UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q10-Q/A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
(Mark One) | |||
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the quarterly period ended March 31, 2017 | |||
or | |||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the transition period from _________________ to _______________________ |
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to _________
Commission file number: 0-21419000-21419
Tiger X Medical, Inc.
BIOCARDIA, INC.
(Exact name of Registrantregistrant as Specifiedspecified in its Charter)charter)
Delaware | 23-2753988 | ||
(State or | (I.R.S. Employer | ||
125 Shoreway Road, Suite B San Carlos, California 94070 | |||
(Address of principal executive offices and zip code) | |||
(650) 226-0120 | |||
(Registrant’s telephone number, including area code) | |||
N/A | |||
(Former name, former address and former fiscal year, if changed since last report) |
4400 Biscayne BlvdMiami, FL 33137(Address of Principal Executive Offices including Zip Code)
(305) 575-4100(Registrant's Telephone Number, Including Area Code)
N/A (Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days.YES x NO ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No☐ | |||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes☒ No☐ | |||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | |||
Large accelerated | Accelerated filer | ||
Non-accelerated | Smaller reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).YES ¨ NO x
As of October 17, 2016, 230,743,141 shares of the issuer's common stock, par value of $0.001 per share, were outstanding.
TIGER X MEDICAL, INC.
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Emerging Growth Company☐ | ||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||||||
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| May 9, 2017. |
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PART I — FINANCIAL INFORMATION
TIGER X MEDICAL, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share amounts)
September 30, | December 31, | |||||
2016 | 2015 | |||||
(Unaudited) | ||||||
Assets | ||||||
Current assets | ||||||
Cash | $ | 19,437 | $ | 13,840 | ||
Prepaid expenses | 46 | 36 | ||||
Total assets | $ | 19,483 | $ | 13,876 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities | ||||||
Accounts payable and accrued expenses | $ | 330 | $ | 10 | ||
Total liabilities | 330 | 10 | ||||
Stockholders' equity | ||||||
Common stock, $0.001 par value, 750,000,000 shares authorized, 230,743,141 and 230,293,141 shares | ||||||
issued and outstanding as of September 30, 2016 (unaudited) and December 31, 2015, respectively | 231 | 230 | ||||
Additional paid-in capital | 25,776 | 25,768 | ||||
Accumulated deficit | (6,854) | (12,132) | ||||
Total stockholders' equity | 19,153 | 13,866 | ||||
Total liabilities and stockholders' equity | $ | 19,483 | $ | 13,876 |
The accompanying notes are(the“Amendment”) to its Form 10-Q for the quarter ended March 31, 2017 (the“Original Form 10-Q”) to correct an integral partinadvertent omission of these condensed consolidated financial statements.
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Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Royalty income | $ | 5,500 | $ | 121 | $ | 5,791 | $ | 382 | ||||
General and administrative expenses | 379 | 38 | 515 | 152 | ||||||||
Income from operations | 5,121 | 83 | 5,276 | 230 | ||||||||
Interest income | - | - | 2 | 2 | ||||||||
Income before income tax provision | 5,121 | 83 | 5,278 | 232 | ||||||||
Provision for income taxes | - | - | - | - | ||||||||
Net income | $ | 5,121 | $ | 83 | $ | 5,278 | $ | 232 | ||||
Net income per share: | ||||||||||||
Basic and diluted | $ | 0.02 | $ | - | $ | 0.02 | $ | - | ||||
Weighted average shares outstanding: | ||||||||||||
Basic and diluted | 230,537,706 | 230,293,141 | 230,375,258 | 230,293,141 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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TIGER X MEDICAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
Six Months Ended | ||||||
September 30, | ||||||
2016 | 2015 | |||||
Cash flows from operating activities | ||||||
Net income | $ | 5,278 | $ | 232 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Stock-based compensation | 9 | - | ||||
Changes in operating assets and liabilities: | ||||||
Prepaid expenses | (10) | (14) | ||||
Accounts payable and accrued expenses | 320 | (1) | ||||
Net cash provided by operating activities | 5,597 | 217 | ||||
Net change in cash | 5,597 | 217 | ||||
Cash, beginning of period | 13,840 | 13,509 | ||||
Cash, end of period | $ | 19,437 | $ | 13,726 | ||
Supplemental disclosure of cash flow information: | ||||||
Interest paid | $ | - | $ | - | ||
Income taxes paid | $ | - | $ | - |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
TIGER X MEDICAL, INC.Notes to Condensed Consolidated Financial StatementsSeptember 30, 2016(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Tiger X Medical, Inc. ("Tiger X" or the "Company"), formerly known as Cardo Medical, Inc., a corporation organized and existing under and by the virtuecertain language from paragraph 4 of the General Corporation Lawcertification of the State of Delaware, previously operatedits Principal Executive Officer filed 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, Inc. ("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.
Basis of Presentation
The accompanying condensed consolidated balance sheet as of December 31, 2015, which has been derived from the Company's audited financial statements as of that date,Exhibit 31.1 and the unaudited condensed consolidated financial informationcertification of the Companyits Principal Financial Officer filed as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015, has been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. In the opinion of management, such financial information includes all adjustments considered necessary for a fair presentation of the Company's financial position at such date and the operating results and cash flows for such periods. Operating results for the interim period ended September 30, 2016 are not necessarily indicative of the results that may be expected for the entire year.
Certain information and footnote disclosure normally included in financial statements in accordance with U.S. GAAP have been omitted pursuantExhibit 31.2 to the rules of the United States Securities and Exchange Commission ("SEC"). These unaudited financial statementsOriginal Form 10-Q.
This Amendment should be read in conjunction with our audited financial statements and accompanying notes includedthe Original Form 10-Q, which continues to speak as of the date thereof. Other than as specifically set forth herein, this Amendment does not modify or update disclosures in the Company's Annual Report onOriginal Form 10-K for10-Q. Accordingly, this Amendment does not reflect events occurring after the year ended December 31, 2015 filed with the SEC on March 25, 2016.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Tiger X Medical, Inc., Accelerated Innovation, Inc. ("Accelerated"), Uni-Knee LLC ("Uni") and Cervical Xpand LLC ("Cervical"). All significant intercompany transactions have been eliminated in consolidation.
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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 joint 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 salesfiling 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.
Use of Estimates
Financial statements prepared in accordance with 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. Actual results could differ from those estimates.
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.
Net Income Per Share
Basic net income per share is computed by using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed giving effect to all dilutive potential common shares using various methods such as the treasury stock or modified treasury stock method in the determination of diluted shares outstanding at each reporting period. Dilutive potential common shares consist of incremental common shares issuable upon exercise of stock options. No dilutive potential common shares are included in the computation of any diluted per share amount because their impact was anti-dilutive.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The likelihood of realizing the tax benefits related to a potential deferred tax asset is evaluated, and a valuation allowance is recognized to reduce that deferred tax asset if it is more likely than not that all or some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are calculated at the beginning and end of the year; the change in the sum of the deferred tax asset, valuation allowance and deferred tax liability during the year generally is recognized as a deferred tax expense or benefit. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.
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The Company evaluates the accounting for uncertainty in income tax recognized in its financial statements and determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit is recorded in its financial statements. For those tax positions where it is "not more likely than not" that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also recorded. The Company has not accrued for any such uncertain tax positions as of September 30, 2016 (unaudited) or December 31, 2015.
Concentration of Credit Risk
The cash and cash equivalents held in the Company's business money market and other bank accounts are with local and national banking institutions and subjected to FDIC insurance limits of $250,000 per banking institution. As of September 30, 2016, the Company's balances in these bank accounts exceeded the insured amount by $19,187,000.
Recent Accounting Pronouncements
There are no recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows.
NOTE 2 - SHARE BASED PAYMENT
The Company has outstanding stock options issued to employees and board members which are exercisable at $0.23 per share. The options vest 20% each year over a five year period and expire after ten years. As of September 30, 2016, there were no unvested options. There was no stock option expense recognized for the nine months ended September 30, 2016 or 2015 in the accompanying condensed consolidated statements of income.
A summary of stock option activity as of September 30, 2016, and changes during the period then ended is presented below.
Weighted- | ||||||||||
Weighted- | Average | |||||||||
Average | Remaining | Aggregate | ||||||||
Exercise | Contractual | Intrinsic | ||||||||
Options | Price | Life (Years) | Value | |||||||
Outstanding at December 31, 2015 | 385,000 | $ | 0.23 | 2.66 | $ | - | ||||
Granted | - | - | - | - | ||||||
Exercised | - | - | - | - | ||||||
Forfeited | (305,000) | 0.23 | - | |||||||
Outstanding at September 30, 2016 (unaudited) | 80,000 | $ | 0.23 | 1.91 | $ | - | ||||
Vested and expected to vest | ||||||||||
at September 30, 2016 (unaudited) | 80,000 | $ | 0.23 | 1.91 | $ | - | ||||
Exercisable at September 30, 2016 (unaudited) | 80,000 | $ | 0.23 | 1.91 | $ | - |
6
On August 11, 2016, the Company granted an aggregate of 450,000 shares of restricted stock to its directors and a consultant. Pursuant to the stock award agreement, the grant of restricted stock of the Company vests in full on August 11, 2017 (the "Vesting Date"), subject to the recipient's continued service with the Company; provided, however, to the extent the recipient's service with the Company is terminated for any reason within thirty (30) days prior to or upon a Change in Control (as defined in the Agreement) prior to the Vesting Date, this grant of restricted stock will immediately and automatically vest in full. The Company recorded stock based compensation of approximately $9,000 related to this grant during the three and nine months ended September 30, 2016. Total unrecognized expense related to the restricted stock grant amounted to approximately $54,000, which will be recognized through the Vesting Date.
NOTE 3 - STOCKHOLDERS' EQUITY
Our authorized capital consists of 750,000,000 shares of common stock and 50,000,000 shares of preferred stock. Our preferred stock may be designated into series pursuant to authority granted by our Certificate of Incorporation, and on approval from our Board of Directors. As of September 30, 2016 and December 31, 2015, we did not have any preferred stock issued.
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," 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.
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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.
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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.
Three Months Ended | ||||||||
September 30, | ||||||||
(In thousands) | 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.
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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.
Nine Months Ended | ||||||||
September 30, | ||||||||
(In thousands) | 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.
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Forward-Looking Statements
Some of the statements in this Quarterly Report onOriginal 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 revisemodify or update any forward- looking statements,related or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.disclosures.
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.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKSIGNATURES
Not applicable for smaller reporting companies.
ITEM 4 - CONTROLS AND PROCEDURES
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.
PART II - OTHER INFORMATION
We know of no material, existing or pending legal proceeding against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
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ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - MINE SAFETY DISCLOSURES
Not applicable
None
The following exhibits are filed as part of, or incorporated by reference into this Report:
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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INDEX TO EXHIBITS
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EXHIBIT INDEX
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