Quarterly report pursuant to Section 13 or 15(d) 06-30-2019

Discontinued Operations

v3.19.2
Discontinued Operations
6 Months Ended
Jun. 30, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

12. Discontinued Operations

 

As explained in Note 1, on October 1, 2018, the Company completed the sale of its retail spine business to CTL Medical. The gain on the sale of the retail spine business is estimated to approximate $1.4 million, which was recognized during the quarter ended December 31, 2018.

 

The Company and CTL Medical entered in an asset purchase agreement whereby CTL Medical agreed to acquire all of the Company’s commercial spine business for total consideration of $8.5 million, which includes a $6.0 million (including interest) note receivable (See Note 7) and CTL Medical’s assumption of the Company’s $2.5 million related party note payable to North Stadium (see Note 11). As a result of the closing, CTL Medical is now the exclusive owner of SINTX’s portfolio of metal and silicon nitride spine products, which are presently sold under the brand names of Taurus, Preference, and Valeo, with access to future silicon nitride spine technologies. The Company has agreed to pay the cost, if any, to re-sterilize and re-package select silicon nitride spinal inventories sold to CTL Medical if the sterilization date expires prior to CTL Medical selling the inventories to a third-party customer. This agreement extends for a total of 24 months, ending on September 30, 2020. The Company estimates the sterilization and repackaging cost to approximate $0.5 million. Manufacturing, R&D, and all intellectual property related to the core, non-spine, biomaterial technology of silicon nitride remains with the Company in Salt Lake City. The Company will serve as CTL’s exclusive OEM provider of silicon nitride products.

 

Operating results related to discontinued operations consisted of the following for the six months ended June 30, 2018:

 

    Six Months Ended  
    June 30, 2018  
Product revenue   $ 4,330  
Costs of revenue     1,045  
Gross profit     3,285  
Operating expenses:        
Research and development     717  
General and administrative     348  
Sales and marketing     2,264  
Total operating expenses     3,329  
Loss from discontinued operations   $ (44)  

 

During the three and six months ended June 30, 2018, the Company only recorded product revenues and cost of revenues related to the spine business. Because of the sale of the retail spine business to CTL Medical, all product revenues and costs of product revenues for this period has been removed from the condensed consolidated statements of operations.