0001493152-19-017023.txt : 20191113 0001493152-19-017023.hdr.sgml : 20191113 20191113155959 ACCESSION NUMBER: 0001493152-19-017023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 63 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191113 DATE AS OF CHANGE: 20191113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Sintx Technologies, Inc. CENTRAL INDEX KEY: 0001269026 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-33624 FILM NUMBER: 191213802 BUSINESS ADDRESS: STREET 1: 1885 WEST 2100 STREET CITY: SALT LAKE CITY STATE: UT ZIP: 84119 BUSINESS PHONE: 801-839-3516 MAIL ADDRESS: STREET 1: 1885 WEST 2100 STREET CITY: SALT LAKE CITY STATE: UT ZIP: 84119 FORMER COMPANY: FORMER CONFORMED NAME: AMEDICA Corp DATE OF NAME CHANGE: 20121231 FORMER COMPANY: FORMER CONFORMED NAME: AMEDICA CORP DATE OF NAME CHANGE: 20031104 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

 

OR

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 001-33624

 

 

SINTX Technologies, Inc.

(previously known as “Amedica Corporation”)

(Exact name of registrant as specified in its charter)

 

 

DELAWARE   84-1375299
(State or other jurisdiction   (IRS Employer
of incorporation or organization)   Identification No.)

 

1885 West 2100 South, Salt Lake City, UT   84119
(Address of principal executive offices)   (Zip Code)

 

(801) 839-3500

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbols   Name of each exchange on which registered
Common Stock   SINT   The NASDAQ Capital Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files); Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer [  ] Accelerated filer [  ]
       
Non-accelerated filer [  ] Smaller reporting company [X]
       
    Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

2,434,008 shares of common stock, $0.01 par value, were outstanding at November 12, 2019.

 

 

 

   
 

 

SINTX Technologies, Inc.

(previously known as Amedica Corporation)

Table of Contents

 

Part I. Financial Information  
Item 1. Financial Statements  
Condensed Consolidated Balance Sheets (unaudited) 3
Condensed Consolidated Statements of Operations (unaudited) 4
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) 5
Condensed Consolidated Statements of Cash Flows (unaudited) 6
Notes to Condensed Consolidated Financial Statements (unaudited) 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 26
Item 4. Controls and Procedures 26
Part II. Other Information  
Item 1. Legal Proceedings 27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Mine Safety Disclosures 27
Item 5. Other Information 27
Item 6. Exhibits 28
Signatures 29

 

 2 
 

 

SINTX Technologies, Inc.

(previously known as Amedica Corporation)

Condensed Consolidated Balance Sheets - Unaudited

(in thousands, except share and per share data)

 

  

September 30, 2019

  

December 31, 2018

 
         
Assets          
Current assets:          
Cash and cash equivalents  $2,926   $5,447 
Trade accounts receivable, net of allowance of $0 and $56,
respectively
   113    263 
Prepaid expenses and other current assets   137    171 
Inventories, net   86    52 
Notes receivable, current portion   1,603    1,084 
Total current assets   4,865    7,017 
           
Inventories, net   625    624 
Property and equipment, net   207    124 
Intangible assets, net   43    46 
Long-term note receivable, net of current portion   2,383    3,669 
Operating lease right-of-use-asset   2,440    - 
Other long-term assets   35    35 
Total assets  $10,598   $11,515 
           
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable  $166   $301 
Accrued liabilities   1,066    838 
Derivative liabilities, current portion   317    1,062 
Current portion of operating lease liability   475    169 
Current portion of debt   6    - 
Other current liabilities   23    10 
Total current liabilities   2,053    2,380 
           
Operating lease liability, net of current portion   1,959    - 
Derivative liabilities, net of current portion   452    504 
Long term debt   15    - 
Other long-term liabilities   91    232 
Total liabilities   4,570    3,116 
           
Commitments and contingencies   -    - 
           
Stockholders’ equity:          
Convertible preferred stock, $0.01 par value, 130,000,000 shares authorized; 249 shares and 4,074 shares issued and outstanding at September 30, 2019 and December 31, 2018.   -    - 
Common stock, $0.01 par value, 250,000,000 shares authorized; 2,363,991 shares, and 726,455 shares issued and outstanding at September 30, 2019 and December 31, 2018.   24    7 
Additional paid-in capital   239,090    237,673 
Accumulated deficit   (233,086)   (229,281)
Total stockholders’ equity   6,028    8,399 
Total liabilities and stockholders’ equity  $10,598   $11,515 

 

The condensed consolidated balance sheet as of December 31, 2018, has been prepared using information from the audited consolidated balance sheet as of that date.

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 3 
 

 

SINTX Technologies, Inc.

(previously known as Amedica Corporation)

Condensed Consolidated Statements of Operations - Unaudited

(in thousands, except share and per share data)

 

  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2019   2018   2019   2018 
Product revenue  $173   $-   $437   $- 
Costs of revenue   151    -    364    - 
Gross profit   22    -    73    - 
Operating expenses:                    
Research and development   869    549    2,557    2,383 
General and administrative   714    654    2,166    2,912 
Sales and marketing   139    -    303    42 
Goodwill impairment   -    6,162    -    6,162 
Total operating expenses   1,722    7,365    5,026    11,499 
Loss from operations   (1,700)   (7,365)   (4,953)   (11,499)
Other income (expenses):                    
Interest expense   (1)   (83)   (3)   (1,367)
Interest income   111    -    349    - 
Change in fair value of derivative liabilities   144    4,480    754    6,500 
Loss on extinguishment of debt   -    -    -    (340)
Offering costs   -    -    -    (682)
Loss on extinguishment of derivative liabilities   -    -    -    (1,252)
Other income, net   -    1    48    6 
Total other income, net   254    4,398    1,148    2,865 
Net loss from continuing operations
before income taxes
   (1,446)   (2,967)   (3,805)   (8,634)
Provision for income taxes   -    -    -    - 
Loss from continuing operations   (1,446)   (2,967)   (3,805)   (8,634)
Loss from discontinued operations   -    (280)   -    (324)
Net loss   (1,446)   (3,247)   (3,805)   (8,958)
Deemed dividend related to the beneficial conversion feature and accretion of a discount on series B preferred stock   (345)   (6,353)   (2,703)   (13,686)
Net loss attributable to common stockholders  $(1,791)  $(9,600)  $(6,508)  $(22,644)
Net loss per share – basic and diluted                    
Basic – continuing operations  $(0.68)  $(7.09)  $(3.00)  $(35.45)
Basic – discontinued operations   -    (0.67)   -    (1.33)
Basic - deemed dividend and accretion of a discount on conversion of series B preferred stock   (0.16)   (15.17)   (2.13)   (56.20)
Basic – attributable to common stockholders  $(0.84)  $(22.93)  $(5.13)  $(92.98)
                     
Diluted – continuing operations  $(0.75)  $(17.80)  $(3.59)  $(49.53)
Diluted – discontinued operations   -    (0.67)   -    (1.07)
Diluted - deemed dividend and accretion of a discount on conversion of series B preferred stock   (0.16)   (15.17)   (2.13)   (45.10)
Diluted – attributable to common stockholders  $(0.91)  $(33.64)  $(5.72)  $(95.70)
Weighted average common shares outstanding:                    
Basic   2,127,293    418,638    1,269,106    243,543 
Diluted   2,127,293    418,692    1,269,106    303,476 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 4 
 

 

SINTX Technologies, Inc.

(previously known as Amedica Corporation)

Condensed Consolidated Statements of Stockholders’ Equity - Unaudited

(in thousands, except share and per share data)

 

   Preferred Stock   Common Stock   Paid-In   Accumulated   Total 
   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
Balance at December 31, 2017   -   $-    100,935   $1   $226,070   $(220,629)  $5,442 
Common stock issued from
exercise of warrants
   -    -    36,205    -    1,653    -    1,653 
Issuance of common stock in exchange for reduction in debt   -    -    19,348    -    1,453    -    1,453 
Issuance of preferred stock from offering, net of issuance costs   15,000    -    -    -    6,748    -    6,748 
Warrants issued in association with debt   -    -    -    -    98    -    98 
Loss on extinguishment of derivative liabilities   -    -    -    -    1,040    -    1,040 
Deemed dividend related to adjustment of the exercise price of warrants issued with debt   -    -    -    -    (9)   -    (9)
Accretion of change in warrant exercise price   -    -    -    -    9    -    9 
Common stock issued due to conversion of preferred stock   (10,598)   -    544,911    5    (5)   -    - 
Accretion of convertible preferred stock discount   -    -    -    -    13,687    -    13,687 
Deemed dividend related to the issuance of preferred stock   -    -    -    -    (13,687)   -    (13,687)
Extinguishment of derivative liabilities   -    -    -    -    575    -    575 
Stock-based compensation   -    -    -    -    39    -    39 
Net loss   -    -    -    -    -    (8,958)   (8,958)
Balance at September 30, 2018   4,402   $-    701,399   $6   $237,671   $(229,587)  $8,090 

 

   Preferred Stock   Common Stock   Paid-In   Accumulated   Total 
   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
Balance at December 31, 2018   4,074   $-    726,455   $7   $237,673   $(229,281)  $8,399 
Common stock issued from exercise of warrants   -    -    35,874    -    103    -    103 
Common stock issued due to conversion of preferred stock   (3,825)   -    1,143,784    12    (12)   -    - 
Stock based compensation   -    -    -    -    2    -    2 
Common stock issued for cash   -    -    457,878    5    1,280    -    1,285 
Removal of derivative liability upon exercise of warrant   -    -    -    -    44    -    44 
Net loss   -    -    -    -    -    (3,805)   (3,805)
Balance at September 30, 2019   249   $-    2,363,991   $24   $239,090   $(233,086)  $6,028 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 5 
 

 

SINTX Technologies, Inc.

(previously known as Amedica Corporation)

Condensed Consolidated Statements of Cash Flows - Unaudited

(in thousands)

 

   Nine Months Ended September 30, 
   2019   2018 
Cash flow from operating activities          
Net loss from continuing operations  $(3,805)  $(8,958)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation expense   79    75 
Non-cash lease expense   264    - 
Amortization of intangible assets   4    - 
Amortization of lease incentive for tenant improvements   -    25 
Non-cash interest income   (344)   - 
Non-cash interest expense   -    956 
Loss on extinguishment of debt   -    340 
Stock based compensation   2    40 
Change in fair value of derivative liabilities   (754)   (6,500)
Loss on extinguishment of derivative liabilities   -    1,252 
Loss on disposal of equipment   -    54 
Loss on impairment of goodwill   -    6,162 
Bad debt expense   (3)   - 
Changes in operating assets and liabilities:          
Trade accounts receivable   154    - 
Prepaid expenses and other current assets   33    (246)
Inventories   (35)   (47)
Accounts payable and accrued liabilities   83    (899)
Net cash used in operating activities - continuing operations   (4,322)   (7,746)
Net cash used in operating activities - discontinued operations   -    (207)
Net cash used in operating activities   (4,322)   (7,953)
Cash flows from investing activities          
Purchase of property and equipment   (141)   (152)
Proceeds from notes receivable, net of imputed interest   1,111    - 
Proceeds from sale of property and equipment   -    8 
Purchase of intangible asset   -    (50)
Net cash used in investing activities   970    (194)
Cash flows from financing activities          
Proceeds from issuance of stock in connection with exercise of warrants, net of issuance costs   103    1,652 
Proceeds from issuance of common stock, net of fees ($245)   1,285    - 
Proceeds from issuance of preferred stock, net of issuance costs ($668)   -    6,749 
Proceeds from issuance of warrant derivative liabilities, net of issuance costs ($682)   -    7,577 
Payments on operating lease liability   (557)   - 
Proceeds from issuance of debt   -    705 
Payments on debt   -    (2,282)
Net cash provided by financing activities   831    14,401 
Net increase (decrease) in cash and cash equivalents   (2,521)   6,254 
Cash and cash equivalents at beginning of period   5,447    539 
Cash and cash equivalents at end of period  $2,926   $6,793 
           
Noncash investing and financing activities          
Right-of-use assets and assumption of operating lease liability  $2,704   $- 
Reduction of derivative liability due to exercise of warrants   44    - 
Hercules and MEF I, LP/Anson Investments Debt Exchange   -    2,265 
Issuance of common stock in exchange for reduction in debt   -    1,453 
Extinguishment of derivative liabilities through exercise of warrants   -    565 
Warrants issued in association with debt   -    98 
Issuance of debt for equipment   21    - 
Supplemental cash flow information          
Cash paid for interest  $2   $405 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 6 
 

 

SINTX TECHNOLOGIES, INC.

(PREVIOUSLY KNOWN AS AMEDICA CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1. Organization and Summary of Significant Accounting Policies

 

Organization

 

SINTX Technologies, Inc. (“SINTX” or “the Company”) (previously known as Amedica Corporation) was incorporated in the state of Delaware on December 10, 1996. SINTX is an OEM ceramics company that develops and commercializes silicon nitride for medical and non-medical applications. The Company believes it is the first and only manufacturer to use silicon nitride in medical applications. The Company acquired US Spine, Inc. (“US Spine”), a Delaware spinal products corporation with operations in Florida, on September 20, 2010. The Company’s products are primarily sold in the United States.

 

As further explained in Note 12, On October 1, 2018, the Company completed the sale of its retail spine business to CTL Medical, a Dallas, Texas-based privately held medical device manufacturer. As a result of the sale, CTL Medical is now the exclusive owner of SINTX’s portfolio of metal and silicon nitride spine products, which are presently sold under the brand names of Taurus, Preference, and Valeo, with access to future silicon nitride spine technologies. Manufacturing, R&D, and all intellectual property related to the core, non-spine, biomaterial technology of silicon nitride remains with the Company. The Company will serve as CTL’s exclusive OEM provider of silicon nitride products.

 

On October 30, 2018, the Company amended its Certificate of Incorporation with the State of Delaware to change its corporate name to SINTX Technologies, Inc. in order to better reflect its focus on silicon nitride science and technologies and pipeline of silicon nitride-based products in various biomedical applications. The Company also changed its trading symbol on the NASDAQ Capital Market to “SINT”. The Company also changed the name of its wholly owned subsidiary US Spine, Inc. to “ST Sub, Inc.”

 

The previous name, Amedica, has transferred to CTL Medical, which is now CTL-Amedica. The Company’s new corporate brand reflects both the Company’s core competence in the science and production of silicon nitride ceramics, as well as encouraging prospects for the future, as an OEM supplier of spine implants to CTL-Amedica, and several opportunities outside of spine. The Company will focus on developing silicon nitride in terms of product design, and future biomaterial formulations, for a variety of OEM customers.

 

Reverse Stock Split

 

On July 26, 2019 the Company effected a 1 for 30 reverse stock split of the Company’s common stock. The par value and the authorized shares of the common and convertible preferred stock were not adjusted as a result of the reverse stock split. All common stock shares, equivalents, and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

 

Basis of Presentation

 

These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and include all assets and liabilities of the Company and its wholly owned subsidiary, ST Sub, Inc. All material intercompany transactions and balances have been eliminated in consolidation. SEC rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, so long as the statements are not misleading. In the opinion of management, these financial statements and accompanying notes contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented herein. These condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 11, 2019. The results of operations for the nine months ended September 30, 2019, are not necessarily indicative of the results to be expected for the year ending December 31, 2019. The Company’s significant accounting policies are set forth in Note 1 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018.

 

 7 
 

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the periods then ended. Actual results could differ from those estimates. The most significant estimates relate to inventory, long-lived and intangible assets and the liability for preferred stock and common stock warrants.

 

Liquidity and Capital Resources

 

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

 

For the nine months ended September 30, 2019 and 2018, the Company incurred net losses from continuing operations of approximately $3.8 million and $8.6 million, respectively, and used cash in continuing operations of approximately $4.3 million and $7.7 million, respectively. The Company had an accumulated deficit of approximately $233 million and $229 million as of September 30, 2019 and December 31, 2018, respectively. To date, the Company’s operations have been principally financed by proceeds received from the issuance of preferred and common stock, convertible debt and bank debt 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 operating activities. 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 operating activities or obtain additional financing is uncertain.

 

The Company is actively generating additional scientific and clinical data confirming the beneficial attributes of silicon nitride and intends to publish the results in leading industry publications. The unique features of the Company’s silicon nitride material are not well known, and the Company believes that the publication of such data would help sales efforts as the Company approaches new prospects. The Company is also making additional changes to the sales strategy, including a focus on revenue growth by expanding the use of silicon nitride in other areas outside of spinal fusion applications.

 

 8 
 

 

The Company has common stock that is publicly traded and has been able to successfully raise capital when needed since the date of the Company’s initial public offering in February 2014. In March 2018, the Company closed on gross proceeds of $1.4 million, before payment of placement agent fees and costs on a warrant reprice and exercise transaction. Additionally, on May 14, 2018, the Company closed on a public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15 million, which excludes underwriting discounts and commissions and offering expenses payable by the Company. On June 4, 2019, the Company entered into an Equity Distribution Agreement, (the “Distribution Agreement”), with Maxim Group LLC (“Maxim”), pursuant to which the Company may sell from time to time, shares of its common stock, having an aggregate offering price of up to $1.6 million through Maxim, as agent (the “ATM Offering”). On September 12, 2019, the Company entered into an amendment to the Distribution Agreement with Maxim, which increased the maximum aggregate offering price of the shares of the Company’s common stock from $1.6 million to $2.5 million. Subject to the terms and conditions of the Distribution Agreement, Maxim will use its commercially reasonable efforts to sell the shares from time to time, based on the Company’s instructions. The Company has no obligation to sell any of the shares and may at any time suspend offers under the Distribution Agreement. The Offering will terminate upon the earlier of (i) the sale of Shares having an aggregate offering price of $2.5 million, (ii) the termination of the Distribution Agreement by either Maxim or the Company upon the provision of fifteen (15) days written notice, or (iii) September 12, 2020. The Company agrees to pay Maxim a transaction fee at a fixed rate of 4.25% of the gross sales price of shares sold under the 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. During the nine months ended September 30, 2019 the Company raised approximately $1.3 million, net of fees, through the issuance of 457,878 shares of common stock under the Distribution Agreement with Maxim. The Company is eligible to raise an additional $1.2 million under this offering. In addition, during the nine months ended September 30, 2019, the Company converted 3,825 shares of preferred stock into 1,143,784 shares of common stock. The Company is engaged in discussions with investment and banking firms to examine financing alternatives, including options for a public offering of the Company’s preferred or common stock. On October 1, 2018, the Company sold the retail spine business. This sale will continue to provide cash flows from November 2019 totaling $1.0 million over the next seven months and $3.5 million for the following 18 months. The buyer also assumed the Company’s $2.5 million related party note payable.

 

Although the Company is seeking to obtain additional equity and/or debt financing, such funding is not assured and may not be available to the Company on favorable or acceptable terms and may involve significant restrictive covenants. Any additional equity financing is also not assured and, if available to the Company, will most likely be dilutive to its current stockholders. If the Company is not able to obtain additional debt or equity financing on a timely basis, the impact on the Company will be material and adverse.

 

These uncertainties create substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Significant Accounting Policies

 

Except as explained below, no material changes were made to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

Accounting Pronouncements Adopted During the Nine Months Ended September 30, 2019

 

In August 2016, the FASB updated accounting guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Under prior U.S. GAAP, there was no specific guidance on the eight cash flow classification issues aforementioned. The Company adopted the new guidance effective January 1, 2019. The guidance in this standard did not have a material impact on the financial statements of the Company upon adoption.

 

In February 2016, the FASB updated the accounting guidance related to leases as part of a joint project with the International Accounting Standards Board (“IASB”) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted the new guidance effective January 1, 2019 (see Note 13), using the modified retrospective approach. Adoption of the new guidance resulted in the Company being required to record an additional operating lease right-of-use asset totaling approximately $0.7 million and liability totaling approximately $0.9 million (with $0.7 million incremental to adoption of the new guidance) on the date of adoption. Subsequent to the initial adoption of the new standard the Company amended the lease (see Note 13). The standard did not materially impact the consolidated net loss and had no impact on cash flows.

 

In May 2014, in addition to several amendments issued during 2016, the FASB updated the accounting guidance related to revenue from contracts with customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The Company adopted the new guidance effective January 1, 2019. The core principle of the new guidance is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The standard defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates are often required within the revenue recognition process than were required under prior U.S. GAAP. The Company has one primary customer (see Note 12) and related contract that has one performance obligation to which revenue is allocated. Revenue under this contract is recognized when the product is shipped to the customer. The Company generally bills its customer upon shipment of the product and invoices are generally due within 30 days. The Company does provide certain rights of return, which historically have not been significant. The Company does not anticipate incurring significant incremental costs to obtain contracts with future customers. The guidance in this standard did not have a material impact on the financial statements of the Company upon adoption.

 

New Accounting Pronouncements Not Yet Adopted

 

The Company has reviewed all recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

 

Reclassification

 

Certain reclassifications were made to the nine months ended September 30, 2018, Statement of Operations to conform to the presentation for the nine months ended September 30, 2019, Statement of Operations. Research and development expenses in 2018 increased by $0.4, million offset by a decrease in general and administrative expenses by the same amount. The reclassification did not affect the 2018 net loss.

 

 9 
 

 

2. Basic and Diluted Net Loss per Common Share

 

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period that are determined to be dilutive. Common stock equivalents are primarily comprised of preferred stock, warrants for the purchase of common stock and stock options. The Company had potentially dilutive securities, totaling approximately 0.5 million and 0.8 million as of September 30, 2019 and 2018, respectively.

 

Below are basic and diluted loss per share data for the three months ended September 30, 2019, which are in thousands except for share and per share data:

 

   Basic Calculation  

Effect of

Dilutive
Warrant
Securities

   Diluted Calculation 
Numerator:               
Loss from continuing operations  $(1,446)  $(144)  $(1,590)
Deemed dividend and accretion of a discount   (345)   -    (345)
Net loss attributable to common stockholders  $(1,791)  $(144)  $(1,935)
                
Denominator:               
Number of shares used in per common share calculations:   2,127,293    -    2,127,293 
                
Net loss per common share:               
Loss from continuing operations  $(0.68)  $(0.07)  $(0.75)
Deemed dividend and accretion of a discount   (0.16)   -    (0.16)
Net loss attributable to common stockholders  $(0.84)  $(0.07)  $(0.91)

 

Below are basic and diluted loss per share data for the nine months ended September 30, 2019, which are in thousands except for share and per share data:

 

   Basic Calculation  

Effect of

Dilutive
Warrant
Securities

   Diluted Calculation 
Numerator:               
Loss from continuing operations  $(3,805)  $(753)  $(4,558)
Deemed dividend and accretion of a discount   (2,703)   -    (2,703)
Net loss attributable to common stockholders  $(6,508)  $(753)  $(7,261)
                
Denominator:               
Number of shares used in per common share calculations:   1,269,106    -    1,269,106 
                
Net loss per common share:               
Loss from continuing operations  $(3.00)  $(0.59)  $(3.59)
Deemed dividend and accretion of a discount   (2.13)   -   (2.13)
Net loss attributable to common stockholders  $(5.13)  $(0.59)  $(5.72)

 

 10 
 

 

Below are basic and diluted loss per share data for the three months ended September 30, 2018, which are in thousands except for share and per share data:

 

   Basic Calculation   Effect of Dilutive
Warrant
Securities
   Diluted Calculation 
Numerator:               
Loss from continuing operations  $(2,967)  $(4,485)  $(7,452)
Income from discontinued operations   (280)   -    (280)
Deemed dividend and accretion of a discount   (6,353)   -    (6,353)
Net loss attributable to common stockholders  $(9,600)  $(4,485)  $(14,085)
                
Denominator:               
Number of shares used in per common share calculations:   418,638    54    418,692 
                
Net loss per common share:               
Loss from continuing operations  $(7.09)  $(10.71)  $(17.80)
Loss from discontinued operations   (0.67)   -    (0.67)
Deemed dividend and accretion of a discount   (15.17)   -    (15.17)
Net loss attributable to common stockholders  $(22.93)  $(10.71)  $(33.64)

 

Below are basic and diluted loss per share data for the nine months ended September 30, 2018, which are in thousands except for share and per share data:

 

   Basic Calculation   Effect of Dilutive
Warrant
Securities
   Diluted Calculation 
Numerator:               
Loss from continuing operations  $(8,634)  $(6,396)  $(15,030)
Income from discontinued operations   (324)   -    (324)
Deemed dividend and accretion of a discount   (13,686)   -    (13,686)
Net loss attributable to common stockholders  $(22,644)  $(6,396)  $(29,040)
                
Denominator:               
Number of shares used in per common share calculations:   243,543    59,933    303,476 
                
Net loss per common share:               
Loss from continuing operations  $(35.45)  $(14.08)  $(49.53)
Loss from discontinued operations   (1.33)   0.26    (1.07)
Deemed dividend and accretion of a discount   (56.20)   11.10    (45.10)
Net loss attributable to common stockholders  $(92.98)  $(2.72)  $(95.70)

 

3. Inventories

 

Inventories consisted of the following (in thousands):

 

  

September 30, 2019

  

December 31, 2018

 
Raw materials  $625   $624 
Intermediate goods   16    - 
WIP   70    47 
Finished goods   -    5 
   $711   $676 

 

As of September 30, 2019, inventories totaling approximately $0.1 million and $0.6 million were classified as current and long-term, respectively. Inventories classified as current represent the carrying value of inventories as of September 30, 2019, that management estimates will be sold by September 30, 2020.

 

4. Intangible Assets

 

Intangible assets consisted of the following (in thousands):

 

  

September 30, 2019

  

December 31, 2018

 
Trademarks  $50   $50 
Less: accumulated amortization   (7)   (4)
   $43   $46 

 

 11 
 

 

5. Fair Value Measurements

 

Financial Instruments Measured and Recorded at Fair Value on a Recurring Basis

 

The Company has issued certain warrants to purchase shares of common stock, which are considered derivative liabilities because they have registration rights which could require a cash settlement and are re-measured to fair value at each reporting period in accordance with accounting guidance. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

 

  Level 1 - quoted market prices for identical assets or liabilities in active markets.
     
  Level 2 - observable prices that are based on inputs not quoted on active markets but corroborated by market data.
     
  Level 3 - unobservable inputs reflecting management’s assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

 

The Company classifies assets and liabilities measured at fair value in their entirety based on the lowest level of input that is significant to their fair value measurement. No financial assets were measured on a recurring basis as of September 30, 2019 and December 31, 2018. The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2019 and December 31, 2018:

 

   Fair Value Measurements as of September 30, 2019 
Description  Level 1   Level 2   Level 3   Total 
Derivative liability                    
Common stock warrants  $-   $-   $769   $769 

 

   Fair Value Measurements as of December 31, 2018 
Description  Level 1   Level 2   Level 3   Total 
Derivative liability                    
Common stock warrants  $-   $-   $1,566   $1,566 

 

The Company did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the nine months ended September 30, 2019 and 2018.

 

   Common Stock
Warrants
 
Balance at December 31, 2017  $(1,357)
Issuances of warrants classified as derivatives   (7,577)
Change in fair value   6,500 
Exercise of warrants   575 
Other, net   (212)
Balance at September 30, 2018  $(2,071)
      
Balance at December 31, 2018  $(1,566)
Change in fair value   754 
Exercise of warrants   44 
Other, net   (1)
Balance at September 30, 2019  $(769)

 

 12 
 

 

Common Stock Warrants

 

The Company has issued certain warrants to purchase shares of common stock, which are considered derivative liabilities because they have registration rights which could require a cash settlement and are re-measured to fair value at each reporting period in accordance with accounting guidance. At September 30, 2019 and December 31, 2018, approximately $0.8 million and $1.6 million, respectively, of the derivative liability was calculated using the Black-Scholes-Merton valuation model. At September 30, 2019 and December 31, 2018, no significant amount of the derivative liability was calculated using the Monte Carlo Simulation valuation model.

 

The assumptions used in estimating the common stock warrant liability using the Black-Scholes-Merton valuation model as of September 30, 2019 and December 31, 2018 were as follows:

 

  

September 30, 2019

  

December 31, 2018

 
Weighted-average risk-free interest rate   1.56%   2.51%
Weighted-average expected life (in years)   3.61    0.9 
Expected dividend yield   -%   -%
Weighted-average expected volatility   64%   157%

 

The assumptions used in estimating the common stock warrant liability using the Monte Carlo Simulation valuation model at September 30, 2019 and December 31, 2018 were as follows:

 

  

September 30, 2019

  

December 31, 2018

 
Weighted-average risk-free interest rate   1.59%   2.46%
Weighted-average expected life (in years)   2.16    3.1 
Expected dividend yield   -%   -%
Weighted average expected volatility   65%   68%

 

In addition, if any time after the second anniversary of the issuance of the warrant, both: (1) the 30-day volume weighted average price of the Company’s stock exceeds $594.00; and (2) the average daily trading volume for such 30-day period exceeds $126 million, the Company may call this warrant for $3.60 per share. For those warrants that have a call provision, management believes the Monte Carlo Simulation valuation model provides a better estimate of fair value for the warrants issued during 2018 and 2017 than the Black-Scholes-Merton valuation model.

 

Other Financial Instruments

 

The Company’s recorded values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded value of debt approximates the fair value as the interest rate approximates market interest rates.

 

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6. Accrued Liabilities

 

Accrued liabilities consisted of the following (in thousands):

 

  

September 30, 2019

  

December 31, 2018

 
Payroll and related expense  $454   $388 
Resterilization and repackaging costs   365    344 
Other   247    106 
   $1,066   $838 

 

7. Debt

 

L2 Capital Debt

 

On January 31, 2018, the Company signed a promissory note in the aggregate principal amount of up to $0.84 million (the “L2 Note”) for an aggregate purchase price of up to $0.75 million and warrants to purchase up to an aggregate of 68,257 shares of common stock (the “Warrants”) at an exercise price of $3.31 per share. The maturity date was six months from date of funding. The L2 Note’s interest rate was 8% per year and a default interest rate of 18% per year.

 

On May 14, 2018, the Company closed on an underwritten public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15.0 million. Part of the proceeds from this offering were used to pay off the outstanding debt with L2 Capital. The total payoff was $1.1 million, with $0.7 million in principal and $0.4 million in interest.

 

Hercules and MEF I, LP/Anson Investments Debt Exchange

 

On January 3, 2018, the Company entered into an Assignment Agreement (the “Assignment Agreement”) with MEF I, LP and Anson Investments Master Fund (collectively the “Assignees” and each an “Assignee”), Hercules Technology III, L.P. (“HT III”) and Hercules Capital, Inc. (“HC” and, together with HT III, “Hercules”), pursuant to which Hercules assigned to the Assignees all amounts remaining due under the Loan and Security Agreement, dated June 30, 2014, as amended, between the Company and Hercules (the “Loan and Security Agreement”) and (2) the note (the “Hercules Note”) between the Company and Hercules evidencing the amounts due under the Loan and Security Agreement. The total amount assigned by Hercules to the Assignees in the aggregate was $2.3 million and was secured by the same collateral underlying the Loan and Security Agreement. Subsequently, the Company entered into an exchange agreement pursuant to which the Assignees agreed to exchange the Hercules Term Loan obligation acquired by them for two senior secured convertible promissory notes issued by the Company, each in the principal amount of $1.1 million for an aggregate principal amount of $2.2 million, (the “Exchange Notes”). The Exchange Notes were scheduled to mature on February 3, 2019 (the “Maturity Date”). The Exchange Notes had interest at a rate of 15% per annum. The Exchange Notes were secured by a first priority security interest in substantially all of the Company assets, including intellectual property, and contains covenants restricting payments to certain of our affiliates.

 

On May 14, 2018, the Company closed on an underwritten public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15.0 million. Part of the proceeds from this offering were used to pay off the outstanding debt with MEF I, L.P and Anson Investments. The total payoff was $1.6 million, with $1.4 million in principal and $0.2 million in interest.

 

 14 
 

 

North Stadium Term Loan – Related Party

 

On July 28, 2017, the Company entered into a $2.5 million term loan (the “North Stadium Loan”) with North Stadium Investments, LLC (“North Stadium”), a company owned and controlled by the Company’s Chief Executive Officer and Chairman of the Board. The North Stadium Loan bore interest at 10% per annum and required the Company to make monthly interest only payments from September 5, 2017 through July 5, 2018. All principal and unpaid interest (if any) under the North Stadium Loan was due and payable on July 28, 2018. The North Stadium Loan was secured by substantially all of the Company’s assets but was junior to security interest in assets encumbered by the Hercules Term Loan (see below). In connection with the North Stadium Loan the Company also issued North Stadium a warrant to purchase up to 1,834 shares of the Company’s common stock at a purchase price of $151.20 per share, subject to a 5-year term. The relative estimated value of the warrants on the date of grant approximated $0.2 million, which was being amortized as interest expense over the life of the term loan.

 

On October 1, 2018, CTL Medical assumed the North Stadium Term Loan debt as part of the sale of the retail spine business. As of December 31, 2018, the Company has been released by North Stadium from any and all obligations related to this debt.

 

Hercules Term Loan

 

On June 30, 2014, the Company entered into a Loan and Security Agreement with Hercules which provided the Company with a $20.0 million term loan. The Hercules Term Loan matured on January 1, 2018. The Hercules Term Loan included a $0.2 million closing fee, which was paid to Hercules on the closing date of the loan. The closing fee was recorded as a debt discount and was being amortized to interest expense over the life of the loan. The Hercules Term Loan also included a non-refundable final payment fee of $1.7 million. The final payment fee was being accrued and recorded to interest expense over the life of the loan.

 

On January 3, 2018, the Hercules Term Loan and all amounts owing thereunder was assigned to MEF I and Anson Investments. See discussion above under “Hercules and MEF I, LP/Anson Investments Debt Exchange” for a more detailed description of that transaction.

 

Equipment Loan

 

In September of 2019 the Company entered into a debt arrangement with a finance company to purchase equipment. The debt balance at September 30, 2019, totaled $0.02 million. The debt incurs interest at 12%, is collateralized by the equipment and is payable in monthly payments of $0.001 million (including interest) over 36 months.

 

 15 
 

 

8. Equity

 

Preferred Stock Conversion

 

From July through December of 2018, Series B Convertible Preferred shareholders of the Company converted 10,926 shares of Series B Convertible Preferred Stock into 569,966 shares of common stock.

 

During May 2018 and June 2018, Series B Convertible Preferred shareholders of the Company converted a total of 4,072 shares of Series B Convertible Preferred Stock into 102,886 shares of common stock.

 

During the nine months ended September 30, 2019, Series B Convertible Preferred shareholders of the Company converted 3,825 shares of Series B Convertible Preferred Stock into 1,143,784 shares of common stock.

 

August 2018 Warrant Exercise

 

During August 2018, pursuant to the cashless exercise provision contained in their warrant, L2 Capital exercised its warrants and was issued 8,069 shares of common stock. The L2 Capital warrant is no longer outstanding.

 

July 2018 Warrant Exercise

 

During May 2018, the Company closed on a public offering, consisting of both convertible preferred stock and warrants. During July 2018, 998 of the warrants were exercised and converted into 998 shares of common stock.

 

May 2018 Warrant Exercise (July 2016 Warrants)

 

During March 2018, the Company repriced 27,733 warrants dated July 8, 2016, from $360 to $63.75 (for further description see Warrant Reprice March 2018 below). During May 2018, an additional 4,861 of the repriced warrants were exercised resulting in gross proceeds to the Company of $0.3 million.

 

August 2019 Warrant Exercise (May 2018 Warrants)

 

During the nine months ended September 30, 2019, 35,874 warrants were exercised resulting in gross proceeds to the Company of approximately $0.1 million.

 

May 2018 Unit Offering

 

On May 14, 2018, the Company closed on an underwritten public offering of units (“the Units”), consisting of convertible preferred stock and warrants, for gross proceeds of $15.0 million, which excludes underwriting discounts and commissions and offering expenses payable by SINTX. The offering was priced at a public offering price of $1,000 per unit. Each unit consisted of one share of Series B Convertible Preferred Stock, with a stated value of $1,100, and warrants to purchase up to 25 shares of common stock (the “May 2018 Warrants”). The May 2018 Warrants are initially exercisable at an exercise price of $48 per share and expire 5 years from the date of issuance. The Series B Preferred Stock is convertible into shares of common stock by dividing the stated value of $1,100 by: (i) for the first 40 trading days following the closing of this offering, $43.54 (the “Conversion Price”), (ii) after 40 trading days but prior to the 81st trading day, the lesser of  (a) the Conversion Price and (b) 87.5% of the lowest volume weighted average price for our Common Stock as reported at the close of trading on the market reporting trade prices for the Common Stock during the five trading days prior to the 41st trading day, and (iii) after 80 trading days, the lesser of  (a) the Conversion Price and (b) 87.5% of the lowest volume weighted average price for our Common Stock as reported at the close of trading on the market reporting trade prices for the Common Stock during the five trading days prior to the date of the notice of conversion. In the case of (ii)(b) and (iii)(b) above, the share price shall not be less than $2.94 (the “Floor Price”). Each of the Conversion Price and Floor Price is subject to adjustment in certain circumstances.

 

The Company raised $15.0 million associated with the issuance of the Units, with $6.8 million, net of issuance costs of $0.6 million, allocated to the preferred stock and $6.9 million, net of issuance costs of $0.7 million, allocated to the warrants. In association with the warrants that were recorded as a derivative liability, the Company immediately expensed approximately $0.7 million of issuance costs. The 15,000 preferred shares were initially convertible into 378,997 shares of common stock and had an effective conversion rate of $43.50 per share based on the proceeds that were allocated to them. The conversion price was adjusted to $19.63, effective July 12, 2018, and was adjusted again on September 7, 2018 to $14.40. During the nine months ended September 30, 2019 the conversion price was adjusted down on several occasions and ultimately settled at $2.84 as of September 30, 2019.

 

Warrant Reprice March 2018

 

During the six months ended June 30, 2018 the Company entered into a warrant amendment agreement (the “Amendment Agreement”) with certain holders of previously issued Series E Common Stock Purchase Warrants (collectively, “Investors”). In connection with that certain Series E Common Stock Purchase Warrant between the Company and Investors dated July 8, 2016, the Company issued to Investors warrants to purchase up to 27,733 shares of common stock (the “Warrant Shares”) at an exercise price of $360.00 per share, (the “Investors Warrants”). Under the terms of the Amendment Agreement, in consideration of Investors exercising 22,279 of the Investors Warrants (the “Warrant Exercise”), the exercise price per share of the Investors Warrants was reduced to $63.75 per share. 22,278 of the Investors Warrants were exercised resulting in gross proceeds to the Company of $1.4 million before payment of placement agent fees and costs. In addition, and as further consideration, the Company issued to Investors new warrants to purchase up to the number of shares of common stock equal to 100% of the number of Warrant Shares issued pursuant to the Warrant Exercise at an exercise price per share equal to $60.00 per share.

 

2019 ATM Stock Offerings

 

During the nine months ended September 30, 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. The Company sold 457,878 shares during the nine months ended September 30, 2019, raising approximately $1.3 million net of issuance cost of $0.2 million. The Company is eligible to raise an additional $1.2 million under this offering.

 

 16 
 

 

9. Stock-Based Compensation

 

A summary of the Company’s outstanding stock option activity for the nine months ended September 30, 2019 is as follows:

 

   Options  

Weighted-
Average

Exercise Price

  

Weighted-

Average
Remaining
Contractual
Life
(Years)

   Intrinsic
Value
 
As of December 31, 2018   377   $7,653    6.0   $- 
Granted   -    -    -    - 
Exercised   -    -    -    - 
Forfeited   -    -    -    - 
Expired   -    -    -    - 
As of September 30, 2019   377   $7,653    5.6   $- 
Exercisable as of September 30, 2019   377   $7,653    5.6   $- 

 

The Company estimates the fair value of each stock option on the grant date using the Black-Scholes-Merton valuation model, which requires several estimates including an estimate of the fair value of the underlying common stock on grant date. The expected volatility was based on an average of the historical volatility of a peer group of similar companies. The expected term was calculated utilizing the simplified method. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option.

 

10. Commitments and Contingencies

 

The Company has executed agreements with certain executive officers of the Company which, upon the occurrence of certain events related to a change in control, call for payments to the executives up to three times their annual salary and accelerated vesting of previously granted stock options.

 

From time to time, the Company is subject to various claims and legal proceedings covering matters that arise in the ordinary course of its business activities. Management believes any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, operating results or cash flows.

 

11. Note Receivable

 

On October 1, 2018, the Company completed the sale of its spine business to CTL Medical. The sale included a $6 million noninterest bearing note receivable. The 36-month term of the note receivable requires 18 payments of $138,889 followed by 18 payments of $194,444, with maturity of the note receivable on October 1, 2021. The note receivable includes an imputed interest rate of 10%, which totaled $915,725 as of October 1, 2018, and has a 36-month amortization. As of September 30, 2019, the net carrying value of the note receivable was approximately $4.0 million.

 

12. Discontinued Operations

 

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

 

 17 
 

 

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

 

13. Leases

 

The Company leases office, warehouse and manufacturing space under a single operating lease, which lease originally expired during 2019 (see Note 1 under Accounting Pronouncements Adopted During the Nine Months Ended September 30, 2019). On June 7, 2019, the lease was amended to extend the rental period through 2024 and reduce the amount of space leased from 54,428 square feet to 29,534 square feet. The new rent is effective the earlier of January 1, 2020 or when the Company vacates the portion of the property that will not be part of the new lease. The amended lease has two five-year extension options. As of September 30, 2019, the operating lease right-of-use asset totaled approximately $2.5 million and the operating lease liability totaled approximately $2.4 million. Non-cash operating lease expense during the nine months ended September 30, 2019, totaled approximately $0.3 million. As of September 30, 2019, the weighted-average discount rate for the Company’s operating lease totaled 6.5%. During the three months ended September 30, 2019, the Company recorded a loss of approximately $0.12 million in association with the lease amendment.

 

Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. The Company accounts for lease components separately from the non-lease components. The depreciable life of the assets and leasehold improvements are limited by the expected lease term.

 

Operating lease future minimum payments together with the present values as of September 30, 2019, are summarized as follows:

 

  

September 30, 2019

 
2019  $245 
2020   494 
2021   509 
2022   525 
2023   540 
Thereafter   556 
Total future minimum lease payments   2,869 
Less amounts representing interests   (435)
Present value of lease liability   2,434 
      
Current-portion of operating lease liability   475 
Long-term portion operating lease liability  $1,959 

 

14. Subsequent Events

 

On November 1, 2019, the Company filed a Form S-1 Registration Statement with the United States Securities and Exchange Commission to distribute to holders of the Company’s common stock, Series B Preferred Stock, and holders of our May 2018 Warrants, as of the Record Date, non-transferable Subscription Rights to purchase Units at a price of $1,000 per Unit. The Subscription Rights will not be tradable. Each Unit consists of one share of our Preferred Stock and yet to be decided number of Warrants. The common stock to be issued upon conversion of the Preferred Stock or exercise of the Warrants, like our existing shares of common stock, will be traded on the NASDAQ Capital Market under the symbol “SINT.”

 

 18 
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements for the year ended December 31, 2018 and the notes thereto, along with Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed separately with the U.S. Securities and Exchange Commission. This discussion and analysis contains forward-looking statements based upon current beliefs, plans, expectations, intentions and projections that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2018, and any updates to those risk factors filed from time to time in our Quarterly Reports on Form 10-Q and in other filings with the Securities and Exchange Commission we may make from time-to-time.

 

Overview

 

We are an OEM ceramics company that develops and commercializes silicon nitride for medical and non-medical applications. The core strength of SINTX Technologies is the manufacturing, research, and development of silicon nitride ceramics for external partners. We believe that silicon nitride has a superb combination of properties that make it ideally suited for long-term human implantation. Other biomaterials are based on bone grafts, metal alloys, and polymers, all of which have well-known practical limitations and disadvantages. In contrast, silicon nitride has a legacy of success in the most demanding and extreme industrial environments. As a human implant material, silicon nitride offers bone ingrowth, resistance to bacterial and viral infection, ease of diagnostic imaging, resistance to corrosion, and superior strength and fracture resistance, among other advantages, all of which claims are validated in our large and growing inventory of peer-reviewed, published literature reports. We believe that our versatile silicon nitride manufacturing expertise positions us favorably to introduce new and innovative devices in the medical and non-medical fields.

 

We also believe that we are the first and only company to commercialize silicon nitride medical implants. Prior to October 1, 2018, we designed, manufactured and commercialized silicon nitride products for our own behalf in the spine implant market. Over 35,000 of our spinal implants manufactured with silicon nitride have been implanted into patients, with an excellent safety record. On October 1, 2018, we sold our spine implant business to CTL Medical and now manufacture spine implants made with silicon nitride for CTL Medical. Prior to selling our spine implant business to CTL Medical, we had received 510(k) regulatory clearance in the United States, a CE mark in Europe, ANVISA approval in Brazil, and ARTG and Prostheses approvals in Australia for a number of silicon nitride spine implant products designed for spinal fusion surgery. Spine implant products manufactured by us from silicon nitride are currently marketed and sold by CTL Medical under the Valeo® brand to surgeons and hospitals in the United States and to selected markets in Europe and South America. These implants are designed for use in cervical (neck) and thoracolumbar (lower back) spine surgery. We are collaborating with CTL Medical to establish a commercial partner in Australia and also working with other partners to obtain regulatory approval for silicon nitride implants in Japan.

 

The sale of our spine implant business to CTL Medical enables us to now focus on our core competencies. These include research and development of silicon nitride and the design and manufacture of medical and nonmedical products manufactured from silicon nitride and other ceramic materials for our own account and in collaboration with other medical device manufacturers. We are targeting original equipment manufacturer (“OEM”) – including CTL Medical - and private label partnerships in order to accelerate adoption of silicon nitride in future markets such as coating products with silicon nitride, hip and knee replacements, dental and maxillofacial implants, extremities, trauma, and sports medicine. Existing biomaterials, based on plastics, metals, and bone grafts have well-recognized limitations that we believe are addressed by silicon nitride, and we are uniquely positioned to convert existing, successful implant designs made by other companies into products manufactured with silicon nitride. OEM and private label partnerships allow us to work with a variety of partners, accelerate the adoption of silicon nitride, and realize incremental revenue at improved operating margins, when compared to the cost-intensive direct sales model.

 

We believe that silicon nitride addresses many of the biomaterial-related limitations in fields such as hip and knee replacements, dental and maxillofacial implants, sports medicine, extremities, and trauma surgery. We further believe that the inherent material properties of silicon nitride, and the ability to formulate the material in a variety of compositions, combined with precise control of the surface properties of the material, opens up a number of commercial opportunities across orthopedic surgery, neurological surgery, maxillofacial surgery, other medical disciplines, as well as commodity items such as industrial fasteners, bushings, and valves to addressing more complex demands of hypersonic missile radomes, aerospace, air-conditioning systems, beverage dispensers, touch-screen glass, and agribusiness fungicides.

 

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.

 

 19 
 

 

Product Revenue

 

We derive our product revenue primarily from the manufacture and sale of spinal fusion products used in the treatment of spine disorders to CTL Medical, with whom we have a 10-year exclusive sales agreement in place. We are currently pursuing other sales opportunities for silicon nitride products outside the spinal fusion application. We generally recognize revenue from sales at the time the product is shipped. In general, our customers do not have any rights of return or exchange.

 

We believe our product revenue will increase as CTL Medical increases sales of silicon nitride spinal fusion products, as we secure other opportunities to manufacture third party products with silicon nitride, and as we continue to introduce new products into the market.

 

Cost of Revenue

 

The expenses that are included in cost of revenue include all in-house manufacturing costs for the products we manufacture.

 

Gross Profit

 

Our gross profit measures our product revenue relative to our cost of revenue. We expect our gross profit 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 business, our revenues and gross profits were based on our retail sales. With the focus on OEM and private label partnerships, the margins are lower, thus causing the decrease in gross profit.

 

Research and Development Expenses

 

Our research and development costs are expensed as incurred. Research and development costs consist of engineering, product development, clinical trials, test-part manufacturing, testing, developing and validating the manufacturing process, manufacturing, facility and regulatory-related costs. Research and development expenses also include employee compensation, employee and non-employee stock-based compensation, supplies and materials, consultant services, and travel and facilities expenses related to research and development activities.

 

We expect to incur additional research and development costs as we continue to develop new spinal fusion products, our product candidates for total joint replacements, such as our total hip replacement product candidate, and dental applications which, may increase our total research and development expenses.

 

General and Administrative Expenses

 

General and administrative expenses consist primarily of salaries, benefits and other related costs, including stock-based compensation for certain members of our executive team and other personnel employed in finance, compliance, administrative, information technology, customer service, executive and human resource departments. General and administrative expenses also include other expenses not part of the other cost categories mentioned above, including facility expenses and professional fees for accounting and legal services.

 

 20 
 

 

RESULTS OF OPERATIONS

 

The following is a tabular presentation of our condensed consolidated operating results for the three and nine months ended September 30, 2019 and 2018 (in thousands):

 

  

Three Months

Ended September 30,

   $   %   Nine Months
Ended September 30,
   $   % 
   2019   2018   Change   Change   2019   2018   Change   Change 
Product revenue  $173   $-   $173    100%  $437   $-   $437    100%
Cost of revenue   151    -    151    100%   364    -    364    100%
Gross profit   22    -    22    100%   73    -    73    100%
Gross profit %   13%   -%   13%   100%   17%   0%   17%   100%
                                         
Operating expenses:                                        
Research and development   869    549    320    58%   2,557    2,383    174    7%
General and administrative   714    654    60    9%   2,166    2,912    (746)   -26%
Sales and marketing   139    -    139    100%   303    42    261    621%
Goodwill Impairment   -    6,162    (6,162)   -100%   -    6,162    (6,162)   -100%
Total operating expenses   1,722    7,365    (5,643)   -77%   5,026    11,499    (6,473)   -56%
Loss from operations   (1,700)   (7,365)   5,665    -77%   (4,953)   (11,499)   6,546    -57%
Other income (expense)   254    4,398    (4,144)   -94%   1,148    2,865    (1,717)   -60%
Net loss before taxes   (1,446)   (2,967)   1,521    -51%   (3,805)   (8,634)   4,829    -56%
Provision for income taxes   -    -    -         -    -    -      
Loss – continuing   (1,446)   (2,967)   1,521    -51%   (3,805)   (8,634)   4,829    -56%
Loss – discontinued   -    (280)   280    -100%   -    (324)   324    -100%
Net loss  $(1,446)  $(3,247)  $1,801    -55%  $(3,805)  $(8,958)  $5,153    -58%

 

Product Revenue

 

For the three months ended September 30, 2019, total product revenue was $0.2 million as compared to $0.0 million in the same period 2018, an increase of $0.2 million, or 100%. This increase was due to the sale of the retail spine business in October 2018 and the related restatement of revenues for the three months ended September 30, 2018 to $0.0 million as a result of the discontinued operations.

 

For the nine months ended September 30, 2019, total product revenue was $0.4 million as compared to $0.0 million in the same period 2018, an increase of $0.4 million, or 100%. This increase was due to the sale of the retail spine business in October 2018 and the related restatement of revenues for the nine months ended September 30, 2018 to $0.0 million as a result of the discontinued operations.

 

Cost of Revenue and Gross Profit

 

For the three months ended September 30, 2019, our cost of revenue increased $0.2 million, or 100%, as compared to the same period in 2018. Gross profit increased $0.02 million and gross margin percentage increased by 100%. Both increases are due to the discontinued operations treatment and the related sale of the retail spine business in October 2018.

 

For the nine months ended September 30, 2019, our cost of revenue increased $0.4 million, or 100%, as compared to the same period in 2018. Gross profit increased $0.07 million and gross margin percentage increased by 100%. Both increases are due to the discontinued operations treatment and the related sale of the retail spine business in October 2018.

 

 21 
 

 

Research and Development Expenses

 

For the three months ended September 30, 2019, research and development expenses increased $0.3 million, or 58%, as compared to the same period in 2018. This increase was primarily attributable to an overall increase in R&D activity to support the Company’s strategic objective of developing new technologies and related products.

 

For the nine months ended September 30, 2019, research and development expenses increased $0.2 million, or 7%, as compared to the same period in 2018. This increase was primarily attributable to an overall increase in R&D activity to support the Company’s strategic objective of developing new technologies and related products.

 

General and Administrative Expenses

 

For the three months ended September 30, 2019, general and administrative expenses increased $0.1 million, or 9%, as compared to the same period in 2018. This increase is due to the increase in administrative related expenses to support the Company’s strategic objective of developing new technologies and related products

 

For the nine months ended September 30, 2019, general and administrative expenses decreased $0.7 million, or 26%, as compared to the same period in 2018. This decrease is due to the Company maintaining a lower overhead structure during the first half of 2019.

 

Sales and Marketing Expenses

 

For the three months ended September 30, 2019, sales and marketing expenses increased $0.1 million, or 100%, as compared to the same period in 2018. This increase was primarily attributable to an overall increase in marketing activities to generate interest in and exposure to the Company’s potential new product lines.

 

For the nine months ended September 30, 2019, sales and marketing expenses increased $0.3 million, or 621%, as compared to the same period in 2018. This increase was primarily attributable to an overall increase in marketing activities to generate interest in and exposure to the Company’s potential new product lines.

 

Other Expense, Net

 

For the three months ended September 30, 2019, other income decreased $4.1 million, or 94%, as compared to the same period in 2018. This decrease was primarily due to a decrease in interest expense of $0.1 million and an increase in interest income of $0.1 million, offset by the change in the fair value of the derivative liabilities in the amount of $4.3 million.

 

For the nine months ended September 30, 2019, other income decreased $1.7 million, or 60%, as compared to the same period in 2018. This decrease was primarily due to the change in the fair value of the derivative liabilities in the amount of $5.8 million offset by the decrease in the loss on the extinguishment of derivative liabilities of $1.3 million, the decrease in interest expense of $1.4 million, the decrease in the loss on extinguishment of debt of $0.3 million and the increase in interest income of $0.3 million, a decrease in offering costs of $0.7 million, and an increase of $0.1 million on other miscellaneous accounts.

 

Liquidity and Capital Resources

 

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

 

 22 
 

 

For the nine months ended September 30, 2019 and 2018, the Company incurred net losses from continuing operations of approximately $3.8 million and $8.6 million, respectively, and used cash in continuing operations of approximately $4.3 million and $7.7 million, respectively. The Company had an accumulated deficit of approximately $233 million and $229 million as of September 30, 2019 and December 31, 2018, respectively. To date, the Company’s operations have been principally financed by proceeds received from the issuance of preferred and common stock, convertible debt and bank debt 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 operating activities. 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 operating activities or obtain additional financing is uncertain.

 

The Company is actively generating additional scientific and clinical data confirming the beneficial attributes of silicon nitride and intends to publish the results in leading industry publications. The unique features of the Company’s silicon nitride material are not well known, and the Company believes that the publication of such data would help sales efforts as the Company approaches new prospects. The Company is also making additional changes to the sales strategy, including a focus on revenue growth by expanding the use of silicon nitride in other areas outside of spinal fusion applications.

 

The Company has common stock that is publicly traded and has been able to successfully raise capital when needed since the date of the Company’s initial public offering in February 2014. In March 2018, the Company closed on gross proceeds of $1.4 million, before payment of placement agent fees and costs on a warrant reprice and exercise transaction. Additionally, on May 14, 2018, the Company closed on a public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15 million, which excludes underwriting discounts and commissions and offering expenses payable by the Company. On June 4, 2019, the Company entered into an Equity Distribution Agreement, (the “Distribution Agreement”), with Maxim Group LLC (“Maxim”), pursuant to which the Company may sell from time to time, shares of its common stock, having an aggregate offering price of up to $1.6 million through Maxim, as agent (the “ATM Offering”). On September 12, 2019, the Company entered into an amendment to the Distribution Agreement with Maxim, which increased the maximum aggregate offering price of the shares of the Company’s common stock from $1.6 million to $2.5 million. Subject to the terms and conditions of the Distribution Agreement, Maxim will use its commercially reasonable efforts to sell the shares from time to time, based on the Company’s instructions. The Company has no obligation to sell any of the shares and may at any time suspend offers under the Distribution Agreement. The Offering will terminate upon the earlier of (i) the sale of Shares having an aggregate offering price of $2.5 million, (ii) the termination of the Distribution Agreement by either Maxim or the Company upon the provision of fifteen (15) days written notice, or (iii) September 12, 2020. The Company agrees to pay Maxim a transaction fee at a fixed rate of 4.25% of the gross sales price of shares sold under the 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. During the nine months ended September 30, 2019, the Company raised approximately $1.3 million, net of fees through the issuance of 457,878 shares of common stock under the Distribution Agreement with Maxim. The Company is eligible to raise an additional $1.2 million under this offering. In addition, during the nine months ended September 30, 2019, the Company converted 3,825 shares of preferred stock into 1,143,784 shares of common stock. The Company is engaged in discussions with investment and banking firms to examine financing alternatives, including options for a public offering of the Company’s preferred or common stock. On October 1, 2018, the Company sold the retail spine business. This sale will continue to provide cash flows from November 2019 totaling $1.0 million over the next seven months and $3.5 million for the following 18 months. The buyer also assumed the Company’s $2.5 million related party note payable.

 

Although the Company is seeking to obtain additional equity and/or debt financing, such funding is not assured and may not be available to the Company on favorable or acceptable terms and may involve significant restrictive covenants. Any additional equity financing is also not assured and, if available to the Company, will most likely be dilutive to its current stockholders. If the Company is not able to obtain additional debt or equity financing on a timely basis, the impact on the Company will be material and adverse.

 

These uncertainties create substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

 23 
 

 

Cash Flows

 

The following table summarizes, for the periods indicated, cash flows from operating, investing and financing activities (in thousands) – unaudited:

 

   Nine Months Ended September 30, 
   2019   2018 
Net cash used in operating activities – continuing operations  $(4,322)  $(7,746)
Net cash used in operating activities – discontinued operations   -    (207)
Net cash used in operating activities   (4,322)   (7,953)
Net cash provided by investing activities   970    (194)
Net cash provided by financing activities   831    14,401 
Net increase (decrease) in cash and cash equivalents  $(2,521)  $6,254 

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities – continuing operations decreased $3.4 million to $4.3 million during the nine months ended September 30, 2019, as compared to $7.7 million for the same period in 2018. The decrease in net cash used in operating activities – continuing operations is due to the decrease in the net loss and related non-cash add backs to the net loss during the nine months ended September 30, 2019 as compared to the same period in 2018.

 

Net Cash Provided by Investing Activities

 

Net cash provided by investing activities – continuing operations increased $1.2 million to $1.0 million during the nine months ended September 30, 2019, compared to net cash used in investing activities – continuing operations of $0.2 million for the same period in 2018. The increase in cash provided by investing activities – continuing operations during 2019 was primarily due to a $1.2 million increase in proceeds from notes receivable.

 

Net Cash Provided by Financing Activities

 

Net cash provided by financing activities was $0.8 million during the nine months ended September 30, 2019, compared to net cash provided by financing activities of $14.4 million during the same period in 2018. The $13.6 million decrease was primarily attributable to the $1.6 million net decrease in proceeds received from the exercise of common stock warrants, a decrease in proceeds from the issuance of debt of $0.7 million, a decrease in proceeds from capital offerings of $13.0 million, $0.6 million increase in the payments of operating lease obligations, all offset by a $2.3 million increase in payments for debt extinguishments.

 

Indebtedness

 

L2 Capital Debt

 

On January 31, 2018, the Company signed a promissory note in the aggregate principal amount of up to $0.84 million (the “L2 Note”) for an aggregate purchase price of up to $0.75 million and warrants to purchase up to an aggregate of 68,257 shares of common stock (the “Warrants”) at an exercise price of $3.31 per share. The maturity date was six months from date of funding. The L2 Note’s interest rate was 8% per year and a default interest rate of 18% per year. On May 14, 2018, the Company closed on an underwritten public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15.0 million. Part of the proceeds from this offering were used to pay off the outstanding debt with L2 Capital. The total payoff was $1.1 million, with $0.7 million in principal and $0.4 million in interest.

 

 24 
 

 

Hercules and MEF I, LP/Anson Investments Debt Exchange

 

On January 3, 2018, the Company entered into an Assignment Agreement (the “Assignment Agreement”) with MEF I, LP and Anson Investments Master Fund (collectively the “Assignees” and each an “Assignee”), Hercules Technology III, L.P. (“HT III”) and Hercules Capital, Inc. (“HC” and, together with HT III, “Hercules”), pursuant to which Hercules assigned to the Assignees all amounts remaining due under the Loan and Security Agreement, dated June 30, 2014, as amended, between the Company and Hercules (the “Loan and Security Agreement”) and (2) the note (the “Hercules Note”) between the Company and Hercules evidencing the amounts due under the Loan and Security Agreement. The total amount assigned by Hercules to the Assignees in the aggregate was $2.3 million and was secured by the same collateral underlying the Loan and Security Agreement. Subsequently, the Company entered into an exchange agreement pursuant to which the Assignees agreed to exchange the Hercules Term Loan obligation acquired by them for two senior secured convertible promissory notes issued by the Company, each in the principal amount of $1.1 million for an aggregate principal amount of $2.2 million, (the “Exchange Notes”). The Exchange Notes were scheduled to mature on February 3, 2019 (the “Maturity Date”). The Exchange Notes had interest at a rate of 15% per annum. Prior to the Maturity Date, principal and interest accrued under the Exchange Notes was payable in cash or, if certain conditions were met, payable in shares of our common stock. The Exchange Notes were secured by a first priority security interest in substantially all of the Company assets, including intellectual property, and contains covenants restricting payments to certain of our affiliates.

 

On May 14, 2018, the Company closed on an underwritten public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15.0 million. Part of the proceeds from this offering were used to pay off the outstanding debt with MEF I, L.P and Anson Investments. The total payoff was $1.6 million, with $1.4 million in principal and $0.2 million in interest.

 

North Stadium Term Loan – Related Party

 

On July 28, 2017, the Company entered into a $2.5 million term loan (the “North Stadium Loan”) with North Stadium Investments, LLC (“North Stadium”), a company owned and controlled by the Company’s Chief Executive Officer and Chairman of the Board. The North Stadium Loan bore interest at 10% per annum and required the Company to make monthly interest only payments from September 5, 2017 through July 5, 2018. All principal and unpaid interest (if any) under the North Stadium Loan was due and payable on July 28, 2018. The North Stadium Loan was secured by substantially all of the Company’s assets but was junior to security interest in assets encumbered by the Hercules Term Loan (see below). In connection with the North Stadium Loan the Company also issued North Stadium a warrant to purchase up to 1,834 shares of the Company’s common stock at a purchase price of $151.20 per share, subject to a 5-year term. The relative estimated value of the warrants on the date of grant approximated $0.2 million, which was being amortized as interest expense over the life of the term loan.

 

On October 1, 2018, CTL Medical assumed the North Stadium Term Loan debt as part of the sale of the retail spine business. As of December 31, 2018, the Company has been released by North Stadium from any and all obligations related to this debt.

 

Hercules Term Loan

 

On June 30, 2014, the Company entered into a Loan and Security Agreement with Hercules which provided the Company with a $20.0 million term loan. The Hercules Term Loan matured on January 1, 2018. The Hercules Term Loan included a $0.2 million closing fee, which was paid to Hercules on the closing date of the loan. The closing fee was recorded as a debt discount and was being amortized to interest expense over the life of the loan. The Hercules Term Loan also included a non-refundable final payment fee of $1.7 million. The final payment fee was being accrued and recorded to interest expense over the life of the loan.

 

On January 3, 2018, the Hercules Term Loan and all amounts owing thereunder was assigned to MEF I and Anson Investments. See discussion above under the heading “Hercules and MEF I, LP/Anson Investments Debt Exchange” for a more detailed description of that transaction.

 

Equipment Loan

 

In September of 2019 the Company entered into a debt arrangement with a finance company to purchase equipment. The debt balance at September 30, 2019, totaled $0.02 million. The debt incurs interest at 12%, is collateralized by the equipment and is payable in monthly payments of $0.001 million (including interest) over 36 months.

 

 25 
 

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, as defined in Item 303(a)(4) of Regulation S-K.

 

Critical Accounting Policies and Estimates

 

A summary of our significant accounting policies and estimates is discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. Except as referenced in New Accounting Pronouncements below, no material changes to significant accounting policies were made during the nine months ended September 30, 2019. The preparation of the financial statements in accordance with U.S. generally accepted accounting principles requires us to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities. Significant areas of uncertainty that require judgments, estimates and assumptions include the accounting for income taxes and other contingencies as well as valuation of derivative liabilities, asset impairment and collectability of accounts receivable. We use historical and other information that we consider to be relevant to make these judgments and estimates. However, actual results may differ from those estimates and assumptions that are used to prepare our financial statements.

 

New Accounting Pronouncements

 

See discussion under Note 1, Organization and Summary of Significant Accounting Policies, to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q, for information on new accounting pronouncements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

This Report includes the certifications of our Chief Executive Officer and Principal Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are properly recorded, processed, summarized and reported within the time periods required by the Commission’s rules and forms.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer and principal financial officer), of the effectiveness of the design and operation of these disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of September 30, 2019. Based on this evaluation, the Chief Executive Officer concluded that our disclosure controls and procedures were effective as of September 30, 2019, the end of the period covered by this Quarterly Report on Form 10-Q.

 

 26 
 

 

Changes in Internal Control Over Financial Reporting

 

There were changes in our internal control over financial reporting that occurred during the third quarter of 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. During the first and second quarter of 2019 we concluded the design and operating effectiveness of our controls were inadequate to ensure that complex accounting matters are always properly accounted for and reviewed in a timely manner. During the third quarter of 2019 this material weakness was remedied.

 

PART II

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not aware of any pending or threatened legal proceeding against us that could have a material adverse effect on our business, operating results or financial condition. The medical device industry is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. As a result, we may be involved in various additional legal proceedings from time to time.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 27 
 

 

ITEM 6. EXHIBITS

 

Exhibit
Number
  Exhibit Description   Filed Herewith   Incorporated by Reference
herein from
Form or
Schedule
  Filing
Date
 

SEC File/

Reg. Number

10.1   Amendment to Equity Distribution Agreement, dated as of September 12, 2019, by and between SINTX Technologies, Inc. and Maxim Group LLC      

Form 8-K

(Exhibit 10.1)

  09/12/19   001-33624
                     
31.1   Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   X            
                     
31.2   Certificate of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   X            
                     
32   Certifications of the Chief Executive Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   X            
                     
101.INS   XBRL Instance Document   X            
                     
101.SCH   XBRL Taxonomy Extension Schema Document   X            
                     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document   X            
                     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document   X            
                     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document   X            
                     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document   X            

 

 28 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

SINTX Technologies, Inc.

(previously known as Amedica Corporation)

   
Date: November 13, 2019 /s/ B. Sonny Bal
  B. Sonny Bal
  Chief Executive Officer
(Principal Executive Officer and Principal Financial Officer)

 

 29 
 

 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

I, B. Sonny Bal, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of SINTX Technologies, Inc. (previously known as Amedica Corporation);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 13, 2019 By: /s/ B. Sonny Bal
    B. Sonny Bal
    Chief Executive Officer

 

   
 

 

EX-31.2 3 ex31-2.htm

 

 

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

I, B. Sonny Bal, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of SINTX Technologies, Inc. (previously known as Amedica Corporation);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 13, 2019 By: /s/ B. Sonny Bal
    B. Sonny Bal
    Chief Executive Officer and Principal Financial Officer

 

   
 

 

EX-32 4 ex32.htm

 

Exhibit 32

 

CERTIFICATIONS UNDER SECTION 906

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of SINTX Technologies, Inc. (previously known as Amedica Corporation), a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

The quarterly report for the quarter ended September 30, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 13, 2019 By: /s/ B. Sonny Bal
    B. Sonny Bal
    Chief Executive Officer
     
  By: /s/ B. Sonny Bal
    B. Sonny Bal
    Principal Financial Officer

 

   
 

 

 

 

 

 

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Dec. 31, 2018
Inventory Disclosure [Abstract]    
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Inventories, non - current $ 625 $ 624
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$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability $ 769 $ 1,566
Fair Value, Inputs, Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability
Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
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Fair Value, Inputs, Level 3 [Member]    
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Note Receivable
9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Note Receivable

11. Note Receivable

 

On October 1, 2018, the Company completed the sale of its spine business to CTL Medical. The sale included a $6 million noninterest bearing note receivable. The 36-month term of the note receivable requires 18 payments of $138,889 followed by 18 payments of $194,444, with maturity of the note receivable on October 1, 2021. The note receivable includes an imputed interest rate of 10%, which totaled $915,725 as of October 1, 2018, and has a 36-month amortization. As of September 30, 2019, the net carrying value of the note receivable was approximately $4.0 million.

 

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Debt
9 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
Debt

7. Debt

 

L2 Capital Debt

 

On January 31, 2018, the Company signed a promissory note in the aggregate principal amount of up to $0.84 million (the “L2 Note”) for an aggregate purchase price of up to $0.75 million and warrants to purchase up to an aggregate of 68,257 shares of common stock (the “Warrants”) at an exercise price of $3.31 per share. The maturity date was six months from date of funding. The L2 Note’s interest rate was 8% per year and a default interest rate of 18% per year.

 

On May 14, 2018, the Company closed on an underwritten public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15.0 million. Part of the proceeds from this offering were used to pay off the outstanding debt with L2 Capital. The total payoff was $1.1 million, with $0.7 million in principal and $0.4 million in interest.

 

Hercules and MEF I, LP/Anson Investments Debt Exchange

 

On January 3, 2018, the Company entered into an Assignment Agreement (the “Assignment Agreement”) with MEF I, LP and Anson Investments Master Fund (collectively the “Assignees” and each an “Assignee”), Hercules Technology III, L.P. (“HT III”) and Hercules Capital, Inc. (“HC” and, together with HT III, “Hercules”), pursuant to which Hercules assigned to the Assignees all amounts remaining due under the Loan and Security Agreement, dated June 30, 2014, as amended, between the Company and Hercules (the “Loan and Security Agreement”) and (2) the note (the “Hercules Note”) between the Company and Hercules evidencing the amounts due under the Loan and Security Agreement. The total amount assigned by Hercules to the Assignees in the aggregate was $2.3 million and was secured by the same collateral underlying the Loan and Security Agreement. Subsequently, the Company entered into an exchange agreement pursuant to which the Assignees agreed to exchange the Hercules Term Loan obligation acquired by them for two senior secured convertible promissory notes issued by the Company, each in the principal amount of $1.1 million for an aggregate principal amount of $2.2 million, (the “Exchange Notes”). The Exchange Notes were scheduled to mature on February 3, 2019 (the “Maturity Date”). The Exchange Notes had interest at a rate of 15% per annum. The Exchange Notes were secured by a first priority security interest in substantially all of the Company assets, including intellectual property, and contains covenants restricting payments to certain of our affiliates.

 

On May 14, 2018, the Company closed on an underwritten public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15.0 million. Part of the proceeds from this offering were used to pay off the outstanding debt with MEF I, L.P and Anson Investments. The total payoff was $1.6 million, with $1.4 million in principal and $0.2 million in interest.

 

North Stadium Term Loan – Related Party

 

On July 28, 2017, the Company entered into a $2.5 million term loan (the “North Stadium Loan”) with North Stadium Investments, LLC (“North Stadium”), a company owned and controlled by the Company’s Chief Executive Officer and Chairman of the Board. The North Stadium Loan bore interest at 10% per annum and required the Company to make monthly interest only payments from September 5, 2017 through July 5, 2018. All principal and unpaid interest (if any) under the North Stadium Loan was due and payable on July 28, 2018. The North Stadium Loan was secured by substantially all of the Company’s assets but was junior to security interest in assets encumbered by the Hercules Term Loan (see below). In connection with the North Stadium Loan the Company also issued North Stadium a warrant to purchase up to 1,834 shares of the Company’s common stock at a purchase price of $151.20 per share, subject to a 5-year term. The relative estimated value of the warrants on the date of grant approximated $0.2 million, which was being amortized as interest expense over the life of the term loan.

 

On October 1, 2018, CTL Medical assumed the North Stadium Term Loan debt as part of the sale of the retail spine business. As of December 31, 2018, the Company has been released by North Stadium from any and all obligations related to this debt.

 

Hercules Term Loan

 

On June 30, 2014, the Company entered into a Loan and Security Agreement with Hercules which provided the Company with a $20.0 million term loan. The Hercules Term Loan matured on January 1, 2018. The Hercules Term Loan included a $0.2 million closing fee, which was paid to Hercules on the closing date of the loan. The closing fee was recorded as a debt discount and was being amortized to interest expense over the life of the loan. The Hercules Term Loan also included a non-refundable final payment fee of $1.7 million. The final payment fee was being accrued and recorded to interest expense over the life of the loan.

 

On January 3, 2018, the Hercules Term Loan and all amounts owing thereunder was assigned to MEF I and Anson Investments. See discussion above under “Hercules and MEF I, LP/Anson Investments Debt Exchange” for a more detailed description of that transaction.

 

Equipment Loan

 

In September of 2019 the Company entered into a debt arrangement with a finance company to purchase equipment. The debt balance at September 30, 2019, totaled $0.02 million. The debt incurs interest at 12%, is collateralized by the equipment and is payable in monthly payments of $0.001 million (including interest) over 36 months.

 

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Inventories
9 Months Ended
Sep. 30, 2019
Inventory Disclosure [Abstract]  
Inventories

3. Inventories

 

Inventories consisted of the following (in thousands):

 

    September 30, 2019     December 31, 2018  
Raw materials   $ 625     $ 624  
Intermediate goods     16       -  
WIP     70       47  
Finished goods     -       5  
    $ 711     $ 676  

 

As of September 30, 2019, inventories totaling approximately $0.1 million and $0.6 million were classified as current and long-term, respectively. Inventories classified as current represent the carrying value of inventories as of September 30, 2019, that management estimates will be sold by September 30, 2020.

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Total
Balance at Dec. 31, 2017 $ 1 $ 226,070 $ (220,629) $ 5,442
Balance, shares at Dec. 31, 2017 100,935      
Common stock issued from exercise of warrants 1,653 1,653
Common stock issued from exercise of warrants, shares 36,205      
Issuance of common stock in exchange for reduction in debt 1,453 1,453
Issuance of common stock in exchange for reduction in debt, shares 19,348      
Issuance of preferred stock from offering, net of issuance costs 6,748 6,748
Issuance of preferred stock from offering, net of issuance costs, shares 15,000      
Warrants issued in association with debt 98 98
Loss on extinguishment of derivative liabilities 1,040 1,040
Deemed dividend related to adjustment of the exercise price of warrants issued with debt (9) (9)
Accretion of change in warrant exercise price 9 9
Common stock issued due to conversion of preferred stock $ 5 (5)
Common stock issued due to conversion of preferred stock, shares (10,598) 544,911      
Accretion of convertible preferred stock discount 13,687 13,687
Deemed dividend related to the issuance of preferred stock (13,687) (13,687)
Extinguishment of derivative liabilities 575 575
Stock-based compensation 39 39
Net loss (8,958) (8,958)
Balance at Sep. 30, 2018 $ 6 237,671 (229,587) 8,090
Balance, shares at Sep. 30, 2018 4,402 701,399      
Balance at Dec. 31, 2018 $ 7 237,673 (229,281) 8,399
Balance, shares at Dec. 31, 2018 4,074 726,455      
Common stock issued from exercise of warrants 103 103
Common stock issued from exercise of warrants, shares 35,874      
Issuance of common stock in exchange for reduction in debt        
Common stock issued due to conversion of preferred stock $ 12 (12)
Common stock issued due to conversion of preferred stock, shares (3,825) 1,143,784      
Stock-based compensation 2 2
Common Stock Issued for Cash $ 5 1,280 $ 1,285
Common Stock Issued for Cash, shares 457,878     457,878
Removal of derivative liability upon exercise of warrant 44 $ 44
Net loss (3,805) (3,805)
Balance at Sep. 30, 2019 $ 24 $ 239,090 $ (233,086) $ 6,028
Balance, shares at Sep. 30, 2019 249 2,363,991      
XML 19 R26.htm IDEA: XBRL DOCUMENT v3.19.3
Fair Value Measurements (Tables)
9 Months Ended
Sep. 30, 2019
Schedule of Financial Liabilities Measured at Fair Value on Recurring Basis by Level Within Fair Value Hierarchy

The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2019 and December 31, 2018:

 

    Fair Value Measurements as of September 30, 2019  
Description   Level 1     Level 2     Level 3     Total  
Derivative liability                                
Common stock warrants   $ -     $ -     $ 769     $ 769  

 

    Fair Value Measurements as of December 31, 2018  
Description   Level 1     Level 2     Level 3     Total  
Derivative liability                                
Common stock warrants   $ -     $ -     $ 1,566     $ 1,566  

 

Schedule of Fair Value Measurement Hierarchy of Derivative Liability

The Company did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the nine months ended September 30, 2019 and 2018.

 

    Common Stock
Warrants
 
Balance at December 31, 2017   $ (1,357 )
Issuances of warrants classified as derivatives     (7,577 )
Change in fair value     6,500  
Exercise of warrants     575  
Other, net     (212 )
Balance at September 30, 2018   $ (2,071 )
         
Balance at December 31, 2018   $ (1,566 )
Change in fair value     754  
Exercise of warrants     44  
Other, net     (1 )
Balance at September 30, 2019   $ (769 )

 

Black-Scholes-Merton Valuation Model [Member]  
Schedule of Assumptions Used in Estimating Fair Value

The assumptions used in estimating the common stock warrant liability using the Black-Scholes-Merton valuation model as of September 30, 2019 and December 31, 2018 were as follows:

 

    September 30, 2019     December 31, 2018  
Weighted-average risk-free interest rate     1.56 %     2.51 %
Weighted-average expected life (in years)     3.61       0.9  
Expected dividend yield     - %     - %
Weighted-average expected volatility     64 %     157 %

 

Monte Carlo Simulation Valuation Model [Member]  
Schedule of Assumptions Used in Estimating Fair Value

The assumptions used in estimating the common stock warrant liability using the Monte Carlo Simulation valuation model at September 30, 2019 and December 31, 2018 were as follows:

 

    September 30, 2019     December 31, 2018  
Weighted-average risk-free interest rate     1.59 %     2.46 %
Weighted-average expected life (in years)     2.16       3.1  
Expected dividend yield     - %     - %
Weighted average expected volatility     65 %     68 %

 

XML 20 R1.htm IDEA: XBRL DOCUMENT v3.19.3
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2019
Nov. 12, 2019
Document And Entity Information    
Entity Registrant Name Sintx Technologies, Inc.  
Entity Central Index Key 0001269026  
Document Type 10-Q  
Document Period End Date Sep. 30, 2019  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Ex Transition Period false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   2,434,008
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2019  
XML 21 R22.htm IDEA: XBRL DOCUMENT v3.19.3
Organization and Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Organization

Organization

 

SINTX Technologies, Inc. (“SINTX” or “the Company”) (previously known as Amedica Corporation) was incorporated in the state of Delaware on December 10, 1996. SINTX is an OEM ceramics company that develops and commercializes silicon nitride for medical and non-medical applications. The Company believes it is the first and only manufacturer to use silicon nitride in medical applications. The Company acquired US Spine, Inc. (“US Spine”), a Delaware spinal products corporation with operations in Florida, on September 20, 2010. The Company’s products are primarily sold in the United States.

 

As further explained in Note 12, On October 1, 2018, the Company completed the sale of its retail spine business to CTL Medical, a Dallas, Texas-based privately held medical device manufacturer. As a result of the sale, CTL Medical is now the exclusive owner of SINTX’s portfolio of metal and silicon nitride spine products, which are presently sold under the brand names of Taurus, Preference, and Valeo, with access to future silicon nitride spine technologies. Manufacturing, R&D, and all intellectual property related to the core, non-spine, biomaterial technology of silicon nitride remains with the Company. The Company will serve as CTL’s exclusive OEM provider of silicon nitride products.

 

On October 30, 2018, the Company amended its Certificate of Incorporation with the State of Delaware to change its corporate name to SINTX Technologies, Inc. in order to better reflect its focus on silicon nitride science and technologies and pipeline of silicon nitride-based products in various biomedical applications. The Company also changed its trading symbol on the NASDAQ Capital Market to “SINT”. The Company also changed the name of its wholly owned subsidiary US Spine, Inc. to “ST Sub, Inc.”

 

The previous name, Amedica, has transferred to CTL Medical, which is now CTL-Amedica. The Company’s new corporate brand reflects both the Company’s core competence in the science and production of silicon nitride ceramics, as well as encouraging prospects for the future, as an OEM supplier of spine implants to CTL-Amedica, and several opportunities outside of spine. The Company will focus on developing silicon nitride in terms of product design, and future biomaterial formulations, for a variety of OEM customers.

 

Reverse Stock Split

Reverse Stock Split

 

On July 26, 2019 the Company effected a 1 for 30 reverse stock split of the Company’s common stock. The par value and the authorized shares of the common and convertible preferred stock were not adjusted as a result of the reverse stock split. All common stock shares, equivalents, and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

 

Basis of Presentation

Basis of Presentation

 

These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and include all assets and liabilities of the Company and its wholly owned subsidiary, ST Sub, Inc. All material intercompany transactions and balances have been eliminated in consolidation. SEC rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, so long as the statements are not misleading. In the opinion of management, these financial statements and accompanying notes contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented herein. These condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 11, 2019. The results of operations for the nine months ended September 30, 2019, are not necessarily indicative of the results to be expected for the year ending December 31, 2019. The Company’s significant accounting policies are set forth in Note 1 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018.

 

Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the periods then ended. Actual results could differ from those estimates. The most significant estimates relate to inventory, long-lived and intangible assets and the liability for preferred stock and common stock warrants.

 

Liquidity and Capital Resources

Liquidity and Capital Resources

 

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

 

For the nine months ended September 30, 2019 and 2018, the Company incurred net losses from continuing operations of approximately $3.8 million and $8.6 million, respectively, and used cash in continuing operations of approximately $4.3 million and $7.7 million, respectively. The Company had an accumulated deficit of approximately $233 million and $229 million as of September 30, 2019 and December 31, 2018, respectively. To date, the Company’s operations have been principally financed by proceeds received from the issuance of preferred and common stock, convertible debt and bank debt 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 operating activities. 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 operating activities or obtain additional financing is uncertain.

 

The Company is actively generating additional scientific and clinical data confirming the beneficial attributes of silicon nitride and intends to publish the results in leading industry publications. The unique features of the Company’s silicon nitride material are not well known, and the Company believes that the publication of such data would help sales efforts as the Company approaches new prospects. The Company is also making additional changes to the sales strategy, including a focus on revenue growth by expanding the use of silicon nitride in other areas outside of spinal fusion applications.

  

The Company has common stock that is publicly traded and has been able to successfully raise capital when needed since the date of the Company’s initial public offering in February 2014. In March 2018, the Company closed on gross proceeds of $1.4 million, before payment of placement agent fees and costs on a warrant reprice and exercise transaction. Additionally, on May 14, 2018, the Company closed on a public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15 million, which excludes underwriting discounts and commissions and offering expenses payable by the Company. On June 4, 2019, the Company entered into an Equity Distribution Agreement, (the “Distribution Agreement”), with Maxim Group LLC (“Maxim”), pursuant to which the Company may sell from time to time, shares of its common stock, having an aggregate offering price of up to $1.6 million through Maxim, as agent (the “ATM Offering”). On September 12, 2019, the Company entered into an amendment to the Distribution Agreement with Maxim, which increased the maximum aggregate offering price of the shares of the Company’s common stock from $1.6 million to $2.5 million. Subject to the terms and conditions of the Distribution Agreement, Maxim will use its commercially reasonable efforts to sell the shares from time to time, based on the Company’s instructions. The Company has no obligation to sell any of the shares and may at any time suspend offers under the Distribution Agreement. The Offering will terminate upon the earlier of (i) the sale of Shares having an aggregate offering price of $2.5 million, (ii) the termination of the Distribution Agreement by either Maxim or the Company upon the provision of fifteen (15) days written notice, or (iii) September 12, 2020. The Company agrees to pay Maxim a transaction fee at a fixed rate of 4.25% of the gross sales price of shares sold under the 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. During the nine months ended September 30, 2019 the Company raised approximately $1.3 million, net of fees, through the issuance of 457,878 shares of common stock under the Distribution Agreement with Maxim. The Company is eligible to raise an additional $1.2 million under this offering. In addition, during the nine months ended September 30, 2019, the Company converted 3,825 shares of preferred stock into 1,143,784 shares of common stock. The Company is engaged in discussions with investment and banking firms to examine financing alternatives, including options for a public offering of the Company’s preferred or common stock. On October 1, 2018, the Company sold the retail spine business. This sale will continue to provide cash flows from November 2019 totaling $1.0 million over the next seven months and $3.5 million for the following 18 months. The buyer also assumed the Company’s $2.5 million related party note payable.

 

Although the Company is seeking to obtain additional equity and/or debt financing, such funding is not assured and may not be available to the Company on favorable or acceptable terms and may involve significant restrictive covenants. Any additional equity financing is also not assured and, if available to the Company, will most likely be dilutive to its current stockholders. If the Company is not able to obtain additional debt or equity financing on a timely basis, the impact on the Company will be material and adverse.

 

These uncertainties create substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Significant Accounting Policies

Significant Accounting Policies

 

Except as explained below, no material changes were made to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

Accounting Pronouncements Adopted During the Quarter Ended March 31, 2019

Accounting Pronouncements Adopted During the Nine Months Ended September 30, 2019

 

In August 2016, the FASB updated accounting guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Under prior U.S. GAAP, there was no specific guidance on the eight cash flow classification issues aforementioned. The Company adopted the new guidance effective January 1, 2019. The guidance in this standard did not have a material impact on the financial statements of the Company upon adoption.

 

In February 2016, the FASB updated the accounting guidance related to leases as part of a joint project with the International Accounting Standards Board (“IASB”) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted the new guidance effective January 1, 2019 (see Note 13), using the modified retrospective approach. Adoption of the new guidance resulted in the Company being required to record an additional operating lease right-of-use asset totaling approximately $0.7 million and liability totaling approximately $0.9 million (with $0.7 million incremental to adoption of the new guidance) on the date of adoption. Subsequent to the initial adoption of the new standard the Company amended the lease (see Note 13). The standard did not materially impact the consolidated net loss and had no impact on cash flows.

 

In May 2014, in addition to several amendments issued during 2016, the FASB updated the accounting guidance related to revenue from contracts with customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The Company adopted the new guidance effective January 1, 2019. The core principle of the new guidance is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The standard defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates are often required within the revenue recognition process than were required under prior U.S. GAAP. The Company has one primary customer (see Note 12) and related contract that has one performance obligation to which revenue is allocated. Revenue under this contract is recognized when the product is shipped to the customer. The Company generally bills its customer upon shipment of the product and invoices are generally due within 30 days. The Company does provide certain rights of return, which historically have not been significant. The Company does not anticipate incurring significant incremental costs to obtain contracts with future customers. The guidance in this standard did not have a material impact on the financial statements of the Company upon adoption.

New Accounting Pronouncements Not Yet Adopted

New Accounting Pronouncements Not Yet Adopted

 

The Company has reviewed all recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

 

Reclassification

Reclassification

 

Certain reclassifications were made to the nine months ended September 30, 2018, Statement of Operations to conform to the presentation for the nine months ended September 30, 2019, Statement of Operations. Research and development expenses in 2018 increased by $0.4, million offset by a decrease in general and administrative expenses by the same amount. The reclassification did not affect the 2018 net loss.

XML 22 R9.htm IDEA: XBRL DOCUMENT v3.19.3
Basic and Diluted Net Loss Per Common Share
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Basic and Diluted Net Loss Per Common Share

2. Basic and Diluted Net Loss per Common Share

 

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period that are determined to be dilutive. Common stock equivalents are primarily comprised of preferred stock, warrants for the purchase of common stock and stock options. The Company had potentially dilutive securities, totaling approximately 0.5 million and 0.8 million as of September 30, 2019 and 2018, respectively.

 

Below are basic and diluted loss per share data for the three months ended September 30, 2019, which are in thousands except for share and per share data:

 

    Basic Calculation    

Effect of

Dilutive
Warrant
Securities

    Diluted Calculation  
Numerator:                        
Loss from continuing operations   $ (1,446 )   $ (144 )   $ (1,590 )
Deemed dividend and accretion of a discount     (345 )     -       (345 )
Net loss attributable to common stockholders   $ (1,791 )   $ (144 )   $ (1,935 )
                         
Denominator:                        
Number of shares used in per common share calculations:     2,127,293       -       2,127,293  
                         
Net loss per common share:                        
Loss from continuing operations   $ (0.68 )   $ (0.07 )   $ (0.75 )
Deemed dividend and accretion of a discount     (0.16 )     -       (0.16 )
Net loss attributable to common stockholders   $ (0.84 )   $ (0.07 )   $ (0.91 )

 

Below are basic and diluted loss per share data for the nine months ended September 30, 2019, which are in thousands except for share and per share data:

 

    Basic Calculation    

Effect of

Dilutive
Warrant
Securities

    Diluted Calculation  
Numerator:                        
Loss from continuing operations   $ (3,805 )   $ (753 )   $ (4,558 )
Deemed dividend and accretion of a discount     (2,703 )     -       (2,703 )
Net loss attributable to common stockholders   $ (6,508 )   $ (753 )   $ (7,261 )
                         
Denominator:                        
Number of shares used in per common share calculations:     1,269,106       -       1,269,106  
                         
Net loss per common share:                        
Loss from continuing operations   $ (3.00 )   $ (0.59 )   $ (3.59 )
Deemed dividend and accretion of a discount     (2.13 )     -       (2.13 )
Net loss attributable to common stockholders   $ (5.13 )   $ (0.59 )   $ (5.72 )

 

Below are basic and diluted loss per share data for the three months ended September 30, 2018, which are in thousands except for share and per share data:

 

    Basic Calculation     Effect of Dilutive
Warrant
Securities
    Diluted Calculation  
Numerator:                        
Loss from continuing operations   $ (2,967 )   $ (4,485 )   $ (7,452 )
Income from discontinued operations     (280 )     -       (280 )
Deemed dividend and accretion of a discount     (6,353 )     -       (6,353 )
Net loss attributable to common stockholders   $ (9,600 )   $ (4,485 )   $ (14,085 )
                         
Denominator:                        
Number of shares used in per common share calculations:     418,638       54       418,692  
                         
Net loss per common share:                        
Loss from continuing operations   $ (7.09 )   $ (10.71 )   $ (17.80 )
Loss from discontinued operations     (0.67 )     -       (0.67 )
Deemed dividend and accretion of a discount     (15.17 )     -       (15.17 )
Net loss attributable to common stockholders   $ (22.93 )   $ (10.71 )   $ (33.64 )

 

Below are basic and diluted loss per share data for the nine months ended September 30, 2018, which are in thousands except for share and per share data:

 

    Basic Calculation     Effect of Dilutive
Warrant
Securities
    Diluted Calculation  
Numerator:                        
Loss from continuing operations   $ (8,634 )   $ (6,396 )   $ (15,030 )
Income from discontinued operations     (324 )     -       (324 )
Deemed dividend and accretion of a discount     (13,686 )     -       (13,686 )
Net loss attributable to common stockholders   $ (22,644 )   $ (6,396 )   $ (29,040 )
                         
Denominator:                        
Number of shares used in per common share calculations:     243,543       59,933       303,476  
                         
Net loss per common share:                        
Loss from continuing operations   $ (35.45 )   $ (14.08 )   $ (49.53 )
Loss from discontinued operations     (1.33 )     0.26       (1.07 )
Deemed dividend and accretion of a discount     (56.20 )     11.10       (45.10 )
Net loss attributable to common stockholders   $ (92.98 )   $ (2.72 )   $ (95.70 )

XML 23 R43.htm IDEA: XBRL DOCUMENT v3.19.3
Stock-Based Compensation - Summary of Stock Option Activity (Details)
9 Months Ended
Sep. 30, 2019
USD ($)
$ / shares
shares
Share-based Payment Arrangement [Abstract]  
Options, Outstanding at beginning of period | shares 377
Options, Granted | shares
Options, Exercised | shares
Options, Forfeited | shares
Options, Expired | shares
Options, Outstanding at end of period | shares 377
Options, Exercisable at end of period | shares 377
Weighted Average Exercise Price, Outstanding at beginning of period | $ / shares $ 7,653
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Forfeited | $ / shares
Weighted Average Exercise Price, Expired | $ / shares
Weighted Average Exercise Price, Outstanding at end of period | $ / shares 7,653
Weighted Average Exercise Price, Exercisable at end of period | $ / shares $ 7,653
Weighted Average Remaining Contractual Terms (Years), Outstanding at beginning 6 years
Weighted Average Remaining Contractual Terms (Years), Outstanding at ending 5 years 7 months 6 days
Weighted Average Remaining Contractual Terms (Years), Exercisable 5 years 7 months 6 days
Intrinsic Value, Outstanding at beginning of period | $
Intrinsic Value, Outstanding at end of period | $
Intrinsic Value, Exercisable at end of period | $
XML 24 R47.htm IDEA: XBRL DOCUMENT v3.19.3
Leases - Schedule of Operating Lease Future Minimum Payments (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jan. 02, 2019
Dec. 31, 2018
Leases [Abstract]      
2019 $ 245    
2020 494    
2021 509    
2022 525    
2023 540    
Thereafter 556    
Total future minimum lease payments 2,869    
Less amounts representing interests (435)    
Present value of lease liability 2,343 $ 900  
Current-portion of operating lease liability 475   $ 169
Long-term portion operating lease liability $ 1,959  
XML 25 R8.htm IDEA: XBRL DOCUMENT v3.19.3
Organization and Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

 

Organization

 

SINTX Technologies, Inc. (“SINTX” or “the Company”) (previously known as Amedica Corporation) was incorporated in the state of Delaware on December 10, 1996. SINTX is an OEM ceramics company that develops and commercializes silicon nitride for medical and non-medical applications. The Company believes it is the first and only manufacturer to use silicon nitride in medical applications. The Company acquired US Spine, Inc. (“US Spine”), a Delaware spinal products corporation with operations in Florida, on September 20, 2010. The Company’s products are primarily sold in the United States.

 

As further explained in Note 12, On October 1, 2018, the Company completed the sale of its retail spine business to CTL Medical, a Dallas, Texas-based privately held medical device manufacturer. As a result of the sale, CTL Medical is now the exclusive owner of SINTX’s portfolio of metal and silicon nitride spine products, which are presently sold under the brand names of Taurus, Preference, and Valeo, with access to future silicon nitride spine technologies. Manufacturing, R&D, and all intellectual property related to the core, non-spine, biomaterial technology of silicon nitride remains with the Company. The Company will serve as CTL’s exclusive OEM provider of silicon nitride products.

 

On October 30, 2018, the Company amended its Certificate of Incorporation with the State of Delaware to change its corporate name to SINTX Technologies, Inc. in order to better reflect its focus on silicon nitride science and technologies and pipeline of silicon nitride-based products in various biomedical applications. The Company also changed its trading symbol on the NASDAQ Capital Market to “SINT”. The Company also changed the name of its wholly owned subsidiary US Spine, Inc. to “ST Sub, Inc.”

 

The previous name, Amedica, has transferred to CTL Medical, which is now CTL-Amedica. The Company’s new corporate brand reflects both the Company’s core competence in the science and production of silicon nitride ceramics, as well as encouraging prospects for the future, as an OEM supplier of spine implants to CTL-Amedica, and several opportunities outside of spine. The Company will focus on developing silicon nitride in terms of product design, and future biomaterial formulations, for a variety of OEM customers.

 

Reverse Stock Split

 

On July 26, 2019 the Company effected a 1 for 30 reverse stock split of the Company’s common stock. The par value and the authorized shares of the common and convertible preferred stock were not adjusted as a result of the reverse stock split. All common stock shares, equivalents, and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

 

Basis of Presentation

 

These unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and include all assets and liabilities of the Company and its wholly owned subsidiary, ST Sub, Inc. All material intercompany transactions and balances have been eliminated in consolidation. SEC rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, so long as the statements are not misleading. In the opinion of management, these financial statements and accompanying notes contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented herein. These condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 11, 2019. The results of operations for the nine months ended September 30, 2019, are not necessarily indicative of the results to be expected for the year ending December 31, 2019. The Company’s significant accounting policies are set forth in Note 1 to the consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the periods then ended. Actual results could differ from those estimates. The most significant estimates relate to inventory, long-lived and intangible assets and the liability for preferred stock and common stock warrants.

 

Liquidity and Capital Resources

 

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

 

For the nine months ended September 30, 2019 and 2018, the Company incurred net losses from continuing operations of approximately $3.8 million and $8.6 million, respectively, and used cash in continuing operations of approximately $4.3 million and $7.7 million, respectively. The Company had an accumulated deficit of approximately $233 million and $229 million as of September 30, 2019 and December 31, 2018, respectively. To date, the Company’s operations have been principally financed by proceeds received from the issuance of preferred and common stock, convertible debt and bank debt 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 operating activities. 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 operating activities or obtain additional financing is uncertain.

 

The Company is actively generating additional scientific and clinical data confirming the beneficial attributes of silicon nitride and intends to publish the results in leading industry publications. The unique features of the Company’s silicon nitride material are not well known, and the Company believes that the publication of such data would help sales efforts as the Company approaches new prospects. The Company is also making additional changes to the sales strategy, including a focus on revenue growth by expanding the use of silicon nitride in other areas outside of spinal fusion applications.

 

The Company has common stock that is publicly traded and has been able to successfully raise capital when needed since the date of the Company’s initial public offering in February 2014. In March 2018, the Company closed on gross proceeds of $1.4 million, before payment of placement agent fees and costs on a warrant reprice and exercise transaction. Additionally, on May 14, 2018, the Company closed on a public offering of units, consisting of convertible preferred stock and warrants, for gross proceeds of $15 million, which excludes underwriting discounts and commissions and offering expenses payable by the Company. On June 4, 2019, the Company entered into an Equity Distribution Agreement, (the “Distribution Agreement”), with Maxim Group LLC (“Maxim”), pursuant to which the Company may sell from time to time, shares of its common stock, having an aggregate offering price of up to $1.6 million through Maxim, as agent (the “ATM Offering”). On September 12, 2019, the Company entered into an amendment to the Distribution Agreement with Maxim, which increased the maximum aggregate offering price of the shares of the Company’s common stock from $1.6 million to $2.5 million. Subject to the terms and conditions of the Distribution Agreement, Maxim will use its commercially reasonable efforts to sell the shares from time to time, based on the Company’s instructions. The Company has no obligation to sell any of the shares and may at any time suspend offers under the Distribution Agreement. The Offering will terminate upon the earlier of (i) the sale of Shares having an aggregate offering price of $2.5 million, (ii) the termination of the Distribution Agreement by either Maxim or the Company upon the provision of fifteen (15) days written notice, or (iii) September 12, 2020. The Company agrees to pay Maxim a transaction fee at a fixed rate of 4.25% of the gross sales price of shares sold under the 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. During the nine months ended September 30, 2019 the Company raised approximately $1.3 million, net of fees, through the issuance of 457,878 shares of common stock under the Distribution Agreement with Maxim. The Company is eligible to raise an additional $1.2 million under this offering. In addition, during the nine months ended September 30, 2019, the Company converted 3,825 shares of preferred stock into 1,143,784 shares of common stock. The Company is engaged in discussions with investment and banking firms to examine financing alternatives, including options for a public offering of the Company’s preferred or common stock. On October 1, 2018, the Company sold the retail spine business. This sale will continue to provide cash flows from November 2019 totaling $1.0 million over the next seven months and $3.5 million for the following 18 months. The buyer also assumed the Company’s $2.5 million related party note payable.

 

Although the Company is seeking to obtain additional equity and/or debt financing, such funding is not assured and may not be available to the Company on favorable or acceptable terms and may involve significant restrictive covenants. Any additional equity financing is also not assured and, if available to the Company, will most likely be dilutive to its current stockholders. If the Company is not able to obtain additional debt or equity financing on a timely basis, the impact on the Company will be material and adverse.

 

These uncertainties create substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Significant Accounting Policies

 

Except as explained below, no material changes were made to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

Accounting Pronouncements Adopted During the Nine Months Ended September 30, 2019

 

In August 2016, the FASB updated accounting guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Under prior U.S. GAAP, there was no specific guidance on the eight cash flow classification issues aforementioned. The Company adopted the new guidance effective January 1, 2019. The guidance in this standard did not have a material impact on the financial statements of the Company upon adoption.

 

In February 2016, the FASB updated the accounting guidance related to leases as part of a joint project with the International Accounting Standards Board (“IASB”) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted the new guidance effective January 1, 2019 (see Note 13), using the modified retrospective approach. Adoption of the new guidance resulted in the Company being required to record an additional operating lease right-of-use asset totaling approximately $0.7 million and liability totaling approximately $0.9 million (with $0.7 million incremental to adoption of the new guidance) on the date of adoption. Subsequent to the initial adoption of the new standard the Company amended the lease (see Note 13). The standard did not materially impact the consolidated net loss and had no impact on cash flows.

 

In May 2014, in addition to several amendments issued during 2016, the FASB updated the accounting guidance related to revenue from contracts with customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The Company adopted the new guidance effective January 1, 2019. The core principle of the new guidance is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The standard defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates are often required within the revenue recognition process than were required under prior U.S. GAAP. The Company has one primary customer (see Note 12) and related contract that has one performance obligation to which revenue is allocated. Revenue under this contract is recognized when the product is shipped to the customer. The Company generally bills its customer upon shipment of the product and invoices are generally due within 30 days. The Company does provide certain rights of return, which historically have not been significant. The Company does not anticipate incurring significant incremental costs to obtain contracts with future customers. The guidance in this standard did not have a material impact on the financial statements of the Company upon adoption.

 

New Accounting Pronouncements Not Yet Adopted

 

The Company has reviewed all recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

 

Reclassification

 

Certain reclassifications were made to the nine months ended September 30, 2018, Statement of Operations to conform to the presentation for the nine months ended September 30, 2019, Statement of Operations. Research and development expenses in 2018 increased by $0.4, million offset by a decrease in general and administrative expenses by the same amount. The reclassification did not affect the 2018 net loss.

XML 26 R4.htm IDEA: XBRL DOCUMENT v3.19.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Income Statement [Abstract]        
Product revenue $ 173 $ 437
Costs of revenue 151 364
Gross profit 22 73
Operating expenses:        
Research and development 869 549 2,557 2,383
General and administrative 714 654 2,166 2,912
Sales and marketing 139 303 42
Goodwill impairment 6,162 6,162
Total operating expenses 1,722 7,365 5,026 11,499
Loss from operations (1,700) (7,365) (4,953) (11,499)
Other income (expenses):        
Interest expense (1) (83) (3) (1,367)
Interest income 111 349
Change in fair value of derivative liabilities 144 4,480 754 6,500
Loss on extinguishment of debt (340)
Offering costs (682)
Loss on extinguishment of derivative liabilities (1,252)
Other income, net 1 48 6
Total other income, net 254 4,398 1,148 2,865
Net loss from continuing operations before income taxes (1,446) (2,967) (3,805) (8,634)
Provision for income taxes
Loss from continuing operations (1,446) (2,967) (3,805) (8,634)
Loss from discontinued operations (280) (324)
Net loss (1,446) (3,247) (3,805) (8,958)
Deemed dividend related to the beneficial conversion feature and accretion of a discount on series B preferred stock (345) (6,353) (2,703) (13,686)
Net loss attributable to common stockholders $ (1,791) $ (9,600) $ (6,508) $ (22,644)
Net loss per share - basic and diluted        
Basic - continuing operations $ (0.68) $ (7.09) $ (3.00) $ (35.45)
Basic - discontinued operations (0.67) (1.33)
Basic - deemed dividend and accretion of a discount on conversion of series B preferred stock (0.16) (15.17) (2.13) (56.20)
Basic - attributable to common stockholders (0.84) (22.93) (5.13) (92.98)
Diluted - continuing operations (0.75) (17.80) (3.59) (49.53)
Diluted - discontinued operations (0.67) (1.07)
Diluted - deemed dividend and accretion of a discount on conversion of series B preferred stock (0.16) (15.17) (2.13) (45.10)
Diluted - attributable to common stockholders $ (0.91) $ (33.64) $ (5.72) $ (95.70)
Weighted average common shares outstanding:        
Basic 2,127,293 418,638 1,269,106 243,543
Diluted 2,127,293 418,692 1,269,106 303,476
XML 27 R27.htm IDEA: XBRL DOCUMENT v3.19.3
Accrued Liabilities (Tables)
9 Months Ended
Sep. 30, 2019
Payables and Accruals [Abstract]  
Schedule of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

    September 30, 2019     December 31, 2018  
Payroll and related expense   $ 454     $ 388  
Resterilization and repackaging costs     365       344  
Other     247       106  
    $ 1,066     $ 838  

 

XML 28 R23.htm IDEA: XBRL DOCUMENT v3.19.3
Basic and Diluted Net Loss Per Common Share (Tables)
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Schedule of Basic and Diluted Loss Per Share

Below are basic and diluted loss per share data for the three months ended September 30, 2019, which are in thousands except for share and per share data:

 

    Basic Calculation    

Effect of

Dilutive
Warrant
Securities

    Diluted Calculation  
Numerator:                        
Loss from continuing operations   $ (1,446 )   $ (144 )   $ (1,590 )
Deemed dividend and accretion of a discount     (345 )     -       (345 )
Net loss attributable to common stockholders   $ (1,791 )   $ (144 )   $ (1,935 )
                         
Denominator:                        
Number of shares used in per common share calculations:     2,127,293       -       2,127,293  
                         
Net loss per common share:                        
Loss from continuing operations   $ (0.68 )   $ (0.07 )   $ (0.75 )
Deemed dividend and accretion of a discount     (0.16 )     -       (0.16 )
Net loss attributable to common stockholders   $ (0.84 )   $ (0.07 )   $ (0.91 )

 

Below are basic and diluted loss per share data for the nine months ended September 30, 2019, which are in thousands except for share and per share data:

 

    Basic Calculation    

Effect of

Dilutive
Warrant
Securities

    Diluted Calculation  
Numerator:                        
Loss from continuing operations   $ (3,805 )   $ (753 )   $ (4,558 )
Deemed dividend and accretion of a discount     (2,703 )     -       (2,703 )
Net loss attributable to common stockholders   $ (6,508 )   $ (753 )   $ (7,261 )
                         
Denominator:                        
Number of shares used in per common share calculations:     1,269,106       -       1,269,106  
                         
Net loss per common share:                        
Loss from continuing operations   $ (3.00 )   $ (0.59 )   $ (3.59 )
Deemed dividend and accretion of a discount     (2.13 )     -       (2.13 )
Net loss attributable to common stockholders   $ (5.13 )   $ (0.59 )   $ (5.72 )

 

Below are basic and diluted loss per share data for the three months ended September 30, 2018, which are in thousands except for share and per share data:

 

    Basic Calculation     Effect of Dilutive
Warrant
Securities
    Diluted Calculation  
Numerator:                        
Loss from continuing operations   $ (2,967 )   $ (4,485 )   $ (7,452 )
Income from discontinued operations     (280 )     -       (280 )
Deemed dividend and accretion of a discount     (6,353 )     -       (6,353 )
Net loss attributable to common stockholders   $ (9,600 )   $ (4,485 )   $ (14,085 )
                         
Denominator:                        
Number of shares used in per common share calculations:     418,638       54       418,692  
                         
Net loss per common share:                        
Loss from continuing operations   $ (7.09 )   $ (10.71 )   $ (17.80 )
Loss from discontinued operations     (0.67 )     -       (0.67 )
Deemed dividend and accretion of a discount     (15.17 )     -       (15.17 )
Net loss attributable to common stockholders   $ (22.93 )   $ (10.71 )   $ (33.64 )

 

Below are basic and diluted loss per share data for the nine months ended September 30, 2018, which are in thousands except for share and per share data:

 

    Basic Calculation     Effect of Dilutive
Warrant
Securities
    Diluted Calculation  
Numerator:                        
Loss from continuing operations   $ (8,634 )   $ (6,396 )   $ (15,030 )
Income from discontinued operations     (324 )     -       (324 )
Deemed dividend and accretion of a discount     (13,686 )     -       (13,686 )
Net loss attributable to common stockholders   $ (22,644 )   $ (6,396 )   $ (29,040 )
                         
Denominator:                        
Number of shares used in per common share calculations:     243,543       59,933       303,476  
                         
Net loss per common share:                        
Loss from continuing operations   $ (35.45 )   $ (14.08 )   $ (49.53 )
Loss from discontinued operations     (1.33 )     0.26       (1.07 )
Deemed dividend and accretion of a discount     (56.20 )     11.10       (45.10 )
Net loss attributable to common stockholders   $ (92.98 )   $ (2.72 )   $ (95.70 )

XML 29 R42.htm IDEA: XBRL DOCUMENT v3.19.3
Equity (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
1 Months Ended 6 Months Ended 9 Months Ended
May 14, 2018
Aug. 31, 2018
Jul. 31, 2018
May 31, 2018
Jun. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Sep. 07, 2018
Jul. 12, 2018
Mar. 31, 2018
Gross proceeds of warrants exercise           $ 103 $ 1,652        
Proceeds from public offering $ 15,000                    
Preferred stock stated value           $ 0.01   $ 0.01      
Common stock state value           0.01   $ 0.01      
Conversion price per share $ 43.50         2.84     $ 14.40 $ 19.63  
Share price           $ 594.00          
Proceeds from issuance of units $ 6,800         $ 6,749        
Preferred stock issuance costs $ 600                    
ATM Equity Distribution Agreement [Member]                      
Sale of stock, shares           457,878          
Sale of stock value           $ 1,300          
Payments of stock issuance costs           200          
Additional offering value           1,200          
Maximum [Member] | ATM Equity Distribution Agreement [Member]                      
Common stock offering price           $ 2,500          
Public Offering [Member]                      
Stock issued price per shares $ 1,000                    
Debt conversion, description The Series B Preferred Stock is convertible into shares of common stock by dividing the stated value of $1,100 by: (i) for the first 40 trading days following the closing of this offering, $43.54 (the "Conversion Price"), (ii) after 40 trading days but prior to the 81st trading day, the lesser of (a) the Conversion Price and (b) 87.5% of the lowest volume weighted average price for our Common Stock as reported at the close of trading on the market reporting trade prices for the Common Stock during the five trading days prior to the 41st trading day, and (iii) after 80 trading days, the lesser of (a) the Conversion Price and (b) 87.5% of the lowest volume weighted average price for our Common Stock as reported at the close of trading on the market reporting trade prices for the Common Stock during the five trading days prior to the date of the notice of conversion. In the case of (ii)(b) and (iii)(b) above, the share price shall not be less than $2.94 (the "Floor Price"). Each of the Conversion Price and Floor Price is subject to adjustment in certain circumstances.                    
Conversion price per share $ 43.54                    
Debt instrument trading percentage 87.50%                    
Share price $ 2.94                    
August 2018 Warrant Exercise [Member] | Secondary Offering [Member]                      
Warrants converted into shares of common stock   8,069                  
July 2018 Warrant Exercise [Member] | Public Offering [Member]                      
Warrants converted into shares of common stock     998                
Warrant exercise     998                
May 2018 Warrant Exercise (July 2016 Warrants) [Member]                      
Warrants to purchase of common stock shares       4,861             27,733
Gross proceeds of warrants exercise       $ 300              
May 2018 Warrant Exercise (July 2016 Warrants) [Member] | Maximum [Member]                      
Warrants exercise price                     $ 360
May 2018 Warrant Exercise (July 2016 Warrants) [Member] | Minimum [Member]                      
Warrants exercise price                     $ 63.75
August 2019 Warrant Exercise (May 2018 Warrants) [Member]                      
Warrants to purchase of common stock shares           35,874          
Gross proceeds of warrants exercise           $ 100          
Convertible Preferred Stock and Warrants [Member]                      
Proceeds from public offering $ 15,000                    
May 2018 Warrants [Member]                      
Warrants to purchase of common stock shares 25                    
Warrants exercise price $ 48                    
Warrant term 5 years                    
Number of warrants issued 6,900                    
Warrants issuance cost $ 700                    
Series E Common Stock Purchase Warrant [Member]                      
Warrant exercise         22,279            
Warrants to purchase of common stock shares         27,733            
Gross proceeds of warrants exercise         $ 1,400            
Series E Common Stock Purchase Warrant [Member] | Maximum [Member]                      
Warrants exercise price         $ 360.00            
Series E Common Stock Purchase Warrant [Member] | Minimum [Member]                      
Warrants exercise price         63.75            
New Warrants [Member]                      
Warrants exercise price         $ 60.00            
Percentage of warrant shares issued for new warrants         100.00%            
Series B Convertible Preferred Stock [Member]                      
Convertible preferred stock shares conversion       4,072 4,072 3,825          
Preferred stock stated value $ 1,100                    
Common stock state value $ 1,100                    
Common Stock [Member]                      
Convertible preferred stock shares conversion 378,997     102,886 102,886 1,143,784          
Preferred Stock [Member]                      
Convertible preferred stock shares conversion 15,000                    
July Through December of 2018 [Member] | Series B Convertible Preferred Stock [Member]                      
Convertible preferred stock shares conversion           10,926          
July Through December of 2018 [Member] | Common Stock [Member]                      
Convertible preferred stock shares conversion           569,966          
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Leases (Details Narrative)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 07, 2019
ft²
Sep. 30, 2019
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2018
USD ($)
Jan. 02, 2019
USD ($)
Dec. 31, 2018
USD ($)
Leases [Abstract]            
Lease expired, description     The Company leases office, warehouse and manufacturing space under a single operating lease, which lease originally expired during 2019      
Lease extended period, description On June 7, 2019, the lease was amended to extend the rental period through 2024   The amended lease has two five-year extension options.      
Area of lease | ft² 54,428          
Reduction of lease area | ft² 29,534          
Operating lease right-of-use asset   $ 2,440 $ 2,440   $ 700
Operating lease liability   $ 2,343 2,343   $ 900  
Non-cash lease expense     $ 264    
Operating lease weighted-average discount rate   6.50% 6.50%      
Loss on amendment lease   $ 120        
XML 32 R32.htm IDEA: XBRL DOCUMENT v3.19.3
Basic and Diluted Net Loss Per Common Share - Schedule of Basic and Diluted Loss Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Earnings Per Share [Abstract]        
Loss from continuing operations, basic calculation $ (1,446) $ (2,967) $ (3,805) $ (8,634)
Income from discontinued operations   (280)   (324)
Deemed dividend and accretion of a discount, basic calculation (345) (6,353) (2,703) (13,686)
Net loss attributable to common stockholders, basic calculation (1,791) (9,600) (6,508) (22,644)
Loss from continuing operations, effect of dilutive warrant securities (144) (4,485) (753) (6,396)
Net loss attributable to common stockholders, effect of dilutive warrant securities (144) (4,485) (753) (6,396)
Loss from continuing operations, diluted calculation (1,590) (7,452) (4,558) (15,030)
Income from discontinued operations, diluted calculation   (280)   (324)
Deemed dividend and accretion of a discount, diluted calculation (345) (6,353) (2,703) (13,686)
Net loss attributable to common stockholders, diluted calculation $ (1,935) $ (14,085) $ (7,261) $ (29,040)
Number of shares used in per common share calculations, basic calculation 2,127,293 418,638 1,269,106 243,543
Number of shares used in per common share calculations, effect of dilutive warrant securities 54 59,933
Number of shares used in per common share calculations, diluted calculation 2,127,293 418,692 1,269,106 303,476
Loss from continuing operations, basic calculation $ (0.68) $ (7.09) $ (3.00) $ (35.45)
Loss from discontinued operations, basic calculation   (0.67)   (1.33)
Deemed dividend and accretion of a discount, basic calculation (0.16) (15.17) (2.13) (56.20)
Net loss attributable to common stockholders, basic calculation (0.84) (22.93) (5.13) (92.98)
Loss from continuing operations, Effect of Dilutive Warrant Securities (0.07) (10.71) (0.59) (14.08)
Loss from discontinued operations, Effect of Dilutive Warrant Securities     0.26
Deemed dividend and accretion of a discount, Effect of Dilutive Warrant Securities 11.10
Net loss attributable to common stockholders, Effect of Dilutive Warrant Securities (0.07) (10.71) (0.59) (2.72)
Loss from continuing operations, diluted calculation (0.75) (17.80) (3.59) (49.53)
Loss from discontinued operations, diluted calculation   (0.67)   (1.07)
Deemed dividend and accretion of a discount, diluted calculation (0.16) (15.17) (2.13) (45.10)
Net loss attributable to common stockholders, diluted calculation $ (0.91) $ (33.64) $ (5.72) $ (95.70)
XML 33 R36.htm IDEA: XBRL DOCUMENT v3.19.3
Fair Value Measurements (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Weighted average price stock exceeds $ 594.00  
Average daily trading value $ 126,000  
Warrants [Member]    
Weighted average price stock exceeds $ 3.60  
Black-Scholes-Merton Valuation Model [Member]    
Derivative liability $ 800 $ 1,600
Monte Carlo Simulation Valuation Model [Member]    
Derivative liability
XML 34 R15.htm IDEA: XBRL DOCUMENT v3.19.3
Equity
9 Months Ended
Sep. 30, 2019
Equity [Abstract]  
Equity

8. Equity

 

Preferred Stock Conversion

 

From July through December of 2018, Series B Convertible Preferred shareholders of the Company converted 10,926 shares of Series B Convertible Preferred Stock into 569,966 shares of common stock.

 

During May 2018 and June 2018, Series B Convertible Preferred shareholders of the Company converted a total of 4,072 shares of Series B Convertible Preferred Stock into 102,886 shares of common stock.

 

During the nine months ended September 30, 2019, Series B Convertible Preferred shareholders of the Company converted 3,825 shares of Series B Convertible Preferred Stock into 1,143,784 shares of common stock.

 

August 2018 Warrant Exercise

 

During August 2018, pursuant to the cashless exercise provision contained in their warrant, L2 Capital exercised its warrants and was issued 8,069 shares of common stock. The L2 Capital warrant is no longer outstanding.

 

July 2018 Warrant Exercise

 

During May 2018, the Company closed on a public offering, consisting of both convertible preferred stock and warrants. During July 2018, 998 of the warrants were exercised and converted into 998 shares of common stock.

 

May 2018 Warrant Exercise (July 2016 Warrants)

 

During March 2018, the Company repriced 27,733 warrants dated July 8, 2016, from $360 to $63.75 (for further description see Warrant Reprice March 2018 below). During May 2018, an additional 4,861 of the repriced warrants were exercised resulting in gross proceeds to the Company of $0.3 million.

 

August 2019 Warrant Exercise (May 2018 Warrants)

 

During the nine months ended September 30, 2019, 35,874 warrants were exercised resulting in gross proceeds to the Company of approximately $0.1 million.

 

May 2018 Unit Offering

 

On May 14, 2018, the Company closed on an underwritten public offering of units (“the Units”), consisting of convertible preferred stock and warrants, for gross proceeds of $15.0 million, which excludes underwriting discounts and commissions and offering expenses payable by SINTX. The offering was priced at a public offering price of $1,000 per unit. Each unit consisted of one share of Series B Convertible Preferred Stock, with a stated value of $1,100, and warrants to purchase up to 25 shares of common stock (the “May 2018 Warrants”). The May 2018 Warrants are initially exercisable at an exercise price of $48 per share and expire 5 years from the date of issuance. The Series B Preferred Stock is convertible into shares of common stock by dividing the stated value of $1,100 by: (i) for the first 40 trading days following the closing of this offering, $43.54 (the “Conversion Price”), (ii) after 40 trading days but prior to the 81st trading day, the lesser of  (a) the Conversion Price and (b) 87.5% of the lowest volume weighted average price for our Common Stock as reported at the close of trading on the market reporting trade prices for the Common Stock during the five trading days prior to the 41st trading day, and (iii) after 80 trading days, the lesser of  (a) the Conversion Price and (b) 87.5% of the lowest volume weighted average price for our Common Stock as reported at the close of trading on the market reporting trade prices for the Common Stock during the five trading days prior to the date of the notice of conversion. In the case of (ii)(b) and (iii)(b) above, the share price shall not be less than $2.94 (the “Floor Price”). Each of the Conversion Price and Floor Price is subject to adjustment in certain circumstances.

 

The Company raised $15.0 million associated with the issuance of the Units, with $6.8 million, net of issuance costs of $0.6 million, allocated to the preferred stock and $6.9 million, net of issuance costs of $0.7 million, allocated to the warrants. In association with the warrants that were recorded as a derivative liability, the Company immediately expensed approximately $0.7 million of issuance costs. The 15,000 preferred shares were initially convertible into 378,997 shares of common stock and had an effective conversion rate of $43.50 per share based on the proceeds that were allocated to them. The conversion price was adjusted to $19.63, effective July 12, 2018, and was adjusted again on September 7, 2018 to $14.40. During the nine months ended September 30, 2019 the conversion price was adjusted down on several occasions and ultimately settled at $2.84 as of September 30, 2019.

 

Warrant Reprice March 2018

 

During the six months ended June 30, 2018 the Company entered into a warrant amendment agreement (the “Amendment Agreement”) with certain holders of previously issued Series E Common Stock Purchase Warrants (collectively, “Investors”). In connection with that certain Series E Common Stock Purchase Warrant between the Company and Investors dated July 8, 2016, the Company issued to Investors warrants to purchase up to 27,733 shares of common stock (the “Warrant Shares”) at an exercise price of $360.00 per share, (the “Investors Warrants”). Under the terms of the Amendment Agreement, in consideration of Investors exercising 22,279 of the Investors Warrants (the “Warrant Exercise”), the exercise price per share of the Investors Warrants was reduced to $63.75 per share. 22,278 of the Investors Warrants were exercised resulting in gross proceeds to the Company of $1.4 million before payment of placement agent fees and costs. In addition, and as further consideration, the Company issued to Investors new warrants to purchase up to the number of shares of common stock equal to 100% of the number of Warrant Shares issued pursuant to the Warrant Exercise at an exercise price per share equal to $60.00 per share.

 

2019 ATM Stock Offerings

 

During the nine months ended September 30, 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. The Company sold 457,878 shares during the nine months ended September 30, 2019, raising approximately $1.3 million net of issuance cost of $0.2 million. The Company is eligible to raise an additional $1.2 million under this offering.

 

XML 35 R11.htm IDEA: XBRL DOCUMENT v3.19.3
Intangible Assets
9 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

4. Intangible Assets

 

Intangible assets consisted of the following (in thousands):

 

    September 30, 2019     December 31, 2018  
Trademarks   $ 50     $ 50  
Less: accumulated amortization     (7 )     (4 )
    $ 43     $ 46  

 

XML 36 R19.htm IDEA: XBRL DOCUMENT v3.19.3
Discontinued Operations
9 Months Ended
Sep. 30, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

12. Discontinued Operations

 

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

 

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

 

XML 37 R29.htm IDEA: XBRL DOCUMENT v3.19.3
Leases (Tables)
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Schedule of Operating Lease Future Minimum Payments

Operating lease future minimum payments together with the present values as of September 30, 2019, are summarized as follows:

 

    September 30, 2019  
2019   $ 245  
2020     494  
2021     509  
2022     525  
2023     540  
Thereafter     556  
Total future minimum lease payments     2,869  
Less amounts representing interests     (435 )
Present value of lease liability     2,434  
         
Current-portion of operating lease liability     475  
Long-term portion operating lease liability   $ 1,959  

 

XML 38 R25.htm IDEA: XBRL DOCUMENT v3.19.3
Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible Assets

Intangible assets consisted of the following (in thousands):

 

    September 30, 2019     December 31, 2018  
Trademarks   $ 50     $ 50  
Less: accumulated amortization     (7 )     (4 )
    $ 43     $ 46  

 

XML 39 R6.htm IDEA: XBRL DOCUMENT v3.19.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash flow from operating activities    
Net loss from continuing operations $ (3,805) $ (8,958)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation expense 79 75
Non-cash lease expense 264
Amortization of intangible assets 4
Amortization of lease incentive for tenant improvements 25
Non-cash interest income (344)
Non-cash interest expense 956
Loss on extinguishment of debt 340
Stock based compensation 2 40
Change in fair value of derivative liabilities (754) (6,500)
Loss on extinguishment of derivative liabilities 1,252
Loss on disposal of equipment 54
Loss on impairment of goodwill 6,162
Bad debt expense (3)
Changes in operating assets and liabilities:    
Trade accounts receivable 154
Prepaid expenses and other current assets 33 (246)
Inventories (35) (47)
Accounts payable and accrued liabilities 83 (899)
Net cash used in operating activities - continuing operations (4,322) (7,746)
Net cash used in operating activities - discontinued operations (207)
Net cash used in operating activities (4,322) (7,953)
Cash flows from investing activities    
Purchase of property and equipment (141) (152)
Proceeds from notes receivable, net of imputed interest 1,111
Proceeds from sale of property and equipment 8
Purchase of intangible asset (50)
Net cash used in investing activities 970 (194)
Cash flows from financing activities    
Proceeds from issuance of stock in connection with exercise of warrants, net of issuance costs 103 1,652
Proceeds from issuance of common stock, net of fees ($245) 1,285
Proceeds from issuance of preferred stock, net of issuance costs ($668) 6,749
Proceeds from issuance of warrant derivative liabilities, net of issuance costs ($682) 7,577
Payments on operating lease liability (557)
Proceeds from issuance of debt 705
Payments on debt (2,282)
Net cash provided by financing activities 831 14,401
Net increase (decrease) in cash and cash equivalents (2,521) 6,254
Cash and cash equivalents at beginning of period 5,447 539
Cash and cash equivalents at end of period 2,926 6,793
Noncash investing and financing activities    
Right-of-use assets and assumption of operating lease liability 2,704
Reduction of derivative liability due to exercise of warrants 44
Hercules and MEF I, LP/Anson Investments Debt Exchange 2,265
Issuance of common stock in exchange for reduction in debt 1,453
Extinguishment of derivative liabilities through exercise of warrants 565
Warrants issued in association with debt 98
Issuance of debt for equipment 21
Supplemental cash flow information    
Cash paid for interest $ 2 $ 405
XML 40 R21.htm IDEA: XBRL DOCUMENT v3.19.3
Subsequent Events
9 Months Ended
Sep. 30, 2019
Subsequent Events [Abstract]  
Subsequent Events

14. Subsequent Events

 

On November 1, 2019, the Company filed a Form S-1 Registration Statement with the United States Securities and Exchange Commission to distribute to holders of the Company’s common stock, Series B Preferred Stock, and holders of our May 2018 Warrants, as of the Record Date, non-transferable Subscription Rights to purchase Units at a price of $1,000 per Unit. The Subscription Rights will not be tradable. Each Unit consists of one share of our Preferred Stock and yet to be decided number of Warrants. The common stock to be issued upon conversion of the Preferred Stock or exercise of the Warrants, like our existing shares of common stock, will be traded on the NASDAQ Capital Market under the symbol “SINT.”

XML 41 R2.htm IDEA: XBRL DOCUMENT v3.19.3
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 2,926 $ 5,447
Trade accounts receivable, net of allowance of $0 and $56, respectively 113 263
Prepaid expenses and other current assets 137 171
Inventories, net 86 52
Notes receivable, current portion 1,603 1,084
Total current assets 4,865 7,017
Inventories, net 625 624
Property and equipment, net 207 124
Intangible assets, net 43 46
Long-term note receivable, net of current portion 2,383 3,669
Operating lease right-of-use-asset 2,440
Other long-term assets 35 35
Total assets 10,598 11,515
Current liabilities:    
Accounts payable 166 301
Accrued liabilities 1,066 838
Derivative liabilities, current portion 317 1,062
Current portion of operating lease liability 475 169
Current portion of debt 6
Other current liabilities 23 10
Total current liabilities 2,053 2,380
Operating lease liability, net of current portion 1,959
Derivative liabilities, net of current portion 452 504
Long term debt 15
Other long-term liabilities 91 232
Total liabilities 4,570 3,116
Commitments and contingencies
Stockholders' equity:    
Convertible preferred stock, $0.01 par value, 130,000,000 shares authorized; 249 shares and 4,074 shares issued and outstanding at September 30, 2019 and December 31, 2018.
Common stock, $0.01 par value, 250,000,000 shares authorized; 2,363,991 shares, and 726,455 shares issued and outstanding at September 30, 2019 and December 31, 2018. 24 7
Additional paid-in capital 239,090 237,673
Accumulated deficit (233,086) (229,281)
Total stockholders' equity 6,028 8,399
Total liabilities and stockholders' equity $ 10,598 $ 11,515
XML 42 R40.htm IDEA: XBRL DOCUMENT v3.19.3
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Payables and Accruals [Abstract]    
Payroll and related expense $ 454 $ 388
Resterilization and repackaging costs 365 344
Other 247 106
Total accrued liabilities $ 1,066 $ 838
XML 43 R44.htm IDEA: XBRL DOCUMENT v3.19.3
Note Receivable (Details Narrative) - USD ($)
9 Months Ended
Oct. 02, 2018
Sep. 30, 2019
Receivables [Abstract]    
Non interest note receivable $ 6,000,000 $ 4,000,000
Debt description The 36-month term of the note receivable requires 18 payments of $138,889 followed by 18 payments of $194,444, with maturity of the note receivable on October 1, 2021.  
Payments of notes receivable $ 138,889 $ 194,444
Maturity date of note receivable   Oct. 01, 2021
Debt instrument imputed interest percentage 10.00%  
Imputed interest $ 915,725  
Imputed interest, description The note receivable includes an imputed interest rate of 10%, which totaled $915,725 as of October 1, 2018, and has a 36-month amortization.  
XML 44 R48.htm IDEA: XBRL DOCUMENT v3.19.3
Subsequent Events (Details Narrative)
Nov. 02, 2019
$ / shares
Subsequent Event [Member] | Holders [Member] | Series B Preferred Stock [Member]  
Purchase price per units $ 1,000
XML 45 R17.htm IDEA: XBRL DOCUMENT v3.19.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

10. Commitments and Contingencies

 

The Company has executed agreements with certain executive officers of the Company which, upon the occurrence of certain events related to a change in control, call for payments to the executives up to three times their annual salary and accelerated vesting of previously granted stock options.

 

From time to time, the Company is subject to various claims and legal proceedings covering matters that arise in the ordinary course of its business activities. Management believes any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, operating results or cash flows.

 

XML 46 R13.htm IDEA: XBRL DOCUMENT v3.19.3
Accrued Liabilities
9 Months Ended
Sep. 30, 2019
Payables and Accruals [Abstract]  
Accrued Liabilities

6. Accrued Liabilities

 

Accrued liabilities consisted of the following (in thousands):

 

    September 30, 2019     December 31, 2018  
Payroll and related expense   $ 454     $ 388  
Resterilization and repackaging costs     365       344  
Other     247       106  
    $ 1,066     $ 838  

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Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($)
$ in Thousands
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 12, 2019
Jul. 26, 2019
Jun. 04, 2019
Jan. 02, 2019
May 14, 2018
Nov. 30, 2019
Nov. 30, 2019
Mar. 31, 2018
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Reverse stock split, description   1 for 30 reverse stock split                      
Loss from continuing operations                 $ (1,446) $ (2,967) $ (3,805) $ (8,634)  
Net cash used in operating activities                     (4,322) (7,746)  
Accumulated deficit                 (233,086)   (233,086)   $ (229,281)
Proceeds from issuance of private placement               $ 1,400          
Proceeds from issuance of public offering         $ 15,000                
Common stock issued for cash                     $ 1,285    
Common stock issued for cash, shares                     457,878    
Operating lease asset       $ 700         2,440   $ 2,440  
Operating lease liability       900         2,343   2,343    
Right-of-use assets and assumption of operating lease liability       $ 700             2,704  
Increase in research and development expenses                         $ 400,000
Retail Spine Business [Member]                          
Related party note payable assumed amount                 $ 2,500   2,500    
Subsequent Event [Member] | Retail Spine Business [Member] | Next Seven Months [Member]                          
Proceeds from sales of business           $ 1,000              
Subsequent Event [Member] | Retail Spine Business [Member] | Following Eighteen Months [Member]                          
Proceeds from sales of business             $ 3,500            
Preferred Stock [Member]                          
Common stock issued for cash                        
Common stock issued for cash, shares                        
Issuance of common stock due to conversion of preferred stock, shares                     (3,825) (10,598)  
Common Stock [Member]                          
Common stock issued for cash                     $ 5    
Common stock issued for cash, shares                     457,878    
Issuance of common stock due to conversion of preferred stock, shares                     1,143,784 544,911  
Equity Distribution Agreement [Member]                          
Common stock offering price, description (i) the sale of Shares having an aggregate offering price of $2.5 million, (ii) the termination of the Distribution Agreement by either Maxim or the Company upon the provision of fifteen (15) days written notice, or (iii) September 12, 2020.                        
Percentage of maximum transaction fee     4.25%                    
Additional common stock offering price $ 1,200                        
Equity Distribution Agreement [Member] | Maximum [Member]                          
Common stock offering price 2,500   $ 1,600                    
Equity Distribution Agreement [Member] | Minimum [Member]                          
Common stock offering price $ 1,600                        
XML 49 R34.htm IDEA: XBRL DOCUMENT v3.19.3
Inventories - Schedule of Components of Inventory (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Inventory Disclosure [Abstract]    
Raw materials $ 625 $ 624
Intermediate goods 16
WIP 70 47
Finished goods 5
Inventory $ 711 $ 676
XML 50 R38.htm IDEA: XBRL DOCUMENT v3.19.3
Fair Value Measurements - Schedule of Fair Value Measurement Hierarchy of Derivative Liability (Details) - Common Stock Warrants [Member] - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Beginning balance $ (1,566) $ (1,357)
Issuances of warrants classified as derivatives   (7,577)
Change in fair value 754 6,500
Exercise of warrants 44 575
Other, net (1) (212)
Ending balance $ (769) $ (2,071)
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Stock-Based Compensation
9 Months Ended
Sep. 30, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

9. Stock-Based Compensation

 

A summary of the Company’s outstanding stock option activity for the nine months ended September 30, 2019 is as follows:

 

    Options    

Weighted-
Average

Exercise Price

   

Weighted-

Average
Remaining
Contractual
Life
(Years)

    Intrinsic
Value
 
As of December 31, 2018     377     $ 7,653       6.0     $ -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited     -       -       -       -  
Expired     -       -       -       -  
As of September 30, 2019     377     $ 7,653       5.6     $ -  
Exercisable as of September 30, 2019     377     $ 7,653       5.6     $ -  

 

The Company estimates the fair value of each stock option on the grant date using the Black-Scholes-Merton valuation model, which requires several estimates including an estimate of the fair value of the underlying common stock on grant date. The expected volatility was based on an average of the historical volatility of a peer group of similar companies. The expected term was calculated utilizing the simplified method. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option.

 

XML 54 R12.htm IDEA: XBRL DOCUMENT v3.19.3
Fair Value Measurements
9 Months Ended
Sep. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements

5. Fair Value Measurements

 

Financial Instruments Measured and Recorded at Fair Value on a Recurring Basis

 

The Company has issued certain warrants to purchase shares of common stock, which are considered derivative liabilities because they have registration rights which could require a cash settlement and are re-measured to fair value at each reporting period in accordance with accounting guidance. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

 

  Level 1 - quoted market prices for identical assets or liabilities in active markets.
     
  Level 2 - observable prices that are based on inputs not quoted on active markets but corroborated by market data.
     
  Level 3 - unobservable inputs reflecting management’s assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

 

The Company classifies assets and liabilities measured at fair value in their entirety based on the lowest level of input that is significant to their fair value measurement. No financial assets were measured on a recurring basis as of September 30, 2019 and December 31, 2018. The following tables set forth the financial liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2019 and December 31, 2018:

 

    Fair Value Measurements as of September 30, 2019  
Description   Level 1     Level 2     Level 3     Total  
Derivative liability                                
Common stock warrants   $ -     $ -     $ 769     $ 769  

 

    Fair Value Measurements as of December 31, 2018  
Description   Level 1     Level 2     Level 3     Total  
Derivative liability                                
Common stock warrants   $ -     $ -     $ 1,566     $ 1,566  

 

The Company did not have any transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy during the nine months ended September 30, 2019 and 2018.

 

    Common Stock
Warrants
 
Balance at December 31, 2017   $ (1,357 )
Issuances of warrants classified as derivatives     (7,577 )
Change in fair value     6,500  
Exercise of warrants     575  
Other, net     (212 )
Balance at September 30, 2018   $ (2,071 )
         
Balance at December 31, 2018   $ (1,566 )
Change in fair value     754  
Exercise of warrants     44  
Other, net     (1 )
Balance at September 30, 2019   $ (769 )

  

Common Stock Warrants

 

The Company has issued certain warrants to purchase shares of common stock, which are considered derivative liabilities because they have registration rights which could require a cash settlement and are re-measured to fair value at each reporting period in accordance with accounting guidance. At September 30, 2019 and December 31, 2018, approximately $0.8 million and $1.6 million, respectively, of the derivative liability was calculated using the Black-Scholes-Merton valuation model. At September 30, 2019 and December 31, 2018, no significant amount of the derivative liability was calculated using the Monte Carlo Simulation valuation model.

 

The assumptions used in estimating the common stock warrant liability using the Black-Scholes-Merton valuation model as of September 30, 2019 and December 31, 2018 were as follows:

 

    September 30, 2019     December 31, 2018  
Weighted-average risk-free interest rate     1.56 %     2.51 %
Weighted-average expected life (in years)     3.61       0.9  
Expected dividend yield     - %     - %
Weighted-average expected volatility     64 %     157 %

 

The assumptions used in estimating the common stock warrant liability using the Monte Carlo Simulation valuation model at September 30, 2019 and December 31, 2018 were as follows:

 

    September 30, 2019     December 31, 2018  
Weighted-average risk-free interest rate     1.59 %     2.46 %
Weighted-average expected life (in years)     2.16       3.1  
Expected dividend yield     - %     - %
Weighted average expected volatility     65 %     68 %

 

In addition, if any time after the second anniversary of the issuance of the warrant, both: (1) the 30-day volume weighted average price of the Company’s stock exceeds $594.00; and (2) the average daily trading volume for such 30-day period exceeds $126 million, the Company may call this warrant for $3.60 per share. For those warrants that have a call provision, management believes the Monte Carlo Simulation valuation model provides a better estimate of fair value for the warrants issued during 2018 and 2017 than the Black-Scholes-Merton valuation model.

 

Other Financial Instruments

 

The Company’s recorded values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded value of debt approximates the fair value as the interest rate approximates market interest rates.

XML 55 R39.htm IDEA: XBRL DOCUMENT v3.19.3
Fair Value Measurements - Schedule of Assumptions Used in Estimating Fair Value (Details) - Common Stock Warrants [Member]
Sep. 30, 2019
Dec. 31, 2018
Black-Scholes-Merton Valuation Model [Member] | Weighted-Average Risk-Free Interest Rate [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Fair value assumptions, measurement input, percentages 1.56 2.51
Black-Scholes-Merton Valuation Model [Member] | Weighted-Average Expected Life (in years) [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Fair value assumptions, measurement input, term 3 years 7 months 10 days 10 months 25 days
Black-Scholes-Merton Valuation Model [Member] | Expected Dividend Yield [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Fair value assumptions, measurement input, percentages 0.00 0.00
Black-Scholes-Merton Valuation Model [Member] | Weighted-Average Expected Volatility [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Fair value assumptions, measurement input, percentages 64 157
Monte Carlo Simulation Valuation Model [Member] | Weighted-Average Risk-Free Interest Rate [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Fair value assumptions, measurement input, percentages 1.59 2.46
Monte Carlo Simulation Valuation Model [Member] | Weighted-Average Expected Life (in years) [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Fair value assumptions, measurement input, term 2 years 1 month 27 days 3 years 1 month 6 days
Monte Carlo Simulation Valuation Model [Member] | Expected Dividend Yield [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Fair value assumptions, measurement input, percentages 0.00 0.00
Monte Carlo Simulation Valuation Model [Member] | Weighted-Average Expected Volatility [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Fair value assumptions, measurement input, percentages 65 68
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Basic and Diluted Net Loss Per Common Share (Details Narrative) - shares
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Earnings Per Share [Abstract]    
Potentially dilutive securities 500,000 800,000
XML 57 R35.htm IDEA: XBRL DOCUMENT v3.19.3
Intangible Assets - Schedule of Intangible Assets (Details) - Trademarks [Member] - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]    
Intangible assets, gross $ 50 $ 50
Less accumulated amortization (7) (4)
Intangible assets, net $ 43 $ 46
XML 58 R24.htm IDEA: XBRL DOCUMENT v3.19.3
Inventories (Tables)
9 Months Ended
Sep. 30, 2019
Inventory Disclosure [Abstract]  
Schedule of Components of Inventory

Inventories consisted of the following (in thousands):

 

    September 30, 2019     December 31, 2018  
Raw materials   $ 625     $ 624  
Intermediate goods     16       -  
WIP     70       47  
Finished goods     -       5  
    $ 711     $ 676  

 

XML 59 R7.htm IDEA: XBRL DOCUMENT v3.19.3
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Common Stock [Member]    
Fee & issuance costs $ 245  
Preferred Stock [Member]    
Fee & issuance costs   $ 668
Warrant Derivative [Member]    
Fee & issuance costs   $ 682
XML 60 R20.htm IDEA: XBRL DOCUMENT v3.19.3
Leases
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Leases

13. Leases

 

The Company leases office, warehouse and manufacturing space under a single operating lease, which lease originally expired during 2019 (see Note 1 under Accounting Pronouncements Adopted During the Nine Months Ended September 30, 2019). On June 7, 2019, the lease was amended to extend the rental period through 2024 and reduce the amount of space leased from 54,428 square feet to 29,534 square feet. The new rent is effective the earlier of January 1, 2020 or when the Company vacates the portion of the property that will not be part of the new lease. The amended lease has two five-year extension options. As of September 30, 2019, the operating lease right-of-use asset totaled approximately $2.5 million and the operating lease liability totaled approximately $2.4 million. Non-cash operating lease expense during the nine months ended September 30, 2019, totaled approximately $0.3 million. As of September 30, 2019, the weighted-average discount rate for the Company’s operating lease totaled 6.5%. During the three months ended September 30, 2019, the Company recorded a loss of approximately $0.12 million in association with the lease amendment.

 

Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. The Company accounts for lease components separately from the non-lease components. The depreciable life of the assets and leasehold improvements are limited by the expected lease term.

 

Operating lease future minimum payments together with the present values as of September 30, 2019, are summarized as follows:

 

    September 30, 2019  
2019   $ 245  
2020     494  
2021     509  
2022     525  
2023     540  
Thereafter     556  
Total future minimum lease payments     2,869  
Less amounts representing interests     (435 )
Present value of lease liability     2,434  
         
Current-portion of operating lease liability     475  
Long-term portion operating lease liability   $ 1,959  

XML 61 R3.htm IDEA: XBRL DOCUMENT v3.19.3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Allowance of trade accounts receivable $ 0 $ 56
Convertible preferred stock, par value $ 0.01 $ 0.01
Convertible preferred stock, shares authorized 130,000,000 130,000,000
Convertible preferred stock, shares issued 249 4,074
Convertible preferred stock, shares outstanding 249 4,074
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 250,000,000 250,000,000
Common stock, shares issued 2,363,991 726,455
Common stock, shares outstanding 2,363,991 726,455
XML 62 R28.htm IDEA: XBRL DOCUMENT v3.19.3
Stock-Based Compensation (Tables)
9 Months Ended
Sep. 30, 2019
Share-based Payment Arrangement [Abstract]  
Summary of Stock Option Activity

A summary of the Company’s outstanding stock option activity for the nine months ended September 30, 2019 is as follows:

 

    Options    

Weighted-
Average

Exercise Price

   

Weighted-

Average
Remaining
Contractual
Life
(Years)

    Intrinsic
Value
 
As of December 31, 2018     377     $ 7,653       6.0     $ -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited     -       -       -       -  
Expired     -       -       -       -  
As of September 30, 2019     377     $ 7,653       5.6     $ -  
Exercisable as of September 30, 2019     377     $ 7,653       5.6     $ -  

 

XML 63 R41.htm IDEA: XBRL DOCUMENT v3.19.3
Debt (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
1 Months Ended 9 Months Ended
May 14, 2018
Jan. 03, 2018
Jul. 28, 2017
Jun. 30, 2014
Sep. 30, 2019
Sep. 30, 2019
Sep. 30, 2018
Oct. 02, 2018
Jan. 31, 2018
Percentage of loan bear interest rate               10.00%  
Total payoff amount           $ 2,282    
Debt maturity date           Oct. 01, 2021      
L2 Capital Debt [Member]                  
Debt principal amount $ 700               $ 840
Debt purchase price                 $ 750
Warrant to purchase shares of common stock                 68,257
Warrant exercise price per share                 $ 3.31
Percentage of loan bear interest rate                 8.00%
Percentage of default interest rate                 18.00%
Gross proceeds of convertible preferred stock and warrants 15,000                
Total payoff amount 1,100                
Interest amount 400                
Hercules Term Loan [Member]                  
Debt principal amount   $ 2,300              
Hercules Term Loan [Member] | Closing Date [Member]                  
Term loan fee amount       $ 200          
Final payment fee for debt       1,700          
Hercules Term Loan [Member] | Loan and Security Agreement [Member]                  
Debt principal amount       $ 20,000          
Debt maturity date       Jan. 01, 2018          
Hercules Term Loan [Member] | Senior Secured Convertible Promissory Notes One [Member]                  
Debt principal amount   1,100              
Hercules Term Loan [Member] | Senior Secured Convertible Promissory Notes Two [Member]                  
Debt principal amount   $ 2,200              
Exchange Notes [Member]                  
Percentage of loan bear interest rate   15.00%              
Debt maturity date   Feb. 03, 2019              
MEF I, L.P. and Anson Investments [Member]                  
Debt principal amount 1,400                
Gross proceeds of convertible preferred stock and warrants 15,000                
Total payoff amount 1,600                
Interest amount $ 200                
North Stadium Loan [Member] | North Stadium Investments, LLC [Member]                  
Debt principal amount     $ 2,500            
Warrant to purchase shares of common stock     1,834            
Warrant exercise price per share     $ 151.20            
Percentage of loan bear interest rate     10.00%            
Debt maturity date     Jul. 28, 2018            
Warrant term     5 years            
Fair value of warrants     $ 200            
Equipment Loan [Member]                  
Debt principal amount         $ 20 $ 20      
Percentage of loan bear interest rate         12.00% 12.00%      
Debt monthly payments         $ 1        
XML 64 R45.htm IDEA: XBRL DOCUMENT v3.19.3
Discontinued Operations (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
Oct. 02, 2018
Dec. 31, 2018
Asset Purchase Agreement [Member]    
Total consideration $ 8,500  
Agreement extension description This agreement extends for a total of 24 months, ending on September 30, 2020.  
Sterilization and repackaging cost $ 500  
Asset Purchase Agreement [Member] | Related Party Note Payable [Member]    
Total consideration 2,500  
Asset Purchase Agreement [Member] | Interest Note Receivable [Member]    
Total consideration $ 6,000  
Retail Spine Business [Member]    
Gain on the sale of business   $ 1,400