{"url_path":"/sec/xtnt/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A **","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1453593/0001493152-26-022604-index.html","accession_number":"0001493152-26-022604","cik":"0001453593","ticker":"XTNT","issuer_name":"Xtant Medical Holdings, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1453593/0001493152-26-022604-index.html","primary_entity_key":"0001453593","primary_entity_name":"Xtant Medical Holdings, Inc."},"word_count":572,"has_tables":true,"body_markdown":"**Item\n1A.**\n**Risk\nFactors**\n\n \n\nAlthough\nas a smaller reporting company, we are not required to provide the information required by this Item 1A, we hereby disclose the following\nnew risk factor:\n\n \n\n**We\nrecently entered into a distribution agreement with Dilon Technologies, Inc. and hired approximately 20 sales personnel in connection\ntherewith, which will result in increased sales and marketing costs and involves other risks, which could adversely affect our business,\noperating results, and financial condition.**\n\n** **\n\nOn\nApril 13, 2026, we announced that we entered into a distribution agreement with Dilon Technologies, Inc. pursuant to which we obtained\nthe exclusive rights to import, market, distribute and sell the HEMOBLAST® Bellows product in the United States and Dilon agreed\nto transition its existing U.S. customer base for the product to us. In connection with the agreement, we hired approximately 20 Dilon\nsales personnel to assist in the sale of the HEMOBLAST® Bellows product in the United States. While the agreement expands our portfolio\nwith a unique and versatile hemostatic solution while also bolstering our own commercial capabilities with the integration of Dilon’s\napproximately 20-person U.S. sales team into our organization, no assurance can be provided that we will be successful in selling the\nHEMOBLAST® Bellows product or successfully integrating it with our portfolio. In addition, while we believe we will be able to leverage\nnew cross-selling opportunities between the HEMOBLAST® Bellows product and our existing products, no assurance can be provided that\nwe will be effective in doing so or otherwise realize the benefits that we anticipate receiving as a result of this new arrangement and\nthe addition of these new sales personnel. We expect our sales and marketing expenses to increase substantially compared to prior periods\nbeginning in our second quarter of 2026. While we anticipate that the additional revenue from the sale of the HEMOBLAST® Bellows\nproduct will offset these additional expenses, no assurance can be provided that it will or that the transition to us of Dilon’s\nexisting U.S. customer base for the product will be successful.\n\n \n\nUnder\nthe terms of the agreement, Dilon will continue to manufacture the HEMOBLAST® Bellows product from its current manufacturing location\nin 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\nin certain circumstances. We, therefore, rely on Dilon, as the sole manufacturer, to produce the product for us and in sufficient quantities\nand at an appropriate transfer price. This arrangement involves risk since we do not control the manufacturing process and Dilon will\nremain responsible for all manufacturing decisions, as well as compliance with all applicable rules and regulations in connection therewith.\nIn addition, since the product is manufactured in France, we are also subject to risks associated with international operations.\n\n \n\nWe\npaid Dilon a $5.0 million exclusivity fee upon execution of the agreement, which fee is subject to repayment by Dilon under certain circumstances,\nincluding upon a termination of the agreement. Since the agreement can be terminated by either party upon certain specified events, no\nassurance can be provided that the agreement will not be terminated, which would result in our loss of the U.S. distribution rights for\nthe product and possibly not being repaid the $5.0 million exclusivity fee we paid Dilon. In addition, if the agreement terminates, we\nwould need to reassign or terminate the additional sales personnel that we hired to sell the product."}