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CDOM > SEC Filings for CDOM > Form 10-Q on 1-Nov-2013All Recent SEC Filings

Show all filings for TIGER X MEDICAL, INC.

Form 10-Q for TIGER X MEDICAL, INC.


1-Nov-2013

Quarterly Report


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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" 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, we discontinued our operations and sold the assets from our previous business lines during 2011. Beginning on January 1, 2013, the Company became classified as a development stage entity. Our continuing operations include the collection and management of our royalty income earned in connection with the Asset Purchase Agreement with Arthrex, as well as continuing to promote our former products sold to Arthrex and seeking a joint venture partner or buyer for the remaining intellectual property owned by the Company. We will also be evaluating future investment opportunities and uses for our cash.

We are headquartered in Los Angeles, California. 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, Inc. ("Arthrex") (the agreement being the "Arthrex Asset Purchase Agreement"), pursuant to which the Company agreed to sell the assets of the Reconstructive Division to Arthrex. The Arthrex Asset Purchase Agreement also provides 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 closing date. During the three and nine months ended September 30, 2013, the Company received total royalty payments of $71,000 and $178,000, respectively, from Arthrex. During the three and nine months ended September 30, 2012, the Company received total royalty payments of $19,000 and $47,000, respectively. These amounts are reflected as revenue on the accompanying condensed consolidated statements of operations.

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, 2013 as Compared to the Three Months Ended September 30, 2012.

The following is a comparison of the condensed consolidated results of operations for Tiger X for the three months ended September 30, 2013 and 2012.

                                                       Three Months Ended
                                                          September 30,
(In thousands)                                         2013           2012       $ Change

Revenue income                                     $      71      $      19    $      52
General and administrative expenses                       45            102          (57)
Income (loss) from operations                             26            (83)         109
Interest income                                            4              2            2
Income (loss) from continuing operations                  30            (81)         111
Discontinued operations
Gain from sale of discontinued Reconstructive             -             532         (532)
and Spine Divisions, net of income taxes
Net income                                         $      30      $     451    $    (421)

Royalty income

Royalty income amounted to $71,000 for the quarter ended September 30, 2013 as compared to $19,000 for the quarter ended September 30, 2012. Revenues represented royalties received from Arthrex in connection with the Arthrex Asset Purchase Agreement. The increase during 2013 is the result of Arthrex's increased sales of the acquired product line. In the future, we expect our primary source of revenue to be royalty payments under the Arthrex Asset Purchase Agreement.


General and Administrative Expenses

General and administrative expenses for the quarter ended September 30, 2013 decreased by $57,000 as compared to the same period in 2012 due primarily to higher business insurance expenses in 2012, as well as higher professional services related to tax issues in 2012. General and administrative expenses primarily represent our continuing operating expenses associated with remaining a public company, including business insurance expense and professional fees such as legal, accounting and audit services. In the future, we expect our general and administrative expenses to remain at the same level as 2013.

Interest Income

During the quarter ended September 30, 2013, we had interest income of $4,000, which represented an increase of $2,000 from the same period in 2012 due to a higher average cash balance outstanding. We had no interest expense in 2013 or 2012, as there was no debt outstanding during this timeframe.

Results of Operations for the Nine Months Ended September 30, 2013 as Compared to the Nine Months Ended September 30, 2012.

The following is a comparison of the condensed consolidated results of operations for Tiger X for the nine months ended September 30, 2013 and 2012.

                                                        Nine Months Ended
                                                          September 30,
(In thousands)                                         2013           2012       $ Change

Royalty income                                      $    178      $      47    $     131
General and administrative expenses                      172            320         (148)
Income (loss) from operations                              6           (273)         279
Interest income                                            8              8           -
Income (loss) from continuing operations                  14           (265)         279
Discontinued operations
Gain from sale of discontinued Reconstructive and          -            532         (532)
Spine Divisions, net of income taxes
Net income                                          $     14      $     267    $    (253)

Royalty income

Royalty income amounted to $178,000 for the nine months ended September 30, 2013 as compared to $47,000 for the same period in 2012. Revenues represented royalties received from Arthrex in connection with the Arthrex Asset Purchase Agreement. The increase during the 2013 is the result of Arthrex's increased sales of the acquired product line. In the future, we expect our primary source of revenue to be royalty payments under the Arthrex Asset Purchase Agreement.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2013 decreased by $148,000 as compared to the same period in 2012 due to greater business insurance expenses in 2012, as well as greater professional services related to tax issues in 2012. General and administrative expenses primarily represent our continuing operating expenses associated with remaining a public company, including business insurance expense and professional fees such as legal, accounting and audit services. In the future, we expect our general and administrative expenses to remain at the same level as 2013.


Interest Income

During the nine months ended September 30, 2013, we had interest income of $8,000. This is consistent with 2012 as our cash levels were consistent during both periods. We had no interest expense in 2013 or 2012, as there was no debt outstanding during this timeframe.

Liquidity and Capital Resources

Net cash used in operating activities was $5,000 for the nine months ended September 30, 2013 compared to net cash used in operating activities of $755,000 for the same period in 2012. The significant change between years was primarily due to a payment for income taxes of $556,000 in 2012, which did not recur in 2013. During 2013, our royalty revenue increased by $131,000 as compared to 2012. Our overall operating costs in 2013 also decreased by $148,000 as compared to 2012.

We had no cash flows from investing activities during the nine months ended September 30, 2013. During the nine months ended September 30, 2012, we had cash provided by investing activities of $900,000, which represented a decrease in restricted cash from the restrictions being removed on the cash held in escrow associated with the sale of the Reconstructive Division.

We had no cash flows from financing activities during the nine months ended September 30, 2013 or 2012.

We believe our cash and cash equivalents as of September 30, 2013 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, 2012 filed on March 22, 2013.

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