Business context and reporting period
This is Tiger X Medical, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2011, filed November 15, 2011. The request identifies BioCardia, Inc., but the supplied filing is for Tiger X Medical, formerly Cardo Medical; the filing does not identify BioCardia as the registrant. Tiger X sold substantially all assets of its Reconstructive Division to Arthrex in June 2011 and its Spine Division to Altus in April 2011. Continuing activity is limited mainly to public-company costs, managing Arthrex royalties, and assessing future uses of cash.
Financial results and liquidity
Amounts below are in thousands of dollars unless stated otherwise.
| Metric | Three months ended September 30, 2011 | Nine months ended September 30, 2011 | Comparable 2010 period |
|---|---|---|---|
| Net sales from continuing operations | $0 | $0 | $0 |
| General and administrative expenses | $110 | $460 | $107 and $437, respectively |
| Loss from continuing operations | $(105) | $(477) | $(107) and $(427), respectively |
| Net income (loss) | $(561) | $9,947 | $(8,113) and $(11,050), respectively |
| Operating cash flow | Not stated for the quarter | $(2,278) | $(3,707) for nine months |
Nine-month net income primarily reflects the $11,842 after-tax gain reported on the division sales; it does not represent operating profitability. The company reported no continuing revenue or gross profit, so a meaningful operating margin is not available. At September 30, cash was $12,608 and restricted cash was $1,219; current assets were $14,001 and current liabilities $744. Total liabilities were $744, with no notes payable outstanding. Cash increased from $127 at December 31, 2010. The filing states management believed cash would fund operations and other activities for at least 12 months and that prior going-concern doubt had been alleviated.
Material changes, outlook and risks
- Arthrex paid total consideration of $14,586 for the Reconstructive Division and agreed to pay royalties equal to 5% of qualifying product net sales for up to 20 years. Altus paid $3,000 for the Spine Division. Sale proceeds, after escrow and adjustments, generated an $11,842 after-tax gain for the nine-month period.
- Escrows totaled $1,219 at September 30. Subsequent October releases included $171 to Arthrex for unrecoverable inventory and $88 to Tiger X for recovered or returned inventory. The filing states $900 remained in escrow through June 10, 2012 for potential indemnification claims; the escrow and claims remain items to monitor.
- Quarterly net loss included a $404 loss from sale adjustments and $52 of discontinued-operations losses. The company had no sales from discontinued divisions in the quarter. For nine months, discontinued operations reported $761 of sales and a $1,418 loss from operations, alongside the sale gain.
- Management expected lower legal and other professional fees and anticipated interest income from its cash balance. The filing provides no quantified earnings, revenue, or royalty guidance and no specific investment plan.
- Disclosure controls and procedures were deemed ineffective at September 30, 2011, citing the CFO’s departure, elimination of the internal accounting and finance department, and insufficient segregation of duties. The CEO also served as interim CFO, with consultants assisting with accounting and financial statements.
- Management cited historical going-concern opinions for 2009 and 2010, although it stated the asset sales and resulting cash alleviated the concern. Risks include limited ongoing operations, uncertain future investment decisions and royalty collections, potential escrow claims, and concentrated receivables: two hospital customers accounted for 44.0% and 37.9% of net receivables.
- The company reported no material pending legal proceedings and no senior debt outstanding. It noted $560 of income tax expense associated with the sale gains for the nine-month period.
Most important facts for investors to verify
- Confirm the registrant identity: the supplied filing is for Tiger X Medical, not BioCardia.
- Review the sale agreements, final purchase-price adjustments, remaining escrow, and any indemnification claims.
- Assess whether Arthrex royalty payments have begun, their calculation basis, and the prospects for meaningful future royalty income.
- Evaluate the company’s cash burn, ongoing public-company costs, liquidity needs, and plans for deploying its cash.
- Monitor remediation of ineffective disclosure controls and the consequences of limited accounting staffing and segregation of duties.
- Distinguish the one-time divestiture gain from recurring results; continuing operations had no revenue and incurred a loss.