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CDOM > SEC Filings for CDOM > Form 10-K on 24-Mar-2014All Recent SEC Filings

Show all filings for TIGER X MEDICAL, INC.

Form 10-K for TIGER X MEDICAL, INC.


24-Mar-2014

Annual Report


Item 7. 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 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 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," "Tiger X," or "Cardo" refers to the business of Tiger X Medical, Inc.

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. As discussed below, in 2011 we entered into an asset purchase agreement to sell substantially all of our assets in the Reconstructive Division to Arthrex, Inc. ("Arthrex"). Additionally, we completed the sale of substantially all of the assets in the Spine Division in 2011. 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 seek a joint venture partner or buyer for the remaining intellectual property owned by the Company. The Company will also be evaluating future investment opportunities and uses for its 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 and Estimates

Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Those material accounting estimates that we believe are the most critical to an investor's understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.

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 allowances for doubtful accounts, net realizable value of assets, share- based payment, and deferred income tax assets. Actual results could differ from those estimates.


Discontinued Operations

In 2011, the Company sold substantially all of its assets from its Reconstructive and Spine Divisions. The Company entered into an Asset Purchase Agreement with 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 years ended December 31, 2013 and 2012, the Company received total royalty payments of $268,000 and $62,000, respectively, from Arthrex and reflected this payment as royalty income on the accompanying consolidated statements of operations.

During the year ended December 31, 2012, the Company filed its tax return and received an income tax refund of approximately $532,000 relating to the income tax paid on the gain on the sale of the discontinued divisions. As a result, the associated income tax benefit was recorded as a component of the gain on the sale of discontinued Reconstructive and Spine divisions on the accompanying condensed consolidated statements of operations during the year ended December 31, 2012.

The pretax gain associated with discontinued operations during the year ended December 31, 2012 resulted from the relief of liabilities associated with the discontinued divisions, net of the write off of remaining accounts receivables believed to be uncollectible. The continuing operations reflected are expenses associated with business insurance, legal and accounting fees that the Company will continue to incur.

Revenue Recognition

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

Income Taxes

Deferred income tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at currently effective tax rates, of future deductible or taxable amounts attributable to events that have been recognized on a cumulative basis in the financial statements. A valuation allowance related to a deferred income tax asset is recorded when it is more likely than not that some portion of the deferred income tax asset will not be realized. Deferred income tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates on the date of enactment.

The Company recognizes all material tax positions, including all significant uncertain tax positions, in which it is more likely than not that the position will be sustained based on its technical merits and if challenged by the relevant taxing authorities. At each balance sheet date, unresolved uncertain tax positions are reassessed to determine whether subsequent developments require a change in the amount of recognized tax benefit.

Recent Accounting Pronouncements

There are no recently issued accounting pronouncements or standards updates 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 and Financial Condition for the Year Ended December 31, 2013 as Compared to the Year Ended December 31, 2012

The following are the consolidated results of our operations for the year ended December 31, 2013 compared to the year ended December 31, 2012.

                                                          Years Ended
                                                         December 31,
(In thousands)                                        2013           2012        $ Change

Royalty income                                   $       268    $        62    $     206

General and administrative expenses                      259            401         (142)
Income (loss) from operations                              9           (339)         348
Interest income                                           10              8            2
Income (loss) from continuing operations                  19           (331)         350
Discontinued operations (Note 1), net of
income taxes
   Gain from sale of discontinued
Reconstructive and Spine Divisions, net of
   income taxes (benefit) of $0 and ($532),
respectively                                               -            532         (532)
   Gain from operations of discontinued
Reconstructive and Spine Divisions,
   net of income taxes                                     -            104         (104)
Net income from discontinued operations                    -            636         (636)
Net income                                       $        19    $       305    $    (286)

Royalty income

Royalty income amounted to $268,000 for the year ended December 31, 2013 compared with $62,000 for 2012. Royalty income 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 year ended December 31, 2013 decreased by $142,000 as compared to the year ended December 31, 2012. General and administrative expenses 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. The primary reason for the decrease in expenses during 2013 relates to a decrease in outside accounting and legal fees of approximately $116,000 as compared to 2012. Our insurance expense also decreased by approximately $47,000 during 2013 due to increased product liability insurance limits we were required to maintain in prior years in conjunction with the sale of the Reconstructive and Spine assets. In the future, we expect our legal and other professional fees to remain at a reduced level.

Interest Income

During the year ended December 31, 2013, we had interest income of $10,000, which represented a $2,000 increase as compared to 2012 due to higher average cash balances outstanding. We had no interest expense in 2013 or 2012, as there was no debt outstanding during this timeframe.


Liquidity and Capital Resources

Net cash provided by operating activities was $27,000 for the year ended December 31, 2013 compared to net cash used in operating activities of $310,000 for 2012. Our cash provided by operations improved during 2013 primarily due to our royalty revenue increasing by $206,000 as compared to 2012. Our overall operating costs in 2013 also decreased by $142,000 as compared to 2012.

We had no cash flows from investing activities during the year ended December 31, 2013. During the year ended December 31, 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 year ended December 31, 2013 or 2012.

We believe our cash balances of $13,295,000 as of December 31, 2013 are adequate to meet our cash needs for the next twelve months and beyond.

Off-Balance Sheet Arrangements

We have no off-balance sheet financing arrangements.

Contractual Obligations

We currently have no contractual obligations.

Forward Looking Statements

Our business, financial condition, results of operations, cash flows and prospects, and the prevailing market price and performance of our common stock, may be adversely affected by a number of factors, including the matters discussed in "Risk Factors". Certain statements and information set forth in this Annual Report on Form 10-K, as well as other written or oral statements made from time to time by us or by our authorized executive officers on our behalf, constitute "forward-looking statements." You should note that our forward-looking statements speak only as of the date of this Annual Report on Form 10-K or when made and we undertake no duty or obligation to update or revise our forward- looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations, plans, intentions and projections reflected in our forward-looking statements are reasonable, such statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that should be considered are included in "Risk Factors" in Item 1A.

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