Business context and reporting period
The filing is a Form 10-Q for the quarter ended September 30, 2015. Although the request identifies BioCardia, Inc., the filing itself is for Tiger X Medical, Inc. Tiger X had discontinued its former orthopedic-device operations and sold assets from those businesses; its continuing revenue came from royalties on products sold by Arthrex. It also promoted former knee product lines and evaluated potential buyers, joint-venture partners, and uses for its cash.
Financial results and position
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Royalty income | 2015: $121,000; 2014: $96,000 | 2015: $382,000; 2014: $299,000 |
| General and administrative expenses | 2015: $38,000; 2014: $54,000 | 2015: $152,000; 2014: $129,000 |
| Income from operations | 2015: $83,000; 2014: $42,000 | 2015: $230,000; 2014: $170,000 |
| Net income | 2015: $83,000; 2014: $43,000 | 2015: $232,000; 2014: $173,000 |
Amounts are in thousands where applicable. Operating margin was approximately 69% for the 2015 quarter and 60% for the first nine months, based on reported royalty income. The filing reports earnings per share as a dash, not a clear numeric value. No income tax provision was recorded.
At September 30, 2015, the balance sheet reports cash of $13.726 million, prepaid expenses and other current assets of $50,000, no accounts payable or accrued expenses, and no reported debt. Stockholders’ equity was reported as $13.776 million. The balance-sheet total-assets line states $13.716 million, which does not reconcile with the listed asset components or total liabilities and equity; the filing text does not provide a clear corrected value.
For the first nine months, operating cash flow was $217,000, compared with $161,000 in 2014. Cash increased by $217,000 to $13.726 million. There were no investing or financing cash flows in either period. The company reported no interest paid or income taxes paid.
Changes, outlook, and risks
- Royalty income increased 26% for the quarter and 28% for the nine-month period year over year. Management attributed the increases to higher Arthrex sales of the acquired product line.
- Quarterly G&A expense fell by $16,000, primarily due to lower professional expenses. Nine-month G&A rose by $23,000, primarily due to higher professional expenses.
- Management expected royalty payments to remain the primary revenue source until it found a partner or buyer for remaining intellectual property or an investment opportunity for its cash. It stated that cash was adequate for needs over the next twelve months and beyond; no numerical revenue or earnings guidance was provided.
- The royalty agreement provides for payments equal to 5% of qualifying net sales for up to the 20th anniversary of the January 2011 closing. Results therefore depend substantially on Arthrex sales and the royalty arrangement.
- Cash balances exceeded FDIC insurance limits by $13.483 million at September 30, 2015. Management reported disclosure controls were effective and no material changes in internal control during the quarter. The company reported no material legal proceedings.
Important facts for investors to verify
- Confirm the filing’s issuer: it is Tiger X Medical, Inc., not BioCardia, Inc.
- Check the reported total-assets figure of $13.716 million against the listed cash and prepaid assets totaling $13.776 million.
- Assess the sustainability and terms of Arthrex royalty income, Tiger X’s principal reported revenue source.
- Consider the substantial uninsured bank balance and the company’s plans for its cash and remaining intellectual property.
- Review the referenced 2014 Form 10-K for risk factors and fuller financial-statement disclosures.