SINTX Technologies, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; it does not provide standalone fourth-quarter financial results. SINTX develops and manufactures advanced ceramics for biomedical, industrial, armor, and antipathogenic applications.
Financial performance
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Product revenue | $606,000 | $594,000 | Up 2% |
| Gross profit | $157,000 | $119,000 | Up 32% |
| Gross margin | 25.9% | 20.0% | Up 5.9 percentage points |
| Operating expenses | $10.777 million | $8.623 million | Up 25% |
| Operating loss | $(10.620) million | $(8.504) million | Loss widened |
| Net loss | $(8.775) million | $(7.029) million | Loss widened 25% |
| Cash used in operations | $(10.132) million | $(9.112) million | Use increased |
| Cash and cash equivalents, year-end | $14.273 million | $25.351 million | Down $11.078 million |
FY2021 basic net loss per share was $0.36; diluted loss per share was $0.38. FY2020 included a $9.565 million deemed dividend and preferred-stock discount accretion, resulting in net loss attributable to common stockholders of $16.594 million, or $1.01 basic and $1.08 diluted per share.
Operating expenses rose as research and development increased 22% to $5.886 million, general and administrative expense increased 15% to $3.603 million, and sales and marketing expense increased 89% to $1.288 million. Other income, net, was $1.845 million and included $905,000 of PPP loan forgiveness and a $696,000 gain from the change in fair value of derivative liabilities.
Liquidity, debt, and financial position
At year-end, total assets were $21.840 million, current assets were $15.028 million, and current liabilities were $2.214 million. The balance sheet reported no long-term debt or current debt; PPP loans were forgiven during 2021. Operating lease liabilities totaled approximately $2.398 million, including $500,000 current and $1.898 million long-term. The company reported $17.728 million in stockholders’ equity and an accumulated deficit of $249.883 million.
Cash fell by $11.078 million during 2021. Investing activities used $1.651 million, including $3.739 million of property and equipment purchases; financing activities provided $705,000. Management stated that existing capital resources were expected to fund operations for at least 12 months, through March 2023, while also noting continued operating losses and reliance on increased sales and/or additional capital to sustain the business.
Material developments and outlook
- Revenue remained nearly flat and heavily concentrated: one customer accounted for 88% of FY2021 revenue, compared with 95% in FY2020. SINTX manufactures silicon-nitride spinal fusion products for CTL Medical under an exclusive arrangement; CTL has no minimum purchase obligation.
- SINTX entered the ceramic armor market in 2021, acquiring equipment and know-how for $2.8 million. $2.7 million of the equipment was not yet in service at year-end; the company expected the armor facility to become operational by mid-2022. A 10-year lease was signed for the facility.
- The company is pursuing silicon-nitride opportunities in medical, industrial, and antipathogenic markets, including products intended to inactivate pathogens. These remain development and commercialization opportunities; the filing provides no quantified revenue guidance.
- A February 2021 equity distribution agreement permits up to $15 million of at-the-market stock sales; no shares had been sold under it by year-end. Potential future equity financing could dilute shareholders.
- On January 3, 2022, Nasdaq notified SINTX that its share price had been below the $1.00 minimum bid requirement for 30 consecutive trading days. The company disclosed a compliance deadline of July 5, 2022, with a possible additional compliance period subject to Nasdaq requirements.
- The company reported no material legal proceedings. Management assessed disclosure controls and internal control over financial reporting as effective at December 31, 2021. The independent auditor issued an unmodified opinion on the financial statements and identified warrant-liability valuation as a critical audit matter.
Key risks and unusual items
SINTX has incurred losses since inception and expects continued losses and operating cash use. Commercial success depends on customer acceptance, product development and regulatory clearances, manufacturing execution, and access to additional financing. Other significant exposures include dependence on CTL and a small customer base, limited supplier arrangements for raw materials, competition from larger companies, reimbursement and regulatory uncertainty, and intellectual-property risks. The filing notes that the core silicon-nitride composition and some manufacturing processes are not protected by patents; a core patent was due to expire in June 2022.
COVID-19 could continue to affect sales, cash flows, operations, counterparties, and access to capital. Additional unusual factors in FY2021 included forgiveness of $905,000 in PPP principal and accrued interest, and gains or losses from remeasurement of derivative warrant liabilities. Management’s liquidity outlook is not a guarantee; the filing states that profitability and positive operating cash flow remain uncertain.
Important facts for investors to verify
- Whether CTL sales and orders support revenue growth, and how the customer concentration changes.
- Actual cash burn, cash runway, and any capital raised under the $15 million equity distribution agreement after year-end.
- Whether the armor facility became operational as planned, and whether it generated commercial orders and revenue.
- Progress, regulatory status, and commercial adoption of medical, industrial, and antipathogenic products.
- Nasdaq listing compliance developments and any resulting reverse stock split or dilution.
- Patent expirations and the strength of remaining intellectual-property protection, as well as warrant-liability valuation assumptions.