TIGER X MEDICAL, INC.

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FORWARD-LOOKING INFORMATION

This report contains forward-looking statements within the meaning of the U.S. federal securities laws that involve risks and uncertainties. Certain statements contained in this report are not purely historical including, without limitation, statements regarding our expectations, beliefs, intentions, anticipations, commitments or strategies regarding the future that are forward-looking. These statements include those discussed in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, including “Critical AccountingPolicies andEstimates,” “Results of Operations,” “Liquidity and Capital Resources,”and “Future Funding Requirements,” and elsewhere in this report.

In this report, the words “may,” “could,” “would,” “might,” “will,” “should,” “plan,” “ forecast,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” “predict,” “potential,” “continue,” “future,” “moving toward” or the negative of these terms or other similar expressions also identify forward-looking statements. Our actual results could differ materially from those forward-looking statements contained in this report as a result of a number of risk factors including, but not limited to, thoselisted in our Annual Report on Form 10-Kand elsewhere in this report. You should carefully consider these risks, in addition to the other information in this report and in our other filings with the SEC. All forward-looking statements and reasons why results may differ included in this report are made as of the date of this report, and we assume no obligation to update any such forward-looking statement or reason why such results might differ, except as required by law.

PART I —I. FINANCIAL INFORMATION

ITEM 1 —1.UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TIGER X MEDICAL,BIOCARDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

The

See accompanying notes are an integral part of theseto condensed consolidated financial statements.

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TIGER X MEDICAL,BIOCARDIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)
(Unaudited)

The(unaudited)

See accompanying notes are an integral part of theseto condensed consolidated financial statements.

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BIOCARDIA, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

TIGER X MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

The

See accompanying notes are an integral part of theseto condensed consolidated financial statements.

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TIGER X MEDICAL, INC.
Notes to Condensed Consolidated Financial Statements
September 30, 2016
(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Tiger X Medical,BioCardia, Inc. ("Tiger X", or the "Company"), formerly known as Cardo Medical, Inc.,Company, is a corporation organizedclinical-stage regenerative medicine company developing novel therapeutics for cardiovascular diseases with large unmet medical needs. Its lead therapeutic candidate is the CardiAMP cell therapy system and existing under and byits second therapeutic candidate is the virtue of the General Corporation Law of the State of Delaware, 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,CardiALLO cell therapy system. To date the Company discontinuedhas devoted substantially all of its orthopedic medical deviceresources to research and development efforts relating to its therapeutic candidates and biotherapeutic delivery systems including conducting clinical trials, developing manufacturing and sales capabilities, in-licensing related intellectual property, providing general and administrative support for these operations and soldprotecting its intellectual property.

The Company has three enabling device product lines: (1) the assets fromCardiAMP cell processing system; (2) the Helix biotherapeutic delivery system, or Helix; and (3) the Morph vascular access product line, or Morph, which offers advanced catheter products for interventional medicine.The Company manages its previous business lines during 2011. Through July 1, 2016, our continuing operations includedas a single segment for the collectionpurposes of assessing performance and management of our royalty income earned in connection with the Asset Purchase Agreement with Arthrex, Inc. ("Arthrex").making operating decisions.

On August 22, 2016, the Company, its wholly-owned subsidiary, Icicle Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary of the Company ("Merger Sub"),Corp, and BioCardia Lifesciences, Inc., a Delaware corporation ("BioCardia"or BioCardia Lifesciences (at the time named BioCardia, Inc.), entered into an Agreement and Plan of Merger, (the "Merger Agreement"),or the Merger Agreement. The transactions contemplated by the Merger Agreement closed on October 24, 2016, pursuant to which Merger Sub will mergeIcicle Acquisition Corp. merged with and into BioCardia Lifesciences, with BioCardia Lifesciences continuing as the surviving company, underor the name "BioCardia, Inc." (the "Merger"). The Company expectsMerger. BioCardia Lifesciences was determined to be the accounting acquirer in the Merger based upon the terms of the Merger and other factors, including: (i) former BioCardia Lifesciences security holders owned approximately 54% of the combined company (on a fully diluted basis) immediately following the closing of the Merger, (ii) former BioCardia Lifesciences directors hold the majority of the board seats in the combined company, and (iii) former BioCardia Lifesciences management holds all of the key positions in the management of the combined company. Following the completion of the Merger, the Company changed its name to close in October 2016.BioCardia, Inc.

Basis

Exchange Ratio

Pursuant to the Merger Agreement, each share of PresentationBioCardia Lifesciences common stock issued and outstanding prior to the Merger, including shares of common stock underlying outstanding preferred stock, convertible notes (which converted into common stock immediately prior to the Merger), and stock options were converted into the right to receive 19.3678009 shares of Company common stock, or the Exchange Ratio. The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the capital structure as a result of the Merger.

The accompanying condensed consolidated balance sheetsheets, statements of operations and cash flows as of DecemberMarch 31, 2015, which has been derived from the Company's audited financial statements as of that date, and the unaudited condensed consolidated financial information of the Company as of September 30, 20162017 and for the three and nine months ended September 30,March 31, 2017 and 2016 and 2015, hasare unaudited. The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles generally accepted in the United States of America ("U.S. GAAP")(U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information and on a basis consistent with the instructions to Form 10-Qannual financial statements and, Article 8-03 of Regulation S-X. Inin the opinion of management, such financial information includesreflect all adjustments consideredwhich include only normal recurring adjustments, necessary for a fair presentation of the Company'sto present fairly our financial position at such date and the operatingas of March 31, 2017, results of operations and cash flows for such periods. Operatingthe three months ended March 31, 2017 and 2016. The results for the interim periodthree months ended September 30, 2016March 31, 2017 are not necessarily indicative of the results that mayto be expected for the entireyear ending December 31, 2017 or for any other interim period or for any other future year.

Certain information and footnote disclosure normally included in financial statements in accordance with U.S. GAAP have been omitted pursuant to the rules of the United States Securities and Exchange Commission ("SEC").

These unauditedcondensed consolidated financial statements should be read in conjunction with ourthe audited financial statements and accompanyingrelated notes included in the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 20152016, filed with the SEC on March 25,30, 2017.

The Company has incurred net losses and negative cash flows from operations since its inception and had an accumulated deficit of $63.0 million as of March 31, 2017. Management expects operating losses and negative cash flows to continue through at least the next several years.

Upon closing of the Merger Agreement, the combined company had approximately $24.0 million in cash, including $19.0 million of cash acquired as part of the Merger and $4.4 million in net proceeds from the issuance of convertible notes in October 2016. Management believes cash of $19.0 million as of March 31, 2017 is sufficient to fund the Company for at least the next twelve-month period following the date of issuance of these financial statements. The Company also plans to raise other additional capital, potentially including debt and equity arrangements, to finance its future operations. If adequate funds are not available, the Company may be required to reduce operating expenses, delay or reduce the scope of its product development programs, obtain funds through arrangements with others that may require the Company to relinquish rights to certain of its technologies or products that the Company would otherwise seek to develop or commercialize itself, or cease operations. While the Company believes in the viability of its strategy to raise additional funds, there can be no assurances to that effect. 

The preparation of the financial statements in accordance with U.S. GAAP requires Company management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property and equipment; allowances for doubtful accounts and sales returns; inventory valuation; fair value of the convertible preferred stock warrant liability; fair value of the maturity date preferred stock warrant liability; fair value of the convertible shareholder notes derivative liability; and share-based compensation.

The condensed consolidated financial statements include the accounts of Tiger X Medical, Inc., Accelerated Innovation, Inc. ("Accelerated"), Uni-Knee LLC ("Uni")the Company and Cervical Xpand LLC ("Cervical").its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated during the consolidation process.

The Company’s significant accounting policies are described in consolidation.Note 2 of the notes to the financial statements included in the 2016 Form 10-K. There have been no changes to those policies except as described below.

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In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification in the statement of cash flows and forfeitures. The Company adopted ASU 2016-09 effective January 1, 2017.

Royalty Agreement

On January 24, 2011,The impact of adopting ASU 2016-09 resulted in the following:

There were no other material impacts to our condensed consolidated financial statements as a result of adopting this updated standard.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides comprehensive guidance for revenue recognition. ASU 2014-09 affects any entity which either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The core principle of the guidance provides that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The new standard can be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the change recognized at the date of the initial application in retained earnings.

In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers, which deferred the effective date for implementation of the standard. Public entities are to apply the new standard for annual and interim reporting periods beginning after December 15, 2017 and earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company has not elected early adoption and has not concluded on an adoption method. The Company has formed a task force that is beginning to assess the Company’s customer contracts and the potential impacts the standard may have on previously reported revenues and future revenues. Given the relatively small volume of revenue arrangements, the Company believes that the analysis will be completed in sufficient time to adopt the new standard when required.

In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842), which supersedes existing guidance on accounting for leases in “Leases (Topic 840)” and generally requires all leases to be recognized in the consolidated balance sheet. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018; early adoption is permitted. The Company does not plan to elect early adoption. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. The Company is currently assessing the future impact of this ASU on its consolidated financial statements.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, and the American Institute of Certified Public Accountants did not or are not believed by management to have a material impact on the Company’s financial statement presentation or disclosures.

(3)     Fair Value Measurement

The fair value of financial instruments reflects the amounts that the Company estimates to receive in connection with the sale of an asset or paid in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company follows a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into the following three levels:

Level 1 – quoted prices in active markets for identical assets and liabilities

Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table sets forth the fair value of our financial assets measured on a recurring basis as of March 31, 2017 and indicates the fair value hierarchy utilized to determine such fair value (in thousands).

The following table sets forth the fair value of our financial assets measured on a recurring basis as of December 31, 2016 and indicates the fair value hierarchy utilized to determine such fair value (in thousands).

As discussed in Note 7, in 2015, the Company issued warrants to purchase preferred stock in connection with the note agreements to various shareholders as described below. The warrant liabilities were recorded at the fair value on the date of issuance and were remeasured each subsequent balance sheet date and as of the warrant exercise date, with fair value changes recognized as income (decrease in fair value) or expense (increase in fair value) in other income (expense) in the consolidated statements of operations.  No warrants are outstanding as of March 31, 2017.

In May 2015, the Company entered into note agreements with various stockholders of the Company and other lenders for a total of $7.2 million, or the 2015 Notes. As discussed more fully in Note 7, the 2015 Notes include embedded derivative features that were determined to be a compound embedded derivative requiring bifurcation and separate accounting at estimated fair value. The Company estimated the fair value of the compound embedded derivative utilizing a Monte Carlo simulation model from inception through June 30, 2016. The inputs used to determine the estimated fair value of the compound embedded derivative instrument include the probability of an Asset Purchase Agreementunderlying event triggering the redemption event and its timing prior to the maturity date of the 2015 Notes. The fair value measurement is based upon significant inputs not observable in the market. These assumptions are inherently subjective and involve significant management judgment. Upon the completion of the Merger, the valuation of the compound embedded derivative was determined based on the settlement value of the common stock exchanged for the notes on October 24, 2016.  No notes are outstanding as of March 31, 2017.

Inventories are stated at the lower of cost or net realizable value using the average cost method. Inventories consist of the following (in thousands):

Write downs for excess or expired inventory are based on management’s estimates of forecasted usage of inventories and are included in cost of goods sold. A significant change in the timing or level of demand for certain products as compared to forecasted amounts may result in recording additional write downs for excess or expired inventory in the future. Charges to cost of goods sold for inventory write-downs, scrap, shrinkage and expired inventories totaled approximately $9,000 and $18,000 for the three months ended March 31, 2017 and 2016, respectively.

Property and equipment, net consist of the following (in thousands):

Depreciation expense totaled approximately $13,000 and $10,000 for the three months ended March 31, 2017 and 2016, respectively.

Accrued liabilities consisted of the following (in thousands):

In May 2015, BioCardia Lifesciences entered into note agreements with Arthrex (the "Arthrex Asset Purchase Agreement"),various stockholders of BioCardia Lifesciences and other lenders for a total of $7.2 million, or the 2015 Notes. The 2015 Notes accrued 8% annual simple interest, matured 18 months from the issue date and were callable after the maturity date by written demand of a majority of the holders of the outstanding note principle. If BioCardia Lifesciences closed an effective registration statement filed under the Securities Act of 1933, as amended, covering the sale of BioCardia Lifesciences common stock (an IPO) prior to maturity, the outstanding principle and accrued interest would have automatically converted into shares of common stock at 80% of the price of the shares of common stock purchased in the IPO. If at any time prior to the maturity date, the Company closed a private placement of the Company’s preferred stock for aggregate sales proceeds of at least $5.0 million excluding note conversions, at the note holder’s option, or the Optional Conversion Right, the outstanding principle and interest may have been converted into shares of the preferred stock at a conversion price equal to 80% of the price of the preferred shares sold in such financing, plus preferred stock warrant coverage equal to 8% with an exercise price equal to the purchase price of the preferred stock sold in such financing. If the notes were held to maturity, subject to BioCardia Lifesciences authorizing sufficient shares of a new class of preferred stock, or the Maturity Date Preferred Stock, the holder would have had the option to convert the outstanding principle and interest to this new class of Maturity Date Preferred Stock at an exercise price of $0.07 per share, plus 8% warrant coverage.

In August 2016, the Company and the holders of the 2015 Notes amended the 2015 Notes, pursuant to which the Company agreed to selloutstanding principal amount and all accrued interest through August 31, 2016 automatically converted into shares of BioCardia Lifesciences common stock at 80% of the assetsconversion price of its joint arthroplasty division, referred to as the Reconstructive Division, to Arthrex. The Arthrex Asset Purchase Agreement also providedconvertible notes issued in October 2016. In addition, the amendment eliminated the payment of interest for the Companyperiod subsequent 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 toAugust 31, 2016, 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 Settlementclosing of the Merger. Upon the completion of the Merger, the 2015 Notes and Release Agreement,accrued interest converted into shares of BioCardia Lifesciences common stock, which were then exchanged at the Exchange Ratio into 67,443,988 shares of the Company’s common stock.

The 2015 Notes had redemption features that were determined to be a compound embedded derivative requiring bifurcation and separate accounting at estimated fair value. The changes in the estimated value are reflected in the change in fair value of convertible shareholder notes derivative liability in the consolidated statements of operations. We estimated the fair value of the compound embedded derivative utilizing a Monte Carlo simulation model. The inputs used to determine the estimated fair value of the compound embedded derivative instrument include the probability of an underlying event triggering the redemption event and its timing prior to the maturity date of the 2015 Notes. The fair value measurement is based upon significant inputs not observable in the market. These assumptions are inherently subjective and involve significant management judgment. Immediately prior to the closing of the Merger, the compound embedded derivative was remeasured based on the settlement value of the common stock exchanged for the notes, and we reclassified the balance of the convertible shareholder notes derivative liability to additional paid-in capital.

The Company recognized interest expense, including amortization of the debt discount of approximately $0 and $550,000 for the three months ended March 31, 2017 and 2016, respectively. 

BioCardia Lifesciences adopted, and the remaining $5,500,000 representedBioCardia Lifesciences shareholders approved, the settlement2002 Stock Plan in 2002, or the 2002 Plan, and the Company assumed the 2002 Plan in the Merger. We will not grant any additional awards under the 2002 Plan following the Merger. In 2016, BioCardia Lifesciences adopted, and the BioCardia Lifesciences shareholders approved, the 2016 Equity Incentive Plan, or the 2016 Plan, and the Company assumed the 2016 Plan in the Merger. We will grant awards, including incentive stock options and nonstatutory stock options, under the 2016 Plan following the Merger.

Stock compensation attributable to manufacturing operations was not significant and was expensed directly to cost of future royalties. goods sold in the condensed consolidated statements of operations. Share-based compensation expense for the three months ended March 31, 2017 and 2016 was recorded as follows (in thousands):

The Royalty Settlementfollowing table summarizes the activity of stock options and Release Agreement became effectiverelated information:

The weighted average grant-date fair value of options granted during the three months ended March 31, 2017 was $0.72 per share.

EmployeeShare-Based Compensation (Stock Options)

During the three months ended March 31, 2017, the Company granted stock options to certain non-employee directors and employees to purchase 2,466,147 shares of common stock. The fair value of each option grant is estimated 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 statementsgrant using the BSM option pricing model with the weighted average assumptions in the table below.  

Unrecognized share-based compensation for employee options granted through March 31, 2017 is approximately $4.1 million to be recognized over a remaining weighted average service period of 3.4 years.

EmployeeShare-Based Compensation (RSUs)

During the three months ended March 31, 2017, the Company granted to certain non-employee directors 736,000 restricted stock units, or RSUs. The fair value of each RSU is estimated on the closing market price on the grant date.  

The following summarizes the activity of non-vested RSUs:

Unrecognized share-based compensation for employee RSUs granted through March 31, 2017 is approximately $630,000 to be recognized over a remaining weighted average service period of 2.8 years.

Nonemployee Share-Based Compensation

During the three months ended March 31, 2017, the Company granted options to purchase 1,947,783 shares of common stock to consultants. These options were granted in exchange for consulting services to be rendered and vest over the term specified in the grant, which correlates to the period the services are rendered. The Company recorded approximately $233,000 and $1,000 for the three months ended March 31, 2017 and 2016, respectively, as nonemployee share-based compensation expense.

The Company accounts for share-based compensation arrangements with nonemployees, using the BSM option pricing model, based on the fair value as these instruments vest. Accordingly, at each reporting date, the Company revalues the unearned portion of the share-based compensation 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 incomeresulting change in fair value is recognized in the consolidated statements of operations over the period the related services are rendered. The following assumptions were used to value the awards as the amount becomes known and collectability is reasonably assured.of March 31, 2017:

Net Income Per

Basic net incomeloss per share is computed by usingdividing net loss by the weighted-average number of common shares outstanding duringfor the period. DilutedSince we were in a loss position for all periods presented, diluted net incomeloss per share is computed giving effect tothe same as basic net loss per share for all dilutiveperiods as the inclusion of all potential common shares using various methods such as the treasuryoutstanding would have been anti-dilutive.  

The following outstanding common 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 inequivalents were excluded from the computation of any diluted net loss 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 betweenperiods presented because including them would have been antidilutive:

(10)     Income Taxes

During the financial statement carrying amounts of existing assetsthree months ended March 31, 2017 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 taxable2016, there was no 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 accountingbenefit for uncertainty infederal or state 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 2015taxes in the accompanying condensed consolidated statementsstatement of income.operations due to the Company’s net loss and a full valuation allowance on the resulting deferred tax assets.

A summary

As of stock option activityMarch 31, 2017, the Company retains a full valuation allowance on its deferred tax assets in all jurisdictions. The realization of the Company’s deferred tax assets depends primarily on its ability to generate future taxable incomewhich is uncertain. The Company does not believe that its deferred tax assets are realizable on a more-likely-than-not basis; therefore, the net deferred tax assets have been fully offset by a valuation allowance.

(11)     Grant Funding

In June 2016, the Company entered into a grant agreement with Maryland Technology Development Corporation, or TEDCO. TEDCO was created by the Maryland State Legislature in 1998 to facilitate the transfer and commercialization of technology from Maryland’s research universities and federal labs into the marketplace. TEDCO administers the Maryland Stem Cell Research Fund to promote State funded stem cell research and cures through financial assistance to public and private entities operating within the State. Under the agreement, TEDCO has agreed to provide the Company an amount not to exceed $750,000 to be used solely to finance the costs to conduct the research project entitled “Heart Failure Trial” over a period of three years. 

In the fourth quarter of 2016, the Company received approximately $312,000 under the grant which will be accounted for as a reduction to research and development expenses as the related qualifying costs are incurred. Approximately $27,000 of the qualifying costs had been incurred as of September 30, 2016, and changes duringMarch 31, 2017. The remaining $285,000 is recorded as grant liability on the period then endedcondensed consolidated balance sheet at March 31, 2017. The amount is presented below.

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On(12)     Related Party Transactions

In August 11, 2016, the Company granted an aggregate of 450,000 shares of restricted stockoption 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 750,000,000purchase 5,027,726 shares of common stock, with 4-year vesting period and 50,000,000the exercise price of $0.15 per share, to OPKO Health, Inc., or OPKO, as consideration for consulting services to be provided by OPKO in accordance with the consulting agreement entered into between the Company and OPKO. The unearned portion of the share-based compensation related to the OPKO option was revalued at March 31, 2017, and the Company recorded $122,000 as expense during the three months ended March 31, 2017. The term of the consulting agreement is 4 years and will be automatically renewed for successive one year periods. The chairman and chief executive officer of OPKO is a beneficial owner of more than 5% of the outstanding shares of preferredthe Company’s common stock and OPKO itself is also a beneficial owner of more than 5% of the outstanding shares of the Company’s common 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'S2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains certain forward-looking statements that involve risk and uncertainties. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those listed in our Annual Report on Form 10-K and elsewhere in this report. Historical results are not necessarily indicative of future results.

Special Note Regarding Smaller Reporting Company Status

We are filing this Quarterly Report on Form 10-Q as a “smaller reporting company” (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended) based on our public float (the aggregate market value of our common equity held by non-affiliates of the Company) as of the last business day of our second fiscal quarter of 2016. As a result of being a smaller reporting company, we are allowed and have elected to omit certain information, including tabular disclosure of contractual obligations, from this Management’s Discussion and Analysis of Financial Condition and Results of Operations; however, we have provided all information for the periods presented that we believe to be appropriate and necessary.

Overview

We are a clinical-stage regenerative medicine company developing novel therapeutics for cardiovascular diseases with large unmet medical needs. Our lead therapeutic candidate is the CardiAMP Cell Therapy System, or CardiAMP. We have initiated our U.S. Food and Drug Administration, or FDA, accepted Phase III pivotal trial for CardiAMP in ischemic systolic heart failure, began treating patients in February 2017 and expect to obtain top-line data in 2019. If our trial is successful, we believe we will be the first company to reach the market with a cell-based therapy to treat heart failure. An Investigational Device Exemption submission to FDA for CardiAMP in the indication of post myocardial indication is anticipated in 2017. Our second therapeutic candidate is the CardiALLO Cell Therapy System, or CardiALLO. We anticipate preparation of an Investigational New Drug, or IND, application for submission to the FDA for a Phase II trial for CardiALLO for the treatment of ischemic systolic heart failure. This IND is expected to have improved Chemistry Manufacturing Controls, or CMC, in the IND relative to our previous co-sponsored investigations. We are committed to applying our expertise in the fields of autologous and allogeneic cell-based therapies to improve the lives of patients with cardiovascular conditions.

To date, we have devoted substantially all of our resources to research and development efforts relating to our therapeutic candidates and biotherapeutic delivery systems, including conducting clinical trials, developing manufacturing and sales capabilities, in-licensing related intellectual property, providing general and administrative support for these operations and protecting our intellectual property. We have also generated modest revenues from sales of our approved products. We have funded our operations primarily through the sales of equity and convertible debt securities, and certain government and private grants. All convertible debt securities were converted into shares of our Common Stock in connection with the Merger.

We have incurred net losses in each year since our inception. Our net losses were approximately $2.9 million and $1.5 million for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, we had an accumulated deficit of approximately $63.0 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs, clinical trials, intellectual property matters, building our manufacturing and sales capabilities, and from general and administrative costs associated with our operations.

Financial Overview

Revenue

We currently have a portfolio of enabling and delivery products, from which we have generated modest revenue.

Cost of Goods Sold

Cost of goods sold includes the costs of raw materials and components, manufacturing personnel and facility costs and other indirect and overhead costs associated with manufacturing our enabling and delivery products.

Research and Development Expenses

Our research and development expenses consist primarily of:

We expense all research and development costs in the periods in which they are incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and clinical sites. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and the services are performed.

We plan to increase our research and development expenses for the foreseeable future as we continue to develop CardiAMP, and subject to the availability of additional funding, further advance the development of CardiALLO and any other therapeutic candidates for additional indications. We typically use our employee and infrastructure resources across multiple research and development programs, and accordingly we have not historically allocated resources specifically to our individual programs.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our therapeutic candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our therapeutic candidates.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries and related costs for employees in executive, finance and administration, sales, corporate development and administrative support functions, including share-based compensation expenses and benefits. Other significant selling, general and administrative expenses include sales commissions, rent, accounting and legal services, obtaining and maintaining patents, the cost of consultants, occupancy costs, insurance premiums and information systems costs.

We expect that our selling, general and administrative expenses will increase as we advance our Phase III pivotal heart failure trial for CardiAMP, and subject to the availability of additional funding, conduct our Phase II trial for CardiALLO and prepare for commercialization. We believe that these increases will likely include increased costs for director and officer liability insurance, costs related to the hiring of additional personnel to support product commercialization efforts and operations and increased fees for outside consultants, attorneys and accountants. We also expect to incur increased costs to comply with corporate governance, internal controls, investor relations and disclosures, and similar requirements applicable to public companies.

Other Income (Expense)

Other income and expense consists primarily of interest income we earn on our cash and cash equivalents, interest charges we incurred in periods when we have convertible debt outstanding, and changes in the fair value of our warrant and convertible shareholder note derivative liabilities in periods when we have warrants or convertible debt outstanding. Subsequent to the Merger we have no interest charges related to the convertible debt and changes in the fair value of our warrant and convertible shareholder note derivative liabilities as such instruments were converted, cancelled or exchanged as part of the Merger. We expect our interest income to increase following the completion of the Merger as we invest our cash on hand pending its use in our operations.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations areis based on our financial statements, which we have prepared in accordance with generally accepted accounting principles generally accepted in the United States, of America.or U.S. GAAP. The preparation of these condensed consolidatedour 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 consolidatedour financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, weperiods presented. We evaluate these estimates and judgments including those described in greater detail below.on an ongoing basis. 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

Other than below, there were no material changes in this "Management'sour critical accounting estimates or accounting policies described in “Management’s Discussion and Analysis of Financial Condition and Results of Operation," except whereOperations” in our 2016 Form 10-K during the context otherwisethree months ended March 31, 2017.

Share-Based Compensation 

We measure and recognize share-based compensation expense for equity awards to employees, directors and consultants based on fair value at the grant date. We use the Black-Scholes-Merton option-pricing model, or BSM, to calculate the fair value of stock options. Restricted stock units (RSUs) are measured based on the fair market values of the underlying stock on the dates of grant. Share-based compensation expense recognized in the statements of operations is based on awards at the time of grant, and is reduced for actual forfeitures at the time that the forfeitures occur. Compensation cost for employee share-based awards will be recognized over the vesting period of the applicable award on a straight-line basis. 

For options granted to nonemployees, we revalue the unearned portion of the share-based compensation and the resulting change in fair value is recognized in the statements of operations over the period the related services are rendered.

The BSM option-pricing model requires the term "we," "us," "our,"input of subjective assumptions, including the "Company," or "Tiger X" refers torisk-free interest rate, the business of Tiger X Medical, Inc.

The following discussion should be read together with the information containedexpected volatility 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 managementvalue of our royalty income earned in connection withCommon Stock, and the Asset Purchase Agreement with Arthrex. 

On August 22, 2016, the Company, Icicle Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiaryexpected term 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 makeoption. These estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statementsinvolve inherent uncertainties and the reported amountsapplication of revenuesmanagement’s judgment. If factors change and expenses duringdifferent assumptions are used, our share-based compensation expense could be materially different in 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 Agreementfuture. 

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 consolidatedtable summarizes our results of operations for Tiger X for the three months ended September 30,March 31, 2017 and 2016 (in thousands):

Revenue.    Revenue decreased by approximately $41,000 in the three months ended March 31, 2017 compared to the three months ended March 31, 2016 primarily due to a reduction in sales volumes. We expect net product revenue for 2017 to be relatively consistent with 2016.

Cost of Goods Sold.    Cost of goods sold decreased by approximately $51,000 in the three months ended March 31, 2017 compared to the three months ended March 31 2016 consistent with the reduction in revenue. We expect cost of goods sold for 2017 to be relatively consistent with 2016.

Research and 2015.

Royalty incomeDevelopment Expenses.    Research and development expenses increased by approximately $592,000 in the three months ended March 31, 2017 compared to the three months ended March 31, 2016 primarily due to expenses incurred in the planning, preparation and inception of the CardiAMP Phase III pivotal heart failure trial. We expect research and development expenses to increase as we continue to enroll and treat patients in the trial and incur additional development expenses related to CardiALLO therapeutic program. 

Royalty income amounted

Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased by approximately $1.2 million in the three months ended March 31, 2017 compared to $5,500,000the three months ended March 31, 2016 primarily due to the additional expense of operating as a public company, including additional salary expenses, stock compensation costs, legal, accounting, tax and other corporate expenses. We expect selling, general and administrative expenses for the quarterremaining quarters to increase moderately from the three month period ended September 30,March 31, 2017 as we continue to build the supporting staff and infrastructure to support the CardiAMP Phase III pivotal trial and public company operations.  

Interest Expense.   Interest expense for the three months ended March 31, 2016 consisted primarily of interest expense related to convertible notes which are no longer outstanding.

Other Income (Expense).Other income (expense) for the three months ended March 31, 2016 consisted primarily of the changes in value of the convertible preferred stock warrant liabilities and the change in value of the convertible shareholder note derivative liability.

Liquidity and Capital Resources

We have incurred net losses each year since our inception and as of March 31, 2017, we had an accumulated deficit of approximately $63.0 million. We anticipate that we will continue to incur net losses for at least the next several years.

We have funded our operations principally through the sales of equity and convertible debt securities as well as the cash acquired through the Merger. As of March 31, 2017, we had cash and cash equivalents of approximately $19.0 million.

The following table shows a summary of our cash flows for the periods indicated (in thousands):

Cash Flows from Operating Activities.    The increase in overall spending for operating activities of approximately $1.5 million in the three months ended March 31, 2017 compared to $121,000 for the quarterthree months ended September 30, 2015. Revenues represented royalties receivedMarch 31, 2016 relates primarily to increased cash outflows to conduct the CardiAMP Phase III pivotal trial, further develop the CardiAMP and CardiALLO programs and to build the supporting infrastructure to sustain these efforts and support operations as a public company.   

Cash Flows from ArthrexInvesting Activities.     Net cash used 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 $142,000investing activities of royalty income recorded$64,000 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 closingMarch 31, 2017 consists of the agreement on July 1, 2016. Other than this amount recorded on July 1, 2016 underpurchase of property and equipment.

Cash Flows from Financing Activities.     Net cash provided by financing activities of $22,000 during the termsthree months ended March 31, 2017 consists of the Royalty Settlement and Release Agreement,proceeds from the exercise of stock options.

Future Funding Requirements

To date, we have generated modest revenue from sales of our approved products. We do not know when, or if, we will have no further royalty income.

Generalgenerate any revenue from our development stage biotherapeutic programs. We do not expect to generate any revenue from sales of our CardiAMP or CardiALLO therapeutic candidates unless and Administrative Expenses

Generaluntil we obtain regulatory approval. At the same time, we expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development and administrativeclinical trials of, and seek regulatory approval for, our therapeutic candidates. In addition, subject to obtaining regulatory approval for any of our therapeutic candidates and companion diagnostic, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. We anticipate that we will need additional funding in connection with our continuing operations.  

Based upon our current operating plan, we believe that the quarter ended September 30, 2016 increased by $341,000cash on hand of $19.0 million as comparedof March 31, 2017 will enable us to fund our operations for at least 12 months from the same period in 2015 due primarilydate of issuance of these financial statements. We have based our estimates on assumptions that may prove to increased legalbe wrong, and professional expenses duringwe may use our available capital resources sooner than we currently expect. Because of the quarter ended September 30, 2016numerous risks and uncertainties associated with the Royalty Settlementdevelopment and Release Agreementcommercialization of our therapeutic candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development of our therapeutic candidates.  

Our future capital requirements will depend on many factors, including:

Until such time that we agreedcan generate meaningful revenue from the sales of approved therapies and products, if ever, we expect to receive approximately $5,642,000 in full satisfactionfinance our operating activities through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements, and other collaborations, strategic alliances and licensing arrangements or a combination of all amounts duethese approaches. To the extent that we raise additional capital through the sale of equity or payable, or which become payable underconvertible debt securities, the Arthrex Asset Purchase Agreement. Other than this amount recorded on July 1, 2016 underownership interests of our Common Stock holders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the Royalty Settlementrights of our Common Stock holders. Debt financing, if available, may involve agreements that include conversion discounts or covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third-party funding, marketing and Release Agreement,distribution arrangements or other collaborations, or strategic alliances or licensing arrangements with third parties, we willmay have no further royalty income.

Generalto relinquish valuable rights to our technologies, future revenue streams, research programs, products or therapeutic candidates or to grant licenses on terms that may not be favorable to us. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research and Administrative Expensesdevelopment programs or the commercialization of any approved therapies or products or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially adversely affect our business, financial condition and results of operations.

General and administrative expenses for

Off-Balance Sheet Arrangements

During the nine months ended September 30, 2016 increased by $363,000periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as compared todefined under 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

Somerules of the Securities and Exchange Commission.

Recent Accounting Pronouncements

See Note 2 of our notes to condensed consolidated financial statements in this Quarterly Report on Form 10-Qfor information regarding recent accounting pronouncements that 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 strictlysignificance or potential significance 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.us.

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 -3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable for smaller reporting companies.applicable.

ITEM 4 -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 ourthe Company’s reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Commission'sSEC’s rules and forms, and that such information is accumulated and communicated to our management, including our interim principal executive officerChief Executive Officer and our interim principal financial officer,Vice President of Finance, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Company’s controls are designed to do, and management necessarily was required to apply its judgment in evaluating the risk related to controls and procedures.

We carried out

In connection with the preparation of this Quarterly Report on Form 10-Q, as of March 31, 2017, an evaluation was performed under the supervision and with the participation of our management, including our interim principal executive officerthe Chief Executive Officer and interim principal financial officer,Vice President of Finance, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d- 15(e) under the Exchange Act) as of. Due to the material weakness in internal control over financial reporting described in our Annual Report on 10-K for the fiscal year end of the period covered by this quarterly report. Based on this evaluation,dated December 31, 2016, our Interim Chief Executive Officer and Interim Chief Financial OfficerVice President of Finance concluded that our disclosure controls and procedures were not effective as of September 30, 2016.March 31, 2017. These conclusions were communicated to the Audit Committee. Notwithstanding the existence of this material weakness, management has concluded that the condensed consolidated financial statements in this Form 10-Q fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for all periods and dates presented.

Changes in Internal Control Overover 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, 2016three month period covered by this Quarterly Report on Form 10-Q that have materially affected or areis reasonably likely to materially affect, our internal control over financial reporting.

PART II -II. OTHER INFORMATION

ITEM 1 -1. LEGAL PROCEEDINGS

We know

The Company may be subject to various claims, complaints, and legal actions that arise from time to time in the normal course of business. Management does not believe that the Company is party to any currently pending legal proceedings. There can be no material,assurance that existing or pendingfuture legal proceeding against our Company, nor are we involved as a plaintiffproceedings arising in any material proceedingthe ordinary course of business 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 hasotherwise will not have a material interest adverse effect on the Company’s business, financial position, results of operations, or cash flows.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our interest.Annual Report on Form 10-K for the year ended December 31, 2016, which could materially affect our business, financial condition, or future results. The risks described in this report and in our Annual Report on 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

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ITEM 2 -2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

None.

ITEM 3 -3. DEFAULTS UPON SENIOR SECURITIES

None

None.

ITEM 4 -4. MINE SAFETY DISCLOSURES

Not applicableapplicable.

ITEM 5 -5. OTHER INFORMATION

None

None.

ITEM 6 - EXHIBITS6. EXHIBIT INDEX

The following exhibits listed in the Exhibit Index to this Quarterly Report on Form 10-Q are filed as part of, or incorporated herein by reference into this Report:

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SIGNATURES

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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