Xtant Medical Holdings, Inc.

Although as a smaller reporting company, we are not required to provide the information required by this Item 1A, we hereby disclose the following new risk factor:

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

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

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

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