Filing summary
Issuer and period: The supplied filing is Tiger X Medical, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2013—not a BioCardia filing. Tiger X was formerly Cardo Medical, Inc. Unless otherwise noted, financial statement amounts below are in thousands of dollars.
Business context
Tiger X had discontinued its former orthopedic-device operations and sold assets from its prior business lines. Its continuing activities were collecting royalties from Arthrex, promoting the former products, seeking a joint-venture partner or buyer for remaining intellectual property, and evaluating future uses for its cash. The company became classified as a development-stage entity on January 1, 2013.
Financial results and position
| Metric | Q1 2013 | Q1 2012 |
|---|---|---|
| Revenue, all from Arthrex royalties | $38 | $11 |
| Gross profit | $38 | $11 |
| General and administrative expense | $64 | $69 |
| Operating loss | $(26) | $(58) |
| Interest income | $1 | $3 |
| Net loss | $(25) | $(55) |
| Net cash used in operations | $(14) | $(26) |
- Revenue increased $27,000, which management attributed to increased sales of Arthrex’s products. The royalty rate is 5% of net sales, payable quarterly, for a term up to the 20th anniversary of the agreement’s closing.
- Gross margin was 100% because the company reported no cost of revenue. Net loss improved by $30,000 year over year.
- Cash was $13.254 million at March 31, 2013, compared with $13.268 million at December 31, 2012. Total assets were $13.275 million; total liabilities were $10,000. The filing reports no debt and no investing or financing cash flows during the quarter.
- Cash used in operations fell by $12,000 year over year; management cited higher royalty revenue. No income-tax provision was recorded. The cash-flow statement reports $26,000 of income taxes paid.
- Common shares outstanding were 230,293,141 at March 31, 2013. The filing reports 575,613 warrants outstanding, exercisable at $0.44 per share and expiring November 13, 2014.
Outlook, risks, and other notable items
- Management expected royalties to remain the primary revenue source and general and administrative expenses to remain at a similar level. It stated that cash would meet needs for the next 12 months and beyond, but the MD&A refers to cash “as of March 31, 2012”; this appears inconsistent with the reporting period and should be verified.
- Disclosure controls and procedures were deemed ineffective as of March 31, 2013. Cited reasons included the former CFO’s departure, elimination of the internal accounting and finance department after operations were reduced, and insufficient segregation of duties. No material changes in internal control over financial reporting were reported during the quarter.
- Cash held at banks exceeded FDIC-insured limits by $12,997,849, creating significant uninsured-deposit exposure. The filing reports no material pending legal proceedings.
- Management cautioned that forward-looking statements are subject to risks and uncertainties and referred investors to the risk factors in the 2012 Form 10-K. It provided no quantified revenue or earnings guidance.
Most important facts to verify
- Confirm that this Tiger X Medical filing is the intended filing, given the request identifies BioCardia, Inc.
- Check the apparent March 31, 2012 cash-date reference in the liquidity discussion against the stated March 31, 2013 reporting period.
- Review the company’s plans to address ineffective disclosure controls and the lack of segregation of duties.
- Assess the concentration of cash above FDIC insurance limits and the company’s reliance on Arthrex royalties.
- Verify royalty receipts and remaining intellectual-property plans, as the filing describes a development-stage company with discontinued former operations.