# BioCardia, Inc.: Form 10-Q for the period ended Sep 30, 2016

- Company: [BioCardia, Inc.](/companies/bcda.md) (CIK 925741)
- Form: 10-Q
- Filed: 2016-10-17
- Accepted by EDGAR: Oct 17, 2016, 17:08 ET
- Period: 2016-09-30
- Accession: 0001136261-16-000628
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/925741/000113626116000628/form10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/925741/000113626116000628/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2016-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Operating income | 3 months, 2016-07-01 to 2016-09-30 | $5.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2016-01-01 to 2016-09-30 | $5.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2016-07-01 to 2016-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2016-01-01 to 2016-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2016-07-01 to 2016-09-30 | $5.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2016-01-01 to 2016-09-30 | $5.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2016-07-01 to 2016-09-30 | $0.02 | us-gaap:EarningsPerShareBasicAndDiluted |
| Diluted EPS | 9 months, 2016-01-01 to 2016-09-30 | $0.02 | us-gaap:EarningsPerShareBasicAndDiluted |
| Diluted shares (weighted) | 3 months, 2016-07-01 to 2016-09-30 | 230,537,706 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2016-01-01 to 2016-09-30 | 230,375,258 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Cash and equivalents | at 2016-09-30 | $19.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2016-09-30 | $19.5m | us-gaap:Assets |
| Total liabilities | at 2016-09-30 | $330.0k | us-gaap:Liabilities |
| Shareholders' equity | at 2016-09-30 | $19.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 11,411 characters.

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

As used in this "Management's Discussion and Analysis of Financial Condition and Results of Operation," except where the context otherwise requires, the term "we," "us," "our," the "Company," or "Tiger X" refers to the business of Tiger X Medical, Inc.

***The following discussion should be read together with the information contained in the unaudited condensed consolidated financial statements and related notes included in Item 1, "Financial Statements," in this Form 10-Q.***

Overview

Tiger X Medical, Inc. ("Tiger X" or the "Company"), formerly known as Cardo Medical, Inc., previously operated as an orthopedic medical device company specializing in designing, developing and marketing high performance reconstructive joint devices and spinal surgical devices. During 2010, the Company discontinued its orthopedic medical device operations and sold the assets from its previous business lines during 2011. Through July 1, 2016, our continuing operations included the collection and management of our royalty income earned in connection with the Asset Purchase Agreement with Arthrex.

On August 22, 2016, the Company, Icicle Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary of the Company ("Merger Sub"), and BioCardia, Inc., a Delaware corporation ("BioCardia"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which Merger Sub will merge with and into BioCardia, with BioCardia continuing as the surviving company under the name "BioCardia, Inc." (the "Merger"). The Company expects the Merger to close in October 2016.

We are headquartered in Miami, Florida. Our common stock is quoted on the National Association of Securities Dealers, Inc.'s, Over-the-Counter Bulletin Board, or the OTC Bulletin Board, with a trading symbol of CDOM.OB.

### Critical Accounting Policies

### Use of Estimates

Financial statements prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management makes estimates relating to share-based payments, and deferred income tax assets. Given the short operating history of Tiger X, actual results could differ from those estimates.

### Royalty Agreement

On January 24, 2011, the Company entered into an Asset Purchase Agreement with Arthrex (the "Arthrex Asset Purchase Agreement"), pursuant to which the Company agreed to sell the assets of its arthroplasty division, referred to as the Reconstructive Division, to Arthrex. The Arthrex Asset Purchase Agreement also provided for the Company to receive royalty payments equal to 5% of net sales of the Company's products made by Arthrex on a quarterly basis for a term up to and including the 20th anniversary of the June 10, 2011 closing date. These amounts were reflected as royalty income on the accompanying condensed consolidated statements of income.

On May 5, 2016, the Company entered into a Royalty Settlement and Release Agreement (the "Royalty Settlement and Release Agreement") with Arthrex, whereby Arthrex agreed to pay the Company $5,642,302 (the "Royalty Payment") in full satisfaction of all amounts due or payable, or which could become payable under the Arthrex Asset Purchase Agreement. Of the Royalty Payment, $142,302 of the amount represented royalty income due to the Company under the Arthrex Asset Purchase Agreement through the date of the Royalty Settlement and Release Agreement, and the remaining $5,500,000 represented the settlement of future royalties. The Royalty Settlement and Release Agreement became effective on July 1, 2016 upon the receipt of the Royalty Payment.

### Revenue Recognition

The Company's revenue consists of royalty income from Arthrex pursuant to the Arthrex Asset Purchase Agreement. Revenue is recognized as the amount becomes known and collectability is reasonably assured.

### Recent Accounting Pronouncements

There are no recently issued accounting pronouncements that we have yet to adopt that are expected to have a material effect on our financial position, results of operations, or cash flows.

**Results of Operations for the Three Months Ended September 30, 2016 as Compared to the Three Months Ended September 30, 2015.**

The following is a comparison of the condensed consolidated results of operations for Tiger X for the three months ended September 30, 2016 and 2015.

*(In thousands)*

|  | Three Months Ended September 30, 2016 | 2015 | $ Change |
| --- | ---: | ---: | ---: |
| Royalty income | $5,500 | $121 | $5,379 |
| General and administrative expenses | 379 | 38 | 341 |
| Income from operations | 5,121 | 83 | 5,038 |
| Interest income | - | - | - |
| Income before income tax provision | 5,121 | 83 | 5,038 |
| Provision for income taxes | - | - | - |
| Net income | $5,121 | $83 | $5,038 |

### Royalty income

Royalty income amounted to $5,500,000 for the quarter ended September 30, 2016 as compared to $121,000 for the quarter ended September 30, 2015. Revenues represented royalties received from Arthrex in connection with the Arthrex Asset Purchase Agreement. We entered into a Royalty Settlement and Release Agreement with Arthrex on May 5, 2016 and effective on July 1, 2016, whereby we agreed to receive approximately $5,642,000 (including approximately $142,000 of royalty income recorded during the three months ended June 30, 2016) in full satisfaction of all amounts due or payable, or which become payable under the Arthrex Asset Purchase Agreement. The remaining $5,500,000 was recorded as revenue upon the closing of the agreement on July 1, 2016. Other than this amount recorded on July 1, 2016 under the terms of the Royalty Settlement and Release Agreement, we will have no further royalty income.

### General and Administrative Expenses

General and administrative expenses for the quarter ended September 30, 2016 increased by $341,000 as compared to the same period in 2015 due primarily to increased legal and professional expenses during the quarter ended September 30, 2016 associated with the Royalty Settlement and Release Agreement with Arthrex, along with the Merger Agreement with BioCardia.

**Results of Operations for the Nine Months Ended September 30, 2016 as Compared to the Nine Months Ended September 30, 2015.**

The following is a comparison of the condensed consolidated results of operations for Tiger X for the nine months ended September 30, 2016 and 2015.

*(In thousands)*

|  | Nine Months Ended September 30, 2016 | 2015 | $ Change |
| --- | ---: | ---: | ---: |
| Royalty income | $5,791 | $382 | $5,409 |
| General and administrative expenses | 515 | 152 | 363 |
| Income from operations | 5,276 | 230 | 5,046 |
| Interest income | 2 | 2 | - |
| Income before income tax provision | 5,278 | 232 | 5,046 |
| Provision for income taxes | - | - | - |
| Net income | $5,278 | $232 | $5,046 |

### Royalty income

Royalty income amounted to $5,791,000 for the nine months ended September 30, 2016 as compared to $382,000 for the nine months ended September 30, 2015. Revenues represented royalties received from Arthrex in connection with the Arthrex Asset Purchase Agreement. We entered into a Royalty Settlement and Release Agreement with Arthrex on May 5, 2016 and effective on July 1, 2016, whereby we agreed to receive approximately $5,642,000 in full satisfaction of all amounts due or payable, or which become payable under the Arthrex Asset Purchase Agreement. Other than this amount recorded on July 1, 2016 under the terms of the Royalty Settlement and Release Agreement, we will have no further royalty income.

### General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2016 increased by $363,000 as compared to the same period in 2015 due primarily to increased legal and professional expenses associated with the Royalty Settlement and Release Agreement with Arthrex, along with the Merger Agreement with BioCardia.

### Liquidity and Capital Resources

Net cash provided by operating activities was $5,597,000 for the nine months ended September 30, 2016 compared to net cash provided by operating activities of $217,000 for the same period in 2015. The change between the nine months ended September 30, 2016 and the same period in 2015 was primarily due to an increase in royalty income in 2016.

We had no cash flows from investing or financing activities during the nine months ended September 30, 2016 or 2015.

We believe our cash and cash equivalents as of September 30, 2016 are adequate to meet our cash needs for the next twelve months and beyond.

### Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q are "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "may," "will," "should," "anticipate," "estimate," "expect," "plan," "believe," "predict," "potential," "project," "target," "forecast," "intend," "assume," "guide," "seek" and similar expressions. Forward-looking statements do not relate strictly to historical or current matters. Rather, forward-looking statements are predictive in nature and may depend upon or refer to future events, activities or conditions. Although we believe that these statements are based upon reasonable assumptions, we cannot provide any assurances regarding future results. We undertake no obligation to revise or update any forward- looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. Information regarding our risk factors appears in Part I, Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2015 filed on March 25, 2016.

## Controls and procedures

As filed, 1,635 characters.

#### Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and that such information is accumulated and communicated to our management, including our interim principal executive officer and our interim principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervision and with the participation of our management, including our interim principal executive officer and interim principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d- 15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based on this evaluation, our Interim Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2016.

#### Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Filed Oct 17, 2016.
Source: SEC EDGAR, the filing index for accession 0001136261-16-000628. Last ingested by Listed: Oct 24, 2026, 15:00 ET. No prices; not investment advice.