Xtant Medical Holdings, Inc.

Previous wording

We recently entered into a distribution agreement with Dilon Technologies, Inc. and hired approximately 20 sales personnel in connection therewith, which will result in increased sales and marketing costs and involves other risks, which could adversely affect our business, operating results, and financial condition.

Current wording

In April 2026, we entered into a Distribution Agreement with Dilon Technologies, Inc. and hired sales personnel in connection therewith, which will result in increased sales and marketing costs and involves other risks, which could adversely affect our business, operating results, and financial condition.

Previous wording

On April 13, 2026, we announced that we entered into a distribution agreement with Dilon Technologies, Inc. pursuant to which we obtained the exclusive rights to import, market, distribute and sell the HEMOBLAST® Bellows product in the United States and Dilon agreed to transition its existing U.S. customer base for the product to us. In connection with the agreement, we hired approximately 20 Dilon sales personnel to assist in the sale of the HEMOBLAST® Bellows product in the United States. While the agreement expands our portfolio with a unique and versatile hemostatic solution while also bolstering our own commercial capabilities with the integration of Dilon’s approximately 20-person U.S. sales team into our organization, no assurance can be provided that we will be successful in selling the HEMOBLAST® Bellows product or successfully integrating it with our portfolio. In addition, while we believe we will be able to leverage new cross-selling opportunities between the HEMOBLAST® Bellows product and our existing products, no assurance can be provided that we will be effective in doing so or otherwise realize the benefits that we anticipate receiving as a result of this new arrangement and the addition of these new sales personnel. We expect our sales and marketing expenses to increase substantially compared to prior periods beginning in our second quarter of 2026. While we anticipate that the additional revenue from the sale of the HEMOBLAST® Bellows product will offset these additional expenses, no assurance can be provided that it will or that the transition to us of Dilon’s existing U.S. customer base for the product will be successful.

Current wording

In April 2026, we entered into a Distribution Agreement with Dilon Technologies, Inc. pursuant to which we obtained the exclusive rights to import, market, distribute and sell the HEMOBLAST® Bellows product in the United States, and Dilon agreed to transition its existing U.S. customer base for the product to us. In connection with the agreement, we hired approximately 20 Dilon sales personnel to assist in selling the HEMOBLAST® Bellows product in the United States. While the agreement expands our portfolio and bolsters our commercial capabilities through the integration of Dilon’s former U.S. sales team, we cannot assure that we will successfully sell the HEMOBLAST® Bellows product or integrate it with our portfolio. In addition, while we believe we can leverage new cross-selling opportunities between the HEMOBLAST® Bellows product and our existing products, we cannot assure that we will be effective in doing so or otherwise realize the anticipated benefits of this distribution arrangement. We expect our sales and marketing expenses to increase substantially compared to prior periods as a result of the additional sales personnel. While we anticipate that additional revenue from HEMOBLAST® Bellows sales, cross-selling opportunities, and utilizing Dilon’s former U.S. sales team to sell our other products will eventually offset these additional expenses, we cannot assure that they will or that the transition to us of Dilon’s existing U.S. customer base will be successful.

Previous wording

Under the terms of the agreement, Dilon will continue to manufacture the HEMOBLAST® Bellows product from its current manufacturing location in France and will supply and sell it to us at a specified transfer price as provided in the agreement, which price is subject to change in certain circumstances. We, therefore, rely on Dilon, as the sole manufacturer, to produce the product for us and in sufficient quantities and at an appropriate transfer price. This arrangement involves risk since we do not control the manufacturing process and Dilon will remain responsible for all manufacturing decisions, as well as compliance with all applicable rules and regulations in connection therewith. In addition, since the product is manufactured in France, we are also subject to risks associated with international operations.

Current wording

Under the Distribution Agreement, Dilon will continue to manufacture the HEMOBLAST® Bellows product at its facility in France and supply it to us at a specified transfer price, which price is subject to adjustment in certain circumstances. We rely on Dilon as the sole manufacturer to produce the product in sufficient quantities and at an appropriate transfer price; there are no alternative suppliers. This arrangement involves risk because we do not control the manufacturing process and Dilon is responsible for all manufacturing decisions and related regulatory compliance. We believe we will have sufficient supply of the HEMOBLAST® Bellows product to support our anticipated sales through the end of third quarter 2026, we are uncertain that supply will be available thereafter. If Dilon is unable to manufacture and supply the product in sufficient quantities or at all, we will be unable to sell it or recognize related revenue. In addition, because the product is manufactured in France, we are subject to risks associated with international operations, including supply chain disruptions, foreign currency exchange fluctuations, and additional regulatory requirements.

Previous wording

We paid Dilon a $5.0 million exclusivity fee upon execution of the agreement, which fee is subject to repayment by Dilon under certain circumstances, including upon a termination of the agreement. Since the agreement can be terminated by either party upon certain specified events, no assurance can be provided that the agreement will not be terminated, which would result in our loss of the U.S. distribution rights for the product and possibly not being repaid the $5.0 million exclusivity fee we paid Dilon. In addition, if the agreement terminates, we would need to reassign or terminate the additional sales personnel that we hired to sell the product.

Current wording

We paid Dilon a $5.0 million exclusivity fee upon execution of the Distribution Agreement. This fee is subject to repayment by Dilon under certain circumstances, including upon termination of the Distribution Agreement for any reason. Because either party may terminate the Distribution Agreement upon certain specified events, we cannot assure that the agreement will remain in effect, and any such termination would result in the loss of our distribution rights for the product. In addition, given the refundable nature of the$5.0 million exclusivity payment, we initially recognized the payment as a deposit asset on our consolidated balance sheet. However, based on an assessment of facts and circumstances, including the uncertainty surrounding recovery of the payment and management’s expectation that repayment was not probable despite contractual repayment provisions, we recognized a $5.0 million charge to operating expenses during the second quarter of 2026, which adversely affected our operating results for that period. Although Dilon currently has the right to terminate the Distribution Agreement upon 30 days’ notice, it has not done so through the date of this report. If the Distribution Agreement terminates, we would need to reassign or terminate the sales personnel we hired to sell the HEMOBLAST® Bellows product.