UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (IRS Employer | |
| of incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||
| The
|
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2)
has been subject to such filing requirements for the past 90 days:
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files);
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
shares of common stock, $0.01 par value, were outstanding at May 11, 2023.
SINTX Technologies, Inc.
Table of Contents
| 2 |
SINTX Technologies, Inc.
Condensed Consolidated Balance Sheets - Unaudited
(in thousands, except share and per share data)
| March 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Account and other receivables, net of allowance | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Inventories | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Inventories, net | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right of use asset | ||||||||
| Other long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Current portion of long-term debt | ||||||||
| Derivative liabilities | ||||||||
| Current portion of operating lease liability | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Long term debt, net of current portion | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Convertible preferred stock Series B, $ par value, total shares authorized inclusive of all series of preferred; shares issued and outstanding as of March 31, 2023 and December 31, 2022. | ||||||||
| Convertible preferred stock Series C, $ par value, total shares authorized inclusive of all series of preferred; shares issued and outstanding as of March 31, 2023 and December 31, 2022. | ||||||||
| Convertible preferred stock Series D, $ par value, total shares authorized inclusive of all series of preferred; shares issued and outstanding as of March 31, 2023 and December 31, 2022. | ||||||||
| Convertible preferred stock Series E, $ par value, total shares authorized inclusive of all series of preferred; and share issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The condensed consolidated balance sheet as of December 31, 2022, has been prepared using information from the audited consolidated balance sheet as of that date.
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
SINTX Technologies, Inc.
Condensed Consolidated Statements of Operations - Unaudited
(in thousands, except share data)
Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Product revenue | $ | $ | ||||||
| Grant and contract revenue | ||||||||
| Total revenue | ||||||||
| Costs of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Sales and marketing | ||||||||
| Grant expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Change in fair value of derivative liabilities | ||||||||
| Offering costs of derivative liabilities | ( | ) | ||||||
| Other income (net) | ||||||||
| Total other income, net | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share – basic and diluted | ||||||||
| Basic – net loss | $ | ( | ) | $ | ( | ) | ||
| Diluted – net loss | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
SINTX Technologies, Inc.
Condensed Consolidated Statements of Stockholders’ Equity - Unaudited
(in thousands, except share and per share data)
| Preferred Stock | Common Stock | Paid-In | Accumulated | Total | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2021 | | ( | ) | |||||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Accumulated | Total | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Common stock issued for cash, net of cash fees | - | |||||||||||||||||||||||||||
| Prefunded warrants issued for cash, net of cash fees | - | - | ||||||||||||||||||||||||||
| Extinguishment of derivative liability upon exercise of warrant | - | - | ||||||||||||||||||||||||||
| Issuance of common stock from the exercise of prefunded warrants for cash | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common stock from the cashless exercise of warrants | - | ( | ) | |||||||||||||||||||||||||
| Redemption of preferred stock | ( | ) | - | ( | ) | ( | ) | |||||||||||||||||||||
| Issuance of agent warrants | - | - | ||||||||||||||||||||||||||
| Round up shares issued in reverse split | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
SINTX Technologies, Inc.
Condensed Consolidated Statements of Cash Flows - Unaudited
(in thousands)
Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flow From Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Amortization of right of use asset | ||||||||
| Amortization of intangible assets | ||||||||
| Stock based compensation | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||
| Bad debt expense | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Other liabilities | ( | ) | ||||||
| Payments on operating lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from issuance of warrant derivative liabilities | ||||||||
| Proceeds from issuance of common stock and prefunded warrants, net of cash fees of $ | ||||||||
| Redemption of Preferred Stock Series E | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Noncash Investing and Financing Activities | ||||||||
| Right of use asset for lease liability | $ | $ | ||||||
| Reduction of derivative liability upon exercise of warrants | ||||||||
| Par value of common stock upon cashless exercise of warrants | ||||||||
| Par value of common stock upon exercise of prefunded warrants | ||||||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
SINTX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
The condensed consolidated financial statements include the accounts of SINTX Technologies, Inc. (“SINTX”) and its wholly-owned subsidiaries, SINTX Armor, Inc. (“SINTX Armor”) and Technology Assessment and Transfer, Inc. (TA&T), which are collectively referred to as “we” or “the Company”. SINTX is an advanced ceramics company formed in December 1996 (and was previously known as Amedica Corporation), is focused on providing solutions in a variety of biomedical, technical, and antipathogenic applications. We have grown from focusing primarily on the research, development and commercialization of medical devices manufactured with silicon nitride to becoming an advanced ceramics company engaged in diverse fields, including biomedical, technical and antipathogenic applications. This diversification enables us to focus on our core competencies, which are the manufacturing, research, and development of products comprised from advanced ceramic materials for external partners. We seek to connect with new customers, partners and manufacturers to help them realize the goal of leveraging our expertise in advanced ceramics to create new, innovative products across these sectors. The Company presently manufactures ceramic powders and components in its Salt Lake City and Maryland facilities. The SINTX Salt Lake City facility is FDA and ANVISA registered, ISO 13485:2016 certified, and ASD9100D certified. The Company’s products are primarily sold in the United States.
The Company is focused on building revenue generating opportunities in three business industries – biomedical, technical (including armor), and antipathogenic – thereby connecting with current and new customers, partners and manufacturers to help realize the goal of leveraging expertise in high-tech ceramics to create new, innovative opportunities across these sectors. We expect our continued investment in research and development to provide additional revenue opportunities.
SINTX believes it is the first and only manufacturer to use silicon nitride in medical applications primarily focused on spine fusion therapies. Since then, we have developed other applications for our silicon nitride technology as well as utilized our expertise in the use of ceramic materials in other applications. In July 2021, the Company acquired the equipment and obtained certain proprietary know-how rights with which it is using to develop, manufacture, and commercialize protective armor from boron carbide and a composite material of silicon carbide and boron carbide for military, law enforcement and civilian uses. The protective armor operations are housed in SINTX Armor. In June 2022, the Company acquired TA&T, a nearly 40-year-old business with a mission to transition advanced materials and process technologies from a laboratory environment to commercial products and services.
On October 1, 2018, the Company completed the sale of its retail spine business to CTL Medical, a Dallas, Texas-based privately held medical device manufacturer. As a result of the sale, CTL Medical became the exclusive owner of the Company’s portfolio of metal and silicon nitride spine products, as well as access to future silicon nitride spine technologies developed by the Company. The Company’s name, Amedica, was also transferred to CTL Medical, which is now CTL Amedica. The Company serves as CTL’s exclusive OEM provider of silicon nitride products. Manufacturing, R&D, and all intellectual property related to the core, non-spine, biomaterial technology including silicon nitride remains with the Company.
On October 30, 2018, the Company amended its Certificate of Incorporation with the State of Delaware to change its corporate name to SINTX Technologies, Inc. The Company also changed its trading symbol on the NASDAQ Capital Market to “SINT”.
The Company’s new corporate brand reflects both the Company’s core competence in the science and production of silicon nitride ceramics and other ceramics, as well as encouraging prospects for the future, as an OEM supplier of spine implants to CTL Amedica, and multiple opportunities outside of spine.
| 7 |
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and include all assets and liabilities of the Company.
SEC rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) so long as the statements are not misleading. In the opinion of management, these financial statements and accompanying notes contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented herein. These condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 29, 2023. The results of operations for the three months ended March 31, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023. The Company’s significant accounting policies are set forth in Note 1 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2022.
Reverse Stock Split
On
December 20, 2022, the Company effected a
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. As of March 31, 2023, the most significant estimate relates to derivative liabilities relating to common stock warrants.
Liquidity and Capital Resources
The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.
For
the three months ended March 31, 2023, and 2022, the Company incurred a net loss of $
The Company is actively generating additional scientific and clinical data to have it published in leading industry publications. The unique features of our advanced ceramic materials are not well known, and we believe the publication of such data would help sales efforts as the Company approaches new prospects. The Company is also making additional changes to the sales strategy, including a focus on revenue growth by expanding the use of silicon nitride in other areas outside of spinal fusion applications. The Company has also acquired equipment and certain proprietary know-how for the purpose of developing, manufacturing and commercializing armored plates made from boron carbide and a composite of boron carbide and silicon carbide for military, law enforcement and other civilian uses.
| 8 |
The Company has common stock that is publicly traded and has been able to successfully raise capital when needed since the date of the Company’s initial public offering in February 2014.
On
February 25, 2021, the Company entered into an Equity Distribution Agreement (as amended, the “2021 Distribution
Agreement”) with Maxim Group LLC (“Maxim”), pursuant to which the Company may sell from time to time, shares of
the Company’s common stock having an aggregate offering price of up to $
On
October 17, 2022, the Company closed on the sale of Units for gross proceeds of approximately $
On
February 10, 2023, the Company closed on a public offering of
units with gross proceeds of approximately $
Management has concluded existing capital resources will be sufficient to fund operations for at least the next 12 months, or through May 2024.
| 9 |
Grant and Contract Revenue
Revenues from grants, contracts, and awards provided by governmental agencies are recorded based upon the terms of the specific agreements, which generally provide that revenue is earned when the allowable costs specified in the applicable agreement have been incurred or a milestone has been met. Cash received from federal grants, contracts, and awards can be subject to audit by the grantor and, if the examination results in a disallowance of any expenditure, repayment could be required.
New Accounting Pronouncements Recently Adopted
In August 2020, the Financial Statement Accounting Board (the “FASB”) issued ASU 2020-06 which simplifies the accounting for convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity. For contracts in an entity’s own equity, the new guidance eliminates some of the current requirements for equity classification such as the requirement that settlement in unregistered shares is permitted. In addition, the new guidance reduces the number of accounting models that require separating embedded conversion features from convertible instruments, including eliminating the requirement to recognize a beneficial conversion feature if the conversion feature is in the money and does not require bifurcation as a derivative liability. As a result, only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The Company adopted the new standards January 1, 2023. The adoption of this standard allows the Company in the future and, in certain circumstances, to avoid derivative treatment of warrants and avoid beneficial conversion treatment of certain convertible preferred shares.
New Accounting Pronouncements Not Yet Adopted
The Company has reviewed all recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.
Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period that are determined to be dilutive. Common stock equivalents are primarily comprised of preferred stock and warrants for the purchase of common stock. For the three months ended March 31, 2023, there is no difference in the number of shares and net loss used to calculate basic and diluted shares outstanding because their effect would have been anti-dilutive. The Company had potentially dilutive securities, totaling approximately million and million as of March 31, 2023, and 2022, respectively.
| 10 |
| Basic Calculation | Effect of Dilutive | Diluted Calculation | ||||||||||
| Numerator: | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Denominator: | ||||||||||||
| Number of shares used in per common share calculations: | ||||||||||||
| Net loss per common share: | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Below are basic and diluted loss per share data for the three months ended March 31, 2022, which are in thousands except for share and per share data:
| Basic Calculation | Effect of Dilutive | Diluted Calculation | ||||||||||
| Numerator: | ||||||||||||
| Net loss | $ | ( | ) | $ | $ | ( | ) | |||||
| Denominator: | ||||||||||||
| Number of shares used in per common share calculations: | ||||||||||||
| Net loss per common share: | ||||||||||||
| Net loss | $ | ( | ) | $ | $ | ( | ) | |||||
3. Inventories
Inventories consisted of the following (in thousands):
| March 31, 2023 | December 31, 2022 | |||||||
| Raw materials | $ | $ | ||||||
| WIP | ||||||||
| Finished goods | ||||||||
| $ | $ | |||||||
As
of March 31, 2023, inventories totaling approximately $
| 11 |
4. Fair Value Measurements
Financial Instruments Measured and Recorded at Fair Value on a Recurring Basis
The Company has issued certain warrants to purchase shares of common stock, which are considered derivative liabilities because they have registration rights which could require a cash settlement and are re-measured to fair value at each reporting period in accordance with accounting guidance. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
| Level 1 - | quoted market prices for identical assets or liabilities in active markets. | |
| Level 2 - | observable prices that are based on inputs not quoted on active markets but corroborated by market data. | |
| Level 3 - | unobservable inputs reflecting management’s assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. |
The Company classifies assets and liabilities measured at fair value in their entirety based on the lowest level of input that is significant to their fair value measurement. No financial assets were measured on a recurring basis as of March 31, 2023, and December 31, 2022. The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of March 31, 2023, and December 31, 2022 (in thousands):
| Fair Value Measurements as of March 31, 2023 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Derivative liability | ||||||||||||||||
| Common stock warrants | $ | $ | $ | $ | ||||||||||||
| Fair Value Measurements as of December 31, 2022 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Derivative liability | ||||||||||||||||
| Common stock warrants | $ | $ | $ | $ | ||||||||||||
| 12 |
The Company did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the three months ended March 31, 2023, and 2022. The following table presents a reconciliation of the derivative liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2023, and 2022 (in thousands):
| Common Stock Warrants | ||||
| Balance as of December 31, 2021 | $ | ( | ) | |
| Change in fair value | ||||
| Balance as of March 31, 2022 | $ | ( | ) | |
| Balance as of December 31, 2022 | $ | ( | ) | |
| Issuance of derivatives | ( | ) | ||
| Exercise of warrants | ||||
| Change in fair value | ||||
| Other | ||||
| Balance as of March 31, 2023 | $ | ( | ) | |
Common Stock Warrants
The Company has issued certain warrants to purchase shares of common stock, which are considered derivative liabilities because they have registration rights which could require a cash settlement and are re-measured to fair value at each reporting period in accordance with accounting guidance. As of March 31, 2023, and December 31, 2022, the derivative liability was calculated using the Monte Carlo Simulation valuation.
The assumptions used in estimating the common stock warrant liability using the Monte Carlo simulation valuation model as of March 31, 2023, and December 31, 2022 were as follows:
March 31, 2023 |
December 31, 2022 |
|||||||
| Weighted-average risk-free interest rate | % | % | ||||||
| Weighted-average expected life (in years) | ||||||||
| Expected dividend yield | % | % | ||||||
| Weighted-average expected volatility | % | % | ||||||
Other Financial Instruments
The Company’s recorded values of cash and cash equivalents, account and other receivables, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded value of notes payable approximates the fair value as the interest rate approximates market interest rates.
5. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
| March 31, 2023 | December 31, 2022 | |||||||
| Payroll and related expense | $ | $ | ||||||
| Accrued payables | ||||||||
| Other | ||||||||
| $ | $ | |||||||
| 13 |
6. Debt
Business Loan
On
July 20, 2021, TA&T (see Note 2), entered into a Loan Authorization and Agreement in the amount of approximately $
Related Party Debt
TA&T
is obligated to repay certain personal loans made by the founders of TA&T to TA&T prior to SINTX’s acquisition of TA&T
(the Personal Loans”). The total amount of the Personal Loans at June 30, 2022, the date of acquisition, was approximately $
7. Equity
2023 Registered Offering
On
February 10, 2023,
2022 Rights Offering
On
October 17, 2022, the Company completed a rights offering (the “Rights Offering”) to holders of the Company’s Series
B Preferred Shares, Series C Preferred Shares, and warrants issued March 6, 2018, May 8, 2018, May 14, 2018, and February 6, 2020 (collectively,
the “Security Holders”) for subscriptions of rights resulting in gross proceeds to the Company of approximately $
2021 Equity Distribution Agreement
On
February 25, 2021, the Company entered into an Equity Distribution Agreement (as amended, the “2021 Distribution Agreement”)
with Maxim Group LLC (“Maxim”), pursuant to which the Company may sell from time to time, shares of the Company’s common
stock having an aggregate offering price of up to $
| 14 |
| March 31, 2023 | ||||||||||||||||
Weighted- Average | Weighted- Average Remaining Contractual | Intrinsic | ||||||||||||||
| Options | Exercise Price | (Years) | Value | |||||||||||||
| As of December 31, 2022 | $ | $ | ||||||||||||||
| Granted | - | - | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Forfeited | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| As of March 31, 2023 | $ | $ | ||||||||||||||
| Exercisable at March 31, 2023 | $ | $ | ||||||||||||||
| Vested and expected to vest at March 31, 2023 | $ | $ | ||||||||||||||
| March 31, 2022 | ||||||||||||||||
Weighted- Average | Weighted- Average Remaining Contractual | Intrinsic | ||||||||||||||
| Options | Exercise Price | (Years) | Value | |||||||||||||
| As of December 31, 2021 | $ | $ | ||||||||||||||
| Granted | - | |||||||||||||||
| Exercised | - | - | ||||||||||||||
| Forfeited | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| As of March 31, 2022 | $ | $ | ||||||||||||||
| Exercisable at March 31, 2022 | $ | $ | ||||||||||||||
| Vested and expected to vest at March 31, 2022 | $ | $ | ||||||||||||||
The Company estimates the fair value of each stock option on the grant date using the Black-Scholes-Merton valuation model, which requires several estimates including an estimate of the fair value of the underlying common stock on grant date. The expected volatility was based on an average of the historical volatility of the Company. The expected term was contractual life of option. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company did not grant any stock options during the first quarter of 2023.
Of the options outstanding as of March 31, 2023, were awarded to non-executive members of the board of directors.
Unrecognized stock-based compensation as of March 31, 2023, is as follows (in thousands):
Weighted Average | ||||||||
Unrecognized Stock-Based | Remaining of Recognition | |||||||
| Compensation | (in years) | |||||||
| Stock options | $ | |||||||
| Stock grants | $ | |||||||
9. Commitments and Contingencies
The Company has executed agreements with certain executive officers of the Company which, upon the occurrence of certain events related to a change in control, call for payments to the executives up to three times their annual salary and accelerated vesting of previously granted stock options.
From time to time, the Company is subject to various claims and legal proceedings covering matters that arise in the ordinary course of its business activities. Management believes any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, operating results or cash flows.
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10. Leases
The Company has entered into multiple operating leases from which it conducts its business.
SINTX
With
respect to SINTX operations, the Company leases
SINTX Armor
On
August 19, 2021, the Company, on behalf of SINTX Armor, entered into an Industrial Lease Agreement (the “SINTX Armor Lease”)
pursuant to which the Company has agreed to lease approximately
TA&T
In
connection with operation of its business, TA&T has entered into various leases from which it conducts its research,
development and manufacturing activities.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. The Company accounts for lease components separately from the non-lease components. The depreciable life of the assets and leasehold improvements are limited by the expected lease term.
As
of March 31, 2023, the operating lease right-of-use assets totaled approximately $
Operating lease future minimum payments together with the present values as of March 31, 2023, are summarized as follows:
| Years Ending December 31, | March 31, 2023 | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total future minimum lease payments | ||||
| Less amounts representing interests | ( | ) | ||
| Present value of lease liability | ||||
| Current-portion of operating lease liability | ||||
| Long-term portion operating lease liability | $ | |||
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements for the year ended December 31, 2022 and the notes thereto, along with Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed separately with the U.S. Securities and Exchange Commission. This discussion and analysis contains forward-looking statements based upon current beliefs, plans, expectations, intentions and projections that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022, and any updates to those risk factors filed from time to time in our Quarterly Reports on Form 10-Q and in other filings with the Securities and Exchange Commission we may make from time-to-time.
Overview
We are an advanced materials company that develops and commercializes advanced ceramics for biomedical, technical, and antipathogenic applications. The core strength of SINTX Technologies is the manufacturing, research, and development of advanced ceramics for external partners.
Biomedical Applications: Since our inception, we have been focused on medical grade silicon nitride. SINTX silicon nitride products are biocompatible, bioactive, antipathogenic, and have shown superb bone affinity. Spinal implants made from SINTX silicon nitride have been successfully implanted in humans since 2008 in the US, Europe, Brazil, and Taiwan. This established use, along with its inherent resistance to bacterial adhesion and bone affinity – means that it may also be suitable in other fusion device applications such as arthroplasty implants, foot wedges, and dental implants. Bacterial infection of any biomaterial implants is always a concern. SINTX silicon nitride is inherently resistant to bacterial colonization and biofilm formation, making it antibacterial. SINTX silicon nitride products can be polished to a smooth and wear-resistant surface for articulating applications, such as bearings for hip and knee replacements.
We believe that silicon nitride has a superb combination of properties that make it suited for long-term human implantation. Other biomaterials are based on bone grafts, metal alloys, and polymers- all of which have well-known practical limitations and disadvantages. In contrast, silicon nitride has a legacy of success in the most demanding and extreme industrial environments. As a human implant material, silicon nitride offers bone ingrowth, resistance to bacterial and viral infection, ease of diagnostic imaging, resistance to corrosion, and superior strength and fracture resistance, among other advantages, all of which claims are validated in our large and growing inventory of peer-reviewed, published literature reports. We believe that our versatile silicon nitride manufacturing expertise positions us favorably to introduce new and innovative devices in the medical and non-medical fields.
In June 2022, we acquired TA&T, a nearly 40-year-old business with a mission to transition advanced materials and process technologies from a laboratory environment to commercial products and services. TA&T has supplied ceramics for use in several biomedical applications. These products were made via 3D printing and include components for surgical instruments as well as conceptual and prototype dental implants.
Technical Applications: It is our belief that our silicon nitride has the best combination of mechanical, thermal, and electrical properties of any technical ceramic material. It is a high-performance technical ceramic with high strength, toughness, and hardness, and is extremely resistant to thermal shock and impact. It is also an electrically insulating ceramic material. Typically, it is used in applications where high load-bearing capacity, thermal stability, and wear resistance are required. We have obtained AS9100D certification and ITAR registration to facilitate entry into the aerospace portion of this market.
We entered the ceramic armor market through the purchase of assets from B4C, LLC and a technology partnership with Precision Ceramics USA. We intend to develop and manufacture high-performance ceramics for personnel, aircraft, and vehicle armor including a 100% Boron Carbide material for ultimate lightweight performance in ballistic applications, and a composite material made of Boron Carbide and Silicon Carbide for exceptional multi-hit performance against ballistic threats. We have signed a 10-year lease for a building near our headquarters in Salt Lake City, UT to house development and manufacturing activities for SINTX Armor.
TA&T’s primary area of expertise is material processing and fabrication know-how for a broad spectrum of monolithic ceramic, ceramic composite, and coating materials. Primary technologies include Additive Manufacturing (3D Printing) of ceramics and metals, low-cost fabrication of fiber reinforced ceramic matrix composites (CMCs) and refractory chemical vapor deposited (CVD) coatings, transparent ceramics for ballistic armor and optical applications, and magnetron sputtered (PVD) coatings for lubrication, wear resistance and environmental barrier coatings for CMCs. TA&T also provides a host of services that include 3D printing, PVD-CVD coatings, material processing-CMCs, CIP, PS, HP, HIP, and material characterization for powders and finished parts-TGA/DSC, PSD. SA, Dilatometry, UV-VIS and FTIR transmission, haze and clarity.
Antipathogenic Applications: Today, there is a global need to improve protection against pathogens in everyday life. SINTX believes that by incorporating its unique composition of silicon nitride antipathogenic powder into products such as face masks, filters, and wound care devices, it is possible to manufacture surfaces that inactivate pathogens, thereby limiting the spread of infection and disease. The discovery in 2020 that SINTX silicon nitride inactivates SARS-CoV-2, the virus which causes the disease COVID-19, has opened new markets and applications for our material.
We presently manufacture advanced ceramic powders and components in our manufacturing facilities based in Salt Lake City, Utah.
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Components of our Results of Operations
We manage our business within one reportable segment, which is consistent with how our management reviews our business, makes investment and resource allocation decisions and assesses operating performance.
Revenue
The majority of our product revenue is derived from the manufacture and sale of spinal fusion products used in the treatment of spine disorders to CTL, with whom we entered into a 10-year exclusive sales agreement in October 2018. We are currently pursuing other sales opportunities for silicon nitride products outside the spinal fusion application and have shipped new orders for these products. In 2021, we made progress in diversifying our revenue by selling a composite product of silicon nitride and PEEK as well as products for the industrial silicon nitride market, the ceramic armor market, and for the antipathogenic market. The acquisition of TA&T brings revenue from multiple markets that we have previously not participated in. We generally recognize revenue from sales where control transfers at a point in time as the title and risk of loss passes to the customer, which is at the time the product is shipped. In general, our customer does not have rights of return or exchange.
We believe our product revenue will increase as we secure opportunities to manufacture third party products with silicon nitride, launch and generate revenue from our ceramic armor products, and as we continue to introduce new products into the market.
We derive grant and contract revenue from awards provided by governmental agencies.
Cost of Revenue
The expenses that are included in cost of revenue include all in-house manufacturing costs for the products we manufacture.
Gross Profit
Our gross profit measures our product revenue relative to our cost of revenue. We expect our gross profit percentage to decrease as we expand the penetration of our silicon nitride technology platform through OEM and private label partnerships, which offer additional avenues for the adoption of silicon nitride. Prior to the sale of our retail spine implant business, our revenues and gross profits were based on our retail sales. With the focus on OEM and private label partnerships, the margins are lower, thus causing the decrease in our gross profit percentage.
Research and Development Expenses
Our research and development costs are expensed as incurred. Research and development costs consist of engineering, product development, clinical trials, test-part manufacturing, testing, developing and validating the manufacturing process, manufacturing, facility and regulatory-related costs. Research and development expenses also include employee compensation, employee and non-employee stock-based compensation, supplies and materials, consultant services, and travel and facilities expenses related to research and development activities.
We expect to incur additional research and development costs as we continue to develop new medical devices, industrial and ceramic armor products, product candidates for antipathogenic applications, and other products which may increase our total research and development expenses.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits and other related costs, including stock-based compensation for certain members of our executive team and other personnel employed in finance, compliance, administrative, information technology, customer service, executive and human resource departments. General and administrative expenses also include other expenses not part of the other cost categories mentioned above, including facility expenses and professional fees for accounting and legal services.
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RESULTS OF OPERATIONS
The following is a tabular presentation of our unaudited condensed consolidated operating results for the three months ended March 31, 2023 and 2022 (in thousands):
Three Months Ended March 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Product revenue | $ | 240 | $ | 101 | $ | 139 | 138 | % | ||||||||
| Grant and contract revenue | 299 | 28 | 271 | 968 | % | |||||||||||
| Total revenue | 539 | 129 | 410 | 318 | % | |||||||||||
| Costs of revenue | 118 | 80 | 38 | 48 | % | |||||||||||
| Gross profit | 421 | 49 | 372 | 759 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 2,200 | 1,653 | 547 | 33 | % | |||||||||||
| General and administrative | 1,169 | 856 | 313 | 37 | % | |||||||||||
| Sales and marketing | 310 | 394 | (84 | ) | -21 | % | ||||||||||
| Grant expenses | 299 | 29 | 273 | 1050 | % | |||||||||||
| Total operating expenses | 3,978 | 2,929 | 1,049 | 36 | % | |||||||||||
| Loss from operations | (3,557 | ) | (2,880 | ) | (677 | ) | 24 | % | ||||||||
| Other income, net | 3,264 | 35 | 3,229 | 9226 | % | |||||||||||
| Net income (loss) before income taxes | (293 | ) | (2,845 | ) | 2,552 | -90 | % | |||||||||
| Provision for income taxes | - | - | - | N/A | ||||||||||||
| Net income (loss) | (293 | ) | (2,845 | ) | 2,552 | -90 | % | |||||||||
Revenue
For the three months ended March 31, 2023, total product revenue increase $0.1 million, or 138% as compared to the same period in 2022. During the quarter ended March 31, 2023 grant and contract revenue increase $0.3 million, or 968% as compared to the same period in 2022. The increases were primarily due to new orders for silicon nitride aerospace components and government grants and contracts in our Salt Lake City operation as well as commercial and government contract revenue in our Maryland operation.
Cost of Revenue and Gross Profit
For the three months ended March 31, 2023, cost of revenue remained relatively unchanged at $0.1 million. Gross profit increased $0.3 million, or 759%, as compared to the same period in 2022. This increase was primarily attributed to an increase in grant and contract revenue.
Research and Development Expenses
For the three months ended March 31, 2023, research and development expenses increased $0.5 million, or 33%, as compared to the same period in 2022. This increase was primarily attributable to an increase in patent expenses and costs of operations associated with the acquisition of TA&T mid-2022.
General and Administrative Expenses
For the three months ended March 31, 2023, general and administrative expenses increased $0.3 million, or 37%, as compared to the same period in 2022. This increase is primarily due to an increase in costs for legal expenses, investor relations, and employee recruiting.
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Sales and Marketing Expenses
For the three months ended March 31, 2023, sales and marketing expenses decreased $0.1 million, or -21%, as compared to the same period in 2022. This decrease was primarily attributable to an overall decrease in costs for outside consulting.
Grant Expenses
For the three months ended March 31, 2023, grant and contract expenses increased by $0.3 million, or 1050%, as compared to the same period in 2022. This increase was primarily attributable to a general increase in grant and contract revenue when compared to the prior year.
Other Income, Net
For the three months ended March 31, 2023, other income increased $3.2 million, or 9226%, as compared to the same period in 2022. This increase was primarily due to other income of $4.0 million associated with the change in the fair value of the derivative liabilities offset by $0.8 million in offering costs associated with those derivative liabilities.
Liquidity and Capital Resources
The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.
For the three months ended March 31, 2023, and 2022, the Company incurred net loss of $0.3 million and $2.8 million, respectively, and used cash in operating activities of $4.9 million and $3.2 million, respectively. The Company had an accumulated deficit of $262.7 million and $262.5 million as of March 31, 2023, and December 31, 2022, respectively. To date, the Company’s operations have been principally financed from proceeds from the issuance of preferred and common stock and, to a lesser extent, cash generated from product sales. It is anticipated that the Company will continue to generate operating losses and use cash in operations. The Company’s continuation as a going concern is dependent upon its ability to increase sales, and/or raise additional funds through the capital markets. Whether and when the Company can attain profitability and positive cash flows from operations or obtain additional financing is uncertain.
The Company is actively generating additional scientific and clinical data to have it published in leading industry publications. We believe the publication of such data would help sales efforts as the Company approaches new prospects. The Company is also making additional changes to the sales strategy, including a focus on revenue growth by expanding the use of silicon nitride in other areas outside of spinal fusion applications. For instance, results from an independent study demonstrated the potential anti-viral properties of our silicon nitride. We believe that we may be able to apply our silicon nitride powder to personal protection products, such as face masks, gowns and gloves, resulting in inactivation of viruses that come into contact with the items.
The Company has common stock that is publicly traded and has been able to successfully raise capital when needed since the date of the Company’s initial public offering in February 2014.
On February 10, 2023, the Company closed on a public offering of 2,150,000 units, with each unit consisting of one share of common stock, or one pre-funded warrant to purchase one share of its common stock, one Class C Warrant to purchase one share of common stock, and one half of one Class D Warrant with each whole Class D Warrant entitling the holder to purchase one share of common stock. Gross proceeds, before deducting offering expenses, totaled approximately $12.0 million. Of the $12.0 million of gross proceeds, approximately $5.4 million were allocated to common stock and prefunded warrants ($4.8 million net of offering costs) and approximately $6.7 million were allocated to derivative liabilities (with approximately $0.7 million of cash offering costs and $0.1 million of agent warrant offering costs recorded as derivative expense).
On October 17, 2022, the Company completed a rights offering of units consisting of convertible preferred stock and common stock warrants, resulting in gross proceeds to the Company of approximately $4.7 million, after deducting expenses relating to the offering, including dealer-manager fees and expenses,
On February 25, 2021, the Company entered into an Equity Distribution Agreement (the “2021 Distribution Agreement”) with Maxim Group LLC (“Maxim”), pursuant to which we may sell from time to time, shares of its our common stock, $0.01 par value per share, having an aggregate offering price of up to $2.0 million through Maxim, as agent. No shares have been sold under the 2021 Distribution Agreement as of March 31, 2023.
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On October 1, 2018, the Company sold the retail spine implant business to CTL Medical. The sale included a $6 million noninterest bearing note receivable payable over a 36-month term. CTL Medical has paid this note in full, and the Company does not expect any future cashflows associated with the note.
The Company is not currently seeking to obtain additional equity and/or debt financing. When the Company desires to seek such additional equity and/or debt financing, such funding is not assured and may not be available to the Company on favorable or acceptable terms and may involve significant restrictive covenants. Any additional equity financing is also not assured and, if available to the Company, will most likely be dilutive to its current stockholders. If the Company is not able to obtain additional debt or equity financing on a timely basis, the impact on the Company will be material and adverse.
Management has concluded that its existing capital resources will be sufficient to fund operations for at least the next 12 months, or through May 2024.
Cash Flows
The following table summarizes, for the periods indicated, cash flows from operating, investing and financing activities (in thousands) – unaudited:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net cash used in operating activities | $ | (4,871 | ) | $ | (3,180 | ) | ||
| Net cash used in investing activities | (236 | ) | (230 | ) | ||||
| Net cash provided by financing activities | 11,488 | - | ||||||
| Net increase (decrease) in cash | $ | 6,381 | $ | (3,410 | ) | |||
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Net Cash Used in Operating Activities
Net cash used in operating activities was $4.9 million during the three months ended March 31, 2023, compared to $3.2 million used during the three months ended March 31, 2022, an increase of $1.7 million. The increase in the net loss from operations, and related non-cash add backs to the net loss, was $1.2 million from 2023 when compared to 2022. The increase in cash used for operating activities during 2023 was primarily due to the $1.1 million mentioned above plus changes in the movement of working capital items during 2023 as compared to the same period in 2022 as follows: a $0.3 million increase in cash used in other liabilities, a $0.1 million increase in accounts receivable, a $0.1 million increase in cash used for payments on operating lease liability, a $0.1 million increase in cash used in accounts payable, and a $0.1 million increase in cash used in prepaid expenses, offset by a $0.1 million decrease in cash used for inventory.
Net Cash Used in Investing Activities
Net cash used in investing activities was $0.2 million during the three months ended March 31, 2023 and 2022, remaining primarily unchanged.
Net Cash Provided by Financing Activities
There was $11.5 million in cash provided by financing activities during the three months ended March 31, 2023, compared to no cash provided by financing activities during the same period in 2022. The $11.5 million increase to net cash provided by financing activities was primarily attributable to an increase in proceeds from issuance of warrant derivative liabilities of $6.7 million and an increase in proceeds from issuance of common stock of $4.8 million.
Indebtedness
Business Loan
On July 20, 2021, TA&T, entered into a Loan Authorization and Agreement in the amount of approximately $350,000 (the “Business Loan”). The Company made a one-time $35,000 buy down payment when acquiring the loan. The Business Loan bore interest at a rate of 3.75% per annum. The Business Loan was secured by a general security interest in all of the assets of TA&T. The Business Loan contained other standard provisions that are customary of loans of this type. The business loan was paid in full during the first quarter of 2023 and there was no outstanding balance at March 31, 2023.
Related Party Debt
TA&T is obligated to repay certain personal loans made by the founders of TA&T to TA&T prior to SINTX’s acquisition of TA&T (the “Personal Loans”). The total amount of the Personal Loans at June 30, 2022 was approximately $350,000. The Company agreed to repay the outstanding balance of the Personal Loans in (i) 24 equal monthly installments beginning September 1, 2022 and each month thereafter until paid in full as one prior owner’s portion of the Personal Loans totaling $157,000, and (ii) for the other owner’s portion of the Personal Loans totaling $193,000. As of March 31, 2023, the related party debt had an outstanding balance of $150,000. The outstanding balance is being paid in monthly installments ending August 1, 2024. The related party debt is not collateralized and has no interest rate.
Wells Fargo Line of Credit
Prior to SINTX’s acquisition of TA&T, TA&T entered into a revolving line of credit with Wells Fargo. As of December 31, 2022, the line of credit with Wells Fargo had no outstanding balance.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined in Item 303(a)(4) of Regulation S-K.
Critical Accounting Policies and Estimates
A summary of our significant accounting policies and estimates is discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to those policies for the three months ended March 31, 2023. The preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles requires us to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities. Significant areas of uncertainty that require judgments, estimates and assumptions include the accounting for income taxes and other contingencies as well as valuation of derivative liabilities, asset impairment and collectability of accounts receivable. We use historical and other information that we consider to be relevant to make these judgments and estimates. However, actual results may differ from those estimates and assumptions that are used to prepare our condensed consolidated financial statements.
New Accounting Pronouncements
See discussion under Note 1, Organization and Summary of Significant Accounting Policies, to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q, for information on new accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
This Report includes the certifications of our Chief Executive Officer and Principal Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are properly recorded, processed, summarized and reported within the time periods required by the Commission’s rules and forms.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer and principal financial officer), of the effectiveness of the design and operation of these disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of March 31, 2023. Based on this evaluation, the Chief Executive Officer concluded that our disclosure controls and procedures were effective as of March 31, 2023, the end of the period covered by this Quarterly Report on Form 10-Q.
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There were no changes in our internal control over financial reporting that occurred during the first quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceeding against us that could have a material adverse effect on our business, operating results or financial condition. The medical device industry is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. As a result, we may be involved in various additional legal proceedings from time to time.
Item 1A. Risk Factors
Information regarding risk factors appears in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 29, 2022. There have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
| Exhibit Number |
Exhibit Description | Filed Herewith |
Incorporated
by Reference herein from Form or Schedule |
Filing Date |
SEC File/ Reg. | |||||
| 4.1 | Form of Pre-Funded Warrant | Exhibit 4.14, Form S-1/A | 02/06/23 | 333-269475 | ||||||
| 4.2 | Form of Class C Warrant | Exhibit 4.13, Form S-1/A | 02/07/23 | 333-269475 | ||||||
| 4.3 | Form of Class D Warrant | Exhibit 4.15, Form S-1/A | 02/07/23 | 333-269475 | ||||||
| 4.4 | Form of Placement Agent Warrant | Exhibit 4.16, Form S-1/A | 02/06/23 | 333-269475 | ||||||
| 4.5 | Form of Warrant Agency Agreement | Exhibit 4.5, Form 8-K | 02/09/23 | 001-33624 | ||||||
| 10.1 | Form of Securities Purchase Agreement | Exhibit 10.1, Form 8-K | 02/09/23 | 001-33624 | ||||||
| 10.2 | Form of Placement Agent Agreement | Exhibit 10.25, Form S-1/A | 02/06/23 | 333-26945 | ||||||
| 31.1 | Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||
| 31.2 | Certificate of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||||||
| 32 | Certifications of the Chief Executive Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||||||
| 101.INS | Inline XBRL Instance Document | X | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SINTX Technologies, Inc. | |
| Date: May 15, 2023 | /s/ B. Sonny Bal |
| B. Sonny Bal | |
Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) |
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