760)	(440)	(2,120)	(1,197)
Interest income	48		133
Bargain purchase gain	11,028		11,028
Total Other Income (Expense)	10,316	(440)	9,041	(1,197)
Net Income (Loss) from Operations Before Provision for Income Taxes	6,931	(2,340)	2,689	(6,228)
Provision for Income Taxes Current and Deferred	2,300	(13)	2,274	(48)
Net Income (Loss)	$ 9,231	$ (2,353)	$ 4,963	$ (6,276)
Net Income (Loss) Per Share:
Basic	$ 0.07	$ (0.03)	$ 0.04	$ (0.07)
Dilutive	$ 0.07	$ (0.03)	$ 0.04	$ (0.07)
Shares used in the computation:
Basic	128,140,238	93,278,610	115,380,792	89,236,832
Dilutive	135,663,274	93,278,610	123,832,401	89,236,832

Related Party Transactions (Details Narrative)	Sep. 30, 2023
OrbiMed Advisors LLC [Member]
Ownership percentage	67.00%