SINTX Technologies, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Financial amounts below are in millions of dollars unless otherwise noted. SINTX develops and manufactures advanced ceramics for biomedical, technical/armor, and antipathogenic applications.
Financial performance
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0.508 | $0.240 | $1.047 | $0.370 |
| Gross profit | $0.404 | $0.174 | $0.825 | $0.224 |
| Gross margin | 79.5% | 72.5% | 78.8% | 60.5% |
| Operating loss | $(3.464) | $(2.783) | $(7.020) | $(5.661) |
| Net loss | $(2.455) | $(2.512) | $(2.748) | $(5.357) |
| Cash used in operating activities | Not separately stated | Not separately stated | $(8.071) | $(5.722) |
- Q2 product revenue was $0.235 million and grant and contract revenue was $0.273 million. For the six-month period, these were $0.475 million and $0.572 million, respectively.
- At June 30, cash and cash equivalents were $9.328 million, versus $6.245 million at December 31, 2022. Current assets were $11.100 million and current liabilities $3.926 million.
- Total liabilities were $5.286 million. Debt was approximately $0.107 million, consisting of non-interest-bearing related-party loans payable through August 2024; the TA&T business loan was paid off in Q1. Operating lease liabilities totaled $2.116 million.
- Stockholders’ equity was $13.812 million, up from $5.704 million at year-end. Accumulated deficit was $265.203 million.
Changes versus prior periods
- Revenue rose 112% in Q2 and 183% for the first six months, attributed mainly to silicon nitride aerospace-component orders and government grants and contracts, including activity at the Maryland operation.
- Gross profit increased with revenue, but operating expenses also rose: 31% in Q2 and 33% for the six months. Higher R&D reflected patent and prototype costs, employee costs, SINTX Armor facility operations, and the TA&T acquisition; G&A also increased.
- Operating losses widened 24% in both comparisons. Six-month net loss improved year over year, substantially reflecting a $4.971 million noncash gain from the change in fair value of warrant derivative liabilities; this should not be read as an equivalent improvement in operating performance.
- Six-month operating cash use increased by $2.349 million year over year. Financing provided $11.488 million, mainly from the February 2023 offering. Cash increased by $3.083 million during the period.
- Common shares outstanding increased from 542,145 at December 31, 2022, to 4,208,027 at June 30, 2023. The company completed a 1-for-100 reverse split in December 2022; presented share amounts reflect the split. The February offering included common shares or pre-funded warrants and warrants.
Outlook, risks, and unusual items
- Going concern: Management expects continued operating losses and cash use. The filing states that continued operations depend on increasing sales and/or obtaining additional capital, that financing is uncertain, and that these conditions raise substantial doubt about the company’s ability to continue as a going concern.
- Management is pursuing new revenue opportunities through advanced-ceramic products and services, including silicon nitride applications beyond spinal fusion, ceramic armor, TA&T capabilities, and antipathogenic products. It is also generating scientific and clinical data to support sales efforts. No quantified revenue, profitability, or cash-flow guidance is provided.
- The February 2023 public offering generated approximately $12.0 million gross proceeds. The company reported $4.840 million of net cash proceeds from common stock and pre-funded warrants and $6.650 million of proceeds associated with warrant derivative liabilities. Further equity financing could dilute shareholders; available financing may be unfavorable or unavailable.
- Warrant derivative liabilities are Level 3 fair-value estimates using a Monte Carlo model and significant unobservable inputs. The liability was $1.051 million at June 30, down from $5.126 million at year-end; fair-value movements materially affected reported earnings.
- The ATM agreement had no sales through June 30, and sales were restricted through August 10, 2023, following the February offering. Management reported no material changes to previously disclosed risk factors, no material pending legal proceedings, and effective disclosure controls as of June 30.
Important facts for investors to verify
- Whether cash, financing access, and revenue growth are sufficient to address the expressly disclosed going-concern uncertainty and operating cash burn.
- How much reported earnings depend on noncash warrant fair-value changes, and how the warrant liability and potential share dilution may evolve.
- Whether higher revenue converts into sustainable operating performance as R&D and other expenses remain elevated.
- The commercial progress and economics of aerospace, armor, TA&T, biomedical, and antipathogenic opportunities; the filing provides no quantified targets or timeline.