Greetings, and welcome to the Xtant Medical Fourth Quarter and Year End Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. And it is now my pleasure to introduce your host Ms. Laura Kendall, Deputy Restructuring Officer. Thank you. You may begin.

Thank you. Good morning, and thank you for joining Xtant Medical's fourth quarter and full year 2017 earnings call. Yesterday afternoon, Xtant issued a press release announcing fourth quarter and full year 2017 financial results and also filed its Form 10-K for the year ended December 31, 2017. My name is Laura Kendall, and I am serving Xtant Medical as Deputy Restructuring Officer and Principal Accounting Officer. Joining me today for the conference call will be Carl O'Connell, Chief Executive Officer for Xtent. At this time as noted, all participants are in listen-only mode and a brief question-and-answer session will follow the formal presentation. Today's call is being webcast and will be posted on the company's website for playback. We expect the duration of the call to be approximately 30 minutes. If I could for a moment just repeat some of the important cautions regarding forward-looking statements. During the course of this call, management may make certain forward-looking statements regarding future events and the company's expected future performance. These forward-looking statements reflect Xtant's current perspective on existing trends and information and can be identified by such words as expect, plan, will, may, anticipate, believe, should, intends and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of our most recent annual report on Form 10-K that was filed yesterday. In addition, any unaudited or pro forma financial information is preliminary and does not purport to project the future financial position or operating results of the company. Actual results may differ materially. For the benefit of those of you who may be listening to the replay, this call was held and recorded on Tuesday, April 3, at approximately 09 A.M. Eastern Time.…

Thank you, Laura, and thank you everyone for joining Xtant Medical's fourth quarter and fiscal 2017 conference call. We managed a lot of changes over the past 12 months and I look forward to highlighting some of our successes, which I feel will be growth drivers as we move forward and will highlight some key areas of focus for Xtant Medical through 2018. Our 2017 revenue declined in comparison to 2016. This was primary due to a lower fixation revenue in second half of the year, mostly as a result of making progressive changes towards sales channels throughout the year terminating some unprofitable distributorships and reducing high commission rates a non-profitable contracts. The positive shift away from these channels will have the company stabilize end-user pricing, as well as drive better margins and profitable growth opportunities long term. Due to this decline is a highly competitive hardware fixation market with increasing the reimbursement pressure and a demand for innovation and clinical justification which we plan in the coming quarters. Conversely, distribution of our biologics portfolio was very successful in 2017 achieving above market revenue growth. This growth was driven by penetrating new course with the OsteoSelect and OsteoSelect PLUS DBM product lines. Increased demand for 3Demin fiber technology supported by continued demand [Technical Difficulty].

Carl, you may begin.

Hello.

Carl, your line is live. Go ahead.

Thank you. Conversely distribution of our biologics portfolio was very successful in 2017 achieving above market revenue growth. This growth was driven by penetrating new accounts with the OsteoSelect and OsteoSelect PLUS DBM product lines. Increased demands for 3Demin fiber technology supported by continued demand by our flagship product line OsteoSponge. This product mix leading our biologics revenue DBM category, we continue to be one of the largest players in U.S. bone replacement market. We also saw robust growth driven by conversion of customers through our viable cell allograft OsteoVive, our product we launched in mid 2016. We anticipate the momentum and interest in our biologics portfolio will continue in 2018. Throughout the year, we touch upon progress the company was making with regards to three transformational initiatives, operational excellence in inventory utilization, strategic positioning from market leadership, and sales channel optimization. These programs were designed to support full integration of Bacterin and X-Spine into Xtant Medical, provide a stable foundation to support sustainable market growth and focus on EBITDA performance. The inventory and instruments optimization project was designed to precash by reducing existing inventory in instrumental levels and optimizing future inventory and instrument needs without negatively impacting delivery to the customer. Because of this project [inaudible] mostly driven by implementation of stronger forecasting processes and adopting integrated business planning and daily activities. In October 2017, we announced our decision to close the Dayton facility and transfer the fixation operation to our location at Montana in an effort to reduce cost by optimizing efficiencies of a single fulfillment location for our customers and appropriately utilizing our infrastructure. The total cost savings derived from the restructuring activity is anticipated to be $2 million annually. I am very pleased with the performance of Greg Juda, our General Manager of Operations at the…

[Operator Instructions] Our first question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.

So I just wanted to talk about the hardware business. It seems like biologics continues to do well with above market growth and that was the original factor in business. The X-Spine acquisition seems to continue to struggle here. Can you talk about what percent of total sales hardware is? How much it was done and Carl just kind of what the plan is to improvement. I saw you terminated some stockings' reseller agreement but anything you can do about the aging hardware product line, and where do you think this starts with the inflexion point for that business to start to turnaround?

I’ll have Laura answer some of details on the numbers and I think you pointed out correctly, our hardware line or sort of looking at the natural decline as the lifecycle of our hardware products sort to mature. And I think also as a factor of shift in distributor relationships, we have less reseller business. So we're not selling against ourselves. And I think going forward, we’re going to look at partnerships with better contributing margins and also looking at performance and management with better relationship with better distributors going forward. But we look forward to looking at where we can focus on our hardware lines and in the next few months and quarters, we’ll hope to address that in the form of hardware strategy going forward.

And Laura on the percent of sales and how much it was down?

Anthony, are you still on the line?

Yes I am. I'm still on the line.

Hi Anthony, we’re having some problems I guess with the line.

Okay, I have got it Carl sorry. I think the company has not disclosed exact percentages of business and declines or growth within its product categories simply because its highly competitive information as you know. So the direction that Carl gave as to what’s happening in the hardware business that we’re looking at it strategically I think we’ve done a great job last year of making inroads on the unprofitable portions of the hardware sector that we found we're not making the contribution and there will be opportunity as to take a look at what we have and figure out a future strategy for that. So at this point we don't disclose those percentages.

The unprofitable parts of that business has that been terminated or there are some unprofitable piece of that business that you think you could turnaround?

Yes, I think - let me answer that. We’re looking very hard into the contributing margins on commission rates and we’re looking also where there is opportunity to restructure a lot of our agreements but we're looking for better performance, better penetration where we have contractual access but we’re doing the deep dive into our margins and especially our commission rates in trying to meet sort of one obviously our goal is profitability. And so we can align that with our goals going forward.

And then Laura on some of the term loan, so was all the deferred interest on the term loans paid down and if not how much is left?

All the deferred interest on the convertible debt was paid down. The deferred interest on the term loan is still outstanding.

And how much is that left?

I don’t have an exact number with me but it's - I would say probably in the 3 million to 4 million range of deferred interest.

And is there a still plan to restructure some of those and if not I know it’s far out July 2020 but how do you plan to deal with the maturity well in 2020?

The maturity of the term loan?

Yes.

Or of the interest, at that point we’ll address but that’s quite a way out for us and definitely a lot of strategic planning will be done in between that on both of the core business, as well as the capitalization of the company. So again we’ve entered into a very corporative stands with Orbimed very supportive of us. And as you know the credit agreement is with Orbimed as well so I’m sure they’ll be much planning going into that renewal in 2020.

And then lastly on the rights offering, the expectation is sometime in 2018 is there any general timing as you trying to do that in the first half, second half?

I would say we are currently planning for the first half, so we want to conclude these transactions that we had queued up in the proxy. So, you should see some activities surrounding that within the first half of the year.

[Operator Instructions] There are no further questions at this time. I'd like to turn the call back over to Mr. O'Connell for any closing remarks.

Thank you. On behalf of the company I would like to thank you for your continued support for Xtant Medical. Thank you again and have a nice day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day.