What changed in Sintx Technologies, Inc.'s 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Sintx Technologies, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+168 added−169 removedSource: 10-K (2024-03-27) vs 10-K (2023-03-29)
Top changes in Sintx Technologies, Inc.'s 2023 10-K
168 paragraphs added · 169 removed · 119 edited across 5 sections
- Item 7. Management's Discussion & Analysis+74 / −79 · 48 edited
- Item 1A. Risk Factors+41 / −48 · 30 edited
- Item 1. Business+51 / −39 · 39 edited
- Item 5. Market for Registrant's Common Equity+1 / −2 · 1 edited
- Item 2. Properties+1 / −1 · 1 edited
Item 1. Business
Business — how the company describes what it does
39 edited+12 added−0 removed206 unchanged
Item 1. Business
Business — how the company describes what it does
39 edited+12 added−0 removed206 unchanged
2022 filing
2023 filing
Biggest changeWe believe that to have a competitive advantage, we must continue to develop and maintain the proprietary aspects of our technologies. 11 We have eleven issued U.S. patents, five foreign patents, eighteen pending U.S. non-provisional patent applications, no pending U.S. provisional patent applications, eighty-five pending foreign applications and six pending PCT patent applications.
Biggest changeWe have fifteen issued U.S. patents, twelve issued foreign patents, fifteen pending U.S. non-provisional patent applications, eighty-one pending foreign applications and one pending PCT patent application. Our first issued patent expired in 2016, with the last of these patents expiring in 2039.
With respect to PCT application serial no PCT/US2021/028641 directed to methods of silicon nitride laser cladding, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries.
With respect to PCT application serial no PCT/US2021/028641 directed to methods of silicon nitride laser cladding, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries. With respect to PCT application serial no.
Third-Party Reimbursement Because we and our customers typically receive payment directly from hospitals and surgical centers, we do not anticipate relying directly on payment for any of our products from third-party payors, such as Medicare, Medicaid, private insurers, and managed care companies.
Third-Party Reimbursement Because our customers typically receive payment directly from hospitals and surgical centers, we do not anticipate relying directly on payment for any of our products from third-party payors, such as Medicare, Medicaid, private insurers, and managed care companies.
These include: ● compliance with the QSR, which require manufacturers to follow stringent design, testing, control, documentation, record maintenance, including maintenance of complaint and related investigation files, and other quality assurance controls during the manufacturing process; ● labeling regulations, which prohibit the promotion of products for uncleared or unapproved or “off-label” uses and impose other restrictions on labeling; and ● medical device reporting obligations, which require that manufacturers investigate and report to the FDA adverse events, including deaths, or serious injuries that may have been or were caused by a medical device and malfunctions in the device that would likely cause or contribute to a death or serious injury if it were to recur. 15 Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions: ● warning letters; ● fines, injunctions, and civil penalties; ● recall or seizure of our products; ● operating restrictions, partial suspension or total shutdown of production; ● refusal to grant 510(k) clearance or PMA approvals of new products; ● withdrawal of 510(k) clearance or PMA approvals; and ● criminal prosecution.
These include: ● compliance with the QSR, which require manufacturers to follow stringent design, testing, control, documentation, record maintenance, including maintenance of complaint and related investigation files, and other quality assurance controls during the manufacturing process; ● labeling regulations, which prohibit the promotion of products for uncleared or unapproved or “off-label” uses and impose other restrictions on labeling; and ● medical device reporting obligations, which require that manufacturers investigate and report to the FDA adverse events, including deaths, or serious injuries that may have been or were caused by a medical device and malfunctions in the device that would likely cause or contribute to a death or serious injury if it were to recur. 16 Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions: ● warning letters; ● fines, injunctions, and civil penalties; ● recall or seizure of our products; ● operating restrictions, partial suspension or total shutdown of production; ● refusal to grant 510(k) clearance or PMA approvals of new products; ● withdrawal of 510(k) clearance or PMA approvals; and ● criminal prosecution.
PCT/US2021/038364 directed to antipathogenic devices and methods thereof for antifungal applications, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries. With respect to PCT application serial no.
PCT/US2021/038364 directed to antipathogenic devices and methods thereof for antifungal applications, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries. 12 With respect to PCT application serial no.
In the presence of bacteria, the force required to separate our silicon nitride from its surrounding bone was over five times that of titanium, while there was effectively no separation force required for PEEK, indicating essentially no osteointegration in a septic environment. 7 ● Antibacterial.
In the presence of bacteria, the force required to separate our silicon nitride from its surrounding bone was over five times that of titanium, while there was effectively no separation force required for PEEK, indicating essentially no osteointegration in a septic environment. ● Antibacterial.
CE Marking gives companies easier access into not only the European market but also to Asian and Latin American markets, most of whom recognize the CE Mark on medical device as a mark of quality and adhering to international standards of consumer safety, health or environmental requirements. 16 Compliance with Healthcare Laws We must comply with various U.S. federal and state laws, rules and regulations pertaining to healthcare fraud and abuse, including anti-kickback and false claims laws, rules, and regulations, as well as other healthcare laws in connection with the commercialization of our products.
CE Marking gives companies easier access into not only the European market but also to Asian and Latin American markets, most of whom recognize the CE Mark on medical device as a mark of quality and adhering to international standards of consumer safety, health or environmental requirements. 17 Compliance with Healthcare Laws We must comply with various U.S. federal and state laws, rules and regulations pertaining to healthcare fraud and abuse, including anti-kickback and false claims laws, rules, and regulations, as well as other healthcare laws in connection with the commercialization of our products.
We have obtained AS9100D certification and ITAR registration to facilitate entry into the aerospace and protective armor markets. We recently entered the ceramic armor market through the purchase of assets from B4C, LLC and a technology partnership with Precision Ceramics USA.
We have obtained AS9100D certification and ITAR registration to facilitate entry into the aerospace and protective armor markets. We entered the ceramic armor market through the purchase of assets from B4C, LLC and a technology partnership with Precision Ceramics USA.
If we fail to track and report as required by these laws or to otherwise comply with these laws, we could be subject to the penalty provisions of the pertinent state and federal authorities. 18 Clinical research is heavily regulated by FDA regulations for the protection of human subjects (21 C.F.R. 50 and 56) and also the regulations of the U.S Department of Health and Human Services, or the Common Rule (45 C.F.R 46).
If we fail to track and report as required by these laws or to otherwise comply with these laws, we could be subject to the penalty provisions of the pertinent state and federal authorities. 19 Clinical research is heavily regulated by FDA regulations for the protection of human subjects (21 C.F.R. 50 and 56) and also the regulations of the U.S Department of Health and Human Services, or the Common Rule (45 C.F.R 46).
We are developing products on our own behalf and for third party manufacturers – including CTL – for use as components in spine, total hip and knee joint replacements, as well as dental and maxillofacial applications. We believe we can also utilize our silicon nitride technology platform to develop future products in additional medical and non-medical markets.
We are developing products on our own behalf and for third party manufacturers – including CTL – for use as components in spine, total hip and knee joint replacements, as well as dental, foot & ankle, and maxillofacial applications. We believe we can also utilize our silicon nitride technology platform to develop future products in additional medical and non-medical markets.
These developments are ongoing, and we cannot predict the effects they will have on our business. 17 The federal False Claims Act imposes liability on any person that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal healthcare program.
These developments are ongoing, and we cannot predict the effects they will have on our business. 18 The federal False Claims Act imposes liability on any person that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal healthcare program.
Therefore, the payment that a hospital would receive for a particular hospital visit would not typically take into account the cost of our products. 19 Medicare has established a number of DRGs for inpatient procedures that involve the use of products similar to ours.
Therefore, the payment that a hospital would receive for a particular hospital visit would not typically take into account the cost of our products. 20 Medicare has established a number of DRGs for inpatient procedures that involve the use of products similar to ours.
In addition, with the FDA clearance of our silicon nitride Valeo products, we are the only company to develop and manufacture a ceramic for use in FDA cleared spinal fusion medical devices in the United States. ● In-House Manufacturing Capabilities. We operate an 18,000 square foot manufacturing facility located at our corporate headquarters in Salt Lake City, Utah.
In addition, with the FDA clearance of our silicon nitride Valeo products, we are the only company to develop and manufacture a ceramic for use in FDA cleared spinal fusion medical devices in the United States. ● In-House Manufacturing Capabilities. We operate a 19,000 square foot manufacturing facility located at our corporate headquarters in Salt Lake City, Utah.
Our 30,000 square foot corporate facility includes an 18,000 square foot FDA registered ISO 13485:2016 certified, and AS9100D certified manufacturing space. It is equipped with state-of-the-art powder processing, spray drying, pressing and computerized machining equipment, sintering furnaces, and other testing equipment that enables us to control the entire manufacturing process for our silicon nitride products and product candidates.
Our 31,000 square foot corporate facility includes an 19,000 square foot FDA registered ISO 13485:2016 certified, and AS9100D certified manufacturing space. It is equipped with state-of-the-art powder processing, spray drying, pressing and computerized machining equipment, sintering furnaces, and other testing equipment that enables us to control the entire manufacturing process for our silicon nitride products and product candidates.
Special 510(k)s are typically processed within 30 days of receipt. 14 The PMA process is more complex, costly and time consuming than the 510(k) clearance procedure.
Special 510(k)s are typically processed within 30 days of receipt. 15 The PMA process is more complex, costly and time consuming than the 510(k) clearance procedure.
We manufacture interbody spinal fusion devices for CTL Amedica and have approximately 5 years remaining of a 10-year exclusive right to continue to manufacture them for CTL Amedica.
We manufacture interbody spinal fusion devices for CTL Amedica and have approximately 4 years remaining of a 10-year exclusive right to continue to manufacture them for CTL Amedica.
This powder can then be utilized to produce composites or coatings. ● Composite of Silicon Nitride and PEEK. We have demonstrated in the laboratory that it is possible to compound our silicon nitride powder and the polymer PEEK and that the ensuing composite material maintains the bioactive properties of silicon nitride.
This powder can then be utilized to produce composites or coatings. ● Composites of Silicon Nitride and PEEK and PEKK. We have demonstrated in the laboratory that it is possible to compound our silicon nitride powder and the polymers PEEK and PEKK and that the ensuing composite material maintains the bioactive properties of silicon nitride.
In addition, three (3) U.S. patents (U.S. patent nos. 9,399,309; 9,517,136; and 9,649,197) directed to silicon nitride manufacturing processes were licensed to CTL Medical under an irrevocable, fully paid-up, worldwide license for a ten-year term with CTL Medical also having a Right of First Negotiation to acquire these patents if SINTX decides to later sell these IP assets to a third party. 12 Our remaining issued patents and pending applications are directed to additional aspects of our products and technologies including, among other things: ● designs for intervertebral fusion devices; ● designs for hip implants; ● designs for knee implants; ● implants with improved antibacterial characteristics; ● implants with improved wear performance and surface functionalization ● antipathogenic, antibacterial, antimicrobial, antifungal, and antiviral compositions, devices, and methods; and ● methods and systems for laser cladding, laser coating, and laser sintering of silicon nitride.
In addition, three (3) U.S. patents (U.S. patent nos. 9,399,309; 9,517,136; and 9,649,197) directed to silicon nitride manufacturing processes were licensed to CTL Medical under an irrevocable, fully paid-up, worldwide license for a ten-year term with CTL Medical also having a Right of First Negotiation to acquire these patents if SINTX decides to later sell these IP assets to a third party. 13 Our remaining issued patents and pending applications are directed to additional aspects of our products and technologies including, among other things: ● designs for intervertebral fusion devices; ● designs for hip implants; ● designs for coated, variable-density, and thin walled implants; ● designs for knee implants; ● implants with improved antibacterial characteristics; ● implants with improved wear performance and surface functionalization ● antipathogenic, antibacterial, antimicrobial, antifungal, and antiviral compositions, devices, and methods; and ● methods and systems for hot-isostatic pressing laser cladding, laser coating, and laser sintering of silicon nitride.
We anticipate that these and other orthopedic companies and OEMs will seek to introduce new biomaterials and products that compete with ours. 13 Our main competitors in the industrial market segment include CoorsTek, Kyocera, and Saint Gobain. Our main competitors in the antipathogenic market segment include BactiGuard and MicroBan.
We anticipate that these and other orthopedic companies and OEMs will seek to introduce new biomaterials and products that compete with ours. 14 Our main competitors in the technical ceramics market segment include CoorsTek, Kyocera, and Saint Gobain. Our main competitors in the antipathogenic market segment include BactiGuard and MicroBan.
ITEM 1. BUSINESS Overview – SINTX Technologies SINTX Technologies is a 26-year-old advanced ceramics company formed in December 1996, focused on providing solutions in a variety of biomedical, technical, and antipathogenic applications.
ITEM 1. BUSINESS Overview – SINTX Technologies SINTX Technologies is an advanced ceramics company formed in December 1996, focused on providing solutions in a variety of biomedical, technical, and antipathogenic applications.
The acquisition of TA&T brings revenue from multiple markets that we have previously not participated in. ● Develop new silicon nitride manufacturing technologies. Our current manufacturing process has allowed us to successfully produce spinal implants for over 10 years.
The launch of SINTX Armor will generate revenue from new products. The acquisition of TA&T brings revenue from multiple markets that we have previously not participated in ● Develop new silicon nitride manufacturing technologies. Our current manufacturing process has allowed us to successfully produce spinal implants for over 10 years.
Failure to obtain favorable negotiated prices with hospitals or healthcare facilities could adversely affect sales of our products. 20 Employees As of March 1, 2023, we had 41 employees. We believe that our success will depend, in part, on our ability to attract and retain qualified personnel.
Failure to obtain favorable negotiated prices with hospitals or healthcare facilities could adversely affect sales of our products. 21 Employees As of March 1, 2024, we had 43 employees. We believe that our success will depend, in part, on our ability to attract and retain qualified personnel.
We have engaged academic and commercial partners to assist us in developing this technology and have received an NIH grant to assist in advancing this work. This composite material would allow the straightforward machinability of a complex device that would be more challenging to manufacture from silicon nitride alone. ● Silicon Nitride Coating.
We have engaged academic and commercial partners to assist us in developing this technology and have received NIH grants to assist in advancing this work. This composite material would allow the straightforward machinability of complex spine and CMF devices that would be more challenging to manufacture from silicon nitride alone. ● Silicon Nitride Coating.
Our first issued patent expired in 2016, with the last of these patents expiring in 2039. We have three U.S. patents directed to articulating implants using our high-strength, high toughness doped silicon nitride solid ceramic. These issued patents, which include US 7,666,229; US 9,051,639; and US 9,517,136 will expire in November 2023, September 2032, and March 2034, respectively.
We have three U.S. patents directed to articulating implants using our high-strength, high toughness doped silicon nitride solid ceramic. These issued patents, which include US 7,666,229; US 9,051,639; and US 9,517,136 will expire in November 2023, September 2032, and March 2034, respectively.
We have received three NIH grants over the last fifteen months in order to develop 3D printed silicon nitride / polymer implantable medical devices. ● Apply our silicon nitride technology platform to new medical opportunities.
We have received three NIH grants to develop 3D printed silicon nitride / polymer implantable medical devices. ● Apply our silicon nitride technology platform to new medical opportunities.
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 and we have focused many of our resources on these opportunities.
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 have signed a 10-year lease at a building near its headquarters in Salt Lake City, Utah to house development and manufacturing activities for SINTX Armor. TA&T operates out of two facilities in Millersville, MD totaling 15,840 square feet. ● Extensive Network of Scientific Collaborators. We have developed strong, multi-year, collaborative relationships with surgeons who have used our products.
We have signed a 10-year lease at a building near its headquarters in Salt Lake City, Utah to house development and manufacturing activities for SINTX Armor. TA&T operates out of two facilities in Millersville, MD totaling 15,840 square feet.
We have hired experienced business development employees to identify new markets and applications for our materials and develop commercial relationships. We made the first shipments of non-medical products in our history in 2020, and several of these have transitioned from prototype to regular production orders. The launch of SINTX Armor will generate revenue from new products.
In 2019, we became ITAR-registered and obtained AS9100D certification of our quality management system. We have hired experienced business development employees to identify new markets and applications for our materials and develop commercial relationships. We made the first shipments of non-medical products in our history in 2020, and several of these have transitioned from prototype to regular production orders.
We believe our silicon nitride is ideal as an implant material and is superior to other biomaterials currently used in the spine implant market such as PEEK, allograft and autograft bone, metal and traditional oxide ceramics, none of which possess all of the favorable characteristics of silicon nitride: ● Promotes Bone Growth.
Silicon nitride, an advanced ceramic, is lightweight, resistant to fracture and strong, and is used in many demanding mechanical, thermal and wear applications, such as in space shuttle bearings, jet engine components, and body armor. 7 We believe our silicon nitride is ideal as an implant material and is superior to other biomaterials currently used in the spine implant market such as PEEK, allograft and autograft bone, metal and traditional oxide ceramics, none of which possess all of the favorable characteristics of silicon nitride: ● Promotes Bone Growth.
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. 9 Our Competitive Strengths We believe we can use our silicon nitride technology platform to become a leading advanced ceramic company and have the following principal competitive strengths: ● Sole Provider of Silicon Nitride Medical Devices.
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.
As a result, we believe our silicon nitride products will have lower revision rates and fewer complications than comparable metal and traditional oxide ceramic products.
As a result, we believe our silicon nitride products will have lower revision rates and fewer complications than comparable metal and traditional oxide ceramic products. ● High Dielectric Breakdown. Our silicon nitride has electrical properties that make it well suited for aerospace engine ignitor applications.
These technologies have been used in over a hundred government research contracts throughout TA&T’s history and are still utilized in the development of novel ceramic-matrix composites. We believe that we can successfully build on TA&T’s legacy, obtain new government contracts, and leverage its wide range of capabilities with materials and manufacturing technologies to increase revenue from non-government sources.
This partnership is expected to leverage the strengths of both organizations in the areas of ceramic additive manufacturing (ceramic 3D printing) and ceramic matrix composites (CMCs). We believe that we can successfully build on TA&T’s legacy, obtain new government contracts, and leverage its wide range of capabilities with materials and manufacturing technologies to increase revenue from non-government sources.
We see specific opportunities in markets such as foot and ankle, dental, maxillofacial, and arthroplasty. 10 Market Opportunity Biomedical We believe our silicon nitride biomaterial technology platform provides us with numerous competitive advantages in the biomaterials market.
We have several partnerships exploring opportunities in face masks, filters, wound care, and coatings. 10 Market Opportunity Biomedical We believe our silicon nitride biomaterial technology platform provides us with numerous competitive advantages in the biomaterials market.
Our AS9100D certification and ITAR registration for the silicon nitride factory have allowed us to obtain orders for aerospace components – initially prototype orders which have now become regular production orders. Furthermore, there are few US-based manufacturers of silicon nitride which means there are limited options for those markets that require domestically produced material.
Our AS9100D certification and ITAR registration for the silicon nitride factory have allowed us to obtain orders for aerospace components – initially prototype orders which have now become regular production orders. In January 2024 we announced that we entered into a 10-year, Long-Term Agreement (LTA) with a leading manufacturer of aerospace components and systems.
Inclusion of silicon nitride technology into the mask may enhance personal safety while reducing the risk of disease spread. Intellectual Property We rely on a combination of patents, trademarks, trade secrets, nondisclosure agreements, proprietary information ownership agreements and other intellectual property measures to protect our intellectual property rights.
Further applications for this technology include wound care. 11 Intellectual Property We rely on a combination of patents, trademarks, trade secrets, nondisclosure agreements, proprietary information ownership agreements and other intellectual property measures to protect our intellectual property rights. We believe that to have a competitive advantage, we must continue to develop and maintain the proprietary aspects of our technologies.
We have several partnerships exploring opportunities in face masks, filters, wound care, and coatings. ● Develop additional commercial opportunities outside of the medical device market. We have pursued the development of non-medical uses for our silicon nitride since selling the retail spine business in 2018. In 2019, we became ITAR-registered and obtained AS9100D certification of our quality management system.
Our Strategy Our goal is to become a leading advanced ceramics company. Key elements of our strategy to achieve this goal are the following: ● Develop additional commercial opportunities outside of the medical device market. We have pursued the development of non-medical uses for our silicon nitride since selling the retail spine business in 2018.
Silicon nitride is a chemical compound comprised of the element’s silicon and nitrogen, with the chemical formula Si 3 N 4 . Silicon nitride, an advanced ceramic, is lightweight, resistant to fracture and strong, and is used in many demanding mechanical, thermal and wear applications, such as in space shuttle bearings, jet engine components, and body armor.
Silicon nitride is a chemical compound comprised of the element’s silicon and nitrogen, with the chemical formula Si 3 N 4 .
Our Strategy Our goal is to become a leading advanced ceramics company. Key elements of our strategy to achieve this goal are the following: ● Develop new products with anti-pathogenic properties, including inactivation of the SARS-CoV-2 virus, utilizing our silicon nitride technology.
We see specific opportunities in markets such as foot and ankle, dental, maxillofacial, and arthroplasty. ● Develop new products with anti-pathogenic properties, including inactivation of the SARS-CoV-2 virus, utilizing our silicon nitride technology.
The first area of focus for application of our unique silicon nitride powder is in face masks and face mask filters. Face masks used by healthcare workers today can capture virus particles, but the virus can remain viable in the mask, even as long 7 days after use.
The first area of focus for application of our unique silicon nitride powder is in face masks and face mask filters. Inclusion of silicon nitride technology into the mask may enhance personal safety while reducing the risk of disease spread.
Added
A furnace used for our SINTX Armor manufacturing operations overheated and is no longer functional. We have been informed by our insurance carrier that a covered loss has occurred, and coverage is available for the Company’s claim submitted with respect to the sintering furnace that overheated at SINTX Armor in October 2023.
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The Company will be replacing the damaged furnace and expects the repaired furnace to be up and running in the 4th quarter 2024. Company management continues to work with third parties to temporarily outsource the sintering process.
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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.
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SA, Dilatometry, UV-VIS and FTIR transmission, haze and clarity. 9 Our Competitive Strengths We believe we can use our silicon nitride technology platform to become a leading advanced ceramic company and have the following principal competitive strengths: ● Sole Provider of Silicon Nitride Medical Devices.
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Subsequent to December 31, 2023 we entered into an amended lease agreement reducing this area to 13,560 square feet. ● Extensive Network of Scientific Collaborators. We have developed strong, multi-year, collaborative relationships with surgeons who have used our products.
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Under the LTA, we will manufacture and supply key ceramic aircraft engine components which have been qualified through a rigorous evaluation process. Furthermore, there are few US-based manufacturers of silicon nitride which means there are limited options for those markets that require domestically produced material.
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These technologies have been used in over a hundred government research contracts throughout TA&T’s history and are still utilized in the development of novel ceramic-matrix composites. TA&T has entered into a Cooperative Research and Development Agreement (CRADA) with the U.S. Army Combat Capabilities Development Command Army Research Laboratory (DEVCOM ARL).
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PCT/US2021/027270 directed to antiviral compositions and devices and methods of use thereof, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries. With respect to PCT application serial no.
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PCT/US2021/056461 directed to systems and methods for selective laser sintering of silicon nitride and metal composites, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries. With respect to PCT application serial no.
Added
PCT/US2021/056452 directed to systems and methods for hot-isostatic pressing to increase nitrogen content in silicon nitride, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries. With respect to PCT application serial no.
Added
PCT/US2021/062650 directed to nitride based antipathogenic compositions and devices and method of use thereof, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries. With respect to PCT application serial no.
Added
PCT/US2022/023868 directed to systems and methods for physical vapor deposition silicon nitride coatings having antimicrobial and osteogenic enhancements, we entered the national stage in Australia, Brazil, Canada, China, Europe, India, Japan, South Korea, and Mexico to seek patent protection for our proprietary technologies in those countries.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
30 edited+11 added−18 removed223 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
30 edited+11 added−18 removed223 unchanged
2022 filing
2023 filing
Biggest changeOur reliance solely on our internal resources to manufacture our silicon nitride products entails risks to which we would not be subject if we had secondary suppliers for their manufacture, including: ● the inability to meet our product specifications and quality requirements consistently; ● a delay or inability to procure or expand sufficient manufacturing capacity to meet additional demand for our products; ● manufacturing and product quality issues related to the scale-up of manufacturing; ● the inability to produce a sufficient supply of our products to meet product demands; ● the disruption of our manufacturing facility due to equipment failure, natural disaster or failure to retain key personnel; and 24 ● our inability to ensure our compliance with regulations and standards of the FDA, including QSRs, and corresponding state and international regulatory authorities, including the CFDA.
Biggest changeOur reliance solely on our internal resources to manufacture our silicon nitride products entails risks to which we would not be subject if we had secondary suppliers for their manufacture, including: ● the inability to meet our product specifications and quality requirements consistently; ● a delay or inability to procure or expand sufficient manufacturing capacity to meet additional demand for our products; ● manufacturing and product quality issues related to the scale-up of manufacturing; ● the inability to produce a sufficient supply of our products to meet product demands; ● the disruption of our manufacturing facility due to equipment failure, natural disaster or failure to retain key personnel; and ● our inability to ensure our compliance with regulations and standards of the FDA, including QSRs, and corresponding state and international regulatory authorities, including the CFDA. 25 Any of these events could lead to a reduction in our product sales, product launch delays, failure to obtain regulatory clearance or approval or impact our ability to successfully sell our products and commercialize our products candidates.
The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs, such as Medicare and Medicaid; ● federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose obligations on covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the Physician Payments Sunshine Act, which requires (i) manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to certain “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, and teaching hospitals, with data collection beginning on August 1, 2013, (ii) applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held in such entities by physicians and their immediate family members, with data collection beginning on August 1, 2013, (iii) manufacturers to submit reports to CMS by March 31, 2014 and t he 90th day of each subsequent calendar year, and (iv) disclosure of such information by CMS on a publicly available website beginning in September 2014; and 33 ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers; state and foreign laws that require medical device companies to comply with the medical device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs, such as Medicare and Medicaid; ● federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose obligations on covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the Physician Payments Sunshine Act, which requires (i) manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to certain “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, and teaching hospitals, with data collection beginning on August 1, 2013, (ii) applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held in such entities by physicians and their immediate family members, with data collection beginning on August 1, 2013, (iii) manufacturers to submit reports to CMS by March 31, 2014 and t he 90th day of each subsequent calendar year, and (iv) disclosure of such information by CMS on a publicly available website beginning in September 2014; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers; state and foreign laws that require medical device companies to comply with the medical device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
In the United States, the commercial success of our products will depend, in part, on the extent to which governmental payers at the federal and state levels, including Medicare and Medicaid, private health insurers and other third-party payers provide coverage for and establish adequate reimbursement levels for procedures utilizing our products.
In the United States, the commercial success of our spinal products will depend, in part, on the extent to which governmental payers at the federal and state levels, including Medicare and Medicaid, private health insurers and other third-party payers provide coverage for and establish adequate reimbursement levels for procedures utilizing our products.
In addition, if one or more of our clinical trials are delayed, competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. 32 Our current and future relationships with third-party payers and current and potential customers in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm administrative burdens and diminished profits and future earnings.
In addition, if one or more of our clinical trials are delayed, competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. 33 Our current and future relationships with third-party payers and current and potential customers in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm administrative burdens and diminished profits and future earnings.
With the sale of our spine implant business to CTL we are now largely dependent on the efforts of CTL to sell the spinal fusion products that we manufacture and then sell to CTL. If CTL is not able to sell such products or is unable to increase demand for such products, then our revenues will substantially decline.
With the sale of our spine implant business to CTL we are now largely dependent on the efforts of CTL to sell the spinal fusion products that we manufacture and then sell to CTL. If CTL is not able to sell such products or is unable to increase demand for such products, then our revenues will decline.
Even if we are successful in launching new products into the market, we expect to continue to incur substantial losses for the foreseeable future as we continue to manufacture products for CTL Medical and other OEM customers and research and develop and seek regulatory approvals for our product candidates. 22 If sales revenue from any of our products or product candidates that receive marketing clearance from the FDA or other regulatory body is insufficient, if we are unable to develop and commercialize any of our product candidates, or if our product development is delayed, we may never become profitable.
Even if we are successful in launching new products into the market, we expect to continue to incur substantial losses for the foreseeable future as we continue to manufacture products for CTL Medical and other OEM customers and research and develop and seek regulatory approvals for our product candidates. 23 If sales revenue from any of our products or product candidates that receive marketing clearance from the FDA or other regulatory body is insufficient, if we are unable to develop and commercialize any of our product candidates, or if our product development is delayed, we may never become profitable.
Any such claim against us, even without merit, may cause us to incur substantial costs, and would place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation. 37 We may be subject to damages resulting from claims that we have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition agreements with our competitors or non-solicitation agreements.
Any such claim against us, even without merit, may cause us to incur substantial costs, and would place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation. 38 We may be subject to damages resulting from claims that we have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition agreements with our competitors or non-solicitation agreements.
We have been, are currently and may in the future be subject to audits and investigations relating to our government contracts and any violations could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, payment of fines and suspension or debarment from future government business, as well as harm to our reputation and financial results. 28 Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business.
We have been, are currently and may in the future be subject to audits and investigations relating to our government contracts and any violations could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, payment of fines and suspension or debarment from future government business, as well as harm to our reputation and financial results. 29 Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business.
In addition, if allegations of impropriety were made against us, we could suffer serious reputational harm, which could negatively affect our financial position, results of operations and liquidity. 30 Our long-term success depends substantially on our ability to obtain regulatory clearance or approval and thereafter commercialize our product candidates; we cannot be certain that we will be able to do so in a timely manner or at all.
In addition, if allegations of impropriety were made against us, we could suffer serious reputational harm, which could negatively affect our financial position, results of operations and liquidity. 31 Our long-term success depends substantially on our ability to obtain regulatory clearance or approval and thereafter commercialize our product candidates; we cannot be certain that we will be able to do so in a timely manner or at all.
Ultimately, we could be prevented from commercializing a product, or forced to cease some aspect of our business operations, as a result of claims of patent infringement or violation of other intellectual property rights, which could have a material and adverse effect on our business, financial condition and results of operations. 38 Risks Related to Potential Litigation from Operating Our Business We may become subject to potential product liability claims, and we may be required to pay damages that exceed our insurance coverage.
Ultimately, we could be prevented from commercializing a product, or forced to cease some aspect of our business operations, as a result of claims of patent infringement or violation of other intellectual property rights, which could have a material and adverse effect on our business, financial condition and results of operations. 39 Risks Related to Potential Litigation from Operating Our Business We may become subject to potential product liability claims, and we may be required to pay damages that exceed our insurance coverage.
We will receive approval or clearance from the FDA to commercialize products requiring a clinical trial only if we can demonstrate to the satisfaction of the FDA, through well-designed and properly conducted clinical trials, that our product candidates are safe and effective and otherwise meet the appropriate standards required for approval or clearance for specified indications. 31 Clinical trials are complex, expensive, time consuming, uncertain and subject to substantial and unanticipated delays.
We will receive approval or clearance from the FDA to commercialize products requiring a clinical trial only if we can demonstrate to the satisfaction of the FDA, through well-designed and properly conducted clinical trials, that our product candidates are safe and effective and otherwise meet the appropriate standards required for approval or clearance for specified indications. 32 Clinical trials are complex, expensive, time consuming, uncertain and subject to substantial and unanticipated delays.
We operate a 30,000 square foot facility which is certified under the ISO 13485 medical device manufacturing standard for medical devices and operates under the FDA’s quality systems regulations, or QSRs. All operations with the exception of raw material production are performed at this facility. We are the sole manufacturer of our silicon-nitride based products.
We operate a 31,000 square foot facility which is certified under the ISO 13485 medical device manufacturing standard for medical devices and operates under the FDA’s quality systems regulations, or QSRs. All operations with the exception of raw material production are performed at this facility. We are the sole manufacturer of our silicon-nitride based products.
If we or any of our strategic partners fail in any of these endeavors, or experience delays in pursuing them, we will not generate revenues as planned and will need to curtail operations or seek additional financing earlier than otherwise anticipated. 25 Part of our strategy is to establish and develop OEM partnerships and arrangements, which subjects us to various risks.
If we or any of our strategic partners fail in any of these endeavors, or experience delays in pursuing them, we will not generate revenues as planned and will need to curtail operations or seek additional financing earlier than otherwise anticipated. 26 Part of our strategy is to establish and develop OEM partnerships and arrangements, which subjects us to various risks.
Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity. 29 Exports and imports of certain of our products are subject to various export control, sanctions and import regulations and may require authorization from regulatory agencies of the U.S. or other countries.
Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition or liquidity. 30 Exports and imports of certain of our products are subject to various export control, sanctions and import regulations and may require authorization from regulatory agencies of the U.S. or other countries.
The proposed legislation remains subject to change, and its impact on us and holders of common shares, pre-funded warrants, or Warrants is uncertain. 34 In addition, the Inflation Reduction Act of 2022 was recently signed into law and includes provisions that will impact the U.S. federal income taxation of corporations.
The proposed legislation remains subject to change, and its impact on us and holders of common shares, pre-funded warrants, or Warrants is uncertain. 35 In addition, the Inflation Reduction Act of 2022 was recently signed into law and includes provisions that will impact the U.S. federal income taxation of corporations.
Actual demand for our products could be significantly less than expected if our assumptions regarding these factors prove to be incorrect or do not materialize. 27 We are dependent on our senior management team, engineering team, and external advisors, and the loss of any of them could harm our business.
Actual demand for our products could be significantly less than expected if our assumptions regarding these factors prove to be incorrect or do not materialize. 28 We are dependent on our senior management team, engineering team, and external advisors, and the loss of any of them could harm our business.
In addition, we may not have sufficient resources to litigate, enforce or defend our intellectual property rights. 36 We have no patent protection covering the composition of matter for our solid silicon nitride or for all of the components of the process we use for manufacturing our silicon nitride, and competitors may create silicon nitride formulations substantially similar to ours.
In addition, we may not have sufficient resources to litigate, enforce or defend our intellectual property rights. 37 We have no patent protection covering the composition of matter for our solid silicon nitride or for all of the components of the process we use for manufacturing our silicon nitride, and competitors may create silicon nitride formulations substantially similar to ours.
Adverse changes in payment rates by payers to hospitals could adversely impact our ability to market and sell our products and negatively affect our financial performance. 26 In international markets, medical device regulatory requirements and healthcare payment systems vary significantly from country to country, and many countries have instituted price ceilings on specific product lines.
Adverse changes in payment rates by payers to hospitals could adversely impact our ability to market and sell these products and negatively affect our financial performance. 27 In international markets, medical device regulatory requirements and healthcare payment systems vary significantly from country to country, and many countries have instituted price ceilings on specific product lines.
In addition, if we are unable to continue to meet the legal, regulatory and other requirements related to being a public company, we may not be able to maintain the listing of our common stock on The NASDAQ Capital Market, which would likely have a material adverse effect on the trading price of our common stock. 39
In addition, if we are unable to continue to meet the legal, regulatory and other requirements related to being a public company, we may not be able to maintain the listing of our common stock on The NASDAQ Capital Market, which would likely have a material adverse effect on the trading price of our common stock. 40 We may not be able to maintain our listing on the NASDAQ Capital Market, which would adversely affect the price and liquidity of our common stock.
Because we typically receive payment directly from the companies for whom we manufacture, such as CTL Medical, we do not anticipate relying directly on payment from third-party payers for our products.
Because we typically receive payment directly from the companies for whom we manufacture, we do not anticipate relying directly on payment from third-party payers for our products.
These companies enjoy significant competitive advantages over us, including: ● broad product offerings, which address the needs of orthopedic surgeons and hospitals in a wide range of procedures; ● products that are supported by long-term clinical data; ● greater experience in, and resources for, launching, marketing, distributing and selling products, including strong sales forces and established distribution networks; ● existing relationships with orthopedic surgeons; ● extensive intellectual property portfolios and greater resources for patent protection; ● greater financial and other resources for product research and development; ● greater experience in obtaining and maintaining FDA and other regulatory clearances and approvals for products and product enhancements; ● established manufacturing operations and contract manufacturing relationships; 23 ● significantly greater name recognition and widely recognized trademarks; and ● established relationships with healthcare providers and payers.
These companies enjoy significant competitive advantages over us, including: ● broad product offerings, which address the needs of orthopedic surgeons and hospitals in a wide range of procedures; ● products that are supported by long-term clinical data; ● greater experience in, and resources for, launching, marketing, distributing and selling products, including strong sales forces and established distribution networks; ● existing relationships with orthopedic surgeons; ● extensive intellectual property portfolios and greater resources for patent protection; ● greater financial and other resources for product research and development; ● greater experience in obtaining and maintaining FDA and other regulatory clearances and approvals for products and product enhancements; ● established manufacturing operations and contract manufacturing relationships; ● significantly greater name recognition and widely recognized trademarks; and ● established relationships with healthcare providers and payers. 24 Our products and any product candidates that we may introduce into the market may not enable us to overcome the competitive advantages of these large and dominant orthopedic companies.
We expect our current cash and cash equivalents will be sufficient to fund our operations through the first quarter of 2025.
We expect our current cash and cash equivalents will be sufficient to fund our operations through the second quarter of 2024.
For the years ended December 31, 2022 and 2021 we incurred a net loss of $12.0 million and $9.3 million, respectively, and used cash in operations of $10.3 million and $10.1 million, respectively. We have an accumulated deficit of $262.5 and $250.4 million as of December 31, 2022 and 2021 respectively.
For the years ended December 31, 2023 and 2022 we incurred a net loss of $8.3 million and $12.0 million, respectively, and used cash in operations of $14.1 million and $10.3 million, respectively. We have an accumulated deficit of $270.7 and $262.5 million as of December 31, 2023 and 2022 respectively.
A significant outbreak in the future of contagious diseases, such as COVID-19, could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn.
A pandemic, epidemic or outbreak of an infectious disease in the United States or elsewhere may adversely affect our business. A significant outbreak in the future of contagious diseases, such as COVID-19, could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn.
The timing and amount of our future capital requirements will depend on many factors, including: ● the level of sales of our current products and the cost of revenue and sales and marketing; ● the extent of any clinical trials that we will be required to conduct in support of the regulatory clearance of our total hip and knee replacement product candidates; ● the scope, progress, results and cost of our product development efforts; ● the costs, timing and outcomes of regulatory reviews of our product candidates; ● the number and types of products we develop and commercialize; 21 ● the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims; and ● the extent and scope of our general and administrative expenses.
Our ability to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm our business, financial condition and results of operations or could cause us to cease operations. 22 The timing and amount of our future capital requirements will depend on many factors, including: ● the level of sales of our current products and the cost of revenue and sales and marketing; ● the extent of any clinical trials that we will be required to conduct in support of the regulatory clearance of our total hip and knee replacement product candidates; ● the scope, progress, results and cost of our product development efforts; ● the costs, timing and outcomes of regulatory reviews of our product candidates; ● the number and types of products we develop and commercialize; ● the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims; and ● the extent and scope of our general and administrative expenses.
If any of the physicians or other healthcare providers or entities with whom we expect to do business, including our collaborators, are found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from participation in government healthcare programs, which could also materially affect our business.
If any of the physicians or other healthcare providers or entities with whom we expect to do business, including our collaborators, are found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from participation in government healthcare programs, which could also materially affect our business. 34 Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.
Our cash and cash equivalents as of December 31, 2022 was $6.2 million. In February 2023 we closed the public offering of $12 million of units consisting of shares of common stock, Pre-funded Warrants, Class C Warrants and Class D Warrants, resulting in net proceeds to us of approximately $10.9 million.
Our cash and cash equivalents as of December 31, 2023 was $3.3 million. In February 2024 we closed the public offering of $4.0 million of units consisting of shares of common stock, Pre-funded Warrants, Class E Warrants and Class F Warrants, resulting in net proceeds to us of approximately $3.7 million.
Risks Related to Our Intellectual Property and Litigation If the combination of patents, trade secrets and contractual provisions that we rely on to protect our intellectual property is inadequate, our ability to commercialize our products successfully will be harmed, and we may not be able to operate our business profitably.
This may create the opportunity for third-party cross border trade or influence our decision to sell or not to sell a product, thus adversely affecting our geographic expansion plans and revenues. 36 Risks Related to Our Intellectual Property and Litigation If the combination of patents, trade secrets and contractual provisions that we rely on to protect our intellectual property is inadequate, our ability to commercialize our products successfully will be harmed, and we may not be able to operate our business profitably.
Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition. We are subject to taxes by the U.S. federal, state, local and foreign tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions.
We are subject to taxes by the U.S. federal, state, local and foreign tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions.
For example, Smith & Nephew has developed a ceramic-coated metal, known as Oxinium, which may overcome certain of the limitations of metal joint replacement products and could directly compete with our silicon nitride and silicon nitride-coated product candidates. We are dependent on CTL’s ability to sell the spinal fusion products we manufacture from silicon nitride.
For example, Smith & Nephew has developed a ceramic-coated metal, known as Oxinium, which may overcome certain of the limitations of metal joint replacement products and could directly compete with our silicon nitride and silicon nitride-coated product candidates. The manufacturing process for our silicon nitride products is complex and requires sophisticated state-of-the-art equipment, experienced manufacturing personnel and highly specialized knowledge.
Removed
Our ability to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm our business, financial condition and results of operations or could cause us to cease operations.
Added
As a small capitalization company, the price of our common shares has been, and is likely to continue to be, highly volatile.
Removed
Our products and any product candidates that we may introduce into the market may not enable us to overcome the competitive advantages of these large and dominant orthopedic companies.
Added
Any announcements concerning us or our competitors, quarterly variations in operating results, introduction of new products, delays in the introduction of new products or changes in product pricing policies by us or our competitors, acquisition or loss of significant customers, partners and suppliers, changes in earnings estimates or our ratings by analysts, regulatory developments, or fluctuations in the economy or general market conditions, among other factors, could cause the market price of our common shares to fluctuate substantially.
Removed
If CTL is not able to sell such products or increase demand for the products our revenues will be substantially impacted which would have a significant impact on our business and operating results. Sales of spinal fusion products manufactured from silicon nitride to CTL account for a significant percentage of our revenues from the sale of products.
Added
There can be no assurance that the market price of our common shares will not decline below its current price or that it will not experience significant fluctuations in the future, including fluctuations that are unrelated to our performance. Currently our common stock is quoted on the NASDAQ Capital Market under the symbol “SINT”.
Removed
We have entered into a 10-year manufacturing and supply agreement with CTL to supply CTL with its requirements of silicon nitride manufactured spinal fusion products. CTL is not under any obligation to purchase any minimum quantities of products from us.
Added
We must satisfy certain minimum listing maintenance requirements to maintain the NASDAQ Capital Market quotation, including certain governance requirements and a series of financial tests relating to stockholders’ equity or net income or market value, public float, number of market makers and stockholder, market capitalization, and maintaining a minimum bid price of $1.00 per share.
Removed
If CTL is not successful in creating demand for such products and selling such products, then they are not required to purchase any products from us. Because of our significant customer concentration, our revenue could fluctuate significantly due to changes in economic conditions, the use of competitive products, or the loss of, reduction of business with, CTL.
Added
On October 20, 2023, we received a notice from the Listing Qualifications Department of The NASDAQ Stock Market stating that the bid price of our common stock for the previous 30 consecutive trading days had closed below the minimum $1.00 per share required for continued listing on The NASDAQ Capital Market under NASDAQ Listing Rule 5550(a)(2).
Removed
A reduction or delay in orders from CTL, or a delay or default in payment by any significant customer, could materially harm our business and results of operations. The manufacturing process for our silicon nitride products is complex and requires sophisticated state-of-the-art equipment, experienced manufacturing personnel and highly specialized knowledge.
Added
We had a period of 180 calendar days, or until April 17, 2024, to regain compliance with the rule. If the Company does not regain compliance with Rule 5550(a)(2) by April 17, 2024, the Company may be eligible for additional time.
Removed
Any of these events could lead to a reduction in our product sales, product launch delays, failure to obtain regulatory clearance or approval or impact our ability to successfully sell our products and commercialize our products candidates.
Added
To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
Removed
A pandemic, epidemic or outbreak of an infectious disease in the United States or elsewhere may adversely affect our business.
Added
If the Company meets these requirements, the Staff will inform the Company that it has been granted an additional 180 calendar days. However, if it appears to Staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, the Staff will provide notice that its securities will be subject to delisting.
Removed
We continue to monitor the rapidly evolving situation and guidance from domestic and international authorities, including federal, state and local public health authorities, regarding the COVID-19 pandemic, and we may need to make changes to our business based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan.
Added
We intend to actively monitor our bid price and will consider available options to resolve the deficiency and regain compliance with the Nasdaq Listing Rules, including considering whether to conduct a reverse stock split.
Removed
Although the Company cannot reasonably estimate the length or severity of the impact that the pandemic will have on its financial results, the Company has experienced, and may continue to experience, a material adverse impact on its sales, results of operations, and cash flows in fiscal 2023.
Added
If Nasdaq delists our common stock from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market.
Removed
In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the ACA, a sweeping law intended, among other things, to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
Added
If this were to occur, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; ● a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future. 41
Removed
Among the provisions of the ACA of importance to our products and product candidates are: ● establishes a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; and ● implements payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models.
Removed
In addition, other legislative changes have been proposed and adopted since the PPACA was enacted.
Removed
For example, on January 2, 2013, former President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Removed
Moreover, certain legislative changes to and regulatory changes under the PPACA have occurred in the 115th United States Congress and under the Trump Administration.
Removed
For example, on December 22, 2017, former President Trump signed a budget reconciliation act into law, which among other things, repealed the penalty for individuals who do not maintain minimum essential coverage, which was a central component of PPACA’s approach to expanding coverage.
Removed
On January 9, 2018, former President Trump signed the Bipartisan Budget Act of 2018, which, among other things, repealed the PPACA provision establishing an independent payment advisory board that would have submitted recommendations to reduce Medicare spending if projected Medicare spending exceeded a specified growth rate. 35 Additional legislative changes to and regulatory changes under the PPACA remain possible.
Removed
This may create the opportunity for third-party cross border trade or influence our decision to sell or not to sell a product, thus adversely affecting our geographic expansion plans and revenues.
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−0 removed2 unchanged
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−0 removed2 unchanged
2022 filing
2023 filing
Biggest changeITEM 2. PROPERTIES Our 29,534 square foot corporate office and manufacturing facilities are located in Salt Lake City, Utah. We occupy these facilities pursuant to a lease that expires in December 2024. Pursuant to the terms of the lease agreement, we may extend the lease for two additional periods of five years each.
Biggest changeITEM 2. PROPERTIES Our 30,764 square foot corporate office and manufacturing facilities are located in Salt Lake City, Utah. We occupy these facilities pursuant to a lease that expires in December 2024. Pursuant to the terms of the lease agreement, we may extend the lease for two additional periods of five years each.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
1 edited+0 added−1 removed2 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
1 edited+0 added−1 removed2 unchanged
2022 filing
2023 filing
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our shares of common stock are currently quoted on The NASDAQ Capital Market under the symbol “SINT”.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our shares of common stock are currently quoted on The NASDAQ Capital Market under the symbol “SINT”. Holders of Record As of December 31, 2023, we had approximately 159 holders of record of our common stock.
Removed
The following table sets forth the high and low sale prices of our common stock, as reported by NASDAQ Capital Markets for the periods indicated: 2022 High Low First Quarter $ 72.00 $ 40.00 Second Quarter $ 66.00 $ 36.00 Third Quarter $ 70.80 $ 30.49 Fourth Quarter $ 33.60 $ 6.46 2021 High Low First Quarter $ 344.00 $ 151.00 Second Quarter $ 206.00 $ 123.00 Third Quarter $ 204.00 $ 122.00 Fourth Quarter $ 136.00 $ 59.00 Holders of Record As of January 23, 2023, we had approximately 158 holders of record of our common stock.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
48 edited+26 added−31 removed49 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
48 edited+26 added−31 removed49 unchanged
2022 filing
2023 filing
Biggest changeResults of Operations Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 The following table sets forth, for the periods indicated, our results of operations for the years ended December 31, 2022 and 2021 (dollars, in thousands): Year Ended December 31, 2022 2021 $ Change % Change Product revenue $ 601 $ 606 $ (5 ) -1 % Grant and contract revenue 960 - 960 100 % Total revenue 1,561 606 955 158 % Costs of revenue 265 449 (184 ) -41 % Gross profit 1,296 157 1,139 725 % Operating expenses: Research and development 6,450 5,886 564 10 % General and administrative 3,990 3,603 387 11 % Sales and marketing 1,336 1,288 48 4 % Grant and contract expense 855 - 855 100 % Total operating expenses 12,631 10,777 1,854 17 % Loss from operations (11,335 ) (10,620 ) (715 ) 7 % Other income (expense), net (704 ) 1,311 (2,015 ) -154 % Net loss before income taxes (12,039 ) (9,309 ) (2,730 ) 29 % Provision for income taxes - - - - % Net loss $ (12,039 ) $ (9,309 ) $ (2,730 ) 29 % 43 Product Revenue Total product revenue was $0.6 million in both 2022 and 2021, remaining largely unchanged.
Biggest changeResults of Operations Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following table sets forth, for the periods indicated, our results of operations for the years ended December 31, 2023 and 2022 (dollars, in thousands): Year Ended December 31, 2023 2022 $ Change % Change Product revenue $ 1,226 $ 601 $ 625 104 % Grant and contract revenue 1,401 960 441 46 % Total revenue 2,627 1,561 1,066 68 % Costs of revenue 784 265 519 196 % Gross profit 1,843 1,296 547 42 % Operating expenses: Research and development 8,713 6,450 2,263 35 % General and administrative 4,222 3,990 232 6 % Sales and marketing 1,137 1,336 (199 ) -15 % Grant and contract expense 1,129 855 274 32 % Total operating expenses 15,201 12,631 2,570 20 % Loss from operations (13,358 ) (11,335 ) (2,023 ) 18 % Other income (expense), net 5,099 (704 ) 5,803 824 % Net loss before income taxes (8,259 ) (12,039 ) 3,780 -31 % Provision for income taxes - - - - % Net loss $ (8,259 ) $ (12,039 ) $ 3,780 -31 % 46 Product Revenue Total product revenue increased $0.6 million, or 104%, as compared to the same period in 2022.
There have been no material changes to those policies for the year ended December 31, 2022. 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.
There have been no material changes to those policies for the year ended December 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.
The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded no impairment loss for definite-lived intangible assets during the year ended December 31, 2022. As explained above, the Company sold most intangible assets that had a carrying value, retaining the carrying value of only one trademark asset.
The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded no impairment loss for definite-lived intangible assets during the year ended December 31, 2023. As explained above, the Company sold most intangible assets that had a carrying value, retaining the carrying value of only one trademark asset.
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.
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, 2023.
However, actual results may differ from those estimates and assumptions that are used to prepare our consolidated financial statements. 47 New Accounting Pronouncement, Not Yet Adopted The Company has reviewed all other 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.
However, actual results may differ from those estimates and assumptions that are used to prepare our consolidated financial statements. 50 New Accounting Pronouncement, 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.
For the years ended December 31, 2022 and 2021, the Company did not record any material interest income, interest expense or penalties related to uncertain tax positions or the settlement of audits for prior periods.
For the years ended December 31, 2023 and 2022, the Company did not record any material interest income, interest expense or penalties related to uncertain tax positions or the settlement of audits for prior periods.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. 49 The Company operates in various tax jurisdictions and is subject to audit by various tax authorities.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. 52 The Company operates in various tax jurisdictions and is subject to audit by various tax authorities.
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.
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, 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.
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 Technology Assessment and Transfer, Inc. (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.
The significant assumptions used in estimating the fair value include the exercise price, volatility of the stock underlying the instrument, risk-free interest rate, estimated fair value of the stock underlying the instrument and the estimated life of the instrument. 50
The significant assumptions used in estimating the fair value include the exercise price, volatility of the stock underlying the instrument, risk-free interest rate, estimated fair value of the stock underlying the instrument and the estimated life of the instrument. 53
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 will 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 at a building near its 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.
We have signed a 10-year lease at a building near our headquarters in Salt Lake City, Utah to house development and manufacturing activities for SINTX Armor. 44 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.
As of December 31, 2022, the related party debt had an outstanding balance of $212,000. 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.
As of December 31, 2023, the related party debt had an outstanding balance of $46,000. 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.
We have obtained AS9100D certification and ITAR registration to facilitate entry into the aerospace portion of this market. We recently entered the ceramic armor market through the purchase of assets from B4C, LLC and a technology partnership with Precision Ceramics USA.
We have obtained AS9100D certification and ITAR registration to facilitate entry into the aerospace and protective armor markets. We entered the ceramic armor market through the purchase of assets from B4C, LLC and a technology partnership with Precision Ceramics USA.
Net Cash Used in Investing Activities Net cash used in investing activities was $1.1 million during 2022, compared to $1.7 million used in investing activities during the same period in 2021, a decrease of $0.6 million.
Net Cash Used in Investing Activities Net cash used in investing activities was $0.5 million during 2023, compared to $1.1 million used in investing activities during the same period in 2022, a decrease of $0.6 million.
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 and we have refocused many of our resources on these opportunities. We presently manufacture advanced ceramic powders and components in our manufacturing facilities based in Salt Lake City, Utah.
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 and Millersville, Maryland.
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.
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.
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.
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 Our product revenue is derived from the manufacture and sale of products.
Cash Flows The following table summarizes, for the periods indicated, cash flows from operating, investing and financing activities (in thousands): Year Ended December 31, 2022 2021 Net cash used in operating activities $ (10,263 ) $ (10,127 ) Net cash provided by (used in) investing activities (1,101 ) (1,656 ) Net cash provided by financing activities 3,336 705 Net cash provided (used) $ (8,028 ) $ (11,078 ) Net Cash Used in Operating Activities Net cash used in operating activities was $10.3 million in 2022, compared to $10.1 million used in 2021, an increase of $0.1 million.
Cash Flows The following table summarizes, for the periods indicated, cash flows from operating, investing and financing activities (in thousands): Year Ended December 31, 2023 2022 Net cash used in operating activities $ (14,115 ) $ (10,263 ) Net cash used in investing activities (501 ) (1,101 ) Net cash provided by financing activities 11,711 3,336 Net cash provided (used) $ (2,905 ) $ (8,028 ) Net Cash Used in Operating Activities Net cash used in operating activities was $14.1 million in 2023, compared to $10.3 million used in 2022, an increase of $3.8 million.
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, 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.
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 with Maxim Group LLC (“Maxim”), which was subsequently amended on October 12, 2023 (as amended, the “2021 Distribution Agreement”), 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 $1.1 million through Maxim, as agent.
The decrease in cash used in investing activities during 2022 was primarily due to a decrease in cash of $2.3 million for the purchase of property and equipment, and a $0.3 million increase in cash acquired in acquisition, offset by $1.9 million of proceeds from notes receivable in the prior year, and a $0.1 million decrease in proceeds from the sale of property and equipment.
The decrease in cash used in investing activities during 2023 was primarily due to a $0.9 million purchase of property and equipment, offset by and a $0.3 million increase in cash acquired in acquisition in the prior year.
Revenue Recognition The Company derives its product revenue primarily from the sale of spinal fusion products, used in the treatment of spine disorders to CTL Medical, with whom the Company has a 10-year exclusive sales agreement in place,7 years of which remain. The Company is currently pursuing other sales opportunities for silicon nitride outside the spinal fusion application.
Revenue Recognition The Company derives its product revenue primarily from the sale of aerospace components and spinal fusion products, used in the treatment of spine disorders to CTL Medical, with whom the Company has a 10-year exclusive sales agreement in place, 7 years of which remain.
Net Cash Provided by Financing Activities Net cash provided by financing activities was $3.3 million during 2022, compared to $0.7 million provided by financing activities during the same period in 2021, an increase of $2.6 million.
Net Cash Provided by Financing Activities Net cash provided by financing activities was $11.7 million during 2023, compared to $3.3 million provided by financing activities during the same period in 2022, an increase of $8.4 million.
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.
SINTX silicon nitride has been shown to be 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.
The sale of the Company’s products has a single performance obligation and revenue is recognized at the time the product is shipped to the customer. In general, the Company’s customers do not have any rights of return or exchange.
The Company is currently pursuing other sales opportunities for silicon nitride outside the spinal fusion application. The sale of the Company’s products has a single performance obligation and revenue is recognized at the time the product is shipped to the customer. In general, the Company’s customers do not have any rights of return or exchange.
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 “Risk Factors” and elsewhere in this Annual Report. Overview We are an advanced materials company that develops and commercializes advanced ceramics for biomedical, technical, and antipathogenic applications.
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 “Risk Factors” and elsewhere in this Annual Report. 43 Overview SINTX Technologies is an advanced ceramics company formed in December 1996, focused on providing solutions in a variety of biomedical, technical, and antipathogenic applications.
The Business Loan is secured by a general security interest in all of the assets of TA&T. The Business Loan contains other standard provisions that are customary of loans of this type. The outstanding balance at December 31, 2022 was $315,000.
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.
As a result, the Company has repaid the loan together with processing fees and interest. 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.
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.
Cost of Revenue The expenses that are included in cost of revenue include all in-house manufacturing costs for the products we manufacture. 42 Gross Profit Our gross profit measures our product revenue relative to our cost of revenue.
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. 45 Gross Profit Our gross profit measures our product revenue relative to our cost of revenue.
This increase was primarily due to the change in the fair value of the derivative liabilities in the amount of $1.8 million, the forgiveness of PPP loans of $0.4 million and a $0.1 million gain on the disposal of assets in the prior year, offset by a $0.3 million increase in other income.
This increase was primarily due to the change in the fair value of the derivative liabilities in the amount of $6.8 million, and a $0.1 million increase in other income offset by a $0.8 million in offering costs on derivative liabilities and a $0.3 million decrease in other income.
The increase in cash used for operating activities during 2022 was primarily due to the movement of working capital items during 2022 as compared to the same period in 2021 as follows: a $0.2 million increase in payments on operating lease liabilities, a $0.1 million increase in cash used for other liabilities, offset by a $0.2 decrease in cash used in prepaids.
The increase in cash used for operating activities during 2023 was primarily due to the $2.3 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 $0.4 million increase in cash used in accounts receivable, a $0.3 million increase for inventory, a $0.3 million increase in cash used for prepaids, a $0.2 million increase in cash used in other liabilities, a $0.2 million increase in cash used in accounts payable and accrued liabilities, and a $0.1 million increase in cash used for payments on operating lease liability.
The Company does not employee salespeople to actively seek additional customers; there are no incremental costs for obtaining customers that need to be capitalized. Account and Other Receivables and Allowance for Doubtful Accounts Account and other receivables are carried at invoiced amount less an allowance for doubtful accounts.
The Company does not employee salespeople to actively seek additional customers; there are no incremental costs for obtaining customers that need to be capitalized. Account and Other Receivables and Allowance for Credit Losses Doubtful Accounts Financial assets, which potentially subject the Company to credit losses, consist primarily of receivables.
For the years ended December 31, 2022 and 2021, the Company incurred a net loss of $12.0 million and $9.3 million, respectively, and used cash in operations of $10.3 million and $10.1 million, respectively. The Company had an accumulated deficit of $262.5 million and $250.4 million as of December 31, 2022 and 2021, respectively.
For the years ended December 31, 2023 and 2022, the Company incurred a net loss of $8.3 million and $12.0 million, respectively, and used cash in operations of $14.1 million and $10.3 million, respectively.
During the year ended December 31, 2022, the Company received grant and contract revenue of $1.0 million. Grant and contract revenue did not exist during the same period of the prior year. Costs of Revenue and Gross Profit Cost of revenue decreased $0.2 million, or 41% as compared to the same period in 2021.
During the year ended December 31, 2023, the Company grant and contract revenue increased $0.4 million as compared to the same period in 2022. Costs of Revenue and Gross Profit Cost of revenue increased $0.5 million, or 196% as compared to the same period in 2022.
This decrease was primarily attributable to a shift in customer base and product mix. Gross profit increased $1.1 million, or 725%, as compared to the same period in 2021. This increase was primarily attributed to grant and contract revenue in 2022 that did not occur in the prior year.
This increase was primarily attributable to an increase in product revenue and a shift in customer base and product mix. Gross profit increased $0.5 million, or 42%, as compared to the same period in 2022. This increase was primarily attributed to an increase in grant and contract revenue and a shift in product mix to more profitable products.
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 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.
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.
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.
The Company reviews the carrying value of inventory on a periodic basis for excess or obsolete items, and records any write-down as a cost of revenue, as necessary. Long Lived Intangible Assets The Company evaluates the carrying value of definite-lived intangibles when events or changes in circumstances indicate that the carrying value may not be recoverable.
Long Lived Intangible Assets The Company evaluates the carrying value of intangibles when events or changes in circumstances indicate that the carrying value may not be recoverable.
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 – mean that it may also be suitable in other fusion device applications such as arthroplasty implants, foot wedges, and dental implants.
This established use, along with its inherent resistance to bacterial adhesion and bone affinity suggests 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.
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.
These revenue sources include coatings, components for aerospace and medical device markets, toll processing services, and government contracts and grants. 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.
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. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements, as defined in Item 303(a)(4) of Regulation S-K.
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, 2023, the line of credit with Wells Fargo had no outstanding balance and the account has been closed.
Research and Development Expenses Research and development expenses increased $0.6 million, or 10%, as compared to the same period in 2021. This increase was primarily attributable to a general increase in the cost of products and services due to price inflation, and additional costs associated with the acquisition of TA&T in 2022.
Research and Development Expenses Research and development expenses increased $2.3 million, or 35%, as compared to the same period in 2022. This increase was primarily attributable to an increase in patent expenses, employee wages, product prototypes, and costs of operations associated with opening the SINTX Armor facility and the acquisition of TA&T.
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 business loan was paid in full during the first quarter of 2023 and there was no outstanding balance at December 31, 2023. 49 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 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 had an accumulated deficit of $270.7 million and $262.5 million as of December 31, 2023 and 2022, respectively. 47 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.
General and Administrative Expenses General and administrative expenses increased $0.4 million, or 11%, as compared to the same period in 2021. This increase is largely due to an increase in patent application expenses and services due to price inflation, and additional costs associated with the acquisition of TA&T in 2022.
General and Administrative Expenses General and administrative expenses increased $0.2 million, or 6%, as compared to the same period in 2022. This increase is primarily due to an increase in costs for investor relations, employee wages, and employee recruitment costs.
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.
SINTX Core Business Biomedical Applications: Since its inception, SINTX has been focused on medical grade silicon nitride. SINTX biomedical products have been shown to be biocompatible, bioactive, antipathogenic, and to have 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 increase was primarily attributable to proceeds from issuance of preferred stock recorded as derivative liabilities of $3.8 million, offset by a $0.5 million decrease in proceeds from the issuance of debt, $0.5 million increase in payments on debt, and $0.2 million decrease in proceeds from issuance of common stock in connection with exercise of warrants. 46 Indebtedness 2020 PPP Loan On April 28, 2020, the Company received funding under a Paycheck Protection Program (“PPP”) loan (the “PPP Loan”) from First State Community Bank (the “Lender”).
This increase was primarily attributable to an increase in proceeds from issuance of common stock of $5.1 million, an increase in proceeds from issuance of warrant derivative liabilities of $2.8 million, and a $0.5 million decrease in the payment on debt.
The Company had no grant and contract expenses for the same period in 2021 due to the Company being awarded federal grant and contract income subsequent to 2021 (and incurring related grant and contract expense during 2022 and incurring none during 2021). 44 Other Income (Expense), Net Other expenses increased $2.0 million, or 154%, as compared to the same period in 2021.
Other Income (Expense), Net Other income (expenses) increased $5.8 million, or 824%, as compared to the same period in 2022.
Removed
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.
Added
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.
Removed
We are currently pursuing other sales opportunities for silicon nitride products outside the spinal fusion application and have shipped new orders for these products.
Added
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.
Removed
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.
Added
Sales and Marketing Expenses Sales and marketing expenses decreased $0.2 million, or -15%, as compared to the same period in 2022. This decrease was primarily attributable to a reduction in employee wages and an overall decrease in costs for outside consulting.
Removed
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.
Added
Grant and Contract Expenses Grant and contract expenses increased $0.2 million, or 32%, 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.
Removed
Sales and Marketing Expenses Sales and marketing expenses remained primarily unchanged when comparing 2022 to 2021. Grant and Contract Expenses For the year ended December 31, 2022, the Company incurred grant and contract expenses of $0.9 million.
Added
On February 2, 2024, the Company closed on a public offering of 16,000,000 units, with each unit consisting of one share of its common stock, or one pre-funded warrant to purchase one share of its common stock, one Class E Warrant with each warrant to purchase one share of common stock, and one Class F Warrant with each warrant to purchase one share of common stock.
Removed
No shares have been sold under the 2021 Distribution Agreement as of December 31, 2022. On February 6, 2020, the Company closed on a rights offering to its stockholders of units, consisting of convertible preferred stock and warrants, for gross proceeds of $9.4 million, which excludes underwriting discounts and commissions and offering expenses payable by the Company.
Added
Each unit was sold at a public offering price of $0.25. The Class E and Class F Warrants in the units are immediately exercisable at a price of $0.25 per share. The Class E Warrants will expire five years from the date of issuance and the Class F Warrants will expire eighteen months from the date of issuance.
Removed
Additionally, during the period of June 2020 through August 2020, the Company closed four registered direct offerings of shares of its common stock, priced at-the-market under Nasdaq rules, resulting in the issuance of a total of 110,150 shares of its common stock for gross proceeds of approximately $20.9 million, which excludes underwriting discounts and commissions and offering expenses payable by the Company. 45 During the year ended December 31, 2019, the Company entered into an ATM equity distribution agreement in which the Company may sell, from time to time, shares of common stock having an aggregate offering price of up to $2.5 million.
Added
Gross proceeds, before deducting placement agent fees and other offering expenses, are approximately $4.0 million.
Removed
During the year ending December 31, 2020 the Company sold 3,544 shares of common stock, raising approximately $0.8 million before considering issuance costs. As a result of the sales during the first half of 2021 there are no longer any funds available to the Company under the ATM.
Added
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.
Removed
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 as of the quarter ended June 30, 2021, and the Company does not expect any future cashflows associated with the note.
Added
Gross proceeds, before deducting offering expenses, totaled approximately $12.0 million.
Removed
Management has concluded that its existing capital resources will be sufficient to fund operations for at least the next 12 months, or through March 2024. Risks Related to COVID-19 Pandemic The COVID-19 pandemic is affecting the United States and global economies and may affect the Company’s operations and those of third parties on which the Company relies.
Added
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).
Removed
In response to the spread of COVID-19 and to ensure safety of employees and continuity of business operations, we temporarily restricted access to the Salt Lake City facility, with our administrative employees continuing their work remotely and limited the number of staff in our manufacturing facility.
Added
Subject to the terms and conditions of the 2021 Distribution Agreement, as amended, Maxim will use its commercially reasonable efforts to sell the shares from time to time, based on our instructions.
Removed
We implemented protective measures such as wearing of face masks, maintaining social distancing, and additional cleaning. Beginning in 2021, we have offered vaccination incentives.
Added
Under the 2021 Distribution Agreement, Maxim may sell the Shares by any method permitted by law deemed to be an “at-the-market” offering (the “ATM”) as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on the Nasdaq Capital Market.
Removed
While the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity.
Added
We have no obligation to sell any shares under the ATM and may at any time suspend offers under the 2021 Distribution Agreement.
Removed
The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. The Company does not yet know the full extent of potential delays or impacts on its business, financing or other activities or on healthcare systems or the global economy as a whole.
Added
The Offering will terminate upon the earlier of (i) the sale of shares having an aggregate offering price of $15.0 million, (ii) the termination by either Maxim or the Company upon the provision of fifteen (15) days written notice, or (iii) February 25, 2025.
Removed
However, these effects could have a material impact on the Company’s liquidity, capital resources, operations and business and those of the third parties on which we rely.
Added
Under the terms of the 2021 Distribution Agreement, Maxim will be entitled to a transaction fee at a fixed rate of 2.0% of the gross sales price of Shares sold under the 2021 Distribution Agreement.
Removed
Correction of an Immaterial Error During the first quarter of 2022 the Company identified an error related to the removal of a loan obligation and the recording of other income for forgiveness of debt totaling approximately $0.5 million, which forgiveness was recorded on November 24, 2021.
Added
The Company will also reimburse Maxim for certain expenses incurred in connection with the 2021 Distribution Agreement and agreed to provide indemnification and contribution to Maxim with respect to certain liabilities under the Securities Act and the Securities Exchange Act of 1934, as amended.
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