Business context and reporting period
Tiger X Medical, Inc. filed this unaudited Form 10-Q for the quarter ended March 31, 2014. The filing describes the company as a development-stage entity that discontinued its orthopedic-device operations in 2010 and sold assets in 2011. Its continuing revenue is royalties from Arthrex; it is also evaluating a partner or buyer for remaining intellectual property and potential uses for its cash.
The request identifies BioCardia, Inc., but the filing is for Tiger X Medical, Inc. Investors should verify that this is the intended filing.
Financial results and liquidity
Unless otherwise stated, amounts below are in thousands of dollars.
| Metric | Q1 2014 | Q1 2013 |
|---|---|---|
| Royalty income | $98 | $38 |
| General and administrative expenses | $35 | $64 |
| Operating income (loss) | $63 | ($26) |
| Net income (loss) | $64 | ($25) |
| Net cash provided by (used in) operations | $27 | ($14) |
At March 31, 2014, cash was $13.322 million, total assets were $13.375 million, liabilities were $1,000, and stockholders’ equity was $13.374 million. Cash increased $27,000 during the quarter. The company reported no debt, interest expense, investing cash flow, or financing cash flow. Management said available cash should meet needs for the next 12 months and beyond. The filing reports no income-tax provision; basic and diluted earnings per share are shown as a dash.
Changes versus the prior comparable period
- Royalty income rose $60,000, or about 158%, which management attributed to higher Arthrex sales of the acquired product line.
- General and administrative expenses declined $29,000, primarily because of higher business taxes in Q1 2013.
- Net income improved by $89,000, from a $25,000 loss to $64,000 income; operating cash flow improved by $41,000.
Outlook, risks and unusual items
- The company expects royalties under its Arthrex agreement to remain its primary revenue source until it finds a partner or buyer for remaining intellectual property or an investment opportunity for its cash. The agreement provides royalties of 5% of qualifying net sales for up to 20 years from closing.
- Management expected general and administrative expenses to remain around Q1 2014 levels. No quantitative revenue or earnings guidance was provided.
- Disclosure controls and procedures were deemed ineffective at March 31, 2014. Reasons included no full-time CFO since June 2011, elimination of the internal accounting and finance department, and insufficient segregation of duties. No material control changes occurred during the quarter.
- Cash balances exceeded FDIC-insured limits by $13.076 million at March 31, 2014, creating significant bank-deposit concentration risk.
- The company said it knew of no material pending legal proceedings. Management cautioned that forward-looking statements are subject to risks and uncertainties.
Key facts for investors to verify
- Whether this Tiger X Medical filing is the intended filing for the requested company, BioCardia, Inc.
- Arthrex royalty calculations, collections, and the sustainability of sales underlying the company’s principal revenue source.
- Cash balances, bank counterparties, and protections for the $13.076 million reported above FDIC-insured limits.
- Remediation of ineffective disclosure controls and the adequacy of finance staffing and segregation of duties.
- Progress on a partner, buyer, or investment opportunity and the expected costs and cash requirements if those plans do not materialize.