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Alphatec Holdings, Inc. – IPO: ‘S-1/A’ on 5/26/06

On:  Friday, 5/26/06, at 5:19pm ET   ·   Private-to-Public:  Document/Exhibit ¶  –  Release Delayed   ·   Accession #:  1047469-6-7732   ·   File #:  333-131609

Previous ‘S-1’:  ‘S-1/A’ on 5/15/06   ·   Next & Latest:  ‘S-1/A’ on 6/1/06   ·   7 References:   By:  Alphatec Holdings, Inc. – ‘10-K’ on 2/27/24 for 12/31/23 By:  Alphatec Holdings, Inc. – ‘S-3ASR’ on 4/19/23 By:  Alphatec Holdings, Inc. – ‘10-K’ on 2/28/23 for 12/31/22 By:  Alphatec Holdings, Inc. – ‘10-K’ on 3/2/22 for 12/31/21 By:  Alphatec Holdings, Inc. – ‘S-3’ on 3/31/21 By:  Alphatec Holdings, Inc. – ‘10-K’ on 3/5/21 for 12/31/20 By:  Alphatec Holdings, Inc. – ‘S-3’ on 8/6/20 

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INDEX TO FINANCIAL STATEMENTS
TABLE OF CONTENTS 2

As filed with the Securities and Exchange Commission on May 26, 2006

Registration No. 333-131609

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ALPHATEC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

2051 Palomar Airport Road
Carlsbad, California 92011
(760) 431-9286
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

Ronald G. Hiscock
Alphatec Holdings, Inc.
2051 Palomar Airport Road
Carlsbad, CA 92011
(760) 431-9286
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

With copies to:

        Approximate date of commencement of proposed sale to public:    As soon as practicable after this Registration Statement becomes effective.

        If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o

        The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated May 26, 2006

9,300,000 Shares

Common Stock

This is our initial public offering of shares of common stock. No public market currently exists for our common stock. We are offering 9,300,000 shares of common stock. We have applied to have our common stock approved for quotation on the Nasdaq National Market under the symbol "ATEC." We anticipate that the initial public offering price will be between $13.00 and $15.00 per share.

Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 10.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

We have granted the underwriters a 30-day option to purchase up to 1,395,000 additional shares to cover any over-allotments. The underwriters expect to deliver the shares of common stock to investors on or about                           , 2006.

The date of this prospectus is                    , 2006.

SUMMARY

        This summary does not contain all of the information that you should consider before investing in our common stock. Before making an investment decision, you should read the entire prospectus carefully, including "Risk Factors" and our consolidated financial statements, the financial statements of Cortek, Inc., or Cortek, and our unaudited pro forma condensed combined consolidated statements of operations information and the notes to those statements and information included elsewhere in this prospectus.

Alphatec Holdings, Inc.

Our Business

        We are a medical device company focused on the design, development, manufacturing and marketing of products for the surgical treatment of spine disorders. Our principal product offering is primarily focused on the over $2.2 billion U.S. spine fusion market. In addition to our U.S. presence, we also participate in the Japanese spine fusion and orthopedic trauma markets through our subsidiary, Alphatec Pacific.

        We offer a broad range of products to our customer base, which primarily consists of spine surgeons. Our principal product offering includes a variety of spinal implant products and systems comprised of components such as spine screws, spinal spacers, and plates and offers multiple solutions to address patients' needs. In September 2005, we acquired substantially all of the assets of Cortek. Through this acquisition, we enhanced our existing portfolio of spine fusion products with a complementary offering of precision milled allograft spacers.

        We believe that our products and systems provide a comprehensive solution for the safe and reproducible surgical treatment of spine disorders. All of our currently marketed products have been cleared by the United States Food and Drug Administration, or FDA. Our products were used in approximately 4,500 and 1,650 surgical procedures in 2005 and the three months ended March 31, 2006, respectively.

Market Opportunity

        The U.S. spine fusion market was approximately $2.2 billion in 2004 and is anticipated to grow to approximately $3.0 billion by 2007. We believe that the spine fusion market will continue to grow as a result of the following market dynamics:

•

Increased Use of Implants



•

Introduction of New Surgical Technologies



•

Favorable Demographics

Our Competitive Strengths and Strategy

        Our goal is to be a leading provider of innovative technologies and comprehensive solutions for the surgical treatment of spine disorders. To achieve this goal, we are employing the following business strategies:

•

Continue to Provide a Full Range of Spine Fusion Products and Expand Our Product Offering.    We believe that our comprehensive portfolio of spinal implant products enables us to maximize our revenue for each procedure by fulfilling a greater portion of a surgeon's spine fusion product needs. We intend to continue to enhance our spine fusion product offering and pursue complementary fusion and non-fusion spine technologies to drive future growth of our business.



•

Focus on Rapid Responsiveness and Total Surgeon Satisfaction.    We believe that our focus on rapid responsiveness to surgeon needs and the support we provide to surgeons differentiate us in

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the marketplace. The design and development of all of our products are done at our facilities. We manufacture substantially all of our non-allograft products at our facilities, which enables us to rapidly modify implants and instruments to satisfy the needs of surgeons. Responding quickly to the needs of surgeons is central to our corporate culture and critical to our success.

•

Expand Sales and Marketing Efforts.    Our products are sold in the U.S. through a network of approximately 52 independent distributors, which we believe employ approximately 140 sales agents, and 28 direct sales representatives and executives. Our sales force targets the approximately 15,000 surgeons in the U.S. that perform spine surgeries. We intend to continue to expand our distribution network and direct sales force in order to increase the market penetration of our products.



•

Develop Innovative Products and Solutions in Conjunction with Surgeons.    One of our core competencies is our ability to develop and commercialize creative spinal devices and instruments that incorporate information and feedback from surgeons. During the 27 months ended March 31, 2006, we developed nine new products that the FDA has cleared to be marketed and sold and we currently have a number of additional products in our pipeline under development.



•

Selectively License or Acquire Complementary Spine Products and Technologies.    In addition to building our product portfolio through internal product development efforts, we intend to continue to selectively license or acquire complementary spine products and technologies.

History

        Alphatec Manufacturing, Inc., subsequently renamed Alphatec Spine, was founded in May 1990 by Shunshiro "Roy" Yoshimi, the current Chairman, President and Chief Executive Officer of our Japanese subsidiary Alphatec Pacific. At its inception, Alphatec Spine was a contract manufacturer of medical devices. In July 1991, Alphatec Spine vertically integrated its operations to develop, manufacture, market and sell proprietary orthopedic trauma products.

        In 2003, Alphatec Spine began to develop, manufacture, market and sell spine products in addition to its orthopedic trauma products. Following its initial success in penetrating the spine market, in 2004 Alphatec Spine dedicated a larger percentage of its manufacturing and commercial resources towards the rapidly growing spine fusion market. As a result of this strategic shift, in 2004 Alphatec Spine sought and received numerous product clearances from the FDA for spine fusion products and achieved the highest annual revenues in its history.

        In March 2005, investors led by HealthpointCapital Partners, L.P., or HealthpointCapital, acquired all of the issued and outstanding capital stock of Alphatec Spine via a merger in which a wholly owned subsidiary of Alphatec Holdings, a newly formed corporation, was merged with and into Alphatec Spine, making Alphatec Spine a wholly owned subsidiary of Alphatec Holdings. Alphatec Holdings raised $87.3 million from investors led by HealthpointCapital in its initial financings, of which $70.0 million in cash was paid to the former shareholders of Alphatec Spine. The remaining capital allowed us to enhance our operational capabilities in the areas of management, sales, manufacturing and research and development, and to retire debt. In an effort to broaden our existing spine implant product offering, we acquired substantially all of the assets of Cortek in September 2005. In addition, in August 2005, Alphatec Pacific repurchased the distribution rights to our products from its exclusive Japanese distributor in order to pursue the expansion of sales of our spine fusion products in Japan while Alphatec Pacific continues to sell orthopedic trauma products in Japan.

HealthpointCapital

        Founded in 2002 and headquartered in New York City, HealthpointCapital is a private equity fund affiliated with HealthpointCapital, LLC, a merchant bank focused exclusively on the orthopedic sector

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that provides independent research, private equity management and corporate finance advisory services. HealthpointCapital and its affiliated private equity fund, HealthpointCapital Partners II, L.P., have approximately $500 million under management. HealthpointCapital is our largest stockholder.

Corporate Reorganization

        In connection with the consummation of this offering, we will complete a series of transactions as specified in our certificate of incorporation in order to reorganize our capital structure. These transactions, which we refer to as the reorganization transactions, include:

•

the creation of a new series of non-voting preferred stock, called New Redeemable preferred stock, that is redeemable at the initial public offering price (i) upon the occurrence of certain changes in control, liquidation events or sales of all or substantially all of our assets, (ii) if the underwriters exercise their over-allotment option to purchase additional shares of our common stock, in which case all of the proceeds of the sale of those additional shares will be used to redeem such shares of New Redeemable preferred stock, or (iii) at our option at any time;



•

the payment of dividends on all series of our common stock for a combination of cash, common stock and New Redeemable preferred stock;



•

the conversion of each share of each series of our outstanding common stock into 3.57 shares of common stock;



•

the redemption of a portion of our outstanding preferred stock for cash; and



•

the exchange of the remaining portion of our outstanding preferred stock for a combination of common stock and New Redeemable preferred stock.

        As part of the reorganization transactions and pursuant to our certificate of incorporation, we are entitled to retain 50% of the net proceeds from this offering, excluding any proceeds from the exercise of the underwriters' over-allotment option, up to a maximum of $65 million. We are required to use the remaining net proceeds from this offering to satisfy the redemption and dividend obligations to our existing stockholders that are described above. To the extent those obligations exceed the remaining net proceeds from this offering, we are required to issue a combination of common stock and New Redeemable preferred stock to satisfy those obligations. We will not issue more than $30 million of New Redeemable preferred stock for that purpose. In addition, we are required to use all of the net proceeds from any exercise of the underwriters' over-allotment option to redeem any outstanding shares of New Redeemable preferred stock.

        Based on an assumed initial offering price of $14.00 per share, we estimate that we will:

•

issue 903,501 shares of common stock and 2,142,722 shares of New Redeemable preferred stock to our existing stockholders in satisfaction of our non-cash redemption and dividend obligations described above;



•

pay $57.4 million of the net proceeds from this offering to our existing stockholders in satisfaction of our cash redemption and dividend obligations described above; and



•

issue 21,610,054 shares of our common stock upon conversion of all shares of each series of our common stock.

        Payment of a portion of our obligations to our existing stockholders in the form of shares of New Redeemable preferred stock that are not convertible into our common stock enables us to (i) retain for our account additional cash from the net proceeds of this offering and (ii) reduce the number of shares of our common stock that will be outstanding upon consummation of this offering.

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        All of our calculations involving the payment in the reorganization transactions of the accrued and unpaid dividends on each of our series of common stock for a combination of cash, common stock and New Redeemable preferred stock are based on the amount of accrued and unpaid dividends on our series of common stock through May 22, 2006. The actual number of shares of common stock and New Redeemable preferred stock issued and cash paid will differ based on the amount of accrued and unpaid dividends through the actual closing date of this offering.

Risks Affecting Us

        Our business is subject to numerous risks as discussed more fully in the section entitled "Risk Factors" immediately following this prospectus summary. If our assumptions about demographic trends and trends in the treatment of spine disorders are not accurate, we may not be able to sustain growth or achieve profitability. In addition, we have experienced rapid growth in revenues since we acquired Alphatec Spine in March 2005 and our ability to succeed and become profitable is dependent on our ability to manage our growth. We operate in a highly competitive market and our success depends on our ability to compete with numerous competitors, including large, well-established medical device companies with significant resources. From our inception in March 2005 through March 31, 2006, we had an accumulated deficit of approximately $25.6 million and may never become profitable.

Corporate Information

        We were incorporated in Delaware on March 4, 2005. Our principal executive offices are located at 2051 Palomar Airport Road, Carlsbad, California, and our telephone number is (760) 431-9286. Our web site address is www.alphatecspine.com. The information contained in, or that can be accessed through, our web site is not part of this prospectus. We have included our web site address as a factual reference and do not intend it to be an active link to our web site.

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The Offering

About this Prospectus

        Unless otherwise indicated, all information contained in this prospectus:

•

reflects a 44.036-for-1 split of each series of our common stock declared on August 1, 2005;



•

reflects the consummation of the reorganization transactions described above, in which we estimate that we will issue 903,501 shares of common stock and 2,142,722 shares of New Redeemable preferred stock and pay $57.4 million in satisfaction of various redemption and dividend obligations to our existing stockholders, based on accrued and unpaid dividends on shares of our common stock through May 22, 2006 and issue 21,610,054 shares of our common stock upon conversion of all shares of each series of our common stock at a conversion rate of 3.57-to-1;



•

reflects the issuance of the common stock offered in this prospectus at an assumed initial public offering price of $14.00 per share, the mid-point of the range set forth on the cover page of this prospectus;



•

reflects the effectiveness of our amended and restated certificate of incorporation and restated by-laws upon the completion of this offering;



•

excludes 509,863 shares of our common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $3.88 per share as of April 15, 2006;

5

•

excludes 79,812 shares of our common stock reserved for future issuance under our stock option plan as of April 15, 2006 and an additional 4,258,000 shares of our common stock to be reserved upon consummation of this offering for future issuance under our stock option plan; and



•

excludes the possible issuance of up to 1,395,000 additional shares of our common stock to the underwriters to cover over-allotments.

        Unless the context otherwise requires, throughout this prospectus:

•

"we," "our," and "us" refer to Alphatec Holdings, Inc. and its consolidated subsidiaries, including Alphatec Spine;



•

"Alphatec Holdings" refers to Alphatec Holdings, Inc.;



•

"Alphatec Spine" refers to Alphatec Spine, Inc. or, prior to its name change, Alphatec Manufacturing, Inc.; and



•

"Alphatec Pacific" refers to our Japanese subsidiary Alphatec Pacific, Inc.

        Unless otherwise specified or the context requires, references to "dollars," "U.S. dollars" and "$" are to United States dollars and references to "yen," "¥" and "JPY" are Japanese Yen. Where we specify Japanese Yen amounts in this prospectus, for convenience, we have included approximate U.S. dollar equivalents using an assumed exchange of ¥116.27 for each $1.00.

        This prospectus contains market data and industry forecasts that were obtained from industry publications. These publications generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. We have not independently verified, and make no representation as to the accuracy of, this information.

        Throughout this prospectus, when we refer to a product being cleared by the FDA, or clearance from the FDA, we mean that the FDA reviewed the product as presented in a type of pre-market submission referred to as a 510(k) and agreed that the product could be marketed and sold.

        Our logos, Alphatec, Cortek, C, Cortek design/logo, Corlok, Osteocor, Biocarpentry, Dovetome, Deltaloc, Duet, Connect and Polylok are the property of Alphatec Spine. We have trademark applications pending that correspond to the marks Solo, Coreograft, Zodiac, Chorus, Novel, Alphagraft, Osteocore, Marco and Alphatec. We also have common-law trademark rights for the following marks: Reveal, Mirage, Tamarack, Zodiac Trauma, Zodiac Deformity, Zodiac M/A, ROC, Solanas, Solo Lumbar, Solo Cervical, Novel PEEK, Novel Titanium and Dense Cancellous. Other trademarks or service marks appearing in this prospectus are the property of their respective holders.

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SUMMARY CONSOLIDATED FINANCIAL DATA

        The following tables summarize our consolidated financial data for the periods presented. We have derived the summary consolidated statements of operations data for the years ended December 31, 2003 and 2004, and the periods from January 1, 2005 to March 17, 2005 and March 18, 2005 to December 31, 2005, from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the summary consolidated statements of operations data for the periods from March 18, 2005 to March 31, 2005 and the three months ended March 31, 2006 and the consolidated balance sheet data as of March 31, 2006, from our unaudited consolidated financial statements, also included elsewhere in this prospectus, and which, in the opinion of management, contain all adjustments necessary for a fair presentation of the consolidated financial data included elsewhere in this prospectus.

        The summary consolidated pro forma as adjusted balance sheet data at March 31, 2006 gives effect to the reorganization transactions and the sale of shares of our common stock at an assumed initial public offering price of $14.00 per share and the application of the net proceeds therefrom as described in "Use of Proceeds" as if such transactions occurred on March 31, 2006.

        Alphatec Predecessor refers to Alphatec Spine prior to its acquisition by Alphatec Holdings on March 18, 2005. Alphatec Combined refers to the combined results of Alphatec Predecessor and Alphatec Holdings.

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        You should read the following information together with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements, the financial statements of Cortek and our unaudited pro forma condensed combined consolidated statements of operations and the notes to those statements and information included elsewhere in this prospectus.

⁽¹⁾

See Note 1 of the notes to our consolidated financial statements for a description of the calculation of the net income (loss) per common share.

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RISK FACTORS

        An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this prospectus, including our consolidated financial statements, the financial statements of Cortek and our unaudited pro forma condensed combined consolidated statement of operations and the notes to those statements and information included elsewhere in this prospectus, before making an investment decision. If any of the following risks actually occurs, our business, financial condition, results of operations and our future growth prospects would be materially and adversely affected. Under these circumstances, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

Our business plan relies on certain assumptions pertaining to the market for our products that, if incorrect, may adversely affect our growth and profitability.

        We allocate our design, development, manufacturing, marketing, management and financial resources based on our business plan, which includes assumptions about various demographic trends and trends in the treatment of spine disorders and the resulting demand for our products. However, these trends are uncertain. There can be no assurance that our assumptions with respect to an aging population with broad medical coverage and longer life expectancy, which we expect to lead to increased spinal injuries and degeneration, are accurate. In addition, an increasing awareness and use of non-invasive means for the prevention and treatment of back pain and rehabilitation purposes may reduce demand for, or slow the growth of sales of, spine fusion products. A significant shift in technologies or methods used in the treatment of back pain or damaged or diseased bone and tissue could adversely affect demand for some or all of our products. For example, pharmaceutical advances could result in non-surgical treatments gaining more widespread acceptance as a viable alternative to spine fusion. The emergence of new biological tissue-based or synthetic materials to facilitate regeneration of damaged or diseased bone and to repair damaged tissue could increasingly minimize or delay the need for spine fusion surgery and provide other biological alternatives to spine fusion. New surgical procedures could diminish demand for some of our products. The increased acceptance of emerging technologies that do not require spine fusion, such as artificial discs and nucleus replacement, for the surgical treatment of spine disorders would reduce demand for, or slow the growth of sales of, spine fusion products. If our assumptions regarding these factors prove to be incorrect or if alternative treatments to those offered by our products gain further acceptance, then actual demand for our products could be significantly less than the demand we anticipate for our products and we may not be able to achieve or sustain growth or profitability.

If we fail to properly manage our anticipated growth, our business could suffer.

        Since March 2005, we have experienced rapid growth in, and we continue to pursue rapid growth in, the number of surgeons using our products, the types of products we offer and the number of states in which we have distributors for our products. Such growth has placed and will continue to place significant demands on our managerial, operational and financial resources and systems. We are currently focused on increasing the size and effectiveness of our sales force, marketing activities, research and development efforts, inventory management systems, management team and corporate infrastructure. If we do not manage our growth effectively, the quality of our products, our relationships with physicians, distributors and hospitals, and our reputation could suffer, which would have a material adverse effect on our business, financial condition and results of operations. We must attract and retain qualified personnel and third-party distributors and manage and train them effectively. Personnel qualified in the design, development, production and marketing of our products are difficult to find and hire, and enhancements of information technology systems to support our growth are difficult to implement. We will also need to carefully monitor and manage our surgeon

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services, our manufacturing capabilities, quality assurance and efficiency, and the quality assurance and efficiency of our suppliers and distributors. This managing, training and monitoring will require allocation of valuable management resources and significant expense. We are also currently implementing new management information systems to assist us in consolidating our enterprise-wide operating and financial performance information. The efficient operation of our business is dependent on our management information systems. We rely on our management information systems to effectively manage accounting and financial functions; manage order entry, order fulfillment and inventory replenishment processes; and maintain our research and development data. Any failure by us to implement our new management information systems or the failure of our management information systems to perform as we anticipate could disrupt our business and product development and could result in decreased sales, increased overhead costs, excess inventory and product shortages, causing our business and results of operations to suffer.

We may not be successful in manufacturing spine fusion products at the levels required to meet future market demand.

        We are seeking to rapidly grow sales of our products and if we are successful, such growth may strain our ability to manufacture an increasingly large supply of our products. We have never produced spine fusion products in quantities significantly in excess of our current production levels. Manufacturers regularly experience difficulties in scaling up production and we may face such difficulties in increasing our production levels. Moreover, we may not be able to manufacture our products with consistent and satisfactory quality or in sufficient quantities to meet demand. Our failure to produce products of satisfactory quality or in sufficient quantities could hurt our reputation, cause hospitals, surgeons or distributors to cancel orders or refrain from placing new orders for our products and reduce or slow growth of sales of our products. Increases in our production volume also could make it harder for us to maintain control over expenses, manage our relationships with our suppliers, maintain good relations with our employees or otherwise manage our business.

We are in a highly competitive market segment, face competition from large, well-established medical device companies with significant resources, and may not be able to compete effectively.

        The market for spine fusion products and procedures is intensely competitive, subject to rapid technological change and significantly affected by new product introductions and other market activities of industry participants. In 2004, 75% of U.S. spine fusion product revenues were generated by DePuy, Inc., a subsidiary of Johnson & Johnson, Medtronic Sofamor Danek, Inc., a subsidiary of Medtronic, Inc., and Synthes, Inc. Our competitors also include numerous other publicly traded companies and privately held companies.

        Several of our competitors enjoy competitive advantages over us, including:

•

more established relationships with spine surgeons;



•

more established distribution networks;



•

broader spine surgery product offerings;



•

stronger intellectual property portfolios;



•

greater financial and other resources for product research and development, sales and marketing, and patent litigation;



•

greater experience in, and resources for, launching, marketing, distributing and selling products;



•

significantly greater name recognition as well as more recognizable trademarks for products similar to the products that we sell;

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•

more established relationships with healthcare providers and payors;



•

products supported by more extensive clinical data; and



•

greater experience in obtaining and maintaining FDA and other regulatory clearances or approvals for products and product enhancements.

        In addition, at any time our current competitors or other companies may develop alternative treatments, products or procedures for the treatment of spine disorders that compete directly or indirectly with our products, including ones that prove to be superior to our spine surgery products. For these reasons, we may not be able to compete successfully against our existing or potential competitors. Any such failure could lead us to modify our strategy, lower our prices, increase the commissions we pay on sales of our products and have a material adverse effect on our business, financial condition and results of operations.

A large percentage of our revenues are derived from the sale of our polyaxial pedicle screws.

        Net sales of our Zodiac polyaxial pedicle screws represented approximately 39.9% and 36.4% of our net sales for 2005 and the three months ended March 31, 2006, respectively. A decline in sales of these screws, due to market demand, the introduction by a third party of a competitive product or otherwise, would have a material adverse impact on our business, financial condition and results of operations. Some of the technology related to our polyaxial pedicle screws is licensed to us. The loss of such license would prevent us from manufacturing, marketing and selling our Zodiac polyaxial pedicle screws and other products that may incorporate such technology, which would have a material adverse effect on our business, financial condition and results of operations.

To be commercially successful, we must convince the spine surgeon community that our products are an attractive alternative to our competitors' products. If the spine surgeon community does not use our products, our sales will decline or we will be unable to increase our sales and profits.

        In order for us to sell our products, surgeons must be convinced that they are superior to competing products for use in spine fusion procedures. Acceptance of our products depends on educating the spine surgeon community as to the distinctive characteristics, perceived benefits, safety and cost-effectiveness of our products compared to our competitors' products and on training surgeons in the proper application of our products. If we are not successful in convincing the spine surgeon community of the merit of our products, our sales will decline and we will be unable to increase our sales and will be unable to achieve and sustain growth or profitability. From January 1, 2006 through April 15, 2006, approximately 180 surgeons used our products in surgical procedures.

        There is a learning process involved for spine surgeons to become proficient in the use of our products. Although most spine surgeons may have adequate knowledge on how to use most of our products based on their clinical training and experience, we believe that the most effective way to introduce and build market demand for our products is by directly training spine surgeons in the use of the products. If surgeons are not properly trained, they may misuse or ineffectively use our products. This may also result in unsatisfactory patient outcomes, patient injury, negative publicity or lawsuits against us, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our sales and marketing efforts are largely dependent upon third parties who are free to market products that compete with our products. We will need to expand our sales and marketing organization significantly.

        In the United States, we currently sell our products primarily through a network of approximately 52 independent distributors, who we believe employ approximately 140 sales agents. As a result, we are dependent upon the sales and marketing efforts of our independent distributors. We also employ 43

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direct sales representatives and executives, 28 of whom sell our products in the U.S. and 15 of whom sell our products in Japan. We pay our independent distributors a commission based on their product placements and sales. To date, none of our independent distributors has been required to sell our products exclusively and all may freely sell the products of our competitors. Many of our independent distributors also market and sell the products of our competitors, and those competitors may have the ability to influence the products that our independent distributors choose to market and sell. Our competitors may be able, by offering higher commission payments or otherwise, to convince our independent distributors to terminate their relationships with us, carry fewer of our products or reduce their sales and marketing efforts for our products.

        As we launch new products and increase our marketing efforts with respect to existing products, we will need to expand our sales and marketing organization. We plan to accomplish this by increasing our network of independent distributors and hiring additional direct sales representatives. The establishment and development of a broader sales network and dedicated sales force may be expensive and time consuming. Because of the intense competition for their services, we may be unable to recruit or retain additional qualified independent distributors and to hire additional direct sales representatives to work with us. Often, our competitors enter into distribution agreements with independent distributors that require such distributors to exclusively sell the products of our competitors. Further, we may not be able to enter into agreements with independent distributors on commercially reasonable terms, if at all. Even if we do enter into agreements with additional independent distributors, it often takes 90 to 120 days for new distributors to reach full operational effectiveness and such distributors may not generate revenue as quickly as we expect them to, commit the necessary resources to effectively market and sell our products or ultimately be successful in selling our products. Our business, financial condition and results of operations will be materially adversely affected if we do not retain our existing independent distributors and attract new, additional independent distributors or if the marketing and sales efforts of our independent distributors and our own direct sales representatives are unsuccessful.

We depend on various third-party suppliers, and in one case a single third-party supplier, for key raw materials used in our manufacturing processes and the loss of these third-party suppliers, or their inability to supply us with adequate raw materials, could harm our business.

        We use a number of raw materials, including titanium, titanium alloys, stainless steel, polyetheretherketone, or PEEK, and allograft, which is human tissue donated by a third party. We rely from time to time on a number of suppliers and in one case on a single source vendor, Invibio, Inc. We have a supply agreement with Invibio, pursuant to which it supplies us with PEEK, a biocompatible plastic that we use in some of our spacers. Invibio is currently the only company approved to distribute PEEK in the U.S. for use in implantable devices. 11.3% and 13.7% of our revenues were derived from products manufactured using PEEK during 2005 and the three months ended March 31, 2006, respectively.

        We depend on a limited number of sources of human tissue for use in our allograft implants and a limited number of entities to process the human tissue into allograft for our allograft implants, and any failure to obtain tissue from these sources or to have the tissue processed by these entities for us in a timely manner will interfere with our ability to effectively meet demand for our allograft implants. As of April 15, 2006, we have contracted with five entities to supply us with human tissue and four entities to process the human tissue into allograft for use in our allograft implants. The processing of human tissue into allograft is very labor intensive and it is therefore difficult to maintain a steady supply stream. In addition, due to seasonal changes in mortality rates, some scarce tissues used for our allograft are at times in particularly short supply. We cannot be certain that our supply of human tissue from our current suppliers and our supply of allograft from our current tissue processors will be available at current levels or will be sufficient to meet our needs.

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        Our dependence on a single third-party supplier and the challenges we may face in obtaining adequate supplies of allograft involve several risks, including limited control over pricing, availability, quality and delivery schedules. In addition, any supply interruption in a limited or sole sourced component or raw material, such as PEEK or allograft, could materially harm our ability to manufacture our products until a new source of supply, if any, could be found. We may be unable to find a sufficient alternative supply channel in a reasonable time period or on commercially reasonable terms, if at all, which would have a material adverse effect on our business, financial condition and results of operations.

Negative publicity concerning methods of tissue recovery and screening of donor tissue in our industry could reduce demand for allograft and impact the supply of available donor tissue.

        Media reports or other negative publicity concerning both alleged improper methods of tissue recovery from donors and disease transmission from donated tissue could limit widespread acceptance of allograft. Unfavorable reports of improper or illegal tissue recovery practices, both in the U.S. and internationally, as well as incidents of improperly processed tissue leading to the transmission of disease, may broadly affect the rate of future tissue donation and market acceptance of allograft technologies. In addition, such negative publicity could cause the families of potential donors to become reluctant to agree to donate tissue to for-profit tissue processors. For example, there have been recent media reports regarding the Brooklyn, New York district attorney's office's investigation of Biomedical Tissue Services, or BTS, a tissue bank, regarding BTS's alleged illegal harvesting of body parts from cadavers, the FDA's investigation of BTS and order for BTS to cease its tissue operations and the resulting recalls being conducted by certain companies selling allograft that were customers of BTS. Although we believe the tissue used in our allograft implants was not procured from the tissue that was allegedly illegally harvested by BTS, these reports have had a negative effect on our allograft business.

If hospitals and other healthcare providers are unable to obtain sufficient reimbursement for procedures performed with our products, it is unlikely that our products will be widely used.

        Successful sales of our products will depend on the availability of adequate reimbursement from third-party payors, including government programs such as Medicare and Medicaid, private insurance plans and managed care programs. Hospitals and other healthcare providers that purchase medical devices such as the ones that we manufacture for treatment of their patients generally rely on third-party payors to pay for all or part of the costs and fees associated with the procedures performed with these devices. The existence of adequate reimbursement for the procedures performed with our products by government and private insurance plans are central to acceptance of our current and future products. We may be unable to sell our products through our distribution channels on a profitable basis if third-party payors deny coverage or reduce their current levels of payment, or if our costs of production increase faster than increases in reimbursement levels. Many private payors use coverage decisions and payment amounts determined by the Centers for Medicare and Medicaid services, or CMS, which administers the Medicare program, as guidelines in setting their reimbursement policies. Future action by CMS or other government agencies may diminish payments to physicians, outpatient centers and hospitals. Those private payors that do not follow the Medicare guidelines may adopt different reimbursement policies for procedures performed with our products. For some governmental programs, such as Medicaid, reimbursement differs from state to state, and some state Medicaid programs may not pay for the procedures performed with our products in an adequate amount, if at all. As the portion of the U.S. population over age 65 and eligible for Medicare continues to grow we may be more vulnerable to reimbursement limitations imposed by CMS. Furthermore, the healthcare industry in the U.S. has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs by imposing lower payment rates and negotiating reduced

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contract rates with service providers. Therefore, we cannot be certain that the procedures performed with our products will be adequately reimbursed.

        Continued market acceptance in Japan will depend, in part, upon the availability of reimbursement within its healthcare payment systems. Reimbursement and healthcare payment systems vary significantly from country to country, and include both government sponsored healthcare and private insurance. We may not continue to obtain reimbursement approvals in Japan in a timely manner, if at all. Any failure to receive reimbursement approvals would negatively impact market acceptance of our products in Japan and any other international markets in which those approvals are sought.

We may face significant uncertainty in the industry due to government healthcare reform.

        Political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes. Reforms under consideration in the U.S. include mandated basic healthcare benefits, controls on healthcare spending through limitations on the growth of private health insurance premiums and Medicare and Medicaid spending, the creation of large insurance purchasing groups and significant modifications to the healthcare delivery system. We anticipate that Congress and certain state legislatures will continue to review and assess alternative healthcare delivery systems and payment methods. Public debate of these issues will likely continue in the future. Due to uncertainties regarding the ultimate features of reform initiatives and their enactment and implementation, we cannot predict which, if any, of such reform proposals will be adopted, when they may be adopted or what impact they may have on us.

We are subject to substantial governmental regulation that could change and thus force us to make modifications to how we develop, manufacture and price our products.

        The medical device industry is regulated extensively by governmental authorities, principally the FDA and corresponding state and foreign regulatory agencies. The FDA and other U.S. and foreign governmental agencies regulate, among other things, the development, manufacturing, clinical trials, marketing clearance and approval, promotion and sale of medical devices.

        Compliance with these regulations is, and will continue to be, time consuming, burdensome and expensive. Failure to comply with these regulations could jeopardize our ability to manufacture and sell our products and result in enforcement actions such as warning letters, fines, injunctions, civil penalties, termination of distribution, seizures of products, total or partial suspension of production, refusal of the FDA or other regulatory agencies to grant future clearances or approvals, or withdrawals or suspensions of current clearances or approvals all of which could result in higher than anticipated costs or lower than anticipated revenue and have a material adverse effect on our business, financial condition and results of operations. In the most egregious cases, we could face criminal sanctions, closure of our manufacturing facilities and prohibitions on sales of our products.

        The regulations to which we are subject are complex and have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated revenue.

        Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly vigilant and sales of our products in foreign countries are subject to rigorous foreign regulations. We rely on Alphatec Pacific with respect to compliance with Japanese regulations. In Hong Kong, the only other country where we currently sell products, we have and will continue to rely on foreign independent sales agencies that sell our products to comply with local regulations. Any failures on the part of such sales agencies and Alphatec Pacific to comply with applicable regulations could result in restrictions on the sale of our products in foreign countries.

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If we fail to obtain, or experience significant delays in obtaining, FDA clearances or approvals for our future products or modifications to our products, our ability to commercially distribute and market our products could suffer.

        Our medical devices are subject to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. The process of obtaining regulatory clearances or approvals to market a medical device, particularly from the FDA, can be costly and time consuming, and there can be no assurance that such clearances or approvals will be granted on a timely basis, if at all. In particular, the FDA permits commercial distribution of most new medical devices only after the devices have received clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act, or 510(k), or are the subject of an approved pre-market approval application, or a PMA. The 510(k) process generally takes three to six months, but can take significantly longer. A PMA must be submitted to the FDA if the device cannot be cleared through the 510(k) process or is not exempt from pre-marketing review by the FDA. A PMA must be supported by extensive data, including results of preclinical studies and clinical trials, manufacturing and control data and proposed labeling, to demonstrate to the FDA's satisfaction the safety and effectiveness of the device for its intended use. The PMA process is more costly and uncertain than the 510(k) clearance process, and generally takes between one and three years, if not longer. In addition, any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design or manufacture, requires a new 510(k) clearance or, possibly, a PMA.

        Our commercial distribution and marketing of any products or product modifications that we develop may be delayed since regulatory clearance or approval is required. In addition, because we cannot assure you that any new products or any product modifications we develop will be subject to the shorter 510(k) clearance process, the regulatory approval process for our new products or product modifications may take significantly longer than anticipated. There is no assurance that the FDA will not require a new product or product modification to go through the lengthy and expensive PMA approval process. Delays in obtaining regulatory clearances and approvals may:

•

delay or prevent commercialization of products we develop;



•

require us to perform costly procedures;



•

diminish any competitive advantages that we may attain; and



•

reduce our ability to collect revenues or royalties.

        To date, all of our medical device products have been cleared through the 510(k) process. We have no experience in obtaining approval for a device through the PMA process.

Our allograft implants and related technologies could become subject to significantly greater regulation by the FDA, which could disrupt our business.

        The FDA may regulate certain allografts as medical devices, drugs or biologics if the allograft is deemed to have been more than minimally manipulated or indicated for nonhomologous use. Homologous use is generally interpreted as the use of tissue for the same basic function in the recipient as it fulfilled in the donor. If the FDA decides that any of our current or future allografts are more than minimally manipulated or indicated for nonhomologous use, it would require us to obtain 510(k) clearance or a PMA approval if the allograft is viewed as a medical device or obtain approval as a drug or biologic if it is viewed as a drug or biologic. Depending on the nature and extent of any FDA decision applicable to our allografts, further distribution of the affected products could be interrupted for a substantial period of time, which would reduce our revenues and hurt our profitability.

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The safety of our products is not yet supported by long-term clinical data and may therefore prove to be less safe and effective than initially thought.

        We obtained clearance to offer all of our current medical device products through the FDA's 510(k) clearance process. The 510(k) clearance process is based on the FDA's agreement that a new product is substantially equivalent to already marketed products. The FDA's 510(k) clearance process is less rigorous than the PMA process and requires little, if any, supporting clinical data. For these reasons surgeons may be slow to adopt our products, we may not have the comparative data that our competitors have, or are generating, and we may be subject to greater regulatory and product liability risks. Further, future studies or experience may indicate that treatment with our products does not improve patient outcomes. Such results would reduce demand for our products and this could cause us to withdraw our products from the market. Moreover, if future studies or experience indicate that our products cause unexpected or serious complications or other unforeseen negative effects, we could be subject to significant legal liability, significant negative publicity, damage to our reputation and a dramatic reduction in sales of our products, all of which would have a material adverse effect on our business, financial condition and results of operations.

If we or our suppliers fail to comply with the FDA's quality system and good tissue practice regulations, the manufacture of our products could be delayed.

        We and our suppliers are required to comply with the FDA's quality system regulations, or QSRs, which cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products. In addition, suppliers and processors of allograft must comply with the FDA's current good tissue practice regulations, or GTPs, which govern the methods used in and the facilities and controls used for the manufacture of human cell tissue and cellular and tissue-based products, record keeping and the establishment of a quality program. The FDA audits compliance with the QSRs and GTPs through inspections of manufacturing and other facilities. If we or our suppliers have significant non-compliance issues or if any corrective action plan is not sufficient, we or our suppliers could be forced to delay the manufacture of our products until such problems are corrected to the FDA's satisfaction, which could have a material adverse effect on our business, financial condition and results of operations. Further, our products could be subject to recall if the FDA determines, for any reason, that our products are not safe or effective. Any recall or FDA requirement demanding that we seek additional approvals or clearances could result in delays, costs associated with modification of a product, loss of revenue and potential operating restrictions imposed by the FDA, all of which could have a material adverse effect on our business, financial condition and results of operations. In November 2003, the FDA performed a pre-announced inspection of our manufacturing facilities. Minor non-compliance items were cited on an FDA Form 483, which is a notice of inspection observation, that we received following the inspection. Following receipt of the Form 483, we submitted a formal response in which we indicated the steps that we had taken to correct the noted deficiencies and we have not received any further request from the FDA with respect to the Form 483 we received.

We may face difficulties integrating Alphatec Spine and the assets and operations we acquired from Cortek.

        We acquired Alphatec Spine in March 2005 and substantially all of the assets of Cortek in September 2005. Our ability to integrate the business of Alphatec Spine and to integrate the acquired assets and operations of Cortek is subject to various risks, including:

•

loss of key personnel, suppliers and distributors;



•

failure to effectively integrate the Alphatec Spine sales and marketing organization and product offering with the organization and offerings we acquired from Cortek; and

17

•

potential incompatibility of our information technology systems with the systems used in the businesses we acquired from Alphatec Spine and Cortek, which could cause internal reporting problems.

        If any of these risks materialize in the future, we may not be able to realize the operating efficiencies, synergies or other benefits expected from our acquisitions. Our failure to successfully integrate the business of Alphatec Spine and to integrate the acquired assets and operations of Cortek in a timely manner without incurring unexpected costs could have a material adverse effect on our business, financial condition and results of operations.

If we choose to acquire new and complementary businesses, products or technologies, we may be unable to complete these acquisitions or successfully integrate them in a cost effective and non-disruptive manner.

        Our success depends in part on our ability to continually enhance and broaden our product offering in response to changing customer demands, competitive pressures and technologies and our ability to increase our market share. Accordingly, we may in the future pursue the acquisition of complementary businesses, products or technologies instead of developing them ourselves. We have no current commitments with respect to any acquisition or investment. We do not know if we will be able to successfully complete any acquisitions, or whether we will be able to successfully integrate any acquired business, product or technology into our business or retain any key personnel, suppliers or distributors. Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete and integrate suitable acquisitions and to obtain any necessary financing. These efforts could be expensive and time consuming, disrupt our ongoing business and distract management. If we are unable to integrate any acquired businesses, products or technologies effectively, our business, financial condition and results of operations will be materially adversely affected. For example, an acquisition could materially impair our operating results by causing us to incur debt or requiring us to amortize significant amounts of expenses, including non-cash acquisition costs, and acquired assets.

We may face additional challenges in our attempts to expand in the Japanese market.

        We believe that many of the primary barriers to success in the market for spinal products in Japan are similar to those in the U.S., including the challenges of increasing market penetration, expanding the direct representative sales force and obtaining regulatory approval for new products. In addition, we may face additional difficulties and challenges in Japan, including that we have historically sold orthopedic trauma products in Japan and will need to expand the scope of our spine product offering, and that Alphatec Pacific's spine fusion product line offering cannot be as extensive as ours is in the U.S. until Alphatec Pacific obtains Japanese regulatory approval for some of our existing products.

We may not be able to timely develop new products or product enhancements that will be accepted by the market.

        We sell our products in a market that is characterized by technological change, product innovation, evolving industry standards, competing patent claims, patent litigation and intense competition. Our success will depend in part on our ability to develop and introduce new products and enhancements or modifications to our existing products, to do so before our competitors and to do so in a manner that does not infringe issued patents of third parties to which we do not have a license. We cannot assure you that we will be able to successfully develop or market new, improved or modified products, or that any of our future products will be accepted by the surgeons who use our current products. Our competitors' product development capabilities could be more effective than our capabilities, and their new products may get to market before our products. In addition, the products of our competitors may be more effective or less expensive than our products. The introduction of new products by our competitors may result in price reductions, reduced margins or loss of market share and may render

18

our products obsolete or noncompetitive. The success of any new product offering or enhancement or modification to an existing product will depend on several factors, including our ability to:

•

properly identify and anticipate surgeon and patient needs;



•

develop new products or enhancements in a timely manner;



•

obtain the necessary regulatory approvals for new products or product enhancements;



•

provide adequate training to potential users of new products;



•

receive adequate reimbursement approval of third-party payors such as Medicaid, Medicare and private insurers; and



•

develop an effective marketing and distribution network.

        Developing products in a timely manner can be difficult, in particular because product designs change rapidly to adjust to patent constraints and to market preferences. As a result, we may experience delays in our product launches which may significantly impede our ability to enter or compete in a given market and may reduce the sales that we are able to generate from these products. We may experience delays in any phase of a product launch, including during research and development, clinical trials, manufacturing, marketing and the surgeon training process. In addition, our suppliers of products or components that we do not manufacture can suffer similar delays, which could cause delays in our product introductions. If we do not develop new products or product enhancements in time to meet market demand or if there is insufficient demand for these new products or enhancements, it could have a material adverse effect on our business financial condition and results of operations.

Our products and product enhancements under development may not be commercially viable.

        While we devote significant resources to research and development, our research and development may not lead to improved or new products that are commercially successful. The research and development process is expensive, prolonged and entails considerable uncertainty. Development of medical devices, from discovery, through testing and registration, to initial product launch, typically takes between three and seven years in the U.S. Each of these periods varies considerably from product to product and country to country. Because of the complexities and uncertainties associated with spine fusion research and development, we may elect to cease development of one or more product candidates if we believe that the product candidate would not be commercially viable.

We are dependent on our senior management team, engineering team, sales and marketing team and key surgeon advisors, and the loss of any of them could harm our business.

        Our continued success depends in part upon the continued availability and contributions of our senior management, engineering and sales and marketing teams and the continued participation of our key surgeon advisors. The Chairman of our Board of Directors, John H. Foster, has obligations outside Alphatec Holdings, including in his capacity as a managing member of HGP, LLC, the general partner of HealthpointCapital, a private equity fund dedicated to growth capital investments in the orthopedic device sector, and as Chairman, Chief Executive Officer, a member of the Board of Managers and a managing director of HealthpointCapital, LLC, a merchant bank focusing exclusively on the orthopedic sector that provides independent research, private equity management and corporate finance advisory services. We have entered into employment agreements with all members of our senior management team, but none of these agreements guarantees the services of the individual for a specified period of time. Our ability to grow or at least maintain our sales levels depends in large part on our ability to attract and retain sales and marketing personnel and for these sales people to maintain their relationships with surgeons directly and through our distributors. We rely on our engineering team to research, design and develop potential products for our product pipeline. We also rely on our surgeon

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advisors to advise us on our products, our product pipeline, long-term scientific planning, research and development and industry trends. In addition, we currently are seeking a regulatory affairs executive experienced in obtaining clearance through the 510(k) and PMA processes and a quality assurance executive experienced in overseeing our quality control systems. We compete for personnel and advisors with other companies and other organizations, many of which are larger and have greater name recognition and financial and other resources than we do. The loss of members of our senior management team, sales and marketing team, engineering team and key surgeon advisors, or our inability to attract or retain other qualified personnel or advisors could have a material adverse effect on our business, financial conditions and results of operations. We have not obtained and do not expect to obtain key man life insurance on any of our senior managers.

We rely on our information technology systems for inventory management, distribution and other functions and to maintain our research and development data. If our information technology systems fail to adequately perform these functions, or if we experience an interruption in their operation, our business, financial condition and results of operations could be adversely affected.

        The efficient operation of our business is dependent on our information technology systems. We rely on our information technology systems to effectively manage accounting and financial functions; manage order entry, order fulfillment and inventory replenishment processes; and maintain our research and development data. The failure of our information technology systems to perform as we anticipate could disrupt our business and product development and could result in decreased sales, increased overhead costs, excess inventory and product shortages, all of which could have a material adverse effect on our business, financial condition and results of operations. In addition, our information technology systems are vulnerable to damage or interruption from:

•

earthquake, fire, flood and other natural disasters;



•

terrorist attacks and attacks by computer viruses or hackers;



•

power loss; and



•

computer systems, or Internet, telecommunications or data network failure.

        Any such interruption could have material adverse effect on our business, financial condition and results of operations.

The majority of our operations and all of our manufacturing facilities are currently conducted in locations that may be at risk of damage from fire, earthquakes or other natural disasters. If a natural disaster strikes, we may be unable to manufacture certain products for a substantial amount of time.

        We currently conduct the majority of our development, manufacturing and management activities in Carlsbad, California near known wildfire areas and earthquake fault zones. We have taken precautions to safeguard our facilities, including obtaining property and casualty insurance, implementing health and safety protocols, storing computer data off-site and having a disaster recovery plan. However, any future natural disaster, such as a fire or an earthquake, could cause substantial delays in our operations, damage or destroy our equipment or inventory and cause us to incur additional expenses. A disaster could seriously harm our business, financial condition and results of operations. Our facilities would be difficult to replace and would require substantial lead time to repair or replace. We do not maintain insurance against earthquakes and floods and the insurance we maintain against fires and other natural disasters would not be adequate to cover a total loss of our manufacturing facilities, may not be adequate to cover our losses in any particular case and may not continue to be available to us on acceptable terms, or at all.

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Alphatec Holdings is a holding company with no operations, and unless it receives dividends or other payments from Alphatec Spine, it will be unable to fulfill its cash obligations.

        As a holding company with no business operations, Alphatec Holdings' material assets consist only of the common stock of Alphatec Spine (and any other subsidiaries Alphatec Holdings may own in the future), dividends and other payments received from time to time from Alphatec Spine or such subsidiaries, and the proceeds raised from the sale of debt and equity securities. Alphatec Spine is legally distinct from Alphatec Holdings and has no obligation, contingent or otherwise, to make funds available to Alphatec Holdings. Alphatec Holdings will have to rely upon dividends and other payments from Alphatec Spine (and any other subsidiaries Alphatec Holdings may have in the future) to generate the funds necessary to fulfill its cash obligations. Alphatec Holdings may not be able to access cash generated by Alphatec Spine in order to fulfill cash commitments. The ability of Alphatec Spine to make dividend and other payments to Alphatec Holdings is subject to the availability of funds after taking into account Alphatec Spine's funding requirements, the terms of Alphatec Spine's indebtedness and applicable state laws. Alphatec Spine's current credit facility from Bank of the West prohibits Alphatec Spine from declaring or paying dividends, other than dividends payable in capital stock, during the term of the facility, which expires in January 2008.

Risks Related to Our Financial Results and Need for Financing

Our quarterly financial results could fluctuate significantly.

        Our quarterly operating results are difficult to predict and may fluctuate significantly from period to period, particularly because our sales prospects are uncertain. The level of our revenues and results of operations at any given time will be based primarily on the following factors:

•

acceptance of our products by surgeons, patients, hospitals and third-party payors;



•

demand and pricing of our products;



•

the mix of our products sold, because profit margins differ among our products;



•

timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors;



•

our ability to grow and maintain a productive sales and marketing organization;



•

regulatory approvals and legislative changes affecting the products we may offer or those of our competitors;



•

the effect of competing technological and market developments;



•

levels of third-party reimbursement for our products;



•

interruption in the manufacturing or distribution of our products;



•

our ability to produce or obtain products of satisfactory quality or in sufficient quantities to meet demand; and



•

changes in our ability to obtain FDA, state and international approval or clearance for our products.

In addition, until we have a larger base of surgeons using our products, occasional fluctuations in the use of our products by individual surgeons or small groups of surgeons will have a proportionately larger impact on our revenues than for companies with a larger customer base.

        Many of the products we may seek to develop and introduce in the future will require FDA, state and international approval or clearance. We cannot begin to commercialize any such products in the U.S. without FDA approval or clearance or outside of the U.S. without appropriate regulatory approvals and import licenses. As a result, it will be difficult for us to forecast demand for these products with any degree of certainty. In addition, we anticipate that our operating expenses will increase in the foreseeable future as we expand our sales and marketing, manufacturing and other commercial capabilities. We cannot assure you that our revenue will increase or be sustained in future periods or that we will be profitable in any future period. Any shortfalls in revenue or earnings from levels expected by our stockholders or by securities or industry analysts could have an immediate and significant adverse effect on the trading price of our common stock in any given period.

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We may need to raise additional funds in the future and such funds may not be available on acceptable terms, if at all.

        We believe that our current cash and cash equivalents, including the net proceeds from this offering, after satisfaction of our redemption and dividend obligations to our existing stockholders, together with our short-term investments, revenues from our operations and Alphatec Spine's ability to draw down on its secured credit facilities, will be sufficient to fund our projected operating requirements for at least the next 12 months. As of September 30 and December 31, 2005, we failed to satisfy certain covenants set forth in our prior credit agreement with Bank of the West. We obtained a waiver for each such non-compliance and in January 2006 entered into a new credit agreement with Bank of the West and paid off our prior credit agreement.

        We may seek additional funds from public and private stock offerings, borrowings under new debt facilities or other sources. Our capital requirements will depend on many factors, including:

•

the revenues generated by sales of our products;



•

the costs associated with expanding our sales and marketing efforts;



•

the expenses we incur in manufacturing and selling our products;



•

the costs of developing new products or technologies;



•

the cost of obtaining and maintaining FDA or other regulatory approval or clearance for our products and products in development;



•

the number and timing of acquisitions and other strategic transactions;



•

the costs associated with increased capital expenditures; and



•

the costs associated with our employee retention programs and related benefits.

        As a result of these factors, we may need to raise additional funds and such funds may not be available on favorable terms, if at all. Furthermore, if we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. In addition, if we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to our potential products or proprietary technologies, or to grant licenses on terms that are not favorable to us. If we cannot raise funds on acceptable terms, we may not be able to develop or enhance our products, execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements. Any of these events could adversely effect our ability to achieve our development and commercialization goals and have a material adverse effect on our business, financial condition and results of operations.

We are subject to certain risks associated with our foreign operations.

        Our operations outside of the United States are primarily in Japan. Certain risks are inherent in international operations, including:

•

difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;



•

foreign customers who may have longer payment cycles than customers in the U.S.;



•

tax rates in foreign countries may exceed those in the U.S. and foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions including transfer pricing restrictions when products produced in one country are sold to an affiliated entity in another country;

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•

economic and political instability in countries where we operate or where end-users of spine fusion surgery reside;



•

difficulties associated with managing a large organization spread throughout various countries;



•

difficulties in obtaining and enforcing intellectual property rights;



•

required compliance with a variety of foreign laws and regulations;



•

imposition of costly and lengthy new export licensing requirements;



•

laws and business practices favoring local companies; and



•

lack of availability and reduced level of reimbursement within prevailing foreign healthcare payment systems.

        If we continue to expand our business outside of the United States, our success will depend, in part, on our ability to anticipate and effectively manage these and other risks. We cannot assure you that these and other factors will not have a material adverse effect on our international operations or our business as a whole.

Our independent registered public accounting firm brought to our attention a material weakness in our internal controls during the most recent audit of our annual consolidated financial statements. Our failure to maintain effective internal controls could have a material adverse effect on our business, operating results and financial condition and cause our stockholders, lenders, suppliers and others to lose confidence in the accuracy or completeness of our financial reports.

        Our independent registered public accounting firm identified and communicated to us a material weakness in our internal control over financial reporting as of December 31, 2005. Management has evaluated this communication and has also concluded that a material weakness existed as of that date.

        A material weakness, as defined by the Public Company Accounting Oversight Board, is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Our independent registered public accounting firm advised our board of directors and our management that our process for our financial statement year-end close and reporting was insufficiently defined and represented a deficiency in the design and operating effectiveness of our year-end close and reporting controls. One of the primary causes of the deficiency in the financial statement close and reporting process noted by our independent registered public accounting firm was the inadequate staffing in our financial accounting and reporting functions. Our independent registered public accounting firm also indicated that this deficiency brings into question whether we will be able to prevent or detect material misstatements in our interim and annual consolidated financial statements in conformity with accounting principles generally accepted in the United States. Management further believes that the root cause of many of the observed deficiencies result from our transition from a small, private company with immature processes and controls to one that is growing rapidly and must meet the reporting and control standards applicable to public companies.

        We have begun to identify a number of actions to address the items noted by our independent public registered accounting firm, including:

•

hiring a new chief financial officer with Securities and Exchange Commission, or SEC, reporting experience, which was accomplished in February 2006;



•

hiring a controller, a position that was previously unfilled, with SEC reporting experience, which was accomplished in January 2006;



•

adopting a formal charter and operating agenda for our audit committee and increasing the number of directors serving on our audit committee;

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•

hiring additional skilled accounting and SEC-experienced personnel to enhance the accounting department;



•

enhancing our system and controls documentation;



•

initiating an upgrade to the latest version of our enterprise resource planning system which we believe will allow the accounting department and other users to be more effective in utilizing this system while reducing certain manual procedures;



•

documenting our formal accounting close process for quarter and year end reporting including documenting all necessary reviews and approvals; and



•

engaging consultants as needed until we complete the hiring of our accounting staff.

        While we have begun to take actions to address the items identified, additional measures may be necessary to complete the remediation of our internal controls. We plan to continue to assess our internal controls and procedures and intend to take further action as necessary or appropriate to address any other matters we identify. However, the process of designing and implementing effective internal controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments. We cannot assure you that the steps we have taken, or may subsequently take, have been or will be sufficient to fully remediate the material weakness identified by our independent registered public accounting firm or ensure that our internal controls are effective.

        We may incur substantial expenses relating to the remediation of the material weakness in our internal controls. Our accounting and financial reporting functions may not have, or may be unable to maintain, adequate resources to ensure that we will not have any future control deficiencies or material weaknesses in our system of internal controls. The effectiveness of our internal controls may in the future be limited by a variety of factors including:

•

faulty human judgment and errors, omissions or mistakes;



•

inappropriate management override of policies and procedures;



•

failure to properly implement our upgraded financial software system; and



•

the possibility that any enhancements to our internal controls may still not be adequate to assure timely and accurate financial information.

        If we fail to achieve and maintain effective internal controls and procedures for financial reporting, we could be unable to provide timely and accurate financial information and therefore be subject to delisting from the Nasdaq National Market, an investigation by the SEC, and civil or criminal sanctions. Additionally, ineffective internal control over financial reporting would place us at increased risk of fraud or misuse of corporate assets and could cause our stockholders, lenders, suppliers and others to lose confidence in the accuracy or completeness of our financial reports.

        Presently, we are not an accelerated filer, as such term is defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and therefore we are not currently subject to the internal control reporting requirements of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. The Sarbanes-Oxley Act requires a company's management to perform an annual assessment of the effectiveness of the company's internal control over financial reporting and for the company's independent registered public accounting firm to express an opinion on management's assessment and on the effectiveness of the company's internal control over financial reporting. These requirements will first apply to our annual report on Form 10-K for our fiscal year ending December 31, 2007.

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Our acquisition of Cortek assets may make it difficult for you to evaluate our historical and future performance.

        Our acquisition of substantially all of the assets of Cortek may make it more difficult for you to evaluate and predict our future operating performance because our financial statements only reflect results of operations which include such assets for the period from September 9, 2005, the date we acquired these assets, through March 31, 2006. Consequently, our historical results of operations and the pro forma financial information provided elsewhere in this prospectus may not give you an accurate indication of how we, together with the business we acquired from Cortek, will perform in the future.

Changes in or interpretations of accounting rules and regulations, such as expensing of stock options, could result in unfavorable accounting charges or require us to change our compensation policies.

        Accounting methods and policies, including policies regarding expensing stock options, are subject to further review, interpretation and guidance from relevant accounting authorities, including the SEC. For example, we are not currently required to record stock-based compensation charges for stock options granted prior to January 1, 2006 if an employee's stock option exercise price is equal to or exceeds the fair value of our common stock at the date of grant. However, a recent change in accounting standards requires all public companies to treat the fair value of stock options granted to employees as an expense effective as of the beginning of the first fiscal year commencing after June 15, 2005. If we had changed our accounting policy to record expense for the fair value of stock options granted in prior periods, our operating expenses would have increased. Through our compensation plan, we rely on grants of stock options and restricted stock to compensate existing employees and attract new employees. Since we currently are required to expense stock options granted on or after January 1, 2006, we may choose to reduce our reliance on stock options as a compensation tool. If we reduce our use of stock options, it may be more difficult for us to attract and retain qualified employees. If we do not reduce our reliance on stock options or if we continue to issue restricted shares, our reported income would decrease. Although we believe that our accounting practices are consistent with current accounting pronouncements, changes to our interpretations of accounting methods or policies in the future may require us to adversely revise how our financial statements are prepared.

A portion of our revenues and expenditures is subject to exchange rate fluctuations that could adversely affect our reported results of operations.

        While a majority of our business is denominated in U.S. dollars, we maintain operations in foreign countries, primarily Japan, that require payments in the local currency. Payments received from customers for goods sold in these countries are typically in the local currency. Consequently, fluctuations in the rate of exchange between the U.S. dollar and certain other currencies may affect our results of operations and period-to-period comparisons of our operating results. For example, if the value of the U.S dollar were to fall relative to the Japanese Yen, the principal foreign currency material to our business, then our reported revenues would increase when we convert the higher valued foreign currency into U.S. dollars. If the value of the U.S. dollar were to increase in relation to the Japanese Yen, then there would be a negative effect on the value of our sales in Japan to the extent our revenues in Japanese Yen are in excess of our Japanese Yen costs at the time that we converted amounts to U.S. dollars in connection with the preparation of our financial statements. We do not currently engage in hedging or similar transactions to reduce these risks.

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Risks Related to Our Intellectual Property and Potential Litigation

If our patents and other intellectual property rights do not adequately protect our products, we may lose market share to our competitors and be unable to operate our business profitably.

        Our success depends significantly on our ability to protect our proprietary rights to the technologies used in our products. We rely on patent protection, as well as a combination of copyright, trade secret and trademark laws, and nondisclosure, confidentiality and other contractual restrictions to protect our proprietary technology. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. For example, we cannot assure you that any of our pending patent applications will result in the issuance of patents to us. The United States Patent and Trademark Office, or PTO, may deny or require significant narrowing of claims in our pending patent applications, and patents issued as a result of the pending patent applications, if any, may not provide us with significant commercial protection or be issued in a form that is advantageous to us. We could also incur substantial costs in proceedings before the PTO. These proceedings could result in adverse decisions as to the priority of our inventions and the narrowing or invalidation of claims in issued patents. Our issued patents and those that may be issued in the future could subsequently be successfully challenged by others and invalidated or rendered unenforceable, which could limit our ability to stop competitors from marketing related products. In addition, our pending patent applications include claims to aspects of our products and procedures that are not currently protected by issued patents.

        Both the patent application process and the process of managing patent disputes can be time consuming and expensive. Competitors may be able to design around our patents or develop products that provide outcomes that are comparable to our products. Although we have entered into confidentiality agreements and intellectual property assignment agreements with certain of our employees, consultants and advisors as one of the ways we seek to protect our intellectual property and other proprietary technology, such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements. Furthermore, the laws of some foreign countries may not protect our intellectual property rights to the same extent as the laws of the U.S., if at all. Since most of our issued patents and pending patent applications are for the U.S. only, we lack a corresponding scope of patent protection in other countries, including in Japan. Thus, we may not be able to stop a competitor from marketing products in other countries that are similar to some of our products.

        In the event a competitor infringes upon one of our patents or other intellectual property rights, enforcing those patents and rights may be difficult and time consuming. Even if successful, litigation to defend our patents against challenges or to enforce our intellectual property rights could be expensive and time consuming and could divert management's attention from managing our business. Moreover, we may not have sufficient resources to defend our patents against challenges or to enforce our intellectual property rights.

        In addition, we hold licenses with third parties that are necessary to utilize certain technologies used in the design and manufacturing of some of our products, including our Zodiac polyaxial pedicle screws, net sales of which represented 39.9% and 36.4% of our net sales for 2005 and the three months ended March 31, 2006, respectively. The loss of such licenses would prevent us from manufacturing, marketing and selling these products, which would have a material adverse effect on our business, financial condition and results of operations.

        We license patents relating to the polyaxial feature of our pedicle screw from Biomet, Inc., or Biomet, pursuant to a license agreement, or the 555 license agreement. This polyaxial feature is incorporated into our Zodiac and Solanas pedicle screws and may be incorporated into future products. The 555 license agreement provides that the royalty shall remain in full force and effect without

26

modification regardless of any ruling by any court regarding the scope, validity, or enforceability of the patents covered by the 555 license agreement. The validity of the U.S. patents covered by the 555 license agreement is being challenged by Medtronic in an infringement action brought by Biomet in the U.S. The European patent covered by the 555 license agreement has recently been revoked by the European Patent Office after it was successfully challenged in an opposition proceeding in Europe initiated by Stryker and Synthes. Biomet is appealing this decision. Biomet can terminate the license in the event we fail to make any of the payments required under the license agreement, materially breach the license agreement, or become insolvent.

The medical device industry is characterized by patent and other intellectual property litigation and we could become subject to litigation that could be costly, result in the diversion of management's time and efforts, require us to pay damages, and/or prevent us from marketing our existing or future products.

        The medical device industry is characterized by extensive litigation and administrative proceedings over patent and other intellectual property rights. Determining whether a product infringes a patent involves complex legal and factual issues, the determination of which is often uncertain. Our competitors may assert that our products, the components of those products, the methods of using those products, or the methods we employ in processing those products are covered by U.S. or foreign patents held by them. In addition, they may claim that their patents have priority over ours because their patents were issued first. Because patent applications can take many years to issue, there may be applications now pending of which we are unaware, which may later result in issued patents that our products may infringe. There could also be existing patents that one or more components of our products may be inadvertently infringing, of which we are unaware. As the number of participants in the market for spine disorder devices and treatments grows, the possibility of patent infringement claims against us increases.

        Any such claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation. If the relevant patents were upheld as valid and enforceable and we were found to infringe, we could be required to pay substantial damages, including treble, or triple, damages if an infringement is found to be willful, and/or royalties and could be prevented from selling our products unless we could obtain a license or were able to redesign our products to avoid infringement. Any such license may not be available on reasonable terms, if at all, and there can be no assurance that we would be able to redesign our products in a way that would not infringe those patents. If we fail to obtain any required licenses or make any necessary changes to our products or technologies, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, all of which could have a material adverse effect on our business, financial condition and results of operations.

        In addition, in order to further our product development efforts, from time to time we enter into agreements with surgeons to develop new products. As consideration for product development activities rendered pursuant to these agreements, in certain instances we have agreed to pay such surgeons royalties on products developed by cooperative involvement between us and such surgeons. There can be no assurance that surgeons with whom we have entered into such an arrangement will not claim to be entitled to a royalty even if we do not believe that such products were developed by cooperative involvement between us and such surgeons. Any such claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation.

We cannot predict the outcome of a lawsuit in which we are a defendant.

        On April 12, 2006, we and HealthpointCapital, our majority stockholder, and its affiliate, HealthpointCapital, LLC, were served with a complaint by Drs. Darryl Brodke, Alan Hilibrand,

27

Richard Ozuna and Jeffrey Wang, or the claimant surgeons, in the Superior Court of California in the County of Orange, claiming, among other things, that, pursuant to certain contractual arrangements Alphatec Spine allegedly entered into with the claimant surgeons in 2001, we are required to pay the claimant surgeons quarterly royalties in an aggregate amount of 6% of the net sales of our polyaxial screws, which the claimant surgeons allege were developed with their assistance prior to the cessation of such development activities in March 2002. We first began to sell polyaxial screws in 2003 and have continued to sell them through the date of this prospectus. Net sales of our polyaxial pedicle screws represented 39.9% and 36.4% of our net sales for 2005 and the three months ended March 31, 2006, respectively. We are in the process of preparing an answer to the complaint, and we plan to vigorously defend ourselves in this action; however, the outcome is uncertain at this time. We may incur substantial expenses in defending against this litigation and, should we be unsuccessful in our defense, we could be liable for damages and be required to pay royalties to the claimant surgeons. Any of these outcomes could reduce our revenues and prospects for growth.

If we become subject to product liability claims, we may be required to pay damages that exceed our insurance coverage.

        Our business exposes us to potential product liability claims that are inherent in the testing, design, manufacture and sale of medical devices for spine surgery procedures. Spine surgery involves significant risk of serious complications, including bleeding, nerve injury, paralysis and even death. To date, our products have not been the subject of any material product liability claims. Currently, we carry product liability insurance in the amount of $10 million per occurrence and $10 million in the aggregate. Any product liability claim brought against us, with or without merit, could result in the increase of our product liability insurance rates or our inability to secure coverage in the future on commercially reasonable terms, if at all. In addition, if our product liability insurance proves to be inadequate to pay a damage award, we may have to pay the excess out of our cash reserves, which could harm our financial condition. If longer-term patient results and experience indicate that our products or any component of a product cause tissue damage, motor impairment or other adverse effects, we could be subject to significant liability. Even a meritless or unsuccessful product liability claim could harm our reputation in the industry, lead to significant legal fees and result in the diversion of management's attention from managing our business.

Because allograft products entail a potential risk of communicable disease to human recipients, we may be the subject of product liability claims regarding our allograft products.

        Our allograft business may expose us to additional potential product liability claims. The development of allografts and technologies for human tissue repair and treatment entails a risk of additional product liability claims because of the risk of transmitting disease to human recipients, and substantial product liability claims may be asserted against us. In addition, successful product liability claims made against one of our competitors could cause claims to be made against us or expose us to a perception that we are vulnerable to similar claims. Even a meritless or unsuccessful product liability claim could harm our reputation in the industry, lead to significant legal fees and result in the diversion of management's attention from managing our business.

We may be subject to damages resulting from claims that we, our employees or our independent distributors have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition agreements with our competitors or non-solicitation agreement.

        Many of our employees were previously employed at other medical device companies, including our competitors or potential competitors. Many of our independent distributors sell, or in the past have sold, products of our competitors. We may be subject to claims that either we, or these employees or independent distributors, have inadvertently or otherwise used or disclosed the trade secrets or other proprietary information of our competitors. In addition, we have been and may in the future be subject

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to claims that we caused an employee or independent distributor to break the terms of his or her non-competition agreement or non-solicitation agreement. Litigation may be necessary to defend against these claims. For example, Abbott Spine, Inc. has brought a suit against us, which is described under "Business—Legal Proceedings." Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to commercialize product candidates, which could have an adverse effect on our business, financial condition and results of operations.

Any claims relating to our improper handling, storage or disposal of biological, hazardous and radioactive materials could be time consuming and costly.

        The manufacture of certain of our products, including our allograft implants, involves the controlled use of biological, hazardous and/or radioactive materials and waste. Our business and facilities and those of our suppliers are subject to foreign, federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials and waste products. Although we believe that our safety procedures for handling and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate the risk of accidental contamination or injury from these materials. In the event of an accident, we could be held liable for damages or penalized with fines. This liability could exceed our resources and any applicable insurance. In addition, under some environmental laws and regulations, we could also be held responsible for all of the costs relating to any contamination at our past or present facilities and at third-party waste disposal sites even if such contamination was not caused by us. We may incur significant expenses in the future relating to any failure to comply with environmental laws. Any such future expenses or liability could have a significant negative impact on our business, financial condition and results of operations.

We and our independent sales agents must comply with various state, federal anti-kickback, self-referral, false claims and similar laws, the breach of which could cause a material adverse effect on our business, financial condition and results of operations.

        Our relationship with surgeons, hospitals and the marketers of our products are subject to scrutiny under various state and federal anti-kickback, self-referral, false claims and similar laws, often referred to collectively as healthcare fraud and abuse laws. Healthcare fraud and abuse laws are complex, and even minor, inadvertent violations can potentially give rise to claims that the relevant law has been violated. Any violations of these laws could result in a material adverse effect on the market price of our common stock, as well as our business, financial condition and results of operations. We cannot assure you that any of the healthcare fraud and abuse laws will not change or be interpreted in the future in a manner which restricts or adversely affects our business activities or relationships with surgeons, hospitals and marketers of our products.

        Federal anti-kickback laws and regulations prohibit any knowing and willful offer, payment, solicitation or receipt of any form of remuneration by an individual or entity in return for, or to induce:

•

the referral of an individual for a service or product for which payment may be made by Medicare, Medicaid or other government-sponsored healthcare program; or



•

purchasing, leasing, ordering or arranging for any service or product for which payment may be made by a government-sponsored healthcare program.

        Possible sanctions for violation of these anti-kickback laws include monetary fines, civil and criminal penalties, exclusion from Medicare and Medicaid programs and forfeiture of amounts collected in violation of such prohibitions. Certain states in which we market our products have similar anti-kickback, anti-fee splitting and self-referral laws, imposing substantial penalties for violations.

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        We have entered into consulting agreements and royalty agreements with surgeons, including some who make referrals to us. In addition, some of our referring surgeons own our stock, which they either purchased in an arms' length transaction on terms identical to those offered to non-surgeons or received from us as fair market value consideration for consulting services performed. While these transactions were structured with the intention of complying with all applicable laws, including the federal ban on physician self-referrals, commonly known as the "Stark Law," state anti-referral laws and other applicable anti-kickback laws, to the extent applicable, it is possible that regulatory agencies may in the future view these transactions as prohibited arrangements that must be restructured or for which we could be subject to other significant penalties, or prohibit us from accepting referrals from these surgeons. We would be materially impacted if regulatory agencies interpret our financial relationships with certain surgeons who refer our products to be in violation of applicable laws and we were unable to achieve compliance with applicable laws. This could subject us to monetary penalties for non-compliance, the cost of which could be substantial, or we may be unable to accept referrals from such surgeons.

        We must comply with a variety of other laws, such as laws prohibiting false claims for reimbursement under Medicare and Medicaid, which can also be triggered by violations of federal anti-kickback laws; Healthcare Insurance Portability and Accounting Act of 1996, which makes it a federal crime to commit healthcare fraud and make false statements; and the Federal Trade Commission Act and similar laws regulating advertisement and consumer protections. In certain cases, federal and state authorities pursue actions for false claims on the basis that manufacturers and distributors are promoting unapproved or off-label uses of their products. Pursuant to FDA regulations, we can only market our products for cleared or approved uses. Although surgeons are permitted to use medical devices for indications other than those cleared or approved by the FDA based on their medical judgment, we are prohibited from promoting products for such off-label uses. We market our products and provide promotional materials and training programs to surgeons regarding the use of our products. Although we believe our marketing, promotional materials and training programs for surgeons do not constitute promotion of unapproved uses of our products, if it is determined that our marketing, promotional materials or training programs constitute promotion of unapproved uses, we could be subject to significant fines in addition to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure and criminal penalty.

        The scope and enforcement of these laws is uncertain and subject to rapid change, especially in light of the lack of applicable precedent and regulations. There can be no assurance that federal or state regulatory authorities will not challenge our current or future activities under these laws. Any such challenge could have a material adverse effect on our business, financial condition and results of operations. Any state or federal regulatory review of us, regardless of the outcome, would be costly and time consuming. Additionally, we cannot predict the impact of any changes in these laws, whether or not retroactive.

Risks Associated with Owning Our Common Stock

There has been no prior public market for our common stock and an active trading market may not develop.

        Prior to this offering, there has been no public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on the Nasdaq National Market or otherwise or how liquid that market might become. The lack of an active market may impair the value of your shares and your ability to sell your shares at the time you wish to sell them. An inactive market may also impair our ability to raise capital by selling our common stock and may impair our ability to acquire other companies, products or technologies by using our common stock as consideration.

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We expect that the price of our common stock will fluctuate substantially and you may not be able to sell your shares at or above the offering price.

        The initial public offering price for the shares of our common stock sold in this offering will be determined by negotiation between the representatives of the underwriters and us. This price may not reflect the market price of our common stock following this offering. In addition, the market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including:

•

volume and timing of orders for our products;



•

quarterly variations in our or our competitors' results of operations;



•

our announcement or our competitors' announcements regarding new products, product enhancements, significant contracts, number of distributors, number of hospitals and surgeons using products, acquisitions or strategic investments;



•

announcements of technological or medical innovations for the treatment of spine pathology;



•

changes in earnings estimates or recommendations by securities analysts;



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our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis;



•

changes in healthcare policy in the U.S. and internationally;



•

product liability claims or other litigation involving us;



•

sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;



•

changes in governmental regulations or in the status of our regulatory approvals, clearances or applications;



•

disputes or other developments with respect to intellectual property rights;



•

changes in the availability of third-party reimbursement in the U.S. or other countries;



•

changes in accounting principles; and



•

general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.

Securities analysts may not initiate coverage of our common stock or may issue negative reports, which may have a negative impact on the market price of our common stock.

        Securities analysts may elect not to provide research coverage of our common stock after the completion of this offering. If securities analysts do not cover our common stock after the completion of this offering, the lack of research coverage may cause the market price of our common stock to decline. The trading market for our common stock may be affected in part by the research and reports that industry or financial analysts publish about our business. If one or more of the analysts who elects to cover us downgrades our stock, our stock price would likely decline rapidly. If one or more of these analysts ceases coverage of us, we could lose visibility in the market, which in turn could cause our stock price to decline. In addition, recently-adopted rules mandated by the Sarbanes-Oxley Act and a global settlement reached in 2003 between the SEC, other regulatory agencies and a number of investment banks have led to a number of fundamental changes in how analysts are reviewed and compensated. In particular, many investment banking firms are required to contract with independent financial analysts for their stock research. It may be difficult for companies such as ours, with smaller market capitalizations, to attract independent financial analysts that will cover our common stock. This could have a negative effect on the market price of our stock.

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Because of their significant stock ownership, our executive officers, directors and principal stockholders will be able to exert control over us and our significant corporate decisions.

        Upon completion of this offering and satisfaction of our redemption and dividend obligations to our existing stockholders, based on shares outstanding at April 15, 2006, our executive officers, directors, and stockholders holding more than 5% of our outstanding common stock and their affiliates will, in the aggregate, beneficially own approximately 41.3% of our outstanding common stock, or approximately 39.6% if the underwriters' over-allotment option is exercised in full. As a result, these persons, acting together, will have the ability to determine the outcome of all matters requiring stockholder approval, including the election and removal of directors and any merger, consolidation, or sale of all or substantially all of our assets. This concentration of ownership may harm the market price of our common stock by, among other things:

•

delaying, deferring or preventing our change in control;



•

impeding a merger, consolidation, takeover or other business combination involving us; or



•

causing us to enter into transactions or agreements that are not in the best interests of all stockholders.

        We also plan to reserve up to 5% of the shares offered in this offering under a directed share program in which our executive officers and directors, principal stockholders, employees, business associates and related persons may be able to purchase shares in this offering at the initial public offering price. This program may further increase the percentage of stock held by persons whose interests are aligned with the interests of our executive officers, directors and principal stockholders.

Certain members of our board of directors also serve as officers and directors of HealthpointCapital and its other portfolio companies.

        Four members of our board of directors also serve as officers and directors of our largest stockholder, HealthpointCapital, or its related entities and of other companies in which HealthpointCapital invests, including companies with which we compete or may in the future compete. Upon completion of this offering, HealthpointCapital will own approximately 37.8% of the outstanding common stock of Alphatec Holdings, or 36.2% if the underwriters' over-allotment option is exercised in full. HealthpointCapital is a private equity fund focused on the worldwide orthopedic device industry. HealthpointCapital and its affiliates may make investments and hold interests in businesses that compete directly or indirectly with us. For example, HealthpointCapital owns a 33% interest in Scient'x S.A., which sells dynamic stabilization and motion preservation spinal implants. John H. Foster, Chairman of our board of directors, is a managing member of HGP, LLC, which is the general partner of, and has a 20% profits interest in, HealthpointCapital, and the Chairman, Chief Executive Officer, a member of the Board of Managers and a managing director of HealthpointCapital, LLC, which owns a 25% ownership interest in HGP, LLC and is the parent company of the fund manager of HealthpointCapital. He is also a director of Scient'x S.A. Mortimer Berkowitz III, a member of our board of directors, is a managing member of HGP, LLC, the President, a member of the Board of Managers and a managing director of HealthpointCapital, LLC and a director of Scient'x S.A. Our directors R. Ian Molson and Stephen E. O'Neil also serve on the Board of Managers of HealthpointCapital, LLC. Such directors may have obligations to HealthpointCapital, HealthpointCapital, LLC, HGP, LLC and to investors in those companies and other portfolio companies of HealthpointCapital and its affiliates, the fulfillment of which might not be in the best interests of us or our stockholders.

        Our Chairman, John H. Foster, has a 3.2% beneficial capital interest in HealthpointCapital, a 36.6% direct interest in HGP, LLC and a 44.2% direct and beneficial interest in HealthpointCapital, LLC. Our director Mortimer Berkowitz III has a less than 1% direct capital interest in HealthpointCapital, a 24.4% direct interest in HGP, LLC and a 30.5% direct and beneficial

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interest in HealthpointCapital, LLC. Our director R. Ian Molson has a less than 1% direct capital interest in HealthpointCapital and a 2.2% direct interest in HealthpointCapital, LLC. Our director Stephen E. O'Neil has a 1.5% direct interest in HealthpointCapital, LLC. Our Executive Vice President of Corporate Development, Laszlo Adam, is a director of, and has a less than a 1% direct interest in, HealthpointCapital, LLC.

        Because of these possible conflicts of interest, such directors may direct potential business and investment opportunities to other entities rather than to us or such directors may undertake or otherwise engage in activities or conduct on behalf of such other entities that is not in, or which may be adverse to, our best interests. Whether a director directs an opportunity to us or to another company, our directors may face claims of breaches of fiduciary duty and other duties relating to such opportunities. Our amended and restated certificate of incorporation requires us to indemnify our directors to the fullest extent permitted by law, which may require us to indemnify them against claims of breaches of such duties arising from their service on our board of directors.

        HealthpointCapital or its affiliates may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Furthermore, HealthpointCapital may have an interest in us pursuing acquisitions, divestitures, financings or other transactions that, in its judgment, could enhance its equity investment, even though such transactions might involve risks to us and our stockholders generally. In addition, if we were to seek a business combination with a target business with which one or more of our existing stockholders or directors may be affiliated, conflicts of interest could arise in connection with negotiating the terms of and completing the business combination. Conflicts that may arise may not be resolved in our favor.

At least half of the net proceeds of this offering will be used to satisfy our redemption and dividend obligations to our existing stockholders.

        Pursuant to the terms of our certificate of incorporation, we are required to use approximately $57.4 million of the net proceeds from this offering, or $75.5 million if the underwriters exercise their over-allotment option in full, to satisfy redemption and dividend obligations to our existing stockholders. In addition, the maximum amount of net proceeds that we may retain from this offering, including any exercise by the underwriters of the over-allotment option, is $65 million. We believe that our current cash and cash equivalents, together with the net proceeds from this offering, after satisfaction of our redemption and dividend obligations to our existing stockholders, together with revenues from our operations and Alphatec Spine's ability to draw down on its secured credit facilities, will be sufficient to meet our projected operating requirements for at least the next 12 months.

Our management team may invest or spend the proceeds of this offering in ways in which you may not agree or in ways that may not yield a return, and the use of the proceeds of this offering will be subject to covenants contained in our debt financing agreements.

        We will use certain of the proceeds from this offering to satisfy redemption and dividend obligations to our existing stockholders and to pay an advisory fee in connection with this offering. We expect to use certain of the net proceeds from this offering that we retain to expand our sales and marketing activities; to fund the clearance or approval and subsequent commercialization of our near-term product candidates; to support our research and development efforts; to repay and retire debt; and for general corporate purposes, including to acquire businesses, products or intellectual property that are complementary to our business, or to obtain the right to use such products and intellectual property. Our management will have considerable discretion in the application of the remaining net proceeds of this offering. Stockholders may not agree with such uses and the remaining net proceeds may be used for corporate purposes that do not increase our operating results or market value. Until the net proceeds are used, they may be placed in investments that do not produce income or that lose value.

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Future sales of our common stock in the public market after this offering may depress our stock price and impair our ability to raise future capital through the sale of our equity securities.

        Upon completion of the reorganization transactions, our current stockholders will hold a substantial number of shares of our common stock that they will be able to sell in the public market in the near future. A significant portion of these shares will be held by a small number of stockholders. Sales by our current stockholders of a substantial number of shares after this offering could significantly reduce the market price of our common stock. Moreover, following the completion of this offering, the holders of approximately 23.0 million shares of common stock and common stock underlying options will have rights, subject to some conditions, to require us to include their shares in registration statements that we may file for ourselves or other stockholders. The 23.0 million shares represent approximately 72.3% of the total number of shares of our common stock to be outstanding immediately after this offering, assuming no exercise of the underwriters' over-allotment option. Please see "Description of Capital Stock—Registration Rights" for a description of the registration rights of these stockholders.

        Following completion of this offering, we also intend to register some or all common stock that we may issue under our existing 2005 Employee, Director and Consultant Stock Plan totaling approximately 6,400,000 shares. In addition, all of such shares, as well as an additional 232,050 shares issued to members of our Scientific Advisory Board and certain of our directors, may be sold pursuant to Rule 701 under the Securities Act of 1933, as amended, or the Securities Act, 90 days after the date of this prospectus. After 90 days, or once we register these shares, they can be freely sold in the public market upon issuance, subject to the lock-up agreements described in "Underwriting" and, in the case of sales pursuant to Rule 701, subject to limitations described in "Shares Eligible for Future Sale—Rule 701." If any of these holders cause a large number of securities to be sold in the public market, the sales could reduce the trading price of our common stock. These sales also could impede our ability to raise future capital. Please see "Shares Eligible for Future Sale" for a description of sales that may occur in the future.

As a new investor, you will experience substantial dilution as a result of this offering and future equity issuances and, as a result, our stock price could decline.

        The initial public offering price is substantially higher than the pro forma net tangible book value per share of our outstanding common stock. For a definition of the term pro forma net tangible book value, please see "Dilution." As a result, investors purchasing common stock in this offering will incur immediate dilution of $12.14 per share. This dilution is due in large part to earlier investors in our company having paid substantially less than the initial public offering price when they purchased their shares. In addition, pursuant to our certificate of incorporation, we are entitled to retain 50% of the net proceeds from this offering, excluding any proceeds from the exercise of the underwriters' over-allotment option, up to a maximum of $65 million. We are required to use the remaining net proceeds from this offering to satisfy redemption and dividend obligations to our existing stockholders. To the extent those obligations exceed the remaining net proceeds from this offering, we are required to issue a combination of common stock and New Redeemable preferred stock to satisfy those obligations, which will result in further dilution to investors. Investors who purchase shares of common stock in this offering will contribute approximately 78% of the total amount we have raised to fund our operations on a pro forma basis, as of March 31, 2006, after giving effect to the reorganization transactions upon the closing of this offering, but will own only approximately 29% of our common stock based upon the number of shares outstanding as of March 31, 2006. Because we may require additional funds to develop new products and continue to expand our business, we may conduct substantial future offerings of equity securities. The exercise of outstanding options and future equity issuances, including future public offerings or future private placements of equity securities and any additional shares issued in connection with acquisitions, will result in further dilution to investors.

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The requirements of being a public company may strain our resources and distract management.

        As a public company, we will be subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. These requirements may place a strain on our personnel, information technology systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting and, as part of each of our annual and quarterly reports, that our chief financial officer make certain certifications regarding our disclosure controls and procedures and internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight will be required. This may divert management's attention from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.

We may incur increased costs as a result of recently enacted and proposed changes in laws and regulations affecting public companies.

        Recently enacted and proposed changes in the laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act and rules implemented by the SEC and by the Nasdaq National Market, have required changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal and financial compliance costs significantly and to make some activities more time-consuming and costly. For example, in anticipation of becoming a public company, we have created additional board committees and adopted policies regarding internal controls and disclosure controls and procedures. In addition, we will incur additional costs associated with our public company reporting requirements. We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge, and we cannot assure you that we will be able to do so without incurring material costs. The new rules could also make it more difficult or more costly for us to obtain certain types of insurance, including directors' and officers' liability insurance. We, therefore, may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. We are presently evaluating and monitoring developments with respect to these new rules and cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs.

In the quarterly reports on Form 10-Q and the annual reports on Form 10-K that we will be required to file when we become a reporting company, our management may not be able to conclude that we have effective disclosure controls and procedures, and we or our independent registered public accounting firm may not be able to conclude that we have effective internal controls over financial reporting. We will also be exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.

        After the consummation of this offering, we will be subject to the reporting requirements of the Exchange Act that require us to file, among other things, quarterly reports on Form 10-Q and annual reports on Form 10-K. Under Section 302 of the Sarbanes-Oxley Act, as a part of each of these reports, our chief executive officer and chief financial officer will be required to evaluate and report their conclusions regarding the effectiveness of our disclosure controls and procedures and to certify that they have done so. This requirement will apply to our first Form 10-Q for the quarter following effectiveness of the registration statement of which this prospectus is a part. In addition, under Section 404 of the Sarbanes-Oxley Act, we will be required to include a report of management on our internal control over financial reporting in our Form 10-K and the independent registered public accounting firm auditing our financial statements will be required to attest to and report on management's assessment of the effectiveness of our internal control over financial reporting and on

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the effectiveness of our internal control over financial reporting. This requirement will first apply to our Form 10-K for our fiscal year ending December 31, 2007.

        We will be evaluating our internal controls systems to allow management to report on, and our independent auditors to attest to, our internal controls. We will be performing the system and process evaluation, testing and any necessary remediation required to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. While we anticipate being able to fully implement the requirements relating to internal controls and all other aspects of Section 404, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations since there is presently no precedent available by which to measure compliance adequacy.

        If we are unable to conclude in a timely manner that our disclosure controls and procedures and internal control over financial reporting are effective, or if our independent registered public accounting firm is unable to conclude that our assessment of our internal control over financial reporting is sufficient or is unable to conclude that our internal controls over financial reporting are effective and therefore issues an adverse opinion, we may be subject to sanctions or investigation by regulatory authorities, including the SEC or the Nasdaq National Market. This type of action could adversely affect our financial results or investors' confidence in our company and our ability to access capital markets, and could cause our stock price to decline. In addition, the control and procedures that we will implement may not comply with all of the relevant rules and regulations of the SEC and the Nasdaq National Market. If we fail to develop and maintain effective controls and procedures, we may be unable to provide the required financial information in a timely and reliable manner.

We may become involved in securities class action litigation that could divert management's attention and harm our business.

        The stock market in general, and the Nasdaq National Market and the market for medical device companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Further, the market prices of securities of medical device companies have been particularly volatile. Factors contributing to this volatility include FDA and international actions with respect to the government regulation of medical devices and third-party reimbursement matters, changes in U.S. or international healthcare policies, and changes in the condition of the medical device industry generally. These broad market and industry factors may materially harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company's securities, securities class action litigation has often been brought against that company. We may become involved in this type of litigation in the future. Litigation is often expensive and diverts management's attention and resources, which could materially harm our financial condition, results of operations and business.

Anti-takeover provisions in our organizational documents and change of control provisions in some of our employment agreements and agreements with distributors, in our agreement relating to the repurchase of stock of Alphatec Pacific and in some of our outstanding debt agreements, as well as the terms of our New Redeemable preferred stock, may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely.

        Certain provisions of our amended and restated certificate of incorporation and restated by-laws that will be effective upon the completion of this offering could discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. Stockholders who wish to participate in these

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transactions may not have the opportunity to do so. Furthermore, these provisions could prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions:

•

allow the authorized number of directors to be changed only by resolution of our board of directors;



•

allow vacancies on our board of directors to be filled only by resolution of our board of directors;



•

authorize our board of directors to issue, without stockholder approval, blank check preferred stock that, if issued, could operate as a "poison pill" to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;



•

require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;



•

establish advance notice requirements for stockholder nominations to our board of directors and for stockholder proposals that can be acted on at stockholder meetings; and



•

limit who may call stockholder meetings.

        Some of our employment agreements and all of our restricted stock agreements and incentive stock option agreements provide for accelerated vesting of benefits, including full vesting of restricted stock and options, upon a change of control. A limited number of our agreements with our distributors include a provision that extends the term of the distribution agreement upon a change in control and makes it more difficult for us or our successor to terminate the agreement. This initial public offering will not constitute a change of control under such agreements. In connection with our sale of 20% of the stock of Alphatec Pacific to Mr. Roy Yoshimi, we entered into a stock purchase agreement pursuant to which we have an obligation to repurchase that stock upon certain changes of control at a purchase price based on revenues of Alphatec Pacific. Alphatec Pacific borrowed ¥350.0 million, or approximately $3.0 million from Mr. Yoshimi, which, along with a fee, is also payable in full upon certain changes in control. We intend to repay this loan out of the net proceeds of this offering. These provisions may discourage or prevent a change of control.

        In addition, in the event of a change of control, we would be required to redeem all outstanding shares of our New Redeemable preferred stock for an aggregate of $30 million, assuming an initial public offering price of $14.00 per share. Further, our amended and restated certificate of incorporation permits us to issue additional shares of preferred stock. The terms of our New Redeemable preferred stock or any new preferred stock we may issue could have the effect of delaying, deterring or preventing a change in control.

We do not intend to pay cash dividends.

        We have never declared or paid cash dividends on our capital stock and, with the exception of the dividends payable in connection with the reorganization transactions, we do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business. In addition, the terms of any future debt or credit facility may preclude us from paying any dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of potential gain for the foreseeable future.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to us. The forward-looking statements are contained principally in the sections entitled "Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." When used in this prospectus, the words "anticipate," "believe," "could," "estimate," "will," "may," "plan," "should," "intend," and "expect" and similar expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements contained in this prospectus. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this prospectus, including under the heading "Risk Factors." Given these factors, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date of this prospectus. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this prospectus. These statements include, among other things, statements relating to:

•

the timing, costs and other limitations involved in obtaining regulatory approval for any of our product candidates and continued compliance with governmental regulation of our existing products and activities;



•

our ability to market, commercialize and achieve market acceptance of any of our products or any product candidates that we are developing or may develop in the future;



•

our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;



•

our estimates of market sizes and anticipated uses of our products;



•

our estimates regarding anticipated operating losses, future revenue, expenses, capital requirements, liquidity and our needs for additional financing;



•

the availability of adequate reimbursement from third-party payors in the United States and foreign markets;



•

our ability to maintain an adequate sales network for our products, including independent distributors;



•

our ability to remediate the material weakness in our internal control over financial reporting;



•

our ability to conclude that we have effective disclosure controls and procedures;



•

any potential requirement by regulatory agencies that we restructure our relationships and/or equity issuances with referring surgeons;



•

our ability to obtain sufficient amounts of raw materials to meet our manufacturing needs;



•

the long-term safety of our products;



•

our ability to develop and maintain relationships with key surgeon advisors;



•

our business strategy and our underlying assumptions about market data, demographic trends and trends in the treatment of spine disorder;



•

our ability to scale up our manufacturing capabilities and facilities;

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•

our use of the proceeds of this offering;



•

our projected capital expenditures;



•

potential changes to the healthcare delivery systems and payment methods by Congress and certain state legislatures;



•

our ability to integrate the assets and operations of Alphatec Spine and Cortek or of any other businesses, products or technologies we might acquire in the future;



•

our ability to attract and retain a qualified management team, as well as other qualified personnel and advisors; and



•

our ability to manage the risks associated with international operations.

        Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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USE OF PROCEEDS

        We estimate that our net proceeds from the sale of 9,300,000 shares of common stock in this offering will be approximately $114.7 million, assuming an initial public offering price of $14.00 per share, after deducting underwriting discounts and commissions and estimated offering costs. If the over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $132.9 million.

        We expect to use $48.0 million of the net proceeds from this offering to expand our sales and marketing activities, to support our research and development efforts, to fund the clearance or approval and subsequent commercialization of our near-term product candidates, and to acquire complementary businesses, products, or technologies, or to obtain the right to use such complementary technologies. We have no present understandings, commitments or agreements to acquire any businesses products or technologies.

        Based on the amounts outstanding at March 31, 2006, we anticipate using approximately $9.4 million of the net proceeds of this offering to reduce our outstanding indebtedness as follows:

•

approximately $6.8 million to reduce current amounts outstanding under our $10.0 million revolving credit facility with Bank of the West, which may be reborrowed; and



•

approximately $2.6 million to repay a loan from the Chairman, President and Chief Executive Officer of Alphatec Pacific, which bears an effective interest rate of 18.46% to its scheduled maturity and is payable in monthly installments through May 2007.

        We will use approximately $57.4 million of the net proceeds from this offering to satisfy redemption and dividend obligations to our existing stockholders, which will be approximately $100.0 million on May 22, 2006. Of such proceeds, $48.4 million will be used to satisfy our aggregate redemption obligations, and $9.0 million will be used to satisfy our aggregate dividend obligations.

        Our estimated offering costs include $1.0 million to pay an advisory fee, and approximately $0.2 million to pay out of pocket costs which may be incurred, to HealthpointCapital, LLC, an affiliate of HealthpointCapital.

        Pursuant to the terms of our certificate of incorporation, we are entitled to retain 50% of the net proceeds from this offering, excluding any proceeds from the exercise of the underwriters' over-allotment option, up to $65 million. We are required to use the remaining net proceeds from this offering to satisfy redemption and dividend obligations to holders of our outstanding Series A preferred stock, Series A-1 preferred stock, Series B preferred stock, Rolling common stock, Series A common stock, Series A-1 common stock, Series B common stock, and Series C common stock. To the extent those obligations exceed the remaining net proceeds from this offering, we are required to issue a combination of common stock and New Redeemable preferred stock to satisfy those obligations. We will not issue more than $30 million of New Redeemable preferred stock. In addition, we are required to use all of the net proceeds from any exercise of the underwriters' over-allotment option to redeem any outstanding shares of New Redeemable preferred stock.

        The amounts that we actually expend for operating and working capital purposes may vary significantly depending on a number of factors, including the timing and success of any FDA clearances we may seek in the future, the timing of regulatory submissions, the status and timing of our research and development efforts, the amount of proceeds actually raised in this offering, the amount of cash generated by our operations, the amount of competition we face and the success we have with obtaining any required technology or licenses and entering into collaboration arrangements. As a result, management will retain broad discretion over the allocation of the net proceeds from this offering.

        All of our calculations involving the payment in the reorganization transactions of the accrued and unpaid dividends on each of our series of common stock for a combination of cash, common stock and

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New Redeemable preferred stock are based on the amount of accrued and unpaid dividends on our series of common stock through May 22, 2006. The actual number of shares of common stock and New Redeemable preferred stock issued and cash paid will differ based on the amount of accrued and unpaid dividends through the closing date of this offering.

        Of the net proceeds of this offering to be used to satisfy our redemption and dividend obligations to our existing stockholders, approximately $36.3 million will be paid to our executive officers, key employees and principal stockholders as described under "Certain Relationships and Related Transactions."

        Pending use of the net proceeds of this offering, we intend to invest the net proceeds in short-term investment grade and U.S. government securities.

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DIVIDEND POLICY

        We have never declared or paid any cash dividends on our capital stock and, with the exception of the dividends payable in connection with the reorganization transactions, we do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain all available funds and any future earnings to support operations and finance the growth and development of our business. Any future determination related to our dividend policy will be made at the discretion of our board of directors.

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CAPITALIZATION

        The following table summarizes our capitalization as of March 31, 2006:

•

on an actual basis; and



•

on a pro forma as adjusted basis to reflect the reorganization transactions, including the conversion of each share of each series of our outstanding common stock into 3.57 shares of common stock, the effectiveness of our amended and restated certificate of incorporation and the sale of the 9,300,000 shares of common stock by us in this offering at an assumed initial public offering price of $14.00 per share and the application of the net proceeds therefrom as described in "Use of Proceeds" as if such transactions occurred on March 31, 2006.

        You should read the following information together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements, the financial statements of Cortek and our unaudited pro forma condensed combined consolidated statements of operations and the notes to those statements and information included elsewhere in this prospectus.

        The number of shares of our common stock to be outstanding immediately after this offering is based on the number of shares outstanding on April 15, 2006. This number of shares outstanding excludes:

•

509,863 shares of our common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $3.88 per share;



•

79,812 shares of our common stock reserved for future issuance under our stock plan as of April 15, 2006 and an additional 4,258,000 shares of our common stock to be reserved upon consummation of this offering for future issuance under our stock plan; and



•

1,395,000 shares of our common stock issuable if the underwriters exercise their over-allotment option.

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DILUTION

        If you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering. We calculate pro forma net tangible book value per share by dividing the net tangible book value, our tangible assets less total liabilities, by the number of outstanding shares of our common stock.

        After giving effect to the reorganization transactions, including the conversion of each share of each series of our outstanding common stock into 3.57 shares of common stock, and the sale of 9,300,000 shares of common stock by us at an assumed initial public offering price of $14.00 per share and the application of the net proceeds therefrom as described under "Use of Proceeds," our pro forma net tangible book value as of March 31, 2006 would be $59.3 million, or $1.86 per share. This represents an immediate increase in the pro forma net tangible book value (deficit) of $6.73 per share to existing stockholders and an immediate dilution of $12.14 per share to new investors purchasing shares in this offering at an assumed initial public offering price of $14.00 per share. The following table illustrates this per share dilution:

        If the underwriters exercise their over-allotment option in full, the pro forma net tangible book value per share would decrease to $1.78, and the dilution per share to new investors would be $12.22. If all outstanding stock options with exercise prices less than the initial public offering price were exercised, the pro forma net tangible book value per share would increase to $1.89, and the dilution per share to new investors would decrease to $12.11. If the underwriters exercise their over-allotment in full and all outstanding stock options with exercise prices less than the initial public offering price were exercised, the pro forma net tangible book value per share would decrease to $1.81, and the dilution per share to new investors would increase to $12.19.

        The following table shows, on a pro forma basis, as of March 31, 2006, after giving effect to the reorganization transactions upon the closing of this offering, the differences between our existing stockholders and investors in this offering with respect to the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by our existing stockholders and the price per share paid by investors in this offering before deducting estimated underwriting discounts and commissions and our estimated offering expenses:

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        Assuming the underwriters' over-allotment option is exercised in full, the percentage of shares of common stock held by existing stockholders will be reduced to 68% and the number of shares of common stock held by new investors will be increased to 10,695,000, or 32%. Assuming that all stock options with exercise prices less than the initial public offering price are exercised, the percentage of shares of common stock held by existing stockholders will be 71% and the percentage of shares of common stock held by new investors will be 29%. Assuming the underwriters' over-allotment option is exercised in full, and that all stock options with exercise prices less than the initial public offering price are exercised, the percentage of shares of common stock held by existing stockholders will be reduced to 68% and the number of shares of common stock held by new investors will be increased to 10,695,000, or 32%.

        Unless otherwise noted, the data above assumes no exercise of any stock options or the underwriters' over-allotment option to purchase up to 1,395,000 shares of our common stock. As of April 15, 2006 there were:

•

509,863 shares of our common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $3.88 per share; and



•

79,812 shares of our common stock reserved for future issuance under our stock plan as of April 15, 2006 and an additional 4,258,000 shares of our common stock to be reserved upon consummation of this offering for future issuance under our stock plan.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following tables summarize our historical consolidated financial data for the periods presented. Accordingly, the information presented does not reflect the reorganization transactions to be completed in connection with the consummation of this offering. We have derived the summary consolidated financial data as of December 31, 2004 and December 31, 2005 and for the years ended December 31, 2003 and 2004, and the periods from January 1, 2005 to March 17, 2005 and March 18, 2005 to December 31, 2005, from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated financial data for the years ended December 31, 2001 and 2002, the period from March 18, 2005 to March 31, 2005 and the three months ended March 31, 2006 and the consolidated balance sheet data as of March 31, 2006, are derived from our unaudited consolidated financial statements, which, in the opinion of management, contain all adjustments necessary for a fair presentation of the consolidated financial data.

        Alphatec Predecessor refers to Alphatec Spine prior to its acquisition by Alphatec Holdings on March 18, 2005. Alphatec Combined refers to the combined results of Alphatec Predecessor and Alphatec Holdings.

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        You should read the following information together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements, the financial statements of Cortek and our unaudited pro forma condensed combined consolidated statements of operations and the notes to those statements and information included elsewhere in this prospectus.