SEC Filing Summary: Tiger X Medical, Inc. — Form 10-Q
Important identity note: The request metadata names BioCardia, Inc., but the supplied filing is for Tiger X Medical, Inc. (formerly Cardo Medical, Inc.), for the quarter ended September 30, 2013. Verify the issuer before relying on this summary.
Business context and reporting period
Tiger X had discontinued its former orthopedic-device operations and sold those business assets in 2011. Its continuing activity is collecting royalties from Arthrex, promoting products sold to Arthrex, seeking a buyer or joint-venture partner for remaining intellectual property, and evaluating uses for its cash. The company identifies itself as a development-stage entity.
Financial performance and liquidity
Unless otherwise noted, amounts are in thousands of dollars.
- Revenue: Royalty income was $71 for the third quarter and $178 for the first nine months of 2013, versus $19 and $47, respectively, in 2012. The filing attributes the increase to higher Arthrex sales of the acquired products.
- Profit: Third-quarter operating income was $26 and net income was $30, compared with an operating loss of $83 and net income of $451 in the 2012 quarter. The prior-year quarter included a $532 gain on the sale of discontinued divisions. For the first nine months, operating income was $6 and net income was $14, versus an operating loss of $273 and net income of $267 in 2012; the prior-year result also included the $532 sale gain.
- Expenses and interest: General and administrative expense was $45 for the quarter and $172 year to date, down from $102 and $320 in 2012. The company reported interest income of $4 for the quarter and $8 year to date, with no debt or interest expense.
- Cash flow: Operating cash use was $5 for the first nine months of 2013, versus $755 in 2012. There were no investing or financing cash flows in 2013. Cash decreased by $5 to $13,263 during the period.
- Balance sheet at September 30, 2013: Cash was $13,263; total assets were $13,308; total liabilities were $3; and stockholders’ equity was $13,305. The filing reports no debt. Cash was essentially unchanged from December 31, 2012.
- Shares: 230,293,141 common shares were outstanding. The company also disclosed 385,000 options and 575,613 warrants outstanding; potential dilution was excluded from diluted EPS as anti-dilutive.
Changes, outlook, and risks
- Management said cash and cash equivalents were adequate for needs over the next 12 months and beyond. It expected royalties to remain its primary revenue source and general and administrative expense to remain at 2013 levels. No numeric revenue or earnings guidance was provided.
- The royalty arrangement entitles the company to 5% of net sales of covered products made by Arthrex, quarterly, for up to 20 years from the 2011 closing. The company’s royalty income therefore depends on Arthrex sales.
- Cash balances exceeded applicable FDIC insurance limits by $12,965,872 at September 30, 2013, creating significant bank-deposit concentration risk.
- Management concluded disclosure controls and procedures were not effective, citing the former CFO’s departure, the elimination of the internal accounting and finance department, and insufficient segregation of duties. No material changes to internal control over financial reporting were reported during the quarter.
- The cash-flow supplemental disclosure reports income taxes paid of $553 in the first nine months of 2012, while MD&A attributes the year-over-year cash-flow change to a $556 tax payment. The filing text does not reconcile these amounts.
- The company reported no material pending legal proceedings. It cautioned that forward-looking statements are subject to risks and uncertainties and referred investors to its 2012 Form 10-K risk factors.
Important facts for investors to verify
- Confirm that Tiger X Medical, rather than BioCardia, is the intended issuer and filing.
- Review Arthrex royalty statements, covered-product sales, payment terms, and the remaining duration of the royalty arrangement.
- Assess the substantial uninsured cash balance and the company’s plans for its cash and remaining intellectual property.
- Review the disclosed ineffective controls, limited accounting staffing, and any subsequent remediation.
- Reconcile the $553 versus $556 income-tax-payment figures and distinguish recurring royalty earnings from the prior-year asset-sale gain.