SINTX Technologies, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Unless otherwise noted, financial amounts below are in millions of dollars; the filing presents most statements in thousands. SINTX develops and manufactures advanced ceramics for biomedical, industrial and antipathogenic applications. It reports one operating segment.
Financial performance
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Product revenue | $0.080 | $0.101 | $0.181 | $0.202 |
| Grant revenue | $0.160 | — | $0.189 | — |
| Total revenue | $0.240 | $0.101 | $0.370 | $0.202 |
| Gross profit | $0.174 | $0.028 | $0.224 | $0.068 |
| Gross margin | 72.5% | 27.7% | 60.5% | 33.7% |
| Operating expenses | $2.957 | $2.391 | $5.885 | $5.272 |
| Operating loss | $(2.783) | $(2.363) | $(5.661) | $(5.204) |
| Net loss | $(2.512) | $(2.199) | $(5.357) | $(4.832) |
| Loss per share, basic and diluted | $(0.10) | $(0.09) | $(0.22) | $(0.20) |
Q2 product revenue declined 21%, while total revenue rose 138% because of grant revenue. For the first half, product revenue fell 10% and total revenue increased 83%, also due to grants. Grant revenue is earned against allowable costs; related grant expenses were $0.150 million in Q2 and $0.176 million for the first half. SINTX reported no income tax provision.
Cash, liquidity and debt
- Cash and cash equivalents were $7.747 million at June 30, 2022, down from $14.273 million at December 31, 2021. Current assets were $9.228 million and current liabilities $2.977 million.
- First-half operating cash use was $5.722 million, compared with $5.339 million in 2021. Investing activities used $0.295 million; financing activities used $0.509 million. Cash decreased by $6.526 million.
- At June 30, the balance sheet showed $0.399 million of debt, $0.249 million of related-party debt, and $2.673 million of operating lease liabilities. The filing also reports a $48,707 balance on TA&T’s Wells Fargo line of credit.
- The Company repaid approximately $0.5 million, including fees and interest, on its 2021 PPP loan in June after determining it was ineligible for the loan. No balance remained at June 30.
- Accumulated deficit was $255.774 million, versus $250.417 million at year-end 2021. Stockholders’ equity was $12.049 million, down from $17.194 million.
Material developments and outlook
- On June 30, SINTX acquired all shares of Technology Assessment and Transfer, Inc. (TA&T), a materials-processing and technology commercialization business. The purchase allocation reported $1.637 million of assets and $1.615 million of liabilities, or $22,000 in net assets acquired. TA&T’s results were not included in the reported six-month statements because the acquisition closed at the end of June 30. Pro forma six-month revenue and net loss, as if included, were $0.959 million and $5.373 million, respectively. Potential revenue-based earnouts were not expected to be achieved at acquisition.
- Management is pursuing revenue growth through OEM and other silicon-nitride applications, ceramic armor, antipathogenic products and TA&T’s capabilities. It expects continued investment in R&D and anticipates ongoing operating losses and cash use. The filing provides no numerical revenue, earnings or cash-flow guidance.
- Management stated that continued operations depend on increasing sales and/or obtaining additional financing. Financing is not assured and may be dilutive or carry restrictive terms. The filing says these uncertainties create substantial doubt about the Company’s ability to continue as a going concern.
- Nasdaq notified SINTX that it had not met the $1.00 minimum bid-price requirement. On July 6, 2022, it received an additional 180-day period through January 2, 2023, to regain compliance; the Company said it could effect a reverse stock split if necessary.
- A $2.0 million at-the-market equity distribution agreement was available through February 25, 2023; no shares had been sold under it through June 30, 2022.
- The Company corrected an immaterial 2021 error relating to forgiveness of a roughly $0.5 million PPP loan. It restated the December 31, 2021 balance sheet and equity balance, reducing reported equity by approximately $0.5 million; cash flows were unaffected.
- Management cited inflation and payroll costs as contributing to higher R&D expense, increased patent-application costs in Q2 G&A, and greater marketing activity in the first half. It also warned that COVID-19-related effects could affect operations and access to capital.
- Management reported disclosure controls were effective as of June 30, 2022, with no material second-quarter change in internal control over financial reporting. It reported no material pending legal proceedings and no material changes to the risk factors in its 2021 Form 10-K.
Key facts for investors to verify
- Cash consumption, available financing, and the Company’s stated going-concern uncertainty.
- Progress toward Nasdaq’s minimum bid-price compliance deadline and any reverse-split action.
- TA&T’s post-acquisition revenue, cash flows, debt obligations and integration results; its reported operating results were not included in Q2.
- Whether product sales grow enough to offset operating expenses, and how much reported revenue depends on grants.
- The corrected 2021 PPP-loan accounting and the remaining SBA audit exposure for the separate 2020 PPP loan, which may be audited through January 2027.