SINTX Technologies, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Unaudited consolidated results include SINTX and its wholly owned subsidiary, SINTX Armor. Dollar amounts below are in millions unless otherwise noted.
Business context
SINTX develops and manufactures advanced ceramics for biomedical, industrial, and antipathogenic uses. It remains an OEM supplier of silicon nitride spine products to CTL Medical and is pursuing applications beyond spinal fusion. The company is also developing ceramic armor products through SINTX Armor.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $0.129 | $0.101 |
| Product revenue | $0.101 | $0.101 |
| Gross profit / margin | $0.049 / 38% | $0.040 / 40% |
| Operating loss | $(2.880) | $(2.841) |
| Net loss | $(2.845) | $(2.633) |
| Loss per share, basic and diluted | $(0.12) | $(0.11) |
| Operating cash used | $(3.180) | $(2.992) |
- Revenue rose 28%, entirely from $0.028 million of grant income; product revenue was unchanged. Operating expenses totaled $2.929 million, up 2% year over year.
- Cash and cash equivalents were $10.863 million at March 31, 2022, down from $14.273 million at year-end 2021. Net cash decreased $3.410 million during the quarter.
- Total assets were $18.883 million and total liabilities were $4.432 million. Current assets were $11.989 million versus current liabilities of $2.669 million.
- Reported debt was $0.524 million, related to the 2021 PPP loan the company says it must repay. Operating lease liabilities totaled $2.276 million, including $0.513 million current.
- Accumulated deficit was $253.262 million. Stockholders’ equity was $14.451 million.
Changes, outlook, and risks
- Net loss increased $0.212 million year over year. Management attributed the change in other income partly to prior-year PPP loan forgiveness income. R&D rose 4%, sales and marketing rose 38%, and general and administrative expense fell 14%.
- Management expects continuing operating losses and operating cash use. It says profitability and positive operating cash flow are uncertain, and continued operations depend on increasing sales and/or raising additional capital. The filing states that these uncertainties create substantial doubt about the company’s ability to continue as a going concern.
- No quantified revenue or earnings guidance is provided. Management describes efforts to expand silicon nitride applications, publish supporting scientific and clinical data, and develop armor products; it believes these efforts may create future revenue opportunities.
- Nasdaq notified the company that its share price had remained below the $1.00 minimum bid requirement for 30 consecutive trading days. The stated deadline to regain compliance was July 5, 2022; potential delisting could impair access to capital. The company’s $2.0 million at-the-market facility had no sales through March 31, 2022.
- The company identified an approximately $0.5 million error involving the 2021 PPP loan: it had recorded forgiveness income and removed the loan although it determined it was ineligible for the Second Draw loan. It restated the December 31, 2021 balance sheet and equity balance, reducing reported equity by approximately $0.5 million. The loan, fees, and interest are to be repaid. The company characterized the error as immaterial; it did not affect 2021 cash flows.
- Other uncertainties include possible COVID-19 effects on operations and access to capital, potential dilution or restrictive terms from future financing, and possible SBA audit of the 2020 PPP loan. Management reported no material pending legal proceeding and no material change to previously disclosed risk factors.
Important facts for investors to verify
- Cash burn, funding needs, and availability and terms of additional financing; the company’s going-concern disclosure is a central risk.
- Repayment status and final amount due for the 2021 PPP loan, including fees and interest, and the correction’s treatment in the full-year 2021 filing.
- Whether SINTX regained Nasdaq’s minimum bid-price compliance after the July 5, 2022 deadline.
- Evidence of commercial traction beyond existing spine-related OEM sales, including grant-funded work, antipathogenic products, and ceramic armor.
- Potential dilution from equity financing, stock awards, and approximately 2.1 million potentially dilutive securities disclosed at March 31, 2022.