Stereotaxis(US:STXS)2025-08-13 19:00markdown Part I Financial Information [Item 1. Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20%28unaudited%29) This section presents Stereotaxis, Inc.'s unaudited consolidated financial statements for the quarter ended June 30, 2025, including the balance sheets, statements of operations, statements of convertible preferred stock and stockholders' equity, and statements of cash flows [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section highlights key changes in assets, liabilities, and stockholders' equity, including a significant decrease in total equity Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Current Assets | $21,904 | $26,439 | | Total Assets | $41,173 | $46,724 | | Total Current Liabilities | $20,748 | $21,602 | | Total Liabilities | $34,421 | $35,292 | | Total Stockholders' Equity | $1,456 | $6,080 | - **Cash and cash equivalents decreased** from **$12,217 thousand** at **December 31, 2024**, to **$6,967 thousand** at **June 30, 2025**[12](index=12&type=chunk) - **Total stockholders' equity significantly decreased** from **$6,080 thousand** at **December 31, 2024**, to **$1,456 thousand** at **June 30, 2025**[12](index=12&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's revenue, cost of revenue, gross margin, and net loss for the reported periods, showing improved operational efficiency Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenue | $8,798 | $4,502 | $16,270 | $11,382 | | Total Cost of Revenue | $4,219 | $1,189 | $7,627 | $4,103 | | Gross Margin | $4,579 | $3,313 | $8,643 | $7,279 | | Operating Loss | $(3,977) | $(6,021) | $(9,906) | $(10,767) | | Net Loss | $(3,826) | $(5,833) | $(9,649) | $(10,340) | | Net Loss per Share (Basic & Diluted) | $(0.05) | $(0.07) | $(0.12) | $(0.13) | - **Total revenue increased** significantly by **95%** for the three months ended **June 30, 2025**, compared to the same period in **2024**, and by **43%** for the six months ended **June 30, 2025**, driven by **increased system sales** and post-acquisition **disposable device sales**[15](index=15&type=chunk) - **Net loss decreased** for both the three-month and six-month periods ended **June 30, 2025**, compared to the prior year, indicating improved operational efficiency despite **increased cost of revenue**[15](index=15&type=chunk) [Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity) This section details changes in the company's capital structure, including convertible preferred stock, common stock, and accumulated deficit Changes in Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2024 | Net Loss (6M 2025) | Stock-based Compensation (6M 2025) | Preferred Stock Conversion (6M 2025) | Balance at June 30, 2025 | | :-------------------------- | :---------------------- | :----------------- | :----------------------------------- | :----------------------------------- | :----------------------- | | Convertible Preferred Stock | $5,352 | - | - | $(56) | $5,296 | | Common Stock | $85 | - | - | $1 | $86 | | Additional Paid-In Capital | $567,926 | - | $4,902 | $56 | $572,950 | | Accumulated Deficit | $(561,725) | $(9,649) | - | - | $(571,374) | | Total Stockholders' Equity | $6,080 | $(9,649) | $4,902 | $57 | $1,456 | - The **accumulated deficit increased** to **$(571.4) million** as of **June 30, 2025**, from **$(561.7) million** at **December 31, 2024**, primarily due to the **net loss** incurred during the period[24](index=24&type=chunk) - **Stock-based compensation contributed $4,902 thousand** to additional paid-in capital for the six months ended **June 30, 2025**[24](index=24&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash flows from operating, investing, and financing activities, and the resulting net change in cash Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Used in Operating Activities | $(5,512) | $(5,434) | | Net Cash Used in Investing Activities | $(23) | $(22) | | Net Cash Provided by Financing Activities | $66 | $58 | | Net Decrease in Cash, Cash Equivalents, and Restricted Cash | $(5,469) | $(5,398) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $6,967 | $15,164 | - The company experienced a **net decrease** in cash, cash equivalents, and restricted cash of **$5,469 thousand** for the six months ended **June 30, 2025**, leading to an ending balance of **$6,967 thousand**[26](index=26&type=chunk) - **Operating activities** continued to be a net user of cash, with **$5,512 thousand** used in the first half of **2025**, a slight **increase** from **$5,434 thousand** in the prior year[26](index=26&type=chunk) [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Financial%20Statements) This section includes detailed notes explaining the company's business, significant accounting policies, recent acquisition of APT, and other financial instrument details - The company's interim financial statements are prepared in accordance with U.S. GAAP for interim information and Form 10-Q instructions, including normal recurring adjustments[45](index=45&type=chunk) - **Key risks and uncertainties** include the fluid **global tariff environment** (e.g., potential U.S.-China tariff expiration, proposed universal baseline tariff), ongoing supply chain disruptions, inflationary pressures, elevated interest rates, and geopolitical conflicts, which could impact **cost structure**, **gross margins**, and product launches[47](index=47&type=chunk)[48](index=48&type=chunk) - **Revenue is recognized** in accordance with ASC 606, distinguishing between initial capital sales of systems and recurring revenue from disposables, royalties, software updates, and service contracts, with allocation based on standalone selling prices[66](index=66&type=chunk)[67](index=67&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) [1. Description of Business](index=9&type=section&id=1.%20Description%20of%20Business) Stereotaxis designs, manufactures, and markets robotic systems, instruments, and information systems for interventional laboratories, primarily focusing on cardiac ablation procedures using its proprietary Robotic Magnetic Navigation technology - **Stereotaxis' core business** involves Robotic Magnetic Navigation (RMN) systems for endovascular interventions, with a primary clinical focus on cardiac ablation procedures[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - The company **acquired Access Point Technologies EP, Inc. (APT)** on **July 31, 2024**, to integrate in-house catheter development and manufacturing expertise, supporting innovation in interventional devices[41](index=41&type=chunk)[42](index=42&type=chunk) - **Key product developments and regulatory approvals** include CE Mark for GenesisX RMN System (Q3 2024), NMPA approval for Genesis RMN in China (Nov 2024), CE Mark for Stereotaxis MAGiC catheter in Europe (Q1 2025), and FDA 510(k) clearance for MAGiC Sweep™ catheter in the U.S. (July 2025)[43](index=43&type=chunk)[44](index=44&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the company's significant accounting policies, including the basis of presentation for unaudited interim financial statements, and details on risks and uncertainties such as global tariffs, supply chain disruptions, and macroeconomic factors [Risks and Uncertainties](index=12&type=section&id=Risks%20and%20Uncertainties) The global tariff environment, macroeconomic and geopolitical factors, and hospital customer pressures pose significant risks to the company's operations and liquidity - The **global tariff environment**, particularly U.S.-China tariffs and proposed universal baseline tariffs, could materially affect the company's **cost structure**, **gross margins**, and product launch timing[47](index=47&type=chunk) - **Macroeconomic and geopolitical factors**, including supply chain challenges, inflation, high interest rates, and conflicts (Russia-Ukraine, Middle East), continue to pose risks to operations and liquidity[48](index=48&type=chunk) - **Hospital customers face staffing and cost pressures**, and liquidity concerns from elevated interest rates, potentially causing delays or cancellations of purchase orders and reduced demand for disposable products[49](index=49&type=chunk) - The company has incurred **cumulative net losses** of approximately **$571.4 million** as of **June 30, 2025**, and expects further losses in **2025** due to continued product development, commercialization, R&D, and sales/marketing initiatives[53](index=53&type=chunk) [Cash and Cash Equivalents](index=14&type=section&id=Cash%20and%20Cash%20Equivalents) This section defines cash and cash equivalents and their composition as of the reporting dates - **Cash and cash equivalents** include cash on hand, money market instruments, and highly liquid investments with original maturities of three months or less[55](index=55&type=chunk) [Restricted Cash](index=14&type=section&id=Restricted%20Cash) This section reports the company's restricted cash balance, which was zero as of June 30, 2025 - The company had **no restricted cash** as of **June 30, 2025**, **decreased** from **$0.2 million** at **December 31, 2024**[56](index=56&type=chunk) [Investments](index=14&type=section&id=Investments) This section confirms the absence of short-term investments for the reported periods - As of **June 30, 2025**, and **December 31, 2024**, the Company had no short-term investments[57](index=57&type=chunk) [Fair Value Measurements](index=14&type=section&id=Fair%20Value%20Measurements) This section describes the fair value classification of financial assets and liabilities, including Level 2 money market funds and Level 3 contingent consideration - Financial assets classified as Level 2 (money market funds) and financial liabilities classified as Level 3 (**contingent consideration** from APT acquisition) are measured at fair value[63](index=63&type=chunk)[64](index=64&type=chunk) [Accounts Receivable, Contract Assets, and Allowance for Credit Losses](index=16&type=section&id=Accounts%20Receivable%2C%20Contract%20Assets%2C%20and%20Allowance%20for%20Credit%20Losses) This section explains the accounting policy for accounts receivable and contract assets, net of an allowance for expected credit losses - Accounts receivable and contract assets are reported net of an allowance for expected credit losses, assessed based on historical and expected net collections[65](index=65&type=chunk) [Revenue and Costs of Revenue](index=16&type=section&id=Revenue%20and%20Costs%20of%20Revenue) This section details the company's revenue recognition policies and sources, including systems, disposables, and recurring services - **Revenue is generated** from initial capital sales of systems, recurring sales of disposable devices, royalties, and other recurring revenue (software updates, service contracts)[67](index=67&type=chunk) Revenue Breakdown (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Systems | $3,038 | $240 | $5,002 | $2,852 | | Disposables, Service and Accessories | $5,760 | $4,262 | $11,268 | $8,530 | | Total Revenue | $8,798 | $4,502 | $16,270 | $11,382 | - **System revenue** represented **31%** and **25%** of **total revenue** for the six months ended **June 30, 2025**, and **2024**, respectively, while disposables, service, and accessories accounted for **34%** and **28%** respectively[72](index=72&type=chunk)[73](index=73&type=chunk) - **Other recurring revenue**, including product maintenance and software enhancements, represented **35%** and **47%** of revenue for the six months ended **June 30, 2025**, and **2024**, respectively[75](index=75&type=chunk) [Assets Recognized from the Costs to Obtain a Contract with a Customer](index=19&type=section&id=Assets%20Recognized%20from%20the%20Costs%20to%20Obtain%20a%20Contract%20with%20a%20Customer) This section outlines the capitalization of sales incentive programs as contract acquisition costs - **Sales incentive programs** for the sales team are capitalized as **contract acquisition costs**, totaling approximately **$0.1 million** as of **June 30, 2025**, and **December 31, 2024**[79](index=79&type=chunk) [Cost of Contracts](index=19&type=section&id=Cost%20of%20Contracts) This section describes the components of costs of systems and disposable revenue recognized at the time of sale - **Costs of systems revenue** include direct product costs, installation labor, warranty, and initial training, recognized at the time of sale[80](index=80&type=chunk) [Goodwill and Intangible Assets](index=19&type=section&id=Goodwill%20and%20Intangible%20Assets) This section explains the accounting treatment for goodwill and definite-lived intangible assets, including impairment testing and amortization - **Goodwill is not amortized** but evaluated for impairment annually; **definite-lived intangible assets are amortized** on a straight-line basis[81](index=81&type=chunk) [Contingent Liabilities- Earnout Consideration](index=19&type=section&id=Contingent%20Liabilities-%20Earnout%20Consideration) This section details the accounting for contingent consideration from the APT acquisition as a Level 3 financial liability - **Contingent consideration** from the APT acquisition is recognized as a Level 3 financial liability, remeasured to fair value at each reporting date, with changes recognized in General and Administrative expenses[82](index=82&type=chunk) [Leasing Arrangements](index=19&type=section&id=Leasing%20Arrangements) This section describes the recognition of operating lease agreements on the balance sheet as right-of-use assets and lease liabilities - **Operating lease agreements are recognized** on the balance sheet as right-of-use (ROU) assets and corresponding lease liabilities, with the discount rate based on the incremental borrowing rate[84](index=84&type=chunk)[86](index=86&type=chunk) [Stock-Based Compensation](index=20&type=section&id=Stock-Based%20Compensation) This section outlines the valuation and recognition methods for time-based and market-based stock awards - **Stock-based compensation** for time-based awards is valued using the Black-Scholes model and recognized over the vesting period (generally four years)[88](index=88&type=chunk) - **Market-based awards** are valued using Monte Carlo simulations, with expense recognized over the minimum service period regardless of market target achievement[89](index=89&type=chunk) [Net Loss per Common Share](index=20&type=section&id=Net%20Loss%20per%20Common%20Share) This section presents the basic and diluted net loss per common share and the factors influencing these metrics Net Loss per Common Share (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(3,826) | $(5,833) | $(9,649) | $(10,340) | | Net Loss Attributable to Common Stockholders | $(4,144) | $(6,158) | $(10,281) | $(10,996) | | Basic EPS | $(0.05) | $(0.07) | $(0.12) | $(0.13) | | Diluted EPS | $(0.05) | $(0.07) | $(0.12) | $(0.13) | - **Basic and diluted net loss per common share improved** to **$(0.05)** for the three months and **$(0.12)** for the six months ended **June 30, 2025**, compared to **$(0.07)** and **$(0.13)** respectively in the prior year[92](index=92&type=chunk) [Recently Issued Accounting Pronouncements](index=20&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section discusses recently issued accounting standards and their expected impact on the company's financial statements - **ASU 2023-09 (Income Taxes)** will be effective for the year ending **December 31, 2025**, requiring enhanced income tax disclosures, but is not expected to have a significant impact[95](index=95&type=chunk) - **ASU 2024-01 (Stock Compensation)** clarifies the scope application of profits interest and similar awards, effective for public business entities after **December 15, 2024**, with no material impact expected[96](index=96&type=chunk) [3. Acquisitions](index=22&type=section&id=3.%20Acquisitions) On July 31, 2024, Stereotaxis acquired Access Point Technologies EP, Inc. (APT) for an upfront stock payment and contingent payments based on regulatory and commercial milestones - The **acquisition of APT** on **July 31, 2024**, involved an upfront payment of **1,486,620 common shares** (**$3.0 million value**) and **contingent payments** up to **$24.0 million** based on milestones through **September 30, 2029**[99](index=99&type=chunk) APT Acquisition Fair Value Summary (in thousands) as of July 31, 2024 | Category | Amount | | :----------------------- | :----- | | Total Assets Acquired | $14,738 | | Total Liabilities Assumed | $1,772 | | Net Assets Acquired | $12,966 | | Goodwill | $3,764 | | Intangible Assets | $7,740 | - **APT contributed $2,562 thousand** in revenue and a **net loss** of **$1,395 thousand** to Stereotaxis' consolidated statement of earnings for the six months ended **June 30, 2025**[102](index=102&type=chunk)[103](index=103&type=chunk) - The **net loss** for the six months ended **June 30, 2025**, included a **$458 thousand expense** due to the revaluation of the **contingent consideration** related to the APT acquisition[102](index=102&type=chunk) [4. Financial Instruments](index=23&type=section&id=4.%20Financial%20Instruments) This section details the company's financial instruments, primarily cash and cash equivalents, and their fair value classifications Cash and Cash Equivalents by Fair Value Level (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Cash | $1,656 | $969 | | Level 2 Money Market Funds | $5,311 | $11,248 | | Total | $6,967 | $12,217 | - **Interest income from cash and investments was $0.3 million** for the six months ended **June 30, 2025**[105](index=105&type=chunk) - The **contingent consideration** from the APT acquisition is a Level 3 financial liability carried at fair value[106](index=106&type=chunk) [5. Inventories](index=24&type=section&id=5.%20Inventories) The company's inventories consist of raw materials, work in process, and finished goods, with a reserve for excess and obsolescence Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Raw Materials | $6,494 | $5,223 | | Work in Process | $1,508 | $1,103 | | Finished Goods | $4,263 | $4,382 | | Reserve for Excess and Obsolescence | $(2,657) | $(2,377) | | Total Inventory | $9,608 | $8,331 | - The **reserve for excess and obsolescence increased** to approximately **$2.7 million**, including slow-moving acquired inventory and Niobe Systems[108](index=108&type=chunk) [6. Prepaid Expenses and Other Assets](index=24&type=section&id=6.%20Prepaid%20Expenses%20and%20Other%20Assets) Prepaid expenses and other assets decreased from $1,955 thousand at December 31, 2024, to $1,054 thousand at June 30, 2025, primarily due to a reduction in deferred cost of revenue Prepaid Expenses and Other Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Prepaid Expenses | $336 | $405 | | Prepaid Commissions | $88 | $78 | | Deposits | $611 | $411 | | Deferred Cost of Revenue | $- | $1,025 | | Other Assets | $19 | $36 | | Total | $1,054 | $1,955 | - **Deferred cost of revenue**, representing costs for delivered but unrecognized system revenue, **decreased** from **$1,025 thousand** to zero[109](index=109&type=chunk) [7. Property and Equipment](index=24&type=section&id=7.%20Property%20and%20Equipment) Net property and equipment decreased slightly from $3,573 thousand at December 31, 2024, to $3,284 thousand at June 30, 2025, primarily due to accumulated depreciation Property and Equipment (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Equipment | $5,121 | $5,098 | | Leasehold Improvements | $2,916 | $2,916 | | Less: Accumulated Depreciation | $(4,753) | $(4,441) | | Net Property and Equipment | $3,284 | $3,573 | [8. Goodwill and Intangible Assets](index=25&type=section&id=8.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained constant at $3,764 thousand, while net intangible assets decreased from $7,358 thousand at December 31, 2024, to $6,899 thousand at June 30, 2025, due to accumulated amortization Goodwill and Intangible Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Goodwill | $3,764 | $3,764 | | Total Intangibles | $7,740 | $7,740 | | Less: Accumulated Amortization | $(841) | $(382) | | Net Intangibles | $6,899 | $7,358 | [9. Leases](index=25&type=section&id=9.%20Leases) The company leases facilities under operating leases, including the Globe Lease (St. Louis) and the Talulla Lease (Rogers, Minnesota, acquired with APT) - The **company has two primary operating leases**: the Globe Lease for its principal executive and manufacturing facilities (10-year term from **2021**) and the Talulla Lease for APT's facilities (4-year term from **August 2024**)[112](index=112&type=chunk)[113](index=113&type=chunk) - As of **June 30, 2025**, the **weighted average discount rate** for operating leases was **9%**, and the **weighted average remaining lease term** was **6.59 years**[114](index=114&type=chunk) Future Minimum Operating Lease Payments (in thousands) as of June 30, 2025 | Year | Amount | | :---------------- | :----- | | 2025 | $539 | | 2026 | $1,097 | | 2027 | $1,122 | | 2028 | $1,147 | | 2029 | $1,173 | | 2030 and thereafter | $2,533 | | Total Lease Payments | $7,611 | | Less: Interest | $(1,884) | | Present Value of Lease Liabilities | $5,727 | [10. Accrued Liabilities](index=26&type=section&id=10.%20Accrued%20Liabilities) Total accrued liabilities decreased from $2,986 thousand at December 31, 2024, to $2,841 thousand at June 30, 2025, primarily due to a reduction in deferred contract obligations Accrued Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrued Salaries, Bonus, and Benefits | $1,362 | $1,569 | | Accrued Warranties | $50 | $50 | | Accrued Professional Services | $211 | $170 | | Accrued Investigational Sites | $73 | $45 | | Deferred Contract Obligation | $- | $1,045 | | Other | $1,145 | $107 | | Total Accrued Liabilities | $2,841 | $2,986 | [11. Convertible Preferred Stock and Stockholders' Equity](index=26&type=section&id=11.%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity) This section details the company's capital structure, including common stock, Series A Convertible Preferred Stock, and various stock award plans - The **Series A Convertible Preferred Stock** has a stated value of **$1,000 per share**, is convertible at **$0.65 per share**, and bears a **6% cumulative annual dividend**[120](index=120&type=chunk) - The **2021 CEO Performance Award Unit Grant** consists of ten vesting tranches, totaling up to **13,000,000 shares**, tied to market capitalization milestones ranging from **$1.0 billion** to **$5.5 billion** and continued employment through **December 31, 2030**[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - As of **June 30, 2025**, none of the CEO Performance Award milestones have been achieved, and there was approximately **$26.3 million** of **unrecognized stock-based compensation expense** remaining[126](index=126&type=chunk) Stock Option and SAR Activity (Six Months Ended June 30, 2025) | Category | Number of Options/SARs | Weighted Average Exercise Price per Share | | :-------------------------- | :--------------------- | :-------------------------------------- | | Outstanding, Dec 31, 2024 | 3,858,360 | $3.79 | | Granted | 673,000 | $1.62 | | Exercised | (24,300) | $1.96 | | Forfeited | (135,720) | $3.06 | | Outstanding, June 30, 2025 | 4,371,340 | $3.49 | Restricted Stock Unit Activity (Six Months Ended June 30, 2025) | Category | Number of Restricted Stock Units | Weighted Average Grant Date Fair Value per Unit | | :-------------------------- | :------------------------------- | :---------------------------------------------- | | Outstanding, Dec 31, 2024 | 1,546,532 | $3.36 | | Granted | 954,093 | $1.67 | | Vested | (120,000) | $5.24 | | Outstanding, June 30, 2025 | 2,380,625 | $2.59 | [12. Product Warranty Provisions](index=29&type=section&id=12.%20Product%20Warranty%20Provisions) The company provides a one-year warranty for capital systems, with costs estimated based on historical experience and product performance Warranty Accrual (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Warranty Accrual, Beginning of Period | $50 | $107 | | Accrual Adjustment | $1 | $6 | | Payments Made | $(1) | $(63) | | Warranty Accrual, End of Period | $50 | $50 | [13. Commitments and Contingencies](index=29&type=section&id=13.%20Commitments%20and%20Contingencies) The company is involved in claims in the ordinary course of business, which management believes will not materially affect its financial position - A **letter of credit** for approximately **$1.8 million**, related to a lease agreement, was fully delivered and completed in **May 2025**[136](index=136&type=chunk) - The **company is contesting a vendor's UCC financing statements** filed in **February 2024** for approximately **$0.6 million**, believing them to be without merit[135](index=135&type=chunk) [14. Subsequent Events](index=29&type=section&id=14.%20Subsequent%20Events) Subsequent to the reporting period, Stereotaxis entered into a registered direct offering on July 17, 2025, to sell $12.5 million in common stock - On **July 17, 2025**, **Stereotaxis entered a registered direct offering** to sell **$12.5 million** in common stock at **$2.00 per share**[137](index=137&type=chunk) - An **initial closing** on **July 18, 2025**, resulted in the issuance of **4,250,000 shares** and **$8.5 million** in gross proceeds, with an additional **2,000,000 shares** and **$4.0 million** expected by **November 25, 2025**[137](index=137&type=chunk) - On **August 7, 2025**, **417,710 common shares** were issued as partial settlement of the APT acquisition earnout consideration[138](index=138&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Stereotaxis' financial condition and operational results for the periods ended June 30, 2025, covering business overview, corporate developments, and financial analysis [Overview](index=30&type=section&id=Overview) Stereotaxis specializes in robotic magnetic navigation (RMN) systems for endovascular interventions, primarily cardiac ablation, aiming to improve precision, stability, and safety - **Stereotaxis specializes in robotic magnetic navigation (RMN) systems** for endovascular interventions, primarily cardiac ablation, aiming to improve precision, stability, and safety[141](index=141&type=chunk)[143](index=143&type=chunk) - The **company's product portfolio includes** Genesis RMN, GenesisX RMN, and Odyssey Solution, with a strategy to expand into coronary, neuro, and peripheral interventions[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) - **Business model involves upfront capital payments** for equipment and installation, and recurring payments for disposable costs, service, and software updates[149](index=149&type=chunk) [Corporate Developments](index=32&type=section&id=Corporate%20Developments) This section highlights recent corporate developments, including the APT acquisition and significant regulatory milestones - **Acquisition of Access Point Technologies EP, Inc. (APT)** on **July 31, 2024**, integrated in-house catheter development and manufacturing expertise[153](index=153&type=chunk)[154](index=154&type=chunk) - **Regulatory milestones include** CE Mark for GenesisX RMN System (Q3 2024), NMPA approval for Genesis RMN in China (Nov 2024), CE Mark for Stereotaxis MAGiC catheter in Europe (Q1 2025), and FDA 510(k) clearance for MAGiC Sweep™ catheter in the U.S. (July 2025)[155](index=155&type=chunk)[156](index=156&type=chunk) [Tariff and Trade Regulation Update](index=33&type=section&id=Tariff%20and%20Trade%20Regulation%20Update) This section provides an update on the global tariff environment and its potential impact on the company's cost structure and operations - The **global tariff environment** remains fluid, with potential impacts on **cost structure**, **gross margins**, and product launch timing[157](index=157&type=chunk) - U.S. tariffs on Mexican and Canadian imports (**25% to 35%**) have immaterial impact due to USMCA qualification of sub-assemblies[158](index=158&type=chunk) - A **10% universal 'baseline' tariff** on non-USMCA imports, effective **April 2, 2025**, is expected to **increase cost of revenues** and R&D expenses in H2 **2025**[159](index=159&type=chunk) - U.S.-China tariffs were reduced to a base rate of **~30%** (U.S. duties on Chinese goods) and **~10%** (China duties on U.S. goods) as of **May 12, 2025**, with a **less than 1% expense increase** anticipated for H2 **2025** if rates remain[162](index=162&type=chunk) - **Increased Section 232 tariffs** on steel and aluminum (**25% to 50%**, effective **June 4, 2025**) could lead to an effective rate of up to **60%** on certain specialty alloys, with long-term effects difficult to predict[163](index=163&type=chunk) [Other Risks and Uncertainties](index=33&type=section&id=Other%20Risks%20and%20Uncertainties) This section discusses ongoing macroeconomic and geopolitical factors, hospital customer pressures, and capital market disruptions that pose risks to the company - **Ongoing macroeconomic and geopolitical factors**, including supply chain disruptions, inflation, and conflicts, continue to impact sourcing, shipping, and manufacturing[165](index=165&type=chunk) - **Hospital customers face staffing and cost pressures**, and liquidity concerns from elevated interest rates, potentially delaying or canceling orders and reducing demand for disposable products[166](index=166&type=chunk) - **Disruptions to capital markets** could negatively impact the company's ability to raise capital and customers' ability to fund projects, leading to delayed spending and increased default risks[167](index=167&type=chunk) - The company has incurred **cumulative net losses** of approximately **$571.4 million** as of **June 30, 2025**, and expects further losses in **2025** as it continues product development and commercialization[170](index=170&type=chunk) - The company believes **existing cash and July 2025 equity raise proceeds** will be sufficient but cannot guarantee future funding availability on acceptable terms[171](index=171&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines the company's critical accounting policies and estimates, which require significant judgment in the preparation of financial statements - The **preparation of consolidated financial statements requires significant estimates and judgments**, which are reviewed on an ongoing basis[172](index=172&type=chunk) [Revenue Recognition](index=35&type=section&id=Revenue%20Recognition) This section details the company's revenue recognition policies and sources, including systems, disposables, and recurring services - **Revenue is recognized** in accordance with ASC 606, based on legally enforceable contracts, identified rights, commercial substance, and probable collectability[174](index=174&type=chunk) - For contracts with **multiple performance obligations**, revenue is allocated based on relative standalone selling prices, which are estimated considering market conditions and entity-specific factors[176](index=176&type=chunk) - **System revenue is recognized** upon transfer of control (delivery/installation acceptance), while **disposable revenue is recognized** at shipment or delivery[177](index=177&type=chunk)[178](index=178&type=chunk) - **Other recurring revenue** (service, software enhancements) is deferred and amortized over the service or update period, typically one year[180](index=180&type=chunk) [Assets Recognized from the Costs to Obtain a Contract with a Customer](index=37&type=section&id=Assets%20Recognized%20from%20the%20Costs%20to%20Obtain%20a%20Contract%20with%20a%20Customer) This section outlines the capitalization of sales incentive programs as contract acquisition costs - **Sales incentive programs** for the sales team are capitalized as **contract acquisition costs**, totaling approximately **$0.1 million** as of **June 30, 2025**, and **December 31, 2024**[183](index=183&type=chunk) [Cost of Contracts](index=39&type=section&id=Cost%20of%20Contracts) This section describes the components of costs of systems and disposable revenue recognized at the time of sale - **Costs of systems revenue** include direct product costs, installation labor, warranty, and initial training, recognized at the time of sale[184](index=184&type=chunk) - **Costs of disposable revenue** include direct product costs and estimated warranty costs, recognized at the time of sale[184](index=184&type=chunk) [Stock-Based Compensation](index=39&type=section&id=Stock-Based%20Compensation) This section outlines the valuation and recognition methods for time-based and market-based stock awards - **Stock compensation expense** for time-based awards is determined using the Black-Scholes model and amortized straight-line over the vesting period (generally four years)[185](index=185&type=chunk) - **Market-based awards** are valued using Monte Carlo simulations, with expense recognized over the minimum service period regardless of market target achievement[186](index=186&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing revenue, cost of revenue, gross margin, and operating expenses for the reported periods [Comparison of the Three Months Ended June 30, 2025, and 2024](index=39&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%2C%20and%202024) This section compares the company's financial performance for the three months ended June 30, highlighting significant changes in revenue, costs, and operating expenses Revenue (Three Months Ended June 30, in millions) | Category | 2025 | 2024 | Change (%) | | :-------------------------- | :--- | :--- | :--------- | | Total Revenue | $8.8 | $4.5 | 95% | | Systems Revenue | $3.0 | $0.2 | 1400% | | Disposables, Service & Accessories | $5.8 | $4.3 | 35% | Cost of Revenue & Gross Margin (Three Months Ended June 30, in millions) | Category | 2025 | 2024 | Change (%) | | :-------------------------- | :--- | :--- | :--------- | | Total Cost of Revenue | $4.2 | $1.2 | 255% | | Overall Gross Margin (%) | 52% | 74% | -22 pp | | Disposables, Service & Accessories Gross Margin (%) | 68% | 76% | -8 pp | Operating Expenses (Three Months Ended June 30, in millions) | Category | 2025 | 2024 | Change (%) | | :-------------------------- | :--- | :--- | :--------- | | Research and Development | $1.8 | $2.3 | -22% | | Sales and Marketing | $3.3 | $3.3 | 0% | | General and Administrative | $4.0 | $3.8 | 6% | | Other Operating Expense | $(0.5) | $0.0 | N/A | [Comparison of the Six Months Ended June 30, 2025 and 2024](index=41&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares the company's financial performance for the six months ended June 30, detailing trends in revenue, costs, and operating expenses Revenue (Six Months Ended June 30, in millions) | Category | 2025 | 2024 | Change (%) | | :-------------------------- | :--- | :--- | :--------- | | Total Revenue | $16.3 | $11.4 | 43% | | Systems Revenue | $5.0 | $2.9 | 72% | | Disposables, Service & Accessories | $11.3 | $8.5 | 32% | Cost of Revenue & Gross Margin (Six Months Ended June 30, in millions) | Category | 2025 | 2024 | Change (%) | | :-------------------------- | :--- | :--- | :--------- | | Total Cost of Revenue | $7.6 | $4.1 | 86% | | Overall Gross Margin (%) | 53% | 64% | -11 pp | | Disposables, Service & Accessories Gross Margin (%) | 68% | 76% | -8 pp | Operating Expenses (Six Months Ended June 30, in millions) | Category | 2025 | 2024 | Change (%) | | :-------------------------- | :--- | :--- | :--------- | | Research and Development | $4.1 | $4.5 | -9% | | Sales and Marketing | $6.4 | $6.3 | 2% | | General and Administrative | $8.5 | $7.2 | 18% | | Other Operating Expense | $(0.5) | $0.0 | N/A | | Net Interest Income | $0.2 | $0.4 | -50% | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial position, including cash, working capital, cash flows, and debt, and its ability to fund operations - As of **June 30, 2025**, the company had **$7.0 million** in cash and cash equivalents and working capital of **$1.2 million**, **decreased** from **$4.8 million** at **December 31, 2024**[200](index=200&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Operating Activities | $(5,512) | $(5,434) | | Investing Activities | $(23) | $(22) | | Financing Activities | $66 | $58 | - **Net cash used in operating activities increased** slightly to **$5.5 million** in H1 **2025**, driven by changes in working capital[202](index=202&type=chunk) - The company had no debt as of **June 30, 2025**[205](index=205&type=chunk) [Off-Balance Sheet Arrangements](index=42&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of off-balance sheet arrangements or relationships with unconsolidated entities - The company does not have any off-balance sheet arrangements or relationships with unconsolidated entities, nor does it engage in trading activities involving non-exchange traded contracts[206](index=206&type=chunk) [Item 3. [Reserved]](index=29&type=section&id=Item%203.%20%5BReserved%5D) This item is reserved and contains no information [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective - The company's **disclosure controls and procedures** were deemed **effective** as of **June 30, 2025**[208](index=208&type=chunk) - **No material changes** in internal control over financial reporting occurred during the period[209](index=209&type=chunk) - The company is in the process of reviewing and integrating the internal control structure of the **acquired Access Point Technologies EP, Inc. business**[210](index=210&type=chunk) Part II Other Information [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) This item states that there are no legal proceedings to report - **No legal proceedings are reported**[213](index=213&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This item states that there are no new risk factors to report - **No new risk factors are reported**[214](index=214&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item states that there are no unregistered sales of equity securities or use of proceeds to report - **No unregistered sales of equity securities or use of proceeds are reported**[215](index=215&type=chunk) [Item 3. Defaults upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This item states that there are no defaults upon senior securities to report - **No defaults upon senior securities are reported**[216](index=216&type=chunk) [Item 4. [Reserved]](index=43&type=section&id=Item%204.%20%5BReserved%5D) This item is reserved and contains no information - **This item is reserved**[217](index=217&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This item states that there is no other information to report - **No other information is reported**[218](index=218&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - Exhibits include Restated Articles of Incorporation, Certificate of Amendment, Certificate of Designations for Series A Preferred Stock, Restated Bylaws, and various certifications (Rule 13a-14(a)/15d-14(a), Section 1350)[219](index=219&type=chunk) - XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are also included[219](index=219&type=chunk)[220](index=220&type=chunk) [Signatures](index=45&type=section&id=Signatures) The report is duly signed on behalf of Stereotaxis, Inc. by its Chief Executive Officer, David L. Fischel, and Chief Financial Officer, Kimberly R. Peery, on August 13, 2025 - The **report was signed by David L. Fischel**, Chief Executive Officer, and Kimberly R. Peery, Chief Financial Officer, on **August 13, 2025**[223](index=223&type=chunk)