Sintx Technologies, Inc. (SINT) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the SINTX Technologies Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, today's call is being recorded. I would like to turn the call over to SINTX Technologies Chief Legal Officer, Kevin Ontiveros.

Thank you, operator, and good afternoon, everyone. Earlier today, SINTX Technologies issued its financial results for the quarter ended June 30, 2026, and filed its quarterly report on Form 10-Q with the Securities and Exchange Commission. The earnings release and Form 10-Q are available in the Investor Relations section of the company's website, and a replay of this call will be available following the conclusion of today's event. Before we begin, I would like to remind everyone that statements made during this call that are not statements of historical fact, are forward-looking statements. These statements include, among other things, expectations regarding revenue growth, customer orders, production and shipping timing, commercialization, market adoption, strategic relationships, operating performance, cost management, liquidity, financing, future business opportunities, and revenue guidance and expectations regarding the timing and amount of revenue recognition. Forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Please refer to the company's most recent Form 10-K, today's Form 10-Q, and other filings with the SEC for a discussion of these risks. SINTX undertakes no obligation to update forward-looking statements except as required by law. Unless otherwise stated, the financial results discussed today are presented in accordance with U.S. generally accepted accounting principles. Joining today's call are Eric Olson, Chairman and Chief Executive Officer; and Kevin Trask, Chief Financial Officer. Eric will begin with a review of the quarter and the company's commercial priorities. Kevin will then discuss the financial results and liquidity. Eric will conclude with the priorities for the remainder of 2026. Eric, please go ahead.

Thank you, Kevin, and thank you to everyone joining us today. The second quarter represented meaningful progress in SINTX's transition from a development company to a commercially-focused biomaterials and medical technology platform company. Our financial results show that commercial activity is beginning to become more visible. We also make clear that our work is not complete. We must convert demand into revenue, establish repeatable medical device commercialization efforts, align our cost structure with the scale of the business, and maintain adequate liquidity. So let me begin with 3 key takeaways from the quarter. First, commercial activity is beginning to show up in our reported results. Second quarter revenue increased 199% year-over-year to $452,000. And product revenue increased 347% to $447,000. Gross profit increased 388% to $278,000. And gross margins improved to approximately 62% compared with 38% a year ago. These percentages are calculated obviously from a small revenue base, and we do not want to overstate them. The important point is that higher product sales, improved pricing on certain OEM products, a favorable sales mix, and the early stage of commercial sales of the SiNAPTIC Osteotomy Foot & Ankle Wedge System are beginning to move the financial statements in the right direction. Second, our business model is taking shape around 2 complementary sources of value. One, our contract manufacturing and OEM activities can provide near-term revenue, customer validation, manufacturing utilization, and operating leverage. Two, our proprietary silicon nitride medical platform can create differentiated products and potential OEM licensing, distribution, and strategic partnership opportunities with greater long-term value. Both rely on the same foundation: material science, precision ceramic processing, quality systems, regulatory experience, and a fully U.S.-based manufacturing facility. Third, we completed financing transactions generating approximately $5 million in gross proceeds, consisting primarily of the June private placement and sales under our ATM program. These financing transactions provided additional capital during the quarter. However, liquidity remains a central priority. On June 30, we had approximately $3.6 million in cash and cash equivalents, and $4.8 million in stockholders' equity. As disclosed in our Form 10-Q, substantial doubt remains regarding our ability to continue as a going concern. We do not minimize that disclosure. Our responsibility is to increase revenue, manage operating and working capital requirements, pursue cost and efficiency actions, and access capital prudently, while focusing resources on the opportunities most likely to create value. Turning first to contract manufacturing. Product revenue growth during the quarter was driven primarily by increased sales in our OEM industrial manufacturing business, reflecting improved customer demand and pricing. We view this business as an important commercial foundation. Customers rely on SINTX for technically demanding components used in applications where mechanical strength, thermal stability, wear and corrosion resistance, manufacturing consistency, and quality control are critical. In June, we announced that SINTX had received purchase orders from multiple existing contract manufacturing customers with an aggregate value exceeding $3.2 million. Subject to customer requirements, manufacturing schedules, and commercial terms, production and shipment activities associated with these purchase orders have begun and will continue into 2027. The value of those purchase orders is meaningful, relative to our current revenue base, but the announcement is the beginning of the work rather than the completion of it. The milestones that matter are qualified production, material availability, manufacturing yield, quality release, on-time shipment, customer acceptance, recognized revenue, cash collection, and repeat orders. Because these are technically demanding components, timing may vary. We will distinguish clearly between order value and recognized revenue, and will update investors as execution progresses. Our manufacturing priorities are straightforward. We are aligning production schedules to customer requirements, managing the working capital needed to support raw materials and work in progress, while protecting quality and delivery performances and evaluating where capacity, process efficiency, or external support may be required. We intend to remain disciplined. Growth that creates excessive work capital pressure or compromised quality would not be sustainable. Turning to our proprietary medical portfolio. The SiNAPTIC Foot & Ankle Osteotomy Wedge System remains our lead commercial product. This system received FDA 510(k) clearance in late 2025. In March 2026, our first SiNAPTIC wedges were used in a reconstructive foot and ankle procedure in the United States, and we recognized initial commercial revenue during our limited use review. Those are important commercialization milestones. They demonstrate that SINTX has moved beyond research and regulatory development into clinical use and commercial activity. We are focused on building adoption and increasing commercial activity, although the timing and amount of future revenue will depend on surgeon adoption, channel development, product availability, and other potential market factors. FDA clearance and first clinical use, however, do not by themselves create a durable medical device business. Commercialization requires surgeon education, case support, channel development, product availability, inventory management, reliable manufacturing, reimbursement awareness, and ongoing clinical and market feedback. Our near-term objective is to establish a disciplined commercial foundation for the Foot & Ankle Wedge System rather than to pursue growth at any cost. We are evaluating the most capital-efficient routes to market, including direct-to-surgeon engagement, distributor relationships, and broader strategic relationships. The right model must provide credible access to foot and ankle surgeons, appropriate clinical support, and an economic structure that will allow SINTX to build adoption without creating a sales infrastructure that is disproportionate to current revenue. Silicon nitride has a combination of properties that we believe can be valuable in musculoskeletal applications, including biocompatibility, bone affinity, strength, imaging compatibility, hydrophilicity, and surface characteristics studied for resistance to bacterial adhesion and clear antipathogenic characteristics. Beyond the wedge system, SINTX's broader opportunities to apply silicon nitride across multiple formats including monolithic implants, powders, coatings, porous structures, and polymer composites. Potential applications span orthopedics, spine, dental, wound care, and other specialized medical markets. The breadth of the platform is valuable, but it also creates a need for us to focus. We are prioritizing programs based on time to revenue, required capital, regulatory pathways, partner interest, manufacturing fit, and strategic value. In the near term, that means concentrating on 3 categories of activity. The first is converting contract manufacturing demand into revenue and repeat business. The second is building a credible commercial path for the SiNAPTIC Foot & Ankle Wedge System. The third is advancing OEM licensing and strategic discussions where a partner can provide market access, development funding, manufacturing volume, or another meaningful source of value. We do not believe SINTX must build every commercial capability internally. As discussed in today's business update, we have engaged one of our board members, Chris Lyons, and his company, Southern Metrics, to help coordinate and evaluate inbound strategic opportunities involving potential commercial partnerships, licensing relationships, and other business development initiatives. That engagement should not be interpreted to mean that any particular transaction is pending or will occur. The quarter also reflects our shift towards commercialization in the way expenses are classified. Sales and marketing expenses increased as we supported product launch activity. Research and development expenses declined, but the majority of that change resulted from the reallocation of certain overhead costs to general and administrative expenses as our operating focus changed. This is important. The reduction in reported R&D expense should not be interpreted as an equivalent reduction in underlying technical activity. At the same time, the current cost structure is highly relative to our revenue base. We recognize that. Management is evaluating staffing, outside services, facilities, project priorities, working capital, and other spending through the lens of commercial return and strategic value. Our goal is not simply to reduce spending in isolation. It is to deploy capital where it can support revenue conversion, customer delivery, medical adoption, or transactions that improve the company's long-term position. We also recognize that shareholders have heard the potential of silicon nitride for many years. The standard now is execution. Scientific publications, intellectual property, manufacturing capabilities, and regulatory clearances are important assets, but the milestones investors should use to judge us are shipments, revenue, gross profit, surgeon use, channel development, partner conversion, cash discipline, and access to capital on reasonable terms. Our second quarter results are an early step in that direction. They do not resolve the company's challenges, but they provide evidence that commercial activity can translate into financial progress. We intend to build credibly, quarter by quarter, by being transparent about what has been accomplished, what remains at risk, and what management is doing next. With that, I will turn the call over to our CFO, Kevin Trask, for a detailed review of the financial results. Kevin?

Thank you, Eric, and good afternoon, everyone. For the second quarter of 2026, total revenue was $452,000 compared with $151,000 in the second quarter of 2025, an increase of 199%. Product revenue was $447,000 compared with $100,000 in the prior year period, an increase of 347%. Grant and contract revenue was $5,000 compared with $51,000 a year ago. Gross profit was $278,000 compared with $57,000 in the prior year quarter. Gross margin was 61.5% compared with 37.7% a year ago. The improvement reflects cost of revenue increasing at a lower rate than revenue, supported by higher margin sales, a favorable sales mix, and improved pricing on certain OEM products. Investors should not assume that the second quarter margin will repeat each quarter. Gross margin can vary based on product mix, pricing, manufacturing efficiency, customer demand, and the mix of product and grant and contract revenue. Total operating expenses were $3.2 million compared with $2.7 million in the second quarter of 2025, an increase of 16%. Research and development expense was $573,000 compared with $1.2 million in the prior year period, a decrease of 54%. The decrease was primarily due to the reallocation of approximately $700,000 of overhead costs to general and administrative expense. Other research and development expenses were generally consistent with the prior year period. General and administrative expense was $2.3 million compared with $1.4 million in the prior year period, an increase of 64%. The increase primarily reflected higher headcount costs, including non-cash stock-based compensation, and the approximately $700,000 of overhead reallocation from research and development. These increases were partially offset by lower board fees, non-employee stock-based compensation, accounting fees, and other general expenses. Sales and marketing expense was $273,000 compared with $21,000 in the prior year period. The increase primarily reflected commercial headcount and launch-related activity associated with the SiNAPTIC product portfolio. Net loss was $2.7 million compared with $2.3 million a year ago. For the first 6 months of 2026, total revenue was $832,000, an increase of 60% from the prior year period. Product revenue increased 91% to $747,000. On a comparable basis, excluding revenue associated with the divested TA&T business, revenue increased approximately 102% compared with the first half of 2025. Gross profit for the first 6 months of 2026 was $422,000 compared with $180,000 a year ago. Net loss was $5.5 million compared with $4.6 million in the prior year period. Turning to the balance sheet, cash and cash equivalents were $3.6 million at June 30, 2026, compared with $4.1 million at December 31, 2025. Current assets were $7 million, current liabilities were $3 million, and stockholders' equity was $4.8 million at quarter end. Inventory was $2.3 million at June 30, 2026, compared with $1 million at year end. The increase primarily reflects inventory purchases and production activity to support anticipated customer demand and commercialization activities. The timing of conversion to revenue will depend on production schedules and customer requirements. Accounts payable and accrued liabilities increased during the first half of 2026, partially offsetting the cash impact of increased inventory and other operating activities. Management is focused on balancing supplier support and customer delivery requirements with responsible cash management. Working capital will remain an important variable as we continue production activity associated with announced orders. Net cash used in operating activities was $5.3 million for the first 6 months of 2026, compared with $3.7 million in the prior year period. The increase reflected the higher net loss and working capital investment, including inventory and receivables, partially offset by increases in accounts payable and accrued liabilities and by non-cash adjustments. Net cash used in investing activities was approximately $91,000 due to investments in property and equipment. Net cash provided by financing activities was $4.8 million during the first 6 months of 2026. Financing activity included net proceeds from the June private placement and at-the-market sales, partially offset by debt payments. As of June 2026, the company had sold approximately $1.3 million under its 2025 at-the-market program and had approximately $5.1 million of remaining capacity. The June 2026 financing, remaining ATM capacity, Armor facility sublease, pricing improvements, divestiture of non-core operations, and growth initiatives, provide important tools, but they do not eliminate the underlying liquidity risk. We will continue to seek opportunities to raise additional funding through equity and/or debt financing. Based on our current production schedules, customer requirements, and expectations regarding the timing of shipments, we currently expect total revenue to be approximately $900,000 to $1.1 million in the third quarter, and approximately $1 million to $1.3 million in the fourth quarter of 2026. These expectations are subject to significant uncertainty, particularly with respect to production timing, customer scheduling, manufacturing execution, and the timing of revenue recognition, and actual results could differ materially. The publicly announced purchase orders provide commercial visibility, but revenue recognition will depend on production, shipment, and other customary conditions. We will provide updates through our public disclosures as execution progresses. With that, I will turn the call back to Eric for closing remarks.

Thank you, Kevin. As we look to the remainder of 2026, our priorities are straightforward. First, execute the contract manufacturing orders already in hand with the quality, timing, work capital discipline, and customer service required to convert demand into recognized revenue and repeat business. Second, build a disciplined commercial foundation for the SiNAPTIC Foot & Ankle Osteotomy Wedge System through surgeon engagement, channel development, training, reliable product availability, and capital-efficient market access. Third, concentrate capital and management attention on programs and strategic relationships with a credible path to revenue, funded development, market access, licensing economics, or meaningful enhancements of the silicon nitride biomaterial platform. Fourth, continue aligning spending, staffing, inventory, and financing decisions with the milestones most likely to create value for our shareholders. SINTX has spent many years building the science, intellectual property, quality systems, manufacturing capabilities, and regulatory foundation of silicon nitride. The standard now is purely execution. We intend to be judged by customer shipments, revenue growth, gross profit, surgeon adoption, partner conversion, cash discipline, and the quality of our public communication. We appreciate the continuous support of our shareholders, employees, customers, clinical collaborators, and strategic partners.

This concludes today's conference call. Thank you for your participation. You may now disconnect.