SEC Comment Letter for Xtant Medical Holdings, Inc. (XTNT) (CIK 0001453593) (XTNT) — Dec 20, 2010
Xtant Medical Holdings, Inc. (XTNT) (CIK 0001453593)
Date: Dec. 20, 2010 · CIK: 0001453593 · Accession: 0000000000-10-076198
AI Filing Summary & Sentiment
File numbers found in text: 333-169620
Letter
Re: Bacterin International Holdings, Inc. Registration Statement on Form S-1/A Filed December 7, 2010 File No. 333-169620 Dear Mr. Gandolfo: We have reviewed your registration statem ent on Form S-1/A filed on December 7, 2010 and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter by amending your registration statement and providing the requested information. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. After reviewing any amendment to your re gistration statement and the information you provide in response to these comments, we may have additional comments. Bacterin International Holdings, Inc., page 1
December 20, 2010
John P. Gandolfo Chief Financial Officer 600 Cruiser Lane Belgrade, Montana 59714
1. We note your response to our prior comment 3. However, the word “leader” still appears in the same context on page F-21 of your notes to the financial statements. Please revise your disclosure there to delete the word. 2. We note your response to our prior comment 4. The statement in the first bullet still appears on page F-21 and the statements in the second and third bullet still appear on page 26. Please delete those statements and confirm that you have deleted these statements elsewhere as applicable. Recent Developments, page 1
3. We note your response to prior comment 5. We also note that the private placements through which the selling stockholders acquired the shares being regi stered are described on page 2 of the filing; however, it still does not appear that the share amounts mentioned add up to the amount being registered through this registration statement. Please revise
Mr. John P. Gandolfo Bacterin Internati onal Holdings, Inc. December 20, 2010 Page 2
your disclosure to clarify when, and in what transactions, the entirety of the 11,250,597 shares (including 4,126,630 shares issuable upon th e exercise of warra nts) were placed with the selling stockholders. Risk Factors
Future revenue will depend on our ability to develop new sales channels…, page 6
4. We note your response to prior comment 10 where you included the $8 million you incurred for sales and marketing expense in 2010. However, we also note that you will continue to expand your sales force in the fu ture. Please expand your disclosure in this risk factor to quantify, to the extent pract icable, the amount of funds you will need to further expand your direct sales force. In addition, please quantify your funding requirements and sources of funding in grea ter detail in the se ction entitled “Cash Requirements” in your Management’s Discussion and Analysis.
Results of Operations
Comparison of Nine Months Ended September 30, 2010 and September 30, 2009 Cost of tissue sales, page 18
5. Please revise the discussion you provided in response to comment 16 to explain why you adjusted biologics inventor ies in the amount of $669,000 dur ing 2009. In addition, please revise your statement that this inventory adjust ment offset the cost increase relating to the higher sales, since both of th ese factors would increase the cost of sales. Furthermore, please also revise the discussion that is provided on page 20 as applicable.
Change in Warrant Deriva tive Liability, page 18
6. Please revise your discussion to explain why th ere was such a significant increase in the value of warrant derivatives during th e three months ended September 30, 2010.
Business, page 23 Overview of Our Business, page 23
7. We note your response to prior comment 18 th at you have revised your disclosure to disclose amounts incurred for expansion of your direct sales force and amounts you anticipate that you will need to increase, expand or update your existing facil ities over the next five years. To the extent practicab le, please disclose the amount of funds you will allocate to the future expansion of your sales force. Products and Services, page 24
8. We note your response to prior comment 22. Pl ease expand your disc losure to clarify that the FDA will have to approve OsteoSponge SC as a cartilage re-generation scaffold
Mr. John P. Gandolfo Bacterin Internati onal Holdings, Inc. December 20, 2010 Page 3
before you can start marketing th e product for that indication.
9. We note your response to prior comment 24. Please revise your disclosure to clarify that the reference to “certain of our products ” is a reference to OsteoSponge SC.
10. We note your response to prior comment 26 that you do not believe that the contract with RyMed Technologies, Inc. is material to your business or operations. Please provide us with a detailed analysis supporti ng your belief that the agreem ent is not material and that you are not substantially dependant on it. For example, please provide information regarding the amount of reve nues generated from the agreement with RyMed for the periods covered by your re gistration statement.
Financial Statements for the Quarterly Period Ended September 30, 2010
(12) Stock-Based Co mpensation, page F-11
11. Please tell us how the warrant issuances described in the narrative on page F-13 reconciles to the roll-fo rward of the warrant activities table. In addition, please revise your disclosure to describe the method you util ized to fair value the warrants and how you accounted for the warrants issued during 2010. If any were accounted for as a derivative, describe the feature that triggered the derivative accounting. Financial Statements for the Year Ended December 31, 2009
(1) Business Description and Summary of Significant Accounting Policies Grants, page F-22
12. Please revise your disclosure to quantify the amount of grants you provided and received during the periods presented. If no amount wa s given or received, disclose that fact. Revenue Recognition, page F-23
13. We acknowledge your response to comment 29. However, you continue to mention that you earn revenues from licensing on pages 16, 24, and F-5. Please revise your discussions throughout your document to be consistent with your response. (8) Convertible Notes Payable, page F-26
14. Refer to your response to comment 41. While you state that the ratchet provision of the conversion rate helps maintain the clear and close relationship of the risks between the conversion feature and the host contract, it is un clear to us how the market risk that the conversion feature will continue to have, even in the event of a conversion price adjustment, are clearly and closely related to a debt instrument. Furthermore, since the economic characteristic of the embedded instrument is equity (i.e. the host instrument is convertible into an equity instrument), th e embedded instrument doe s not appear to be clearly and closely related to the host inst rument (debt). Please provide us a scope
Mr. John P. Gandolfo Bacterin Internati onal Holdings, Inc. December 20, 2010 Page 4
analyses under ASC 815-40-15 and ASC 815-40 -25 as originally requested in our comment to support your accounting. * * * * *
You may contact Keira Ino at (202) 551-3659 or Lisa Vanjoske at (202) 551-3614 if you have questions regarding comments on the financial statements and related matters. Please contact Johnny Gharib at (202) 551-3170 or Se bastian Gomez Abero at (202) 551- 3578 with any other questions. Sincerely, Jeffrey Riedler Assistant Director
Show Raw Text
December 20, 2010
John P. Gandolfo
Chief Financial Officer
600 Cruiser Lane
Belgrade, Montana 59714
Re: Bacterin International Holdings, Inc.
Registration Statement on Form S-1/A
Filed December 7, 2010
File No. 333-169620
Dear Mr. Gandolfo:
We have reviewed your registration statem ent on Form S-1/A filed on December 7, 2010
and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter by amending your registration statement and providing the
requested information. If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
After reviewing any amendment to your re gistration statement and the information you
provide in response to these comments, we may have additional comments.
Bacterin International Holdings, Inc., page 1
1. We note your response to our prior comment 3. However, the word “leader” still appears
in the same context on page F-21 of your notes to the financial statements. Please revise
your disclosure there to delete the word.
2. We note your response to our prior comment 4. The statement in the first bullet still appears on page F-21 and the statements in the second and third bullet still appear on
page 26. Please delete those statements and confirm that you have deleted these statements elsewhere as applicable. Recent Developments, page 1
3. We note your response to prior comment 5. We also note that the private placements through which the selling stockholders acquired the shares being regi stered are described
on page 2 of the filing; however, it still does not appear that the share amounts mentioned
add up to the amount being registered through this registration statement. Please revise
Mr. John P. Gandolfo Bacterin Internati onal Holdings, Inc.
December 20, 2010 Page 2
your disclosure to clarify when, and in what transactions, the entirety of the 11,250,597 shares (including 4,126,630 shares issuable upon th e exercise of warra nts) were placed
with the selling stockholders.
Risk Factors
Future revenue will depend on our ability to develop new sales channels…, page 6
4. We note your response to prior comment 10 where you included the $8 million you incurred for sales and marketing expense in 2010. However, we also note that you will
continue to expand your sales force in the fu ture. Please expand your disclosure in this
risk factor to quantify, to the extent pract icable, the amount of funds you will need to
further expand your direct sales force. In addition, please quantify your funding
requirements and sources of funding in grea ter detail in the se ction entitled “Cash
Requirements” in your Management’s Discussion and Analysis.
Results of Operations
Comparison of Nine Months Ended September 30, 2010 and September 30, 2009
Cost of tissue sales, page 18
5. Please revise the discussion you provided in response to comment 16 to explain why you
adjusted biologics inventor ies in the amount of $669,000 dur ing 2009. In addition, please
revise your statement that this inventory adjust ment offset the cost increase relating to the
higher sales, since both of th ese factors would increase the cost of sales. Furthermore,
please also revise the discussion that is provided on page 20 as applicable.
Change in Warrant Deriva tive Liability, page 18
6. Please revise your discussion to explain why th ere was such a significant increase in the
value of warrant derivatives during th e three months ended September 30, 2010.
Business, page 23
Overview of Our Business, page 23
7. We note your response to prior comment 18 th at you have revised your disclosure to
disclose amounts incurred for expansion of your direct sales force and amounts you
anticipate that you will need to increase, expand or update your existing facil ities over the
next five years. To the extent practicab le, please disclose the amount of funds you will
allocate to the future expansion of your sales force.
Products and Services, page 24
8. We note your response to prior comment 22. Pl ease expand your disc losure to clarify
that the FDA will have to approve OsteoSponge SC as a cartilage re-generation scaffold
Mr. John P. Gandolfo Bacterin Internati onal Holdings, Inc.
December 20, 2010 Page 3
before you can start marketing th e product for that indication.
9. We note your response to prior comment 24. Please revise your disclosure to clarify that
the reference to “certain of our products ” is a reference to OsteoSponge SC.
10. We note your response to prior comment 26 that you do not believe that the contract with
RyMed Technologies, Inc. is material to your business or operations. Please provide us
with a detailed analysis supporti ng your belief that the agreem ent is not material and that
you are not substantially dependant on it. For example, please provide information
regarding the amount of reve nues generated from the agreement with RyMed for the
periods covered by your re gistration statement.
Financial Statements for the Quarterly Period Ended September 30, 2010
(12) Stock-Based Co mpensation, page F-11
11. Please tell us how the warrant issuances described in the narrative on page F-13
reconciles to the roll-fo rward of the warrant activities table. In addition, please revise
your disclosure to describe the method you util ized to fair value the warrants and how
you accounted for the warrants issued during 2010. If any were accounted for as a derivative, describe the feature that triggered the derivative accounting.
Financial Statements for the Year Ended December 31, 2009
(1) Business Description and Summary of Significant Accounting Policies
Grants, page F-22
12. Please revise your disclosure to quantify the amount of grants you provided and received during the periods presented. If no amount wa s given or received, disclose that fact.
Revenue Recognition, page F-23
13. We acknowledge your response to comment 29. However, you continue to mention that
you earn revenues from licensing on pages 16, 24, and F-5. Please revise your
discussions throughout your document to be consistent with your response.
(8) Convertible Notes Payable, page F-26
14. Refer to your response to comment 41. While you state that the ratchet provision of the
conversion rate helps maintain the clear and close relationship of the risks between the
conversion feature and the host contract, it is un clear to us how the market risk that the
conversion feature will continue to have, even in the event of a conversion price
adjustment, are clearly and closely related to a debt instrument. Furthermore, since the economic characteristic of the embedded instrument is equity (i.e. the host instrument is
convertible into an equity instrument), th e embedded instrument doe s not appear to be
clearly and closely related to the host inst rument (debt). Please provide us a scope
Mr. John P. Gandolfo Bacterin Internati onal Holdings, Inc.
December 20, 2010 Page 4
analyses under ASC 815-40-15 and ASC 815-40 -25 as originally requested in our
comment to support your accounting.
* * * * *
You may contact Keira Ino at (202) 551-3659 or Lisa Vanjoske at (202) 551-3614 if you
have questions regarding comments on the financial statements and related matters. Please contact Johnny Gharib at (202) 551-3170 or Se bastian Gomez Abero at (202) 551- 3578 with
any other questions.
Sincerely,
Jeffrey Riedler
Assistant Director