Xtant Medical Holdings, Inc.

Previous wording

We have an extensive sales channel of 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 (“IDNs”) and through group purchasing organizations (“GPOs”). 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 direct sales representatives and stocking distribution partners in Europe, Canada, Mexico, South America, Australia, and certain Pacific region countries.

Current wording

We have an extensive sales channel of 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 (“IDNs”) and through group purchasing organizations (“GPOs”). 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 direct sales representatives and stocking distribution partners in Europe, Canada, Mexico, South America, Australia, 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.

Previous wording

We have focused and intend to continue to focus primarily on four key growth initiatives: (1) introduce new products, including our recently launched premium, next-generation demineralized bone matrix, Trivium™ in addition to our introductions last year: Cortera® Posterior Fixation System, viable bone matrix, OsteoVive® Plus, and amniotic membrane allografts, SimpliGraft™ and SimpliMax™; (2) expand our distribution network; (3) penetrate adjacent markets; and (4) leverage our growth platform with technology and strategic acquisitions. While the intent of these four key growth initiatives is to increase our future revenues, no assurance can be provided that we will be successful in implementing these growth initiatives or increasing our future revenues.

Current wording

We have focused and intend to continue to focus primarily on four key growth initiatives: (1) introduce new products, including our recently launched CollagenX™, a bovine collagen particulate product for surgical wound closure; OsteoFactor Pro TM, allogenic growth factor solution and Trivium™, a next-generation demineralized bone matrix, in addition to our introductions last year: Cortera® Posterior Fixation System, viable bone matrix, OsteoVive® Plus, and amniotic membrane allografts, SimpliGraft™ and SimpliMax™; (2) expand our distribution network; (3) penetrate adjacent markets; and (4) leverage our growth platform with technology and strategic acquisitions. While the intent of these four key growth initiatives is to increase our future revenues, no assurance can be provided that we will be successful in implementing these growth initiatives or increasing our future revenues.

Previous wording

During the first quarter of 2025, we entered into a manufacture and license agreement with a distributor pursuant to which we agreed to manufacture and supply to the distributor our SimpliGraft® product under the distributor’s name and brand in exchange for a one-time $1.5 million cash payment and minimum SimpliGraft® product purchase obligations of the distributor. During the fourth quarter of 2024, we entered into a license agreement with a distributor granting an exclusive right and license to manufacture and commercialize in the United States our SimpliMax™ product in exchange for a one-time $1.5 million cash payment and minimum quarterly royalty payments based on the volume of product sold by the distributor. The Centers for Medicare and Medicaid Services (“CMS”) issued a Local Coverage Determination implementing significant changes to reimbursement for cellular and tissue-based products, which would impact our SimpliMax™ and SimpliGraft® products and constitute a CMS Policy Change under these license agreements, which changes were initially intended to become effective in February 2025 but were delayed to April 2025 and then again delayed to January 1, 2026. On July 14 and 15, 2025, CMS released the CY 2026 Physician Fee Schedule (“PFS”) proposal and the CY 2026 Hospital Outpatient Prospective Payment System (“OPPS”) proposal. Under these proposed rules, which are scheduled for implementation on January 1, 2026, CMS is calling for a consistent payment approach for skin substitutes across the private office and HOPD settings with a fixed price of $125.38 per square centimeter. The PFS and OPPS proposals are currently in a comment period, ending in mid-September, after which CMS will publish its final rules for reimbursement in these care settings. Together with the Local Coverage Determinations and the recently announced Wasteful and Inappropriate Service Reduction model, there are several significant potential changes to reimbursement of skin substitutes that could begin impacting the industry and the Company, beginning January 1, 2026.

Current wording

During the first quarter of 2025, we entered into a manufacture and license agreement with a distributor pursuant to which we agreed to manufacture and supply to the distributor our SimpliGraft® product under the distributor’s name and brand in exchange for a one-time $1.5 million cash payment and minimum SimpliGraft® product purchase obligations of the distributor. During the fourth quarter of 2024, we entered into a license agreement with a distributor granting an exclusive right and license to manufacture and commercialize in the United States our SimpliMax™ product in exchange for a one-time $1.5 million cash payment and minimum quarterly royalty payments based on the volume of product sold by the distributor. The Centers for Medicare and Medicaid Services (“CMS”) issued a Local Coverage Determination implementing significant changes to reimbursement for cellular and tissue-based products, which would impact our SimpliMax™ and SimpliGraft® products and constitute a CMS Policy Change under these license agreements, which changes were initially intended to become effective in February 2025 but were delayed to April 2025 and then again delayed to January 1, 2026. On July 14 and 15, 2025, CMS released the CY 2026 Physician Fee Schedule (“PFS”) proposal and the CY 2026 Hospital Outpatient Prospective Payment System (“OPPS”) proposal. Under these proposed rules, which are scheduled for implementation on January 1, 2026, CMS is calling for a consistent payment approach for skin substitutes across the private office and hospital outpatient departments settings with a fixed price of $125.38 per square centimeter. The comment period for the PFS and OPPS proposals concluded in mid-September 2025, and it is anticipated that CMS will publish its final rules for reimbursement in these care settings in November 2025. Together with the Local Coverage Determinations and the recently announced Wasteful and Inappropriate Service Reduction model, there are several significant potential changes to reimbursement of skin substitutes that could begin impacting the industry and the Company when the final rules become effective on January 1, 2026. Because of these regulatory changes, it is possible that these license agreements may be terminated, adversely affecting our future license revenue.

Previous wording

On July 7, 2025, we entered into an Asset Purchase Agreement (the “Coflex/CoFix Agreement”) with Companion Spine, LLC, a company to whom we have sold certain of our Coflex and CoFix products from time to time in the ordinary course of business (“Companion”), or its affiliate designee (together with Companion, the “Buyer”). Pursuant to and subject to the terms and conditions of the Coflex/CoFix Agreement, we agreed to sell and assign to the Buyer certain assets relating to our Coflex and CoFix products in the United States (the “Coflex/CoFix Business” and such assets, the “Coflex/CoFix Assets” ) and the Buyer agreed to assume certain liabilities in connection therewith (such transaction, the “Coflex/CoFix Transaction”) for a total purchase price of $17.5 million, subject to a closing inventory valuation adjustment set forth in the Coflex/CoFix Agreement (the “Coflex/CoFix Purchase Price”). Concurrently with the execution and delivery of the Coflex/CoFix Agreement, $2.5 million of the Coflex/CoFix Purchase Price was paid to us as a cash deposit that is non-refundable, except in the event the Coflex/CoFix Agreement is terminated by the Buyer due to certain breaches by us under the Coflex/CoFix Agreement. Completion of the Coflex/CoFix Transaction is subject to the Buyer obtaining financing. Up to two additional $2.5 million cash deposits may be paid to us by the Buyer in the event the Buyer requires additional time to obtain financing. The remaining balance of the Coflex/CoFix Purchase Price will be paid to us at the closing of the Coflex/CoFix Transaction and will consist of a cash payment of up to $6.8 million (if the two additional deposits are not made) and a $8.2 million unsecured promissory note to be issued by the Buyer to us. The promissory note will mature on December 31, 2025.

Current wording

As previously disclosed, on July 7, 2025, we entered into an Asset Purchase Agreement (the “Coflex/CoFix Agreement”) with Companion Spine, LLC, a company to whom we have sold certain of our Coflex and CoFix products from time to time in the ordinary course of business (“Companion”), or its affiliate designee (together with Companion, the “Buyer”). Pursuant to and subject to the terms and conditions of the Coflex/CoFix Agreement, we agreed to sell and assign to the Buyer certain assets relating to our Coflex and CoFix products in the United States (the “Coflex/CoFix Business” and such assets, the “Coflex/CoFix Assets” ) and the Buyer agreed to assume certain liabilities in connection therewith (such transaction, the “Coflex/CoFix Transaction”) for a total purchase price of $17.5 million, subject to a closing inventory valuation adjustment set forth in the Coflex/CoFix Agreement (the “Coflex/CoFix Purchase Price”). Concurrently with the execution and delivery of the Coflex/CoFix Agreement, $2.5 million of the Coflex/CoFix Purchase Price was paid to us as a cash deposit that is non-refundable, except in the event the Coflex/CoFix Agreement is terminated by the Buyer due to certain breaches by us under the Coflex/CoFix Agreement. Completion of the Coflex/CoFix Transaction is subject to the Buyer obtaining financing. Under the Coflex/CoFix Agreement, the Buyer had the ability to pay us up to two additional $2.5 million cash deposits in the event the Buyer required additional time to obtain financing. On each of September 4, 2025 and November 3, 2025, pursuant to the terms of the Coflex/CoFix Agreement, the Buyer paid us an additional $2.5 million cash deposit to provide additional time for the Buyer to obtain financing. If the Buyer obtains financing and the closing of the Coflex/CoFix Transaction occurs, the remaining balance of the Coflex/CoFix Purchase Price will be required to be paid by the Seller to us at the closing and will consist of a cash payment of $1.8 million and a $8.2 million unsecured promissory note to be issued by the Buyer to us. If issued, the promissory note will mature on December 31, 2025.

Previous wording

The completion of the Transactions is expected to occur in the third quarter of 2025, although no assurance can be provided that the closings will not be delayed or that the closings will occur. The closing of each of the Transactions is contingent on the other closing at the same time. The Agreements contain certain termination rights for the respective parties, including the right to terminate the Coflex/Cofix Agreement and Paradigm Agreement if the Coflex/CoFix Transaction or Paradigm Transaction, respectively, is not consummated by September 15, 2025, which date is subject to extension if Companion pays additional deposits to us.

Current wording

The completion of the Transactions is expected to occur in the fourth quarter of 2025, although no assurance can be provided that the Seller will obtain financing to fund the Transactions, that the closings will not be delayed or that the closings will occur. The closing of each of the Transactions is contingent on the other closing at the same time. The Agreements contain certain termination rights for the respective parties, including the right to terminate the Coflex/CoFix Agreement and Paradigm Agreement if the Coflex/CoFix Transaction or Paradigm Transaction, respectively, is not consummated by December 31, 2025. If completed, the Transactions will significantly reduce our future revenues.

Previous wording

In addition, on July 7, 2025, we entered into a Limited Consent and Amendment No. 3 to Amended and Restated Credit, Security and Guaranty Agreement (Term Loan) (the “Term Loan Limited Consent”) with MidCap Financial Trust and a Limited Consent and Amendment No. 3 to Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan) (the “Revolving Loan Limited Consent” and together with the Term Loan Limited Consent, the “Limited Consent Agreements”) with MidCap Funding IV Trust (collectively, with MidCap Financial Trust, “MidCap”). Under the Limited Consent Agreements, MidCap agreed, subject to the terms and conditions set forth in the Limited Consent Agreements, to, among other things, consent to us entering into the Coflex/CoFix Agreement and Paradigm Agreement and the consummation of the Transactions in accordance with the terms and subject to the conditions set forth therein, including our prepayment in accordance with the Term Loan Credit Agreement of $9.6 million to MidCap from the proceeds of the Transactions.

Current wording

In addition, on July 7, 2025, we entered into a Limited Consent and Amendment No. 3 to Amended and Restated Credit, Security and Guaranty Agreement (Term Loan) (the “Term Loan Limited Consent”) with MidCap Financial Trust and a Limited Consent and Amendment No. 3 to Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan) (the “Revolving Loan Limited Consent” and together with the Term Loan Limited Consent, the “Limited Consent Agreements”) with MidCap Funding IV Trust (collectively, with MidCap Financial Trust, “MidCap”). Under the Limited Consent Agreements, MidCap agreed, subject to the terms and conditions set forth in the Limited Consent Agreements, to, among other things, consent to us entering into the Coflex/CoFix Agreement and Paradigm Agreement and the consummation of the Transactions in accordance with the terms and subject to the conditions set forth therein, including our prepayment in accordance with the Term Loan Credit Agreement of $9.6 million to MidCap from the proceeds of the transactions contemplated by the Coflex/CoFix Agreement and Paradigm Agreement, $7.5 million of which has been prepaid as of the filing of this report from the $7.5 million in non-refundable deposits we have received from the Seller.

Previous wording

Comparison of Three and Six Months Ended June 30, 2025 and June 30, 2024

Current wording

Comparison of Three and Nine Months Ended September 30, 2025 and September 30, 2024

Previous wording

Total revenue for the three and six months ended June 30, 2025 was $35.4 million and $68.3 million, respectively, which represent increases of 18%, compared to $30.0 million and $57.8 million for the three and six months ended June 30, 2024, respectively. These increases are attributed primarily to an increase in orthobiologics sales during the current year periods and $5.0 million and $8.6 million of licensing revenue recognized during the three and six months ended June 30, 2025, respectively.

Current wording

Total revenue for the three and nine months ended September 30, 2025 was $33.3 million and $101.6 million, respectively, which represents an increase of 19% and 18%, respectively, compared to $27.9 million and $85.8 million for the three and nine months ended September 30, 2024, respectively. These increases are attributed primarily to $5.5 million and $14.1 million of licensing revenue recognized during the three and nine months ended September 30, 2025, respectively, and an increase in orthobiologics sales during the current year periods. These increases were partially offset by decreased hardware revenue in the current year periods.

Previous wording

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, inventory on consignment that may be missing and not returned, and reserves for estimated missing and damaged consigned surgical instruments. Cost of sales decreased by $0.2 million to $11.2 million for the three months ended June 30, 2025 from $11.4 million for the three months ended June 30, 2024. Cost of sales increased by $1.9 million to $23.8 million for the six months ended June 30, 2025 from $21.9 million for the six months ended June 30, 2024. The decrease associated with the three-month comparison was due primarily to reduced product costs resulting from transition to internal production, partially offset by greater revenue during the current year period compared to the prior year period. The increases associated with the six-month comparison are primarily due to greater revenue in the current year periods compared to the prior year periods, as described above.

Current wording

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, inventory on consignment that may be missing and not returned, and reserves for estimated missing and damaged consigned surgical instruments. Cost of sales decreased by $0.4 million to $11.3 million for the three months ended September 30, 2025 from $11.6 million for the three months ended September 30, 2024. Cost of sales increased by $1.5 million to $35.1 million for the nine months ended September 30, 2025 from $33.6 million for the nine months ended September 30, 2024. The decrease associated with the three-month comparison was due primarily to reduced product costs resulting from the transition to internal production in the current year period compared to the prior year period. The increase associated with the nine-month comparison was primarily due to greater revenue in the current year period compared to the prior year period, as described above.

Previous wording

Gross profit as a percentage of revenue increased to 68.6% for the three months ended June 30, 2025 compared to 62.1% for the same period in 2024 and increased to 65.2% for the six months ended June 30, 2025 compared to 62.1% for the same period in 2024. Of the increase for the three-month comparison, 460 basis points were due to sales mix and greater scale and improved production efficiency and 110 basis points were due to reductions in product cost. Of the increase for the six-month comparison, 280 basis points were due to sales mix and greater scale and 100 basis points were due to reductions in product cost.

Current wording

Gross profit as a percentage of revenue increased to 66.1% for the three months ended September 30, 2025 compared to 58.4% for the same period in 2024 and increased to 65.5% for the nine months ended September 30, 2025 compared to 60.9% for the same period in 2024. Of the increase for the three-month comparison, 860 basis points were due to sales mix and greater scale, partially offset by a decrease of 300 basis points due to increased charges for excess and obsolete inventory. Of the increase for the nine-month comparison, 530 basis points were due to sales mix and greater scale, partially offset by a decrease of 180 basis points due to increased charges for excess and obsolete inventory.

Previous wording

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 professional fees, as well as occupancy costs. General and administrative expenses decreased 3%, or $0.2 million, to $7.5 million for the three months ended June 30, 2025, compared to $7.7 million for the same period in 2024. General and administrative expenses decreased 3%, or $0.5 million, to $15.0 million for the six months ended June 30, 2025, compared to $15.5 million for the same period in 2024. The decrease for the three-month comparison is primarily attributable to $0.5 million of reduced stock-based compensation expense, partially offset by $0.3 million of additional legal fees associated with the Transactions with Companion. The decrease for the six-month comparison is primarily attributable to $0.6 million of reduced stock-based compensation expense and $0.3 million of reduced audit fees, partially offset by $0.4 million of additional legal fees associated primarily with the Transactions with Companion.

Current wording

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 professional fees, as well as occupancy costs. General and administrative expenses decreased 6%, or $0.4 million, to $7.1 million for the three months ended September 30, 2025, compared to $7.5 million for the same period in 2024. General and administrative expenses decreased 4%, or $0.9 million, to $22.1 million for the nine months ended September 30, 2025, compared to $23.0 million for the same period in 2024. The decrease for the three-month comparison is primarily attributable to $0.5 million of reduced stock-based compensation expense and $0.5 million of reduced retention and severance expense, partially offset by additional expense of $0.5 million related to various compensation plans. The decrease for the nine-month comparison is primarily attributable to $1.1 million of reduced stock-based compensation expense and $0.5 million of reduced severance expense, partially offset by additional expense of $0.8 million related to various compensation plans and $0.5 million of additional legal fees associated primarily with the pending Transactions with Companion.

Previous wording

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 decreased 12%, or $1.6 million, to $11.6 million for the three months ended June 30, 2025, compared to $13.2 million for the same period in 2024. Sales and marketing expenses decreased 11%, or $2.8 million, to $22.9 million for the six months ended June 30, 2025, compared to $25.6 million for the same period in 2024. The decrease for the three-month comparison is primarily due to reduced commission expense of $1.5 million resulting from revenue mix and $0.7 million of reduced compensation expense related to headcount, partially offset by $0.9 million of additional consulting fees during the current year period. The decrease for the six-month comparison is primarily due to reduced commission expense of $2.3 million resulting from revenue mix and $1.3 million of reduced compensation expense related to headcount, partially offset by $1.4 million of additional consulting fees.

Current wording

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 decreased 1%, or $0.1 million, to $11.7 million for the three months ended September 30, 2025, compared to $11.9 million for the same period in 2024. Sales and marketing expenses decreased 8%, or $3.0 million, to $34.6 million for the nine months ended September 30, 2025, compared to $37.5 million for the same period in 2024. The decrease for the three-month comparison is primarily due to reduced commission expense of $0.7 million resulting from revenue mix, partially offset by $1.0 million of additional consulting fees during the current year period. The decrease for the nine-month comparison is primarily due to reduced commission expense of $3.0 million resulting from revenue mix and $1.6 million of reduced compensation expense related to headcount, partially offset by $2.3 million of additional consulting fees.

Previous wording

Research and development expenses consist primarily of internal costs for the development of new technologies. Research and development expenses were $0.6 million for each of the three months ended June 30, 2025 and 2024. Research and development expenses were $1.0 million for the six months ended June 30, 2025, compared to $1.2 million for the same period in 2024.

Current wording

Research and development expenses consist primarily of internal costs for the development of new technologies. Research and development expenses were $0.6 million for the three months ended September 30, 2025, compared to $0.7 million for the same period in 2024. Research and development expenses were $1.6 million for the nine months ended September 30, 2025, compared to $1.9 million for the same period in 2024.

Previous wording

Interest expense consists of interest incurred from our debt instruments and finance leases. Interest expense was $1.0 million and $2.0 million for the three and six months ended June 30, 2025, respectively, compared to $1.0 million and $1.8 million for the three and six months ended June 30, 2023. The increase for the six-month comparison resulted primarily from additional borrowings on our revolving line of credit and the additional borrowing of $5.0 million under our term credit agreement in May 2024. We expect that our annualized interest expense will increase approximately $0.1 million for every 25 basis points of increase to the reference rate associated with our credit agreements.

Current wording

Interest expense consists of interest incurred from our debt instruments and finance leases. Interest expense was $0.9 million and $3.0 million for the three and nine months ended September 30, 2025, respectively, compared to $1.2 million and $3.0 million for the three and nine months ended September 30, 2024.

Previous wording

The increase in income tax expense for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 was primarily due to an increase in cash state taxes in 2025.

Current wording

The increase in income tax expense for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to an increase in cash state taxes in 2025.

Previous wording

Net cash provided by operating activities for the first six months of 2025 was $2.6 million compared to net cash used by operating activities of $10.8 million for the first six months of 2024. This change relates primarily to net income for the first six months of 2025 compared to a net loss in the comparable prior year period.

Current wording

Net cash provided by operating activities for the first nine months of 2025 was $7.2 million compared to net cash used in operating activities of $12.6 million for the first nine months of 2024. This change relates primarily to net income for the first nine months of 2025 compared to a net loss in the comparable prior year period.

Previous wording

Net cash used in investing activities for the first six months of 2025 was $1.5 million compared to $1.2 million for the first six months of 2024. This increase relates primarily to increased purchases of property and equipment in the current year period.

Current wording

Net cash provided by investing activities for the first nine months of 2025 was $3.2 million compared to net cash used in investing activities of $3.2 million for the first nine months of 2024. This change relates primarily to $5.0 million advances from pending sale of Coflex/CoFix assets and international hardware business in the current year period, partially offset by decreased purchases of property and equipment in the current year period.

Previous wording

Net cash used in financing activities for the first six months of 2025 was $0.3 million compared to net cash provided by financing activities of $11.6 million for the first six months of 2024. This change relates primarily to $7.4 million of reduced revolver borrowings, net of repayments, during the current year period compared to the prior year period.

Current wording

Net cash used in financing activities for the first nine months of 2025 was $6.0 million compared to net cash provided by financing activities of $16.9 million for the first nine months of 2024. This change relates primarily to $9.1 million of reduced revolver borrowings, net of repayments, during the current year period compared to the prior year period, $5.0 million additional borrowings during the prior year period, $5.0 million payment on long term debt related to the advances from pending sale of Coflex/CoFix assets and international hardware business in the current year period and an increase of $4.5 million in proceeds from private placements during the prior year period.

Previous wording

The Company, 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, each in its respective capacity as agent, and lenders from time to time party thereto. Under the Term Credit Agreement (the “Term Facility”), we have borrowed up to the maximum of $22.0 million as of June 30, 2025.

Current wording

The Company, 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, each in its respective capacity as agent, and lenders from time to time party thereto. As of September 30, 2025, $17.0 million was outstanding under the term loan facility under the Term Credit Agreement (the “Term Facility”), reduced from $22.0 million as of June 30, 2025 and December 31, 2204. This reduction was due to prepayments of $5.0 million from non-refundable deposits paid to us by Companion. On November 3, 2025, the outstanding term loan under the Term Facility was further reduced with another prepayment as a result of another $2.5 million non-refundable deposit paid to us by Companion. See Note 2, “Pending Sale of Coflex/CoFix Assets and International Hardware Business” to our condensed consolidated financial statements.

Previous wording

The Facilities have a maturity date of March 1, 2029. 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. As of June 30, 2025, the Company had $12.0 million outstanding and $5.0 million of availability under the Revolving Credit Facility.

Current wording

The Facilities have a maturity date of March 1, 2029. 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. As of September 30, 2025, the Company had $11.3 million outstanding and $5.7 million of availability under the Revolving Credit Facility.

Previous wording

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, 2025, the effective rate of the Term Credit Agreement, inclusive of authorization of debt issuance costs and accretion of the final payment, was 13.23%, and the effective rate of the Revolving Credit Agreement was 8.94%.

Current wording

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 September 30, 2025, the effective rate of the Term Credit Agreement, inclusive of authorization of debt issuance costs and accretion of the final payment, was 13.18%, and the effective rate of the Revolving Credit Agreement was 8.89%.

Previous wording

We believe that our $7.0 million of cash and cash equivalents as of June 30, 2025, 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 2026. However, we may require or seek additional capital to fund our future operations and business strategy prior to August 2026. Accordingly, there is no assurance that we will not need or seek additional financing prior to such time.

Current wording

We believe that our $10.6 million of cash and cash equivalents as of September 30, 2025, 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 November 2026. However, we may require or seek additional capital to fund our future operations and business strategy prior to November 2026. Accordingly, there is no assurance that we will not need or seek additional financing prior to such time.

Previous wording

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, 2025 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Current wording

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 nine months ended September 30, 2025 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.