Business context and reporting period
This unaudited Form 10-Q covers the quarter ended March 31, 2012. The registrant is Tiger X Medical, Inc., formerly Cardo Medical, Inc.; the supplied filing does not identify BioCardia, Inc. as the registrant. Tiger X had sold its Reconstructive and Spine divisions in 2011. Continuing activity consisted principally of managing and collecting royalties under its Arthrex agreement and evaluating future uses for cash.
Financial results and position
Amounts below are in thousands of dollars, except shares. The filing’s cash flow statement reports the three months ended March 31.
| Metric | Q1 2012 | Q1 2011 / comparison |
|---|---|---|
| Revenue | $11 | $0 |
| Gross profit | $11 | $0 |
| General and administrative expense | $69 | $101 |
| Operating loss | $(58) | $(101) |
| Net interest income (expense) | $3 | $(24) |
| Loss from continuing operations | $(55) | $(125) |
| Loss from discontinued operations | $0 | $(196) |
| Net loss | $(55) | $(321) |
| Cash used in operating activities | $(26) | $(558) |
Revenue was royalty income from Arthrex; cost of revenue was nil. A meaningful operating margin is not provided and would not be representative given the minimal royalty revenue and ongoing public-company expenses. At March 31, cash and cash equivalents were $12.652 million, restricted cash was $0.9 million, and total assets were $13.636 million. Total liabilities were $0.711 million, consisting of accounts payable and accrued expenses; the company reported no debt. Stockholders’ equity was $12.925 million. Common shares outstanding were 230,293,141.
Material changes versus prior comparable period
Net loss improved by $266,000 year over year, reflecting the absence of the prior-year discontinued-operations loss, lower general and administrative expense, and a swing from interest expense to interest income. Operating cash use fell by $532,000. The company reported no investing or financing cash flows in Q1 2012; in Q1 2011 it used $52,000 for capital expenditures and received net financing cash of $724,000. The company said the remaining debt was repaid in Q2 2011.
Outlook, risks, and notable disclosures
- The company expected future revenue primarily from Arthrex royalties equal to 5% of net sales of covered products, payable quarterly for a term extending up to the 20th anniversary of the sale closing.
- Management stated that available cash was adequate for needs over the next 12 months and beyond, and expected general and administrative expenses to remain reduced. It also planned to evaluate future investment opportunities and uses for cash.
- The $0.9 million of restricted cash related to remaining Arthrex transaction escrow. The filing describes potential adjustments and claims against transaction proceeds.
- Bank balances exceeded FDIC-insured amounts by $12,929,293 as of March 31, 2012, creating significant uninsured deposit exposure.
- Management concluded disclosure controls and procedures were not effective at quarter-end, citing the former CFO’s departure, elimination of the internal accounting and finance department, and insufficient segregation of duties. No material changes to internal control over financial reporting during the quarter were reported.
- The filing reported no material pending legal proceedings and no uncertain tax positions accrued. Forward-looking statements are subject to risks described in the company’s 2011 Form 10-K.
Important facts for investors to verify
- Confirm the issuer identity: this filing is for Tiger X Medical, Inc. (formerly Cardo Medical), not a filing identified as BioCardia, Inc.
- Review the Arthrex royalty terms, reported royalty receipts, and any related escrow adjustments or claims.
- Assess cash accessibility, including the restricted escrow balance and substantial uninsured bank deposits.
- Review remediation of the disclosed ineffective controls and the company’s limited finance staffing and segregation of duties.
- Evaluate whether management’s cash-adequacy outlook is supportable given minimal recurring revenue and continuing public-company costs.