SINTX Technologies, Inc. — Q1 2023 Form 10-Q
Period: Three months ended March 31, 2023; comparisons are with Q1 2022 unless stated otherwise. Financial amounts below are in millions, except per-share data. SINTX develops and manufactures advanced ceramics for biomedical, technical/armor, and antipathogenic markets. Its activities include silicon nitride products, ceramic armor, and services and products from TA&T, acquired in 2022.
Financial performance
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Product revenue | $0.240 | $0.101 |
| Grant and contract revenue | $0.299 | $0.028 |
| Total revenue | $0.539 | $0.129 |
| Gross profit | $0.421 | $0.049 |
| Operating expenses | $3.978 | $2.929 |
| Operating loss | $(3.557) | $(2.880) |
| Net loss | $(0.293) | $(2.845) |
| Cash used in operating activities | $(4.871) | $(3.180) |
- Total revenue rose 318%, with product revenue up 138% and grant and contract revenue up 968%. Management attributed growth to new silicon nitride aerospace orders and government grants and contracts in Salt Lake City, plus commercial and government contract revenue in Maryland.
- Gross profit was $0.421 million, approximately 78% of revenue; management said the increase was primarily attributable to grant and contract revenue. Grant expenses also rose to $0.299 million from $0.026 million.
- Research and development expense increased 33% to $2.200 million, mainly due to patent costs and TA&T operating costs. General and administrative expense increased 37% to $1.169 million, reflecting legal, investor-relations, and recruiting costs. Sales and marketing expense declined 21% to $0.310 million.
- Net loss narrowed substantially, but this was largely due to a $4.006 million gain from the change in fair value of warrant derivative liabilities, partly offset by $0.786 million of offering costs related to derivatives. Operating loss widened 24%; the net result should not be viewed as evidence of improved operating profitability.
Cash, liquidity, and capital structure
- Cash and cash equivalents were $12.626 million at March 31, 2023, versus $6.245 million at December 31, 2022. Current assets were $14.291 million and current liabilities $5.126 million.
- Operating cash use increased to $4.871 million from $3.180 million. Investing cash use was $0.236 million. Financing provided $11.488 million, principally from the February public offering. Cash increased $6.381 million during the quarter.
- On February 10, 2023, SINTX closed a public offering of 2.15 million units for approximately $12.0 million gross proceeds. Units included common shares or pre-funded warrants, Class C warrants, and half of a Class D warrant. The company reported approximately $4.8 million net proceeds allocated to common stock and pre-funded warrants; approximately $6.7 million was allocated to derivative liabilities. The warrants carry potential dilution.
- Common shares outstanding increased from 542,145 at December 31, 2022 to approximately 4.05 million at March 31, 2023, reflecting offering shares and warrant exercises, among other transactions. A 1-for-100 reverse split effected in December 2022 is reflected retroactively in share and per-share data.
- Total liabilities were $6.706 million. The business loan was paid in full in Q1; related-party debt was $0.150 million, payable in monthly installments through August 2024. Operating lease liabilities totaled approximately $2.297 million. Derivative liabilities were $2.267 million, down from $5.126 million at year-end.
- Accumulated deficit was $262.748 million. Management expects continued operating losses and operating cash use, but stated existing capital resources should fund operations for at least 12 months, through May 2024. SINTX said it was not then seeking additional equity or debt financing.
Outlook, risks, and other matters
- Management’s strategy is to grow revenue by expanding silicon nitride applications beyond spinal fusion, pursuing external manufacturing partnerships, developing ceramic armor, and advancing antipathogenic products. It expects additional R&D costs as these products are developed; no specific revenue or earnings guidance was provided.
- Management says continued operations depend on increasing sales and/or accessing capital markets. The timing of profitability, positive operating cash flow, or additional financing is uncertain; financing may be unavailable or dilutive. The filing nevertheless states management’s 12-month liquidity conclusion through May 2024.
- Warrant derivative liabilities use Level 3 fair-value estimates, including assumptions about volatility, and are a significant area of judgment. Fair-value changes can materially affect reported earnings without corresponding operating cash flow.
- The company reported no material change in previously disclosed risk factors, no material pending legal proceedings known to management, and no off-balance-sheet arrangements. It reported effective disclosure controls as of March 31, 2023.
- The ATM facility had no sales through March 31, 2023; the company agreed not to sell under it through August 10, 2023 following the February offering. Management noted a public-float limitation on securities sales.
Key facts for investors to verify
- Whether revenue growth—particularly grant and contract revenue—translates into recurring commercial product sales and improved operating margins.
- Cash burn and whether the stated runway through May 2024 remains achievable without additional financing.
- Potential dilution from outstanding warrants, pre-funded warrants, and future capital raises; confirm the current share count and warrant terms.
- The composition and cash-flow implications of warrant derivative liabilities and the unusually large noncash fair-value gain in Q1.
- The filing reports basic loss per share of $(0.13) and diluted loss per share of $(1.74), while its EPS note provides a separate warrant-adjusted calculation; verify the applicable presentation and share impact.