Stereotaxis(STXS) - 2021 Q3 - Quarterly Report

Part I Financial Information Financial Statements This section presents Stereotaxis, Inc.'s unaudited consolidated financial statements for Q3 and nine months ended September 30, 2021, detailing financial position, operations, equity, and cash flows Balance Sheets Total assets increased to $61.9 million by September 30, 2021, driven by new lease assets, while cash decreased slightly to $40.2 million Balance Sheet Summary (as of September 30, 2021 vs. December 31, 2020) | Metric | Sep 30, 2021 (USD) | Dec 31, 2020 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $40,243,223 | $43,939,512 | | Total current assets | $53,410,612 | $52,716,739 | | Total assets | $61,920,294 | $55,455,825 | | Liabilities & Equity | | | | Total current liabilities | $13,842,468 | $13,573,186 | | Total liabilities | $21,763,384 | $15,226,584 | | Total stockholders' equity | $34,573,142 | $34,623,918 | Statements of Operations Q3 2021 revenue grew to $9.1 million, but net loss widened to $4.6 million due to increased G&A expenses, while nine-month revenue rose 35% Statement of Operations Highlights | Metric | Q3 2021 (USD) | Q3 2020 (USD) | Nine Months 2021 (USD) | Nine Months 2020 (USD) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $9,106,452 | $8,703,583 | $26,780,432 | $19,805,279 | | Gross Margin | $4,734,558 | $4,678,328 | $17,282,448 | $13,743,628 | | Operating Loss | $(4,619,817) | $(1,563,039) | $(9,538,660) | $(5,537,205) | | Net Loss | $(4,618,559) | $(1,572,972) | $(7,361,354) | $(5,465,609) | | Net Loss per Share (Basic) | $(0.07) | $(0.03) | $(0.11) | $(0.09) | - A significant factor in the increased net loss was a gain on extinguishment of debt of $2.2 million recognized in the first nine months of 2021, related to the forgiveness of the PPP loan[14] Statements of Convertible Preferred Stock and Stockholders' Equity Stockholders' equity remained stable at $34.6 million as of September 30, 2021, with net loss offset by $6.8 million in share-based compensation - For the nine months ended September 30, 2021, the net loss of $7.4 million was the primary driver of the decrease in accumulated deficit, which was partially offset by share-based compensation of $6.8 million[21] Statements of Cash Flows Net cash used in operating activities improved to $0.9 million for the first nine months of 2021, with total cash and equivalents at $42.5 million Cash Flow Summary (Nine Months Ended September 30) | Cash Flow Activity | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | $(889,992) | $(3,819,735) | | Net cash used in investing activities | $(1,037,649) | $(70,896) | | Net cash provided by financing activities | $535,683 | $17,304,345 | | Net (decrease) increase in cash | $(1,391,958) | $13,413,714 | Notes to Financial Statements Notes detail accounting policies, business operations in robotic navigation, revenue recognition, a new 10-year lease, $2.2 million PPP loan forgiveness, and significant CEO performance award compensation - The company designs, manufactures, and markets advanced robotic magnetic navigation (RMN) systems, including the Genesis RMN and Niobe Systems, for use in interventional procedures to treat arrhythmias[27][28] - In June 2021, the company's $2.2 million Paycheck Protection Program (PPP) loan was fully forgiven by the SBA, resulting in a gain on debt extinguishment[91] - A new 10-year performance award for the CEO, tied to market capitalization milestones, resulted in $4.3 million of stock-based compensation expense for the nine-month period ended September 30, 2021[97][101] - The company entered into a new 10-year lease for its principal executive offices and manufacturing facility, recognizing a $5.9 million right-of-use asset and lease liability in Q3 2021[81][82] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses 35% revenue growth for the first nine months of 2021, increased operating expenses due to CEO performance award compensation, and a strong liquidity position with $42.8 million cash Results of Operations Nine-month revenue grew 35% to $26.8 million driven by system sales, but operating loss increased due to 108% rise in G&A expenses from CEO performance award compensation Comparison of Nine Months Ended September 30, 2021 and 2020 | Metric | 9M 2021 (USD) | 9M 2020 (USD) | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $26.8 million | $19.8 million | +35% | Increased system sales | | Gross Margin % | 65% | 69% | -4 p.p. | Changes in product mix | | R&D Expenses | $7.6 million | $6.0 million | +26% | Higher project spending and hiring | | G&A Expenses | $10.3 million | $5.0 million | +108% | Higher stock-based compensation for CEO Performance Award and professional fees | - For Q3 2021, revenue increased 5% year-over-year to $9.1 million, while G&A expenses surged 169% to $3.9 million, primarily due to stock-based compensation for the CEO Performance Award[160][164] Liquidity and Capital Resources The company maintains a strong liquidity position with $42.8 million in cash and no debt, and net cash used in operations improved to $0.9 million - As of September 30, 2021, the company had $42.8 million in cash and cash equivalents (inclusive of restricted cash) and no debt[173][176] - Net cash used in operating activities for the first nine months of 2021 improved to $0.9 million from $3.8 million in the same period of 2020[173] - The company's $2.2 million Paycheck Protection Program (PPP) loan was fully forgiven by the SBA in June 2021, resulting in a gain on debt extinguishment[178] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting identified - Based on an evaluation as of the end of the period covered by this report, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[185] - There were no material changes during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[186][187] Part II Other Information Legal Proceedings A class action complaint regarding CEO Performance Award disclosure deficiencies was settled for $675,000 in attorneys' fees without admission of wrongdoing - A putative class action complaint was filed on April 29, 2021, alleging disclosure deficiencies in the proxy statement concerning the CEO Performance Award[190] - The company agreed to pay $675,000 to the plaintiff's counsel for attorneys' fees and expenses to achieve a full satisfaction of the claims[193] Risk Factors Updated risk factors highlight significant stock-based compensation expense, potential stockholder dilution, and disincentives for change in control related to the CEO Performance Award - The company will incur significant stock-based compensation expense over the term of the CEO Performance Award, regardless of whether performance milestones are met. As of September 30, 2021, approximately $53.1 million of expense remained to be recognized[195] - Stockholders may face substantial dilution if all 13,000,000 shares under the CEO Performance Award are issued upon achievement of all milestones[196] - Provisions in the award agreement related to a change in control could discourage potential mergers or acquisitions that might otherwise be beneficial to stockholders[198] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the reporting period - There were no unregistered sales of equity securities during the reporting period[200] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and Sarbanes-Oxley Act certifications - The report includes a list of filed exhibits, such as the Restated Articles of Incorporation, Bylaws, and certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002[204][205]