Xtant Medical (XTNT) 8-K Other Events

Exhibit 99.2

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The following unaudited pro forma financial statements have been prepared in accordance with guidelines specified by Article 11 of Regulation S-X. Specifically, the Unaudited Combined Statements of Operations for the twelve months ended December 31, 2014 and the six months ended June 30, 2015, have been prepared as if the offering of our 6.00% Convertible Senior Notes due 2021, the use of the net proceeds therefrom, the entry by Xtant Medical Holdings, Inc., formerly known as Bacterin International Holdings, Inc. (“Xtant”), into an amended and restated credit agreement, which replaced its existing credit agreement, the extinguishment of X-spine Systems, Inc.’s (“X-spine”) revolving line of credit and the combination of Xtant and X-spine occurred on January 1, 2014, and include all adjustments that (i) are deemed to be directly attributable to the transactions and (ii) are factually supportable. The Unaudited Combined Balance Sheet as of June 30, 2015 has been prepared as if these transactions occurred as of June 30, 2015 and include all adjustments that (a) are deemed to be directly attributable to the transactions, (b) have a continuing impact on our financial statements, and (c) are factually supportable.

The transactions are more fully described in Note 1 hereto. The pro forma adjustments are based upon various estimates and assumptions that our management believes are reasonable and appropriate given the currently available information. Use of different estimates and judgments could yield different results.

The unaudited pro forma financial statements do not reflect any future operating efficiencies, associated cost savings or possible integration costs that may occur related to the combination of Xtant and X-spine.

The unaudited pro forma financial statements do not purport to reflect our results of operations or financial position that would have occurred had we operated as a public company or as a group of companies during the periods presented. The unaudited pro forma financial statements should not be relied upon as being indicative of our financial condition or results of operations had the transactions occurred on the date assumed nor as a projection of our results of operations or financial position for any future period or date.

The unaudited pro forma financial statements should be read in conjunction with the historical financial statements and related notes of Xtant, appearing in Xtant’s public filings available on www.sec.gov, and X-spine, appearing elsewhere in this Current Report on Form 8-K and in our Current Report on Form 8-K filed July 28, 2015.

XTANT MEDICAL HOLDINGS, INC.
Unaudited Pro Forma Combined Statements of Operations
	For the Twelve Months Ended December 31, 2014
	Bacterin			X-Spine Systems Inc.			Pro Forma Adj's			Pro Forma
Revenue
Tissue and Medical Device Sales	$	34,569,160		$	42,144,675		$			$	76,713,835
Royalties and other		762,652			68,343						830,995
Total Revenue		35,331,812			42,213,018			0			77,544,830
Cost of sales		13,034,314			14,488,855						27,523,169
Gross Profit		22,297,498			27,724,163			0			50,021,661
Operating Expenses
General and administrative		8,886,972			4,731,252						13,222,774
								(395,450	)(a)
Sales and marketing		16,912,865			15,865,370						32,778,235
Research and development		1,443,018			2,140,450						3,583,468
Depreciation and amortization		271,748						395,450	(a)		4,630,917
								3,963,719	(b)
Impairment of Assets		912,549									912,549
Non-cash consulting expense		135,075						-			135,075
Total Operating Expenses		28,562,227			22,737,072			3,963,719			55,263,018
Income (Loss) from Operations		(6,264,729	)		4,987,091			(3,963,719	)		(5,241,357	)
Other Income (Expense)
Interest expense		(5,660,357	)		(593,593	)		(10,920,554	)(c)		(10,920,554	)
								6,253,950	(d)
Change in warrant derivative liability		1,736,053						-			1,736,053
Other income (expense)		(318,836	)								(318,836	)
Total Other Income (Expense)		(4,243,140	)		(593,593	)		(4,666,604	)		(9,503,337	)
Net Gain (Loss) from Operations Before (Provision) Benefit for Income Taxes	$	(10,507,869	)	$	4,393,498		$	(8,630,323	)	$	(14,744,694	)
Current					(112,337	)					(112,337	)
Deferred
Net Income (Loss)	$	(10,507,869	)	$	4,281,161		$	(8,630,323	)	$	(14,857,031	)
Net loss per share:
Basic	$	(1.76	)							$	(1.46	)
Dilutive	$	(1.76	)							$	(1.46	)
Shares used in the computation:
Basic		5,954,195						4,242,655	(e)		10,196,850
Dilutive		5,954,195						4,242,655	(e)		10,196,850

XTANT MEDICAL HOLDINGS, INC.
Unaudited Pro Forma Combined Statements of Operations
	For the Six Months Ended June 30, 2015
	Bacterin			X-Spine Systems Inc.			Pro Forma Adj's			Pro Forma
Revenue
Tissue and Medical Device Sales	$	19,009,956		$	23,875,991		$			$	42,885,947
Royalties and other		385,773			78,765						464,538
Total Revenue		19,395,729			23,954,756						43,350,485
Cost of sales		6,847,766			8,503,778						15,351,544
Gross Profit		12,547,963			15,450,978						27,998,941
Operating Expenses
General and administrative		4,824,300			3,236,646						7,878,508
								(182,438	)(a)
Sales and marketing		9,749,249			9,145,080						18,894,329
Research and development		724,732			1,101,627						1,826,359
Depreciation and amortization		224,774			-			182,438	(a)		2,638,838
								2,231,626	(b)
Non-cash consulting expense		140,869			-			-			140,869
Total Operating Expenses		15,663,924			13,483,353			2,231,626			31,378,903
Gain (Loss) from Operations		(3,115,961	)		1,967,625			(2,231,626	)		(3,379,962	)
Other Income (Expense)
Interest expense		(2,819,220	)		(166,459	)		(5,992,052	)(c)		(5,992,052	)
								2,985,679	(d)
Change in warrant derivative liability		(476,289	)		-			-			(476,289	)
Non-cash consideration associated stock agreement		(558,185	)		-			-			(558,185	)
Other income (expense)		(103,126	)								(103,126	)
Total Other Income (Expense)		(3,956,820	)		(166,459	)		(3,006,373	)		(7,129,652	)
Net Gain (Loss) from Operations Before (Provision) Benefit for Income Taxes	$	(7,072,781	)	$	1,801,166		$	(5,237,999	)	$	(10,509,614	)
Benefit (Provision) for Income Taxes
Current					(11,143	)		-			(11,143	)
Deferred								-			-
Net Income (Loss)	$	(7,072,781	)	$	1,790,023		$	(5,237,999	)	$	(10,520,757	)
Net loss per share:
Basic	$	(1.02	)							$	(0.94	)
Dilutive	$	(1.02	)							$	(0.94	)
Shares used in the computation:
Basic		6,914,698						4,242,655	(e)		11,157,353
Dilutive		6,914,698						4,242,655	(e)		11,157,353

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XTANT MEDICAL HOLDINGS, INC.
Unaudited Pro Forma Combined Balance Sheet
	As of June 30, 2015
	Bacterin			X-Spine Systems Inc.		Combined before Adj's			Pro Forma Adj's			Pro Forma
Current Assets:
Cash and cash equivalents		2,026,108			3,000		2,029,108						7,680,874
										5,651,766	(a)
Trade accounts receivable		5,574,285			6,972,764		12,547,049						12,547,049
Inventories, net		9,392,150			12,861,550		22,253,700						22,253,700
Prepaid and other current assets		1,033,605			204,167		1,237,772			(223,410	)(b)		1,464,688
										120,663	(c)
										329,663	(d)
Total Current Assets		18,026,148			20,041,481		38,067,629			5,878,681			43,946,310
Non-current inventories		1,839,971			0		1,839,971						1,839,971
Property and equipment, net		4,430,038			7,533,106		11,963,144						11,963,144
Intangible assets, net		609,348			648,882		1,258,230			(648,882	)(e)		43,802,848
										43,193,500	(f)
Goodwill		0			0		0			22,816,088	(f)		22,816,088
Other Assets		1,446,515			0		1,446,515			(744,698	)(b)		2,203,118
										(300,000	)(n)
										482,651	(c)
										1,318,651	(d)
Total Assets	$	26,352,020		$	28,223,469	$	54,575,489			71,995,990		$	126,571,479
Liabilities + Equity
Accounts payable		4,577,488			3,435,848		8,013,336						8,013,336
Accounts payable - related party		293,565			267,249		560,814						560,814
Accrued liabilities		2,399,599			2,164,179		4,563,778						4,563,778
Warrant derivative liability		1,796,660			0		1,796,660						1,796,660
Current portion of capital lease obligations		42,761			0		42,761						42,761
Current portion of royalty liability		1,169,500			0		1,169,500			(1,169,500	)(b)		0
Current portion of long-term debt		52,374			0		52,374						52,374
Current Liabilities		10,331,947			5,867,276		16,199,223			(1,169,500	)		15,029,723
Capital lease obligation, less current portion		37,496			0		37,496						37,496
Long term royalty liability, less current portion		6,139,374			0		6,139,374			(6,139,374	)(b)		0
Long-term debt, less current portion		21,691,674			0		21,691,674			42,000,000	(h)		43,247,713
										(24,000,000	)(h)
										(700,000	)(b)
										4,256,039	(b)
Revolving Line of Credit		0			12,867,606		12,867,606			(12,867,606	)(g)		0
Convertible Long Term Debt		0			0		0			65,000,000	(i)		65,000,000
Long Term Liabilities		27,868,544			12,867,606		40,736,150			67,549,060			108,285,210
Total Liabilities	$	38,200,491		$	18,734,882	$	56,935,373			66,379,560		$	123,314,933
Preferred stock, par value		-					0			0	(j)		0
Common stock, par value		7			1,100,000		1,100,007			4	(k)		11
										(1,100,000	)(j)
Additional paid-in capital		66,091,741			350,000		66,441,741			14,849,289	(k)		80,941,030
										(350,000	)(j)
Accumulated deficit		(77,940,219	)		8,038,587		(69,901,632	)		(8,038,587	)(j)		(77,684,494	)
										2,784,726	(l)
										(2,529,001	)(m)
Total Stockholders' Equity		(11,848,471	)		9,488,587		(2,359,884	)		5,616,430			3,256,546
Total Liabilities and Equity	$	26,352,020		$	28,223,469	$	54,575,489			71,995,990		$	126,571,479

Note 1 – Basis of Pro Forma Presentation

For purposes of pro forma presentation, the acquisition date of X-spine Systems, Inc. is assumed to be the following for each of the respective financial statements.

· Unaudited Combined Statement of Operations for the twelve months ended December 31, 2014 and the six months ended June 30, 2015 – Acquisition Date January 1, 2014

· Unaudited Combined Balance sheet as of June 30, 2015 – Acquisition Date June 30, 2015

In conjunction with the acquisition of X-spine, the following equity and debt instruments were issued.

· 4,242,655 common shares of Bacterin International Holdings, Inc.

· $42,000,000 in long term debt; maturity July 2020, interest rate of 14% plus LIBOR (minimum 1%)

· $65,000,000 in convertible debt; maturity July 2021, interest rate of 6%

Note: The issuance of the $42,000,000 in long term debt replaces the Company’s existing long term debt of $24,000,000 for an incremental increase of $18,000,000.

For purposes of these unaudited pro forma condensed combined financial statements, it has been assumed that the proceeds associated with Long Term Debt and Convertible Long Term Debt instruments have been received as of the Acquisition Date(s).

The unaudited pro forma condensed combined financial statements have been prepared assuming that the acquisition is accounted for using the acquisition method of accounting. Accordingly, the assets acquired and liabilities of the Seller have been adjusted to their fair values as of June 30, 2015.

Fair Values as of June 30,2015
X-spine Tangible Assets		$	27,574,587
X-spine Tangible Liabilities			(5,867,276	)
Net Tangible Assets			21,707,311
Goodwill			22,816,088
Identifiable intangible assets
Tradename	4,543,300
Technology	28,698,700
Non-Compete	40,500
Customer Relationship	9,911,000		43,193,500
Cash	72,867,606
Stock	14,849,293
Consideration - Stock and Cash		$	87,716,899

A fair market value of $21.7 million has been assigned to net tangible assets acquired. The difference between the fair market value of the net tangible assets and the consideration given have been allocated between Identifiable intangible assets (technology, trademarks, customer relationships and non-compete agreements) which will be amortized over three (3) to fourteen (14) years and Goodwill which in accordance with the ASC No. 805 Business Combinations will not be amortized but instead will be tested for impairment at least annually and whenever events or circumstances have occurred that may indicate a possible impairment.

Acquisition-related costs are estimated to be $2.5 million for the period ended June 30, 2015.

Note 2 – Pro Forma Presentation Adjustments and Assumptions

The adjustments included in the column under the heading “Pro Forma Adjustments” in the unaudited pro forma condensed combined financial statements are as follows:

Pro Forma Adjustments to the Combined Balance Sheet

a) To record cash and cash equivalents which is the excess of consideration given less net term debt, convertible debt and equity instruments issued.

b) To eliminate the Long term debt discount, royalty liability and debt penalty fee associated with the extinguishment of the prior long term debt instrument.

c) To record that portion of the third party fees incurred in conjunction with the acquisition of X-spine associated with the issuance with the modification and amendment of the existing long term debt instrument.

d) To record that portion of the third party fees incurred in conjunction with the acquisition of X-spine associated with the convertible debt instrument classified as part of long term debt.

e) To eliminate the historical intangible assets of the Seller.

f) To record the Identifiable intangible assets and Goodwill associated with the acquisition of X-spine.

g) To record the extinguishment of the Revolving Line of Credit which will be paid off with the issuance of new debt associated with the acquisition of X-spine.

h) To record the issuance of the extinguishment and issuance of the modification and amendment of the existing long term debt instrument associated with the acquisition of X-spine.

i) To record the issuance of the convertible long term debt instrument classified as part of long term debt.

j) To eliminate the Seller’s portion of Stockholders’ equity.

k) To record the values associated with common stock and additional paid in capital associated with the 4,242,655 shares of common stock issued to the Seller as part of the consideration for X-spine.

l) To record the gain associated with the extinguishment of the long term debt instrument associated with the modification and amendment of the existing long term debt instrument

m) To record that portion of the third party fees incurred in conjunction with the acquisition of X-spine a portion of which had been recorded as part of prepaid expenses.

n) To eliminate those prepaid expenses related to the third party fees incurred in conjunction with the acquisition of X-spine.

Pro Forma Adjustments to the Combined Statements of Operations

a) To reclassify amortization and depreciation from General and administrative expense to Depreciation and amortization expense which is the financial reporting presentation used by Bacterin for the six months ending June 30, 2015 and for the twelve months ending December 31, 2014.

b) To record the amortization of Identifiable intangible assets expense for the six months ending June 30, 2015 and for the twelve months ending December 31, 2014.

c) To record the interest expense associated with the issuance of modified and amended existing debt and of the convertible debt instruments associated with the acquisition of X-spine for the six months ending June 30, 2015 and for the twelve months ending December 31, 2014.

d) To reverse out the interest expense associated with the prior term debt instrument and revolving line of credit which has been extinguished with the issuance of the modified and amended existing long term debt and of the new convertible debt instruments associated with the acquisition of X-spine for the six months ending June 30, 2015 and for the twelve months ending December 31, 2014.

e) To reflect the common stock shares issued as consideration for the acquisition.