##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the quarterly period ended September 30, 2007.
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the Transition Period from  to
 Commission File Number 0-19278
 OSTEOTECH, INC.
  Delaware
(State or other jurisdiction of incorporation or 
organization)
    
    13-3357370
(I.R.S. Employer Identification No.)
 51 James Way, Eatontown, New Jersey 07724
 (732) 542-2800
 Not Applicable
 þ o
  o þ o
 o þ




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##### 



OSTEOTECH, INC.
 FORM 10-Q
 Table of Contents
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risks
    
    
    21Item 4. Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 5. Other Information
    
    
    23Item 6. Exhibits
    
    
    23EX-10.1: FORM OF 2007 STOCK INCENTIVE PLAN RESTRICTED STOCK UNIT AGREEMENTEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  -2-




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 OSTEOTECH, INC. and SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (dollars in thousands)
 September 30,
    
    December 31,2007
    
    2006(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    20,840
    
    
    $
    17,946Accounts receivable, net of allowance of $568 in 2007
and $488 in 2006
    
    
    19,194
    
    
    
    18,507Deferred processing costs
    
    
    32,038
    
    
    
    29,067Inventories
    
    
    879
    
    
    
    1,005Prepaid expenses and other current assets
    
    
    2,817
    
    
    
    2,795Total current assets
    
    
    75,768
    
    
    
    69,320Property, plant and equipment, net
    
    
    33,980
    
    
    
    36,340Other assets
    
    
    6,061
    
    
    
    7,373Total assets
    
    $
    115,809
    
    
    $
    113,033LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    17,286
    
    
    $
    15,861Current maturities of capital lease obligation
    
    
    786
    
    
    
    727Total current liabilities
    
    
    18,072
    
    
    
    16,588Capital lease obligation
    
    
    14,279
    
    
    
    14,876Other liabilities
    
    
    5,789
    
    
    
    7,716Total liabilities
    
    
    38,140
    
    
    
    39,180Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value; 5,000,000 shares
authorized; no shares issued or outstandingCommon stock, $.01 par value; 70,000,000 shares
authorized; issued and outstanding 17,649,975 shares
in 2007 and 17,396,775 shares in 2006
    
    
    176
    
    
    
    174Additional paid-in capital
    
    
    67,471
    
    
    
    65,784Accumulated other comprehensive income
    
    
    1,430
    
    
    
    1,114Retained earnings
    
    
    8,592
    
    
    
    6,781Total stockholders equity
    
    
    77,669
    
    
    
    73,853Total liabilities and stockholders equity
    
    $
    115,809
    
    
    $
    113,033
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OSTEOTECH, INC. and SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (dollars in thousands, except per share data)
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006(Restated)
    
    
    
    
    
    (Restated)Revenue
    
    $
    25,651
    
    
    $
    23,448
    
    
    $
    77,338
    
    
    $
    73,810Cost of revenue
    
    
    11,443
    
    
    
    11,994
    
    
    
    38,023
    
    
    
    38,117Gross profit
    
    
    14,208
    
    
    
    11,454
    
    
    
    39,315
    
    
    
    35,693Marketing, selling and general and
administrative
    
    
    11,051
    
    
    
    9,751
    
    
    
    33,341
    
    
    
    29,856Research and development
    
    
    1,178
    
    
    
    1,192
    
    
    
    3,457
    
    
    
    3,50712,229
    
    
    
    10,943
    
    
    
    36,798
    
    
    
    33,363Operating income
    
    
    1,979
    
    
    
    511
    
    
    
    2,517
    
    
    
    2,330Other expenses:Interest income
    
    
    244
    
    
    
    197
    
    
    
    756
    
    
    
    522Interest expense
    
    
    (401
    )
    
    
    (416
    )
    
    
    (1,215
    )
    
    
    (1,260
    )Other
    
    
    (208
    )
    
    
    (131
    )
    
    
    (186
    )
    
    
    359(365
    )
    
    
    (350
    )
    
    
    (645
    )
    
    
    (379
    )Income before income taxes
    
    
    1,614
    
    
    
    161
    
    
    
    1,872
    
    
    
    1,951Income tax provision (benefit)
    
    
    10
    
    
    
    (74
    )
    
    
    61
    
    
    
    105Net income
    
    $
    1,604
    
    
    $
    235
    
    
    $
    1,811
    
    
    $
    1,846Earnings per share:Basic
    
    $
    .09
    
    
    $
    .01
    
    
    $
    .10
    
    
    $
    .11Diluted
    
    $
    .09
    
    
    $
    .01
    
    
    $
    .10
    
    
    $
    .11Shares used in computing earnings
per share:Basic
    
    
    17,573,134
    
    
    
    17,295,314
    
    
    
    17,494,807
    
    
    
    17,281,703Diluted
    
    
    17,990,101
    
    
    
    17,352,420
    
    
    
    17,858,501
    
    
    
    17,356,109
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OSTEOTECH, INC. and SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  (dollars in thousands)
 Nine Months EndedSeptember 30,2007
    
    2006(Restated)Cash Flow From Operating ActivitiesNet income
    
    $
    1,811
    
    
    $
    1,846Adjustments to reconcile net income
to net cash provided by operating activities:Depreciation and amortization
    
    
    4,026
    
    
    
    4,537Stock-based compensation expense
    
    
    496
    
    
    
    162Changes in current assets and liabilities:Accounts receivable
    
    
    (687
    )
    
    
    (1,858
    )Deferred processing costs
    
    
    (2,086
    )
    
    
    (215
    )Inventories
    
    
    126
    
    
    
    108Prepaid expenses and other current assets
    
    
    (22
    )
    
    
    328Note receivables from patent litigation settlement
    
    
    750
    
    
    
    750Accounts payable and other liabilities
    
    
    (548
    )
    
    
    (2,105
    )Net cash provided by operating activities
    
    
    3,866
    
    
    
    3,553Cash Flow From Investing ActivitiesCapital expenditures
    
    
    (1,488
    )
    
    
    (1,509
    )Other, net
    
    
    (189
    )
    
    
    (468
    )Net cash used in investing activities
    
    
    (1,677
    )
    
    
    (1,977
    )Cash Flow From Financing ActivitiesProceeds from issuance of common stock
    
    
    1,193
    
    
    
    186Principal payments on capital lease obligation
    
    
    (538
    )
    
    
    (485
    )Net cash provided by (used in) financing activities
    
    
    655
    
    
    
    (299
    )Effect of exchange rate changes on cash
    
    
    50
    
    
    
    131Net increase in cash and cash equivalents
    
    
    2,894
    
    
    
    1,408Cash and cash equivalents at beginning of period
    
    
    17,946
    
    
    
    13,484Cash and cash equivalents at end of period
    
    $
    20,840
    
    
    $
    14,892Supplementary cash flow data:Cash paid during the period for interest
    
    $
    1,216
    
    
    $
    1,260Cash paid during the period for taxes
    
    $
    114
    
    
    $
    76
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OSTEOTECH, INC. and SUBSIDIARIES
 
 Notes to Unaudited Condensed Consolidated Financial Statements
 (dollars in thousands, except per share data)
 1. Basis of Presentation
 General
  Adoption of New Accounting Pronouncement
   2. Recent Accounting Pronouncements
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OSTEOTECH, INC. andSUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements  (dollars in thousands, except per share data)
  3. Deferred Processing Costs
  September 30,
    
    December 31,2007
    
    2006Unprocessed donor tissue
    
    $
    14,191
    
    
    $
    11,957Tissue in process
    
    
    5,807
    
    
    
    5,533Implantable donor tissue
    
    
    12,040
    
    
    
    11,577$
    32,038
    
    
    $
    29,067
  3. Inventories
  September 30,
    
    December 31,2007
    
    2006Supplies
    
    $
    258
    
    
    $
    187Raw materials
    
    
    513
    
    
    
    489Finished goods
    
    
    108
    
    
    
    329$
    879
    
    
    $
    1,005
 4. Stock Compensation Plans
  -7-




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OSTEOTECH, INC. andSUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements  (dollars in thousands, except per share data)
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Grants:RSUs
    
    
    459,200
    
    
    
    5,000
    
    
    
    515,700
    
    
    
    40,000Stock options
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    45,000Non-cash
compensation
expense recognized
in statements of
operations
    
    $
    265
    
    
    $
    44
    
    
    $
    496
    
    
    $
    162
     Nine Months EndedWeighted Average Assumptions
    
    September 30, 2006Expected holding period (years)
    
    
    5Risk-free interest rate
    
    
    4.71
    %Volatility factor
    
    
    75
    %Dividend yield
    
    
    0Annual forfeiture rate
    
    
    3
    %Fair value per share at date of grant
    
    $
    3.25
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OSTEOTECH, INC. and SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements  (dollars in thousands, except per share data)
 5. Debt and Financing Agreement
  6. Income Taxes
      -9-




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OSTEOTECH, INC. and SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements  (dollars in thousands, except per share data)
    7. Commitments and Contingencies
 Litigation
  Scotty Foster and Linda Foster v. Osteotech, Inc.
   Eddie Don Glenn v. Osteotech, Inc.
  -10-




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OSTEOTECH,
INC. and SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements  (dollars in thousands, except per share data)
   ReSource Tissue Bank v. OST Developpement SA
    8. Comprehensive Income
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006(Restated)
    
    
    
    
    
    (Restated)Net income
    
    $
    1,604
    
    
    $
    235
    
    
    $
    1,811
    
    
    $
    1,846Currency
translation adjustments
    
    
    381
    
    
    
    (283
    )
    
    
    316
    
    
    
    (13
    )Comprehensive income (losses)
    
    $
    1,985
    
    
    $
    (48
    )
    
    $
    2,127
    
    
    $
    1,833
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OSTEOTECH, INC. and SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements  (dollars in thousands, except per share data)
 9. Earnings Per Share
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006(Restated)
    
    
    
    
    
    (Restated)Net income available to common
stockholders
    
    $
    1,604
    
    
    $
    235
    
    
    $
    1,811
    
    
    $
    1,846Denominator for basic earnings per share,
weighted average common shares
outstanding
    
    
    17,573,134
    
    
    
    17,295,314
    
    
    
    17,494,807
    
    
    
    17,281,703Effect of dilutive securities after
application of the treasury stock
method:RSUs
    
    
    80,388
    
    
    
    31,630
    
    
    
    32,974
    
    
    
    11,758Stock options
    
    
    336,579
    
    
    
    25,476
    
    
    
    330,720
    
    
    
    62,648Denominator
for diluted earnings per share
    
    
    17,990,101
    
    
    
    17,352,420
    
    
    
    17,858,501
    
    
    
    17,356,109Basic earnings per share
    
    $
    .09
    
    
    $
    .01
    
    
    $
    .10
    
    
    $
    .11Diluted earnings per share
    
    $
    .09
    
    
    $
    .01
    
    
    $
    .10
    
    
    $
    .11
  10. Operating Segments
   Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006(Restated)
    
    
    
    
    
    (Restated)Revenue:DBM
    
    $
    17,044
    
    
    $
    13,379
    
    
    $
    48,687
    
    
    $
    42,701Traditional Tissue
    
    
    3,963
    
    
    
    4,166
    
    
    
    13,132
    
    
    
    12,281Spinal Allografts
    
    
    2,292
    
    
    
    3,159
    
    
    
    8,301
    
    
    
    10,768Hybrid/Synthetics
    
    
    528
    
    
    
    325
    
    
    
    1,169
    
    
    
    938Client Services
    
    
    1,664
    
    
    
    2,289
    
    
    
    5,536
    
    
    
    6,672Other
    
    
    160
    
    
    
    130
    
    
    
    513
    
    
    
    450$
    25,651
    
    
    $
    23,448
    
    
    $
    77,338
    
    
    $
    73,810
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OSTEOTECH, INC. and SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements  (dollars in thousands, except per share data)
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006(restated)
    
    
    
    
    
    (restated)Operating income
(loss):DBM
    
    $
    6,499
    
    
    $
    3,335
    
    
    $
    14,009
    
    
    $
    12,154Traditional Tissue
    
    
    433
    
    
    
    1,982
    
    
    
    2,360
    
    
    
    4,314Spinal Allografts
    
    
    766
    
    
    
    195
    
    
    
    1,788
    
    
    
    1,472Hybrid/Synthetics
    
    
    (371
    )
    
    
    (364
    )
    
    
    (372
    )
    
    
    (497
    )Client Services
    
    
    1,167
    
    
    
    1,346
    
    
    
    4,172
    
    
    
    3,066Other
    
    
    46
    
    
    
    (34
    )
    
    
    224
    
    
    
    66Corporate
    
    
    (6,561
    )
    
    
    (5,949
    )
    
    
    (19,664
    )
    
    
    (18,245
    )$
    1,979
    
    
    $
    511
    
    
    $
    2,517
    
    
    $
    2,330
  11. Other Expenses
  -13-




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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
 Results of Operations
 Critical Accounting Policies and Estimates
  Operating Segment Realignment and Adoption of Accounting Principle
    -14-




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Net Income
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(dollars in thousands,except per share
    
    2007
    
    2006
    
    Change
    
    Percent
    
    2007
    
    2006
    
    Change
    
    Percentamounts)
    
    
    
    
    
    (Restated)
    
    
    
    
    
    Change
    
    
    
    
    
    (Restated)
    
    
    
    
    
    ChangeNet income
    
    $
    1,604
    
    
    $
    235
    
    
    $
    1,369
    
    
    
    583
    %
    
    $
    1,811
    
    
    $
    1,846
    
    
    $
    (35
    )
    
    
    (2
    %)Earnings per share:Basic
    
    $
    .09
    
    
    $
    .01
    
    
    
    
    
    
    
    
    
    
    $
    .10
    
    
    $
    .11Diluted
    
    $
    .09
    
    
    $
    .01
    
    
    
    
    
    
    
    
    
    
    $
    .10
    
    
    $
    .11
   Revenue
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Percent
    
    
    
    
    
    
    
    
    
    
    
    
    
    Percent2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    Change(dollars in thousands)
    
    
    
    
    
    (restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    (restated)DBM
    
    $
    17,044
    
    
    $
    13,379
    
    
    $
    3,665
    
    
    
    27
    %
    
    $
    48,687
    
    
    $
    42,701
    
    
    $
    5,986
    
    
    
    14
    %Traditional Tissue
    
    
    3,963
    
    
    
    4,166
    
    
    
    (203
    )
    
    
    (5
    )%
    
    
    13,132
    
    
    
    12,281
    
    
    
    851
    
    
    
    7
    %Spinal Allograft
    
    
    2,292
    
    
    
    3,159
    
    
    
    (867
    )
    
    
    (27
    )%
    
    
    8,301
    
    
    
    10,768
    
    
    
    (2,467
    )
    
    
    (23
    )%Hybrid/Synthetic
    
    
    528
    
    
    
    325
    
    
    
    203
    
    
    
    62
    %
    
    
    1,169
    
    
    
    938
    
    
    
    231
    
    
    
    25
    %Client Services
    
    
    1,664
    
    
    
    2,289
    
    
    
    (625
    )
    
    
    (27
    )%
    
    
    5,536
    
    
    
    6,672
    
    
    
    (1,136
    )
    
    
    (17
    )%Other Product Lines
    
    
    160
    
    
    
    130
    
    
    
    30
    
    
    
    23
    %
    
    
    513
    
    
    
    450
    
    
    
    63
    
    
    
    14
    %$
    25,651
    
    
    $
    23,448
    
    
    $
    2,203
    
    
    
    9
    %
    
    $
    77,338
    
    
    $
    73,810
    
    
    $
    3,528
    
    
    
    5
    %
  -15-




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® ®
 ® ®
  ®
   Gross Margin
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006(dollars in thousands)
    
    
    
    
    
    (Restated)
    
    
    
    
    
    (Restated)Gross profit
    
    $
    14,208
    
    
    $
    11,454
    
    
    $
    39,315
    
    
    $
    35,693Gross margin
    
    
    55
    %
    
    
    49
    %
    
    
    51
    %
    
    
    48
    %
  -16-




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Operating Expenses
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Percent
    
    
    
    
    
    
    
    
    
    
    
    
    
    Percent(dollars in thousands)
    
    2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeMarketing, selling
and general and
administrative
    
    $
    11,051
    
    
    $
    9,751
    
    
    $
    1,300
    
    
    
    13
    %
    
    $
    33,341
    
    
    $
    29,856
    
    
    $
    3,485
    
    
    
    12
    %Research and
development
    
    
    1,178
    
    
    
    1,192
    
    
    
    (14
    )
    
    
    (1
    )%
    
    
    3,457
    
    
    
    3,507
    
    
    
    (50
    )
    
    
    (1
    )%Total
    
    $
    12,229
    
    
    $
    10,943
    
    
    $
    1,286
    
    
    
    12
    %
    
    $
    36,798
    
    
    $
    33,363
    
    
    $
    3,435
    
    
    
    10
    %
   Operating Income
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Percent
    
    
    
    
    
    
    
    
    
    
    
    
    
    Percent(dollars in thousands)
    
    2007
    
    2006
    
    Change
    
    Change
    
    2007
    
    2006
    
    Change
    
    ChangeDBM Segment
    
    $
    6,499
    
    
    $
    3,335
    
    
    $
    3,164
    
    
    
    95
    %
    
    $
    14,009
    
    
    $
    12,154
    
    
    $
    1,855
    
    
    
    15
    %Traditional Tissue
Segment
    
    
    433
    
    
    
    1,982
    
    
    
    (1,549
    )
    
    
    (78
    )%
    
    
    2,360
    
    
    
    4,314
    
    
    
    (1,954
    )
    
    
    (45
    )%Spinal Allograft Segment
    
    
    766
    
    
    
    195
    
    
    
    571
    
    
    
    293
    %
    
    
    1,788
    
    
    
    1,472
    
    
    
    316
    
    
    
    21
    %Hybrid/Synthetic Segment
    
    
    (371
    )
    
    
    (364
    )
    
    
    (7
    )
    
    
    2
    %
    
    
    (372
    )
    
    
    (497
    )
    
    
    125
    
    
    
    (25
    )%Client Services Segment
    
    
    1,167
    
    
    
    1,346
    
    
    
    (179
    )
    
    
    (13
    )%
    
    
    4,172
    
    
    
    3,066
    
    
    
    1,106
    
    
    
    36
    %Other Product Lines
    
    
    46
    
    
    
    (34
    )
    
    
    80
    
    
    
    235
    %
    
    
    224
    
    
    
    66
    
    
    
    158
    
    
    
    239
    %8,540
    
    
    
    6,460
    
    
    
    2,080
    
    
    
    32
    %
    
    
    22,181
    
    
    
    20,575
    
    
    
    1,606
    
    
    
    8
    %Corporate
    
    
    (6,561
    )
    
    
    (5,949
    )
    
    
    (612
    )
    
    
    (10
    )%
    
    
    (19,664
    )
    
    
    (18,245
    )
    
    
    (1,419
    )
    
    
    (8
    )%Operating income
    
    $
    1,979
    
    
    $
    511
    
    
    $
    1,468
    
    
    
    287
    %
    
    $
    2,517
    
    
    $
    2,330
    
    
    $
    187
    
    
    
    8
    %
 -17-




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##### Table of Contents



Other Expense
   Income Tax Provision (benefit)
   -18-




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##### Table of Contents



Liquidity and Capital Resources
   -19-




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##### Table of Contents



Recent Accounting Developments
   Contractual Obligations
  Impact of Inflation and Foreign Currency Exchange Fluctuations
  -20-




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##### Table of Contents



Litigation
   
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  -21-




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  Scotty Foster and Linda Foster v. Osteotech, Inc.
   Eddie Don Glenn v. Osteotech, Inc.
   ReSource Tissue Bank v. OST Developpement SA
  -22-




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##### Table of Contents



Item 5. OTHER INFORMATION
     
 Item 6. EXHIBITS AND
  Exhibit
    
    
    
    PageNumber
    
    Description
    
    Number10.1
    
    Form of Osteotech, Inc. 2007 Stock Incentive Plan Restricted Stock Unit Agreement
(for employees)
    
    +31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
    
    +31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
    
    +32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
    
    +32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
    
    +
 
 +
    
    Filed herewith. -23-




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##### Table of Contents



SIGNATURES
  Date: November 6, 2007
    
    
    
    Osteotech, Inc.(Registrant)Date: November 6, 2007
    
    By:
    
    /s/ Sam Owusu-AkyawSam Owusu-AkyawPresident and Chief Executive
Officer(Principal Executive Officer)Date: November 6, 2007
    
    By:
    
    /s/ Mark H. BurroughsMark H. BurroughsExecutive Vice President, Chief Financial Officer(Principal Financial Officer and
Chief Accounting Officer)
 -24-