STXS 10-K
Stereotaxis, Inc. (STXS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(MARK ONE)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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DOCUMENTS INCORPORATED BY REFERENCE
STEREOTAXIS, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
STEREOTAXIS, INC.
INDEX TO FORM 10-K
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PART I
| ITEM 1. | BUSINESS |
In this report, “Stereotaxis”, the “Company”, “Registrant”, “we”, “us”, and “our” refer to Stereotaxis, Inc. and its wholly owned subsidiaries. GenesisX RMN®, Genesis RMN®, Niobe®, Navigant®, Synchrony™, SynX™, Odyssey®, Odyssey Cinema™, MAGiC™, MAGiC Sweep™, EMAGIN™, Map-iT™, QuikCAS™, Cardiodrive®, Vdrive®, Vdrive Duo™, V-CAS™, V-Loop™, V-Sono™, and NuVizion™ are trademarks of Stereotaxis, Inc. All other trademarks that appear in this report are the property of their respective owners.
FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K, including the sections entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements. These statements relate to, among other things:
| ● | our business, operating, sales and marketing, and regulatory strategies; | |
| ● | our value proposition; | |
| ● | our overall liquidity and our ability to fund operations; | |
| ● | our ability to convert backlog to revenue; | |
| ● | the ability of physicians to perform certain medical procedures with our products safely, effectively and efficiently; | |
| ● | the adoption of our products by hospitals and physicians; | |
| ● | the market opportunity for our products, including expected demand for our products; | |
| ● | the timing and prospects for regulatory approval of our additional disposable interventional devices; | |
| ● | the success of our business partnerships and strategic relationships; | |
| ● | our industry generally, and overall macroeconomic conditions; | |
| ● | our estimates regarding our capital requirements; | |
| ● | our plans for hiring additional personnel; and | |
| ● | any of our other plans, objectives, expectations and intentions contained in this annual report are not historical facts. |
These statements relate to future events or future financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, or “continue”, or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. These statements are only predictions.
Factors that may cause our actual results to differ materially from our forward-looking statements include, among others, changes in general economic and business conditions and the risks and other factors set forth in “Item 1A—Risk Factors” and elsewhere in this annual report on Form 10-K.
Our actual results may be materially different from what we expect. We undertake no duty to update these forward-looking statements after the date of this annual report, even though our situation may change in the future. All of our forward-looking statements are qualified by these cautionary statements.
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OVERVIEW
Stereotaxis designs, manufactures and markets robotic systems, instruments and information systems for the interventional laboratory. Our proprietary robotic technology, Robotic Magnetic Navigation, fundamentally transforms endovascular interventions using precise computer-controlled magnetic fields to directly control the tip of flexible interventional catheters or devices. Direct control of the tip of an interventional device, in contrast to all manual hand-held devices that are controlled from their handle, can improve the precision, stability, reach and safety of these devices during procedures.
Our primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias. Cardiac ablation has become a well-accepted therapy for arrhythmias and a multi-billion-dollar medical device market with expectations for substantial long-term growth. We have shared our aspirations and a product strategy to expand the clinical focus of our technology to several additional endovascular indications including coronary, neuro, and peripheral interventions.
There is substantial real-world evidence and clinical literature for Robotic Magnetic Navigation in electrophysiology. Hundreds of electrophysiologists at over one hundred hospitals globally have treated over 150,000 arrhythmia patients with our robotic technology. Clinical use of our technology has been documented in over 500 clinical publications. Robotic Magnetic Navigation is designed to enable physicians to complete more complex interventional procedures with greater success and safety by providing image-guided delivery of catheters through the blood vessels and chambers of the heart to treatment sites. This is achieved using externally applied computer-controlled magnetic fields that govern the motion of the working tip of the catheter, resulting in improved navigation. The more flexible atraumatic design of catheters driven using magnetic fields may reduce the risk of patient harm and other adverse events. Performing the procedure from a control cockpit enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency. We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging or unsuccessful and generates significant x-ray exposure, and we are investing in research and development in these areas.
Our primary products include the Genesis RMN and the GenesisX RMN Systems, the Odyssey and Synchrony & SynX Solutions, various interventional devices under the Map-iT, MAGiC and EMAGIN brands, and other related devices. Through our strategic relationships with fluoroscopy system manufacturers, providers of catheters and electrophysiology mapping systems, and other parties, we offer our customers x-ray systems and other accessory diagnostic and therapeutic devices.
The Genesis RMN and the GenesisX RMN Systems are designed to enable physicians to complete complex interventional procedures by providing image-guided delivery of catheters through the blood vessels and chambers of the heart to treatment sites. This is achieved using externally applied magnetic fields that govern the motion of the working tip of the catheter, resulting in improved navigation, efficient procedures, and reduced x-ray exposure. The GenesisX RMN System, the latest generation of the Genesis RMN System, is designed to enhance the accessibility of Robotic Magnetic Navigation by reducing the lengthy construction cycle necessary to install prior generation RMN systems.
The Odyssey Solution consolidates lab information onto one large integrated display, enabling physicians to view and control all the key information in the operating room. This is designed to improve lab layout and procedure efficiency. The system also features a remote viewing and recording capability called Odyssey Cinema. The Odyssey Solution and Odyssey Cinema are being replaced by next generation innovative solutions branded Synchrony and SynX. Synchrony digitizes and modernizes the interventional cath lab with a 4K high-definition display that consolidates the viewing and control of disparate systems in the lab, offering enhanced procedure experience with custom layouts, streamlined workflows, an intuitive user interface, and a decluttered environment. Synchrony is made available with SynX a cloud-based HIPAA and GDPR-compliant browser and mobile-based app that allows for secure remote connectivity, collaboration, recording, and monitoring of the cath lab. As these technologies gain regulatory approvals they are being commercialized alongside RMN systems and as stand-alone solutions.
We pursue arrangements with fluoroscopy system manufacturers to provide RMN Systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms. An integrated x-ray system is critical for customer adoption of RMN Systems, and when offered as a bundled purchase with the RMN System, it may reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.
We promote our full suite of products necessary for a typical hospital implementation, subject to regulatory approvals or clearances. This implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically includes equipment and installation charges. The recurring payments typically include disposable costs for each procedure, equipment service costs beyond the warranty period, and ongoing software updates. In hospitals where our full suite of products has not been implemented, equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.
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As of December 31, 2025, we had approximately $9.1 million of system backlog, consisting of outstanding purchase orders and other commitments for these systems. Of the December 31, 2026 backlog, we expect approximately 78% to be recognized as revenue over the course of 2026. We had system backlog of approximately $14.4 million as of December 31, 2024. There can be no assurance that we will recognize such revenue in any period or at all because some of our purchase orders and other commitments are subject to contingencies that are outside our control. These orders and commitments may be revised, modified or canceled, either by their express terms, because of negotiations or by project changes or delays. In addition, the sales cycle for the robotic magnetic navigation system is lengthy and generally involves construction or renovation activities at customer sites. Consequently, revenues and/or orders resulting from sales of our robotic magnetic navigation system can vary significantly from one reporting period to the next.
We have strategic relationships with technology leaders and innovators in the global interventional market. Through these strategic relationships we provide compatibility with our robotic magnetic navigation system, integrated x-ray systems, digital imaging and 3D catheter location sensing technology, and compatible disposable interventional devices. The maintenance of these strategic relationships, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
On July 31, 2024, the Company completed its acquisition of all the shares of capital stock of Access Point Technologies EP, Inc., a Minnesota corporation (“APT”), from APT Holding Company, Inc., a Minnesota corporation. APT, based in Rogers, Minnesota, designs, manufactures, and commercializes a portfolio of differentiated high-quality diagnostic catheters, branded as Map-iT catheters, used during cardiac ablation procedures that are commercially available across key global geographies.
The integration with APT provides in-house catheter development, manufacturing expertise and specialized knowledge that will further Stereotaxis’ innovation efforts in developing a broad family of interventional devices navigated by our robots within electrophysiology and across a range of endovascular procedures.
We were incorporated in Delaware in June of 1990 as Stereotaxis, Inc. Our principal executive offices are located at 710 North Tucker Boulevard, Suite 110, St. Louis, Missouri 63101, and our telephone number is (314) 678-6100.
We operate our business as one segment, as defined by U.S. generally accepted accounting principles. Our financial results for the years ended December 31, 2025 and 2024 are discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
THE STEREOTAXIS VALUE PROPOSITION
Although great strides have been made in manual interventional devices and techniques, significant challenges remain that reduce interventional productivity and limit both the number of complex procedures and the types of diseases that can be treated manually. These challenges primarily involve the inherent mechanical limitations of manual instrument control and the lack of integration of the information systems used by physicians in the interventional lab as well as a significant amount of training and experience required to ensure proficiency. As a result, many complex cases in electrophysiology are treated with palliative drug therapy, and many procedures are still performed as invasive surgeries rather than as minimally invasive endovascular interventions.
Our systems address the current challenges in the interventional lab by providing precise computerized control of the working tip of the interventional instrument and by integrating this control with the visualization technology and information systems used during electrophysiology and endovascular interventional procedures, on a cost-justified basis.
We believe that our technology can:
| ● | Improve patient outcomes by optimizing therapy. Difficulty in controlling the working tip of disposable interventional devices can lead to sub-optimal results in many procedures. Conversely, the precise control of multiple complex diagnostic and therapeutic devices by a single physician can lead to better outcomes for the patient. Precise instrument control is necessary for treating a number of cardiac and other endovascular conditions. To treat arrhythmias, precise placement of an ablation catheter against a beating inner heart wall is necessary. Maintaining this precision and contact can be very challenging, especially in the most complex procedures. For endovascular navigation, precise and safe navigation through complex vasculature may also have a significant impact on procedure outcomes, efficiency, and cost. We believe our robotic technology can enhance procedure results by improving navigation of disposable interventional devices to treatment sites, and by affecting more precise and safe treatments once these sites are reached. |
| ● | Expand the market by enabling minimally invasive endovascular intervention. Treatment of a number of major diseases, including ventricular tachycardia, atrial fibrillation, congenital heart diseases, stroke, peripheral vascular disease, and coronary vascular disease, is highly challenging using conventional wire and/or catheter-based techniques. These patients may therefore be referred to more invasive or less curative therapies because of the difficulty in precisely and safely controlling the working tip of disposable interventional devices used to treat these complex cases endovascularly. Because our robotic technology provides precise, computerized control of the working tip of disposable interventional devices, we believe that it will potentially enable difficult diseases to be treated endovascularly on a much broader scale than today. |
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| ● | Enhance patient and physician safety. The clinical value of our technology has been demonstrated in over 500 publications and in the real-world experience of more than 150,000 procedures. The clinical literature as well as other available data suggests meaningful reductions in major complications and patient exposure to radiation during procedures utilizing our robotic technology. This may be driven by the softer a-traumatic design of an interventional device navigated using magnetic fields. These safety benefits to patients are complemented by improved occupational safety for the physicians and nursing staff who are performing the procedures. Healthcare professionals face significant orthopedic and radiation exposure risks. Studies have documented increased rates of orthopedic injury and tumors in these interventional cardiologist physicians Our robotic technology improves physician safety and reduces physician fatigue by enabling them to conduct procedures remotely from an adjacent control room, which reduces their exposure to harmful radiation, and the orthopedic burden of wearing lead. | |
| ● | Improve clinical workflow and information management. Complex ablation procedures involve several sources of information, which conventionally require a physician to mentally integrate and process large quantities of information from different sources in real time, often from separate user interfaces. Sources of information include real time x-ray and/or ultrasound images, real time location sensing systems providing the 3-D location of a catheter tip, pre-operative map of the electrical activity of the heart, real time recording of electrical activity of the heart, and temperature feedback from an ablation catheter. The Odyssey and Synchrony & SynX Solutions improve clinical workflow and information management efficiency by integrating and synchronizing the multiple sources of diagnostic and imaging information found in the interventional labs into a large-screen user interface with single mouse and keyboard control. |
| ● | Enhance hospital efficiency by reducing and standardizing procedure times, disposables utilization and staffing needs. Conventional interventional procedure times currently range from several minutes to many hours as physicians often engage in repetitive, “trial and error” maneuvers due to difficulties with manually controlling the working tip of disposable interventional devices. By reducing both navigation time and the time needed to carry out therapy at the target site, we believe that our robotic technology can reduce procedure times compared to manual procedures, especially in the most complex procedures such as the treatment of ventricular tachycardia. We believe the robotic magnetic navigation system can also reduce the variability in procedure times compared to manual methods. Greater standardization of procedure times allows for more efficient scheduling of interventional cases including staff requirements. We also believe that additional cost savings from robotics can result from decreased use of multiple catheters, high-end deflectable sheaths, and contrast media in procedures compared with manual methods further enhancing the rate of return to hospitals. | |
| ● | Expand the population of physicians who can effectively perform complex endovascular procedures. Training required for physicians to safely and effectively carry out manual interventional procedures typically takes years, over and above the training required to become a specialist in cardiology. This has led to a shortage of physicians who are skilled in performing more complex procedures. We believe that our robotic technology can allow procedures that previously required the highest levels of manual dexterity and skill to be performed effectively by a broader range of interventional physicians, with more standardized outcomes. In addition, interventional physicians can learn to use robotic systems in a relatively short period of time. The robotic magnetic navigation system can also be programmed to carry out sequences of complex navigation automatically further enhancing ease of use. We believe the Odyssey and Synchrony & SynX Solutions can allow advanced training online thereby accelerating learning. | |
| ● | Help hospitals recruit physicians and attract patients. Due to the clinical benefits of our products, we believe hospitals will realize significant operational benefits when recruiting physicians to work in a safer procedure environment, while attracting patients who desire to have safer procedures that lead to better long-term outcomes. |
PRODUCTS
Robotic Magnetic Navigation
Our proprietary robotic magnetic navigation systems (“RMN”) include the GenesisX RMN, Genesis RMN and the prior generation Niobe Systems. These systems are designed to enable physicians to complete more complex interventional procedures by providing image-guided delivery of catheters and guidewires through the blood vessels and chambers of the heart to treatment sites. This is achieved using externally applied magnetic fields that govern the motion of the working tip of the catheter or guidewire, resulting in improved navigation, efficient procedures and reduced x-ray exposure. Our systems provide physicians with precise remote digital instrument control in combination with sophisticated image integration. It can be operated either from an adjacent room and outside the x-ray fluoroscopy field or beside the patient table, as in traditional interventional procedures. Our RMN system allows the operator to navigate disposable interventional devices to the treatment site through complex paths in the blood vessels and chambers of the heart to deliver treatment by using computer controlled, externally applied magnetic fields to directly govern the motion of the working tip of these devices, each of which has a magnetically sensitive tip that predictably responds to magnetic fields generated by our system. Because the working tip of the disposable interventional device is directly controlled by these external magnetic fields, the physician has the same degree of control regardless of the number or type of turns, or the distance traveled by the working tip to arrive at its position in the blood vessels or chambers of the heart. This results in highly precise digital control of the working tip of the disposable interventional device while still giving the physician the option to manually advance the device.
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Through our arrangements with manufacturers and providers of fluoroscopy systems, catheters, and electrophysiology mapping systems, we provide compatibility between the robotic magnetic navigation system and the visualization and information systems used during electrophysiology and endovascular procedures to provide the physician with a comprehensive information and instrument control system. In addition, we have integrated the robotic magnetic navigation system with 3D catheter location sensing technology to provide accurate real-time information as to the 3D location of the working tip of the instrument. The maintenance of these technology compatibility, integrations, and strategic relationships is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives.
Our robotic magnetic navigation systems utilize two permanent magnets mounted on articulating and pivoting arms with one magnet on either side of the patient table. These magnets generate magnetic navigation fields that steer and deflect the magnetic interventional devices in the patient anatomy. These magnetic fields are significantly less than the strength of fields typically generated by MRI equipment. The robotic magnetic navigation system is indicated for use in cardiac, peripheral and neurovascular applications. The robotic magnetic navigation system is used in conjunction with the Cardiodrive Automated Catheter Advancement System (“Cardiodrive”) and the QuikCAS automated catheter advancement single-use disposable device, which together are used to remotely advance and retract a catheter while the robotic magnetic navigation system magnets steer the working tip of the device.
Odyssey® Solution
The Odyssey Solution, and the next generation, Synchrony and SynX Solution, offer a fully integrated, real-time information solution to manage, control, record and share procedures across networks or around the world. We believe that these tools enhance the physician workflow in interventional labs through a consolidated user interface of multiple systems on a single display to enable greater focus on the case and improve the efficiency of the lab. Using a single mouse and keyboard, the Odyssey Solution allows the user to command multiple systems in the lab from a single point of control. In addition, the Odyssey Solution acquires a real-time, remote view of the lab, capturing synchronized procedure data for review of important events during cases. The Odyssey Solution enables physicians to access recorded cases and creates snapshots following procedures for enhanced clinical reporting, auditing and presentation. The Odyssey Solution enables physicians to establish a comprehensive master archive of procedures performed in the lab providing an excellent tool for training new staff on standard practices. The Odyssey Solution further enables procedures to be observed remotely around the world with high-speed Internet access over a hospital VPN, even wirelessly using a standard laptop or Windows tablet computer. The next generation solution, branded as Synchrony and SynX, modernizes the interventional cath lab with a 4K high-definition display that consolidates the viewing and control of disparate systems in the lab, offering enhanced procedure experience with custom layouts, streamlined workflows, an intuitive user interface, and a decluttered environment. Synchrony™ is made available with SynX™, a cloud-based HIPAA and GDPR-compliant browser and mobile-based app that allows for secure remote connectivity, collaboration, recording, and monitoring of the cath lab.
X-ray systems
We pursue arrangements with fluoroscopy system manufacturers to provide such systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms. An integrated x-ray system is critical for customer adoption of RMN systems, and when offered as a bundled purchase offer with the RMN System, may reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.
Disposables and Other Accessories
Our robotic magnetic navigation systems are designed to use a toolkit of associated disposable interventional devices. We market and distribute disposable and related devices that can be used with our robotic magnetic navigation systems and in traditional, manual procedures.
Within the robotic device toolkit, we manufacture and distribute the MAGiC catheter, the MAGiC Sweep mapping catheter, the QuikCAS, the iCONNECT, and the V-CAS devices.
Prior to regulatory clearance of a replacement device, our propriety MAGiC ablation catheter, in Europe in 2025 and regulatory approval in the U.S. in early 2026, the robotically enabled ablation catheters predominantly used with our RMN Systems were co-developed with Biosense Webster, a wholly owned subsidiary of Johnson and Johnson (the “J&J catheters”). The J&J catheters were solely manufactured and distributed by them and their obligation to supply those catheters ended on December 31, 2025. We do not know their plans for the continuation of the J&J catheters, and we have no guarantees that supply of those catheters will continue into 2026. Although we are ramping up production of the MAGiC ablation catheter as a replacement device, continued supply of the J&J catheters into 2026 remains of significant importance for many customers of our technology.
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On July 31, 2024, the Company completed its acquisition of Access Point Technologies EP, Inc, based in Rogers, Minnesota providing us with the Map-iT portfolio of devices. These devices include differentiated high-quality diagnostic catheters used in traditional cardiac ablation procedures and are commercially available across key global geographies. The acquisition also provides us with the basis to develop additional magnetically enabled devices which can be used with our RMN systems.
Revenue from sales of disposable products is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but can also occur at the time of delivery depending on the customer arrangement. Disposable products are covered by an assurance-type warranty that provides for the return of defective products. Warranty costs were not material for the periods presented.
The maintenance of strategic relationships with compatible devices, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible devices and/or equivalent alternatives. We cannot provide any assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
Other Recurring Revenue
Other recurring revenue includes revenue from product maintenance plans, service-type warranties, and other post warranty maintenance. Revenue from services and software enhancements, including service-type warranties, are deferred and amortized over the service or update period, which is typically one year. Revenue related to services performed on a time-and-materials basis is recognized when performed.
Regulatory Approval
We have received regulatory clearance, and/or approvals necessary for us to market the Genesis System with Cardiodrive, iCONNECT, Navigant, Odyssey and QuikCAS in the U.S., Europe, and China, and we are in the process of pursuing registrations for extending our markets in other countries.
We have received regulatory clearance, and/or approvals necessary for us to market the GenesisX RMN System, the latest generation of the Genesis RMN System in the U.S. and Europe, and we are in the process of obtaining necessary approvals in other countries.
We have regulatory clearances and approvals that allow us to market the SynX collaboration solution in the U.S. and Europe.
We have obtained the CE marking for us to market the Synchrony system in Europe and are in the process of obtaining necessary approvals in the US and other countries.
We have received regulatory clearance, and/or approvals necessary for us to market the Niobe System with Cardiodrive, e-Contact, Navigant, Odyssey, QuikCAS in the U.S., Europe, Canada, China, Japan, and various other countries.
We have received regulatory clearance, licensing and/or approvals necessary for us to market the Vdrive and Vdrive Duo Systems with the V-CAS in the U.S., Europe, and Canada.
We have received regulatory clearance, licensing and/or approvals necessary for us to market the Stereotaxis MAGiC catheter, a robotically navigated magnetic ablation catheter designed to perform minimally invasive cardiac ablation procedures in the U.S. and Europe, and we are in the process of obtaining necessary approvals in other countries.
We have received regulatory clearance and/or approvals necessary for us to market the Map-it diagnostic mapping catheters in the U.S. and Europe.
The MAGiC Sweep™ catheter, the first robotically navigated high-density EP mapping catheter, received FDA 510(k) clearance in July 2025. We are in the process of obtaining necessary approvals in other geographies.
We are also currently seeking regulatory clearances for the EMAGIN 5F catheter guide designed to robotically navigate tortuous venous and arterial vasculature.
FINANCIAL INFORMATION ABOUT CUSTOMERS
No single customer accounted for more than 10% of total revenue for the years ended December 31, 2025 and 2024. No single country, other than the U.S., accounted for more than 10% of total revenue for the years ended December 31, 2025, and 2024.
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CLINICAL APPLICATIONS
We have focused our clinical and commercial efforts on applications of our products primarily in electrophysiology procedures for the treatment of arrhythmias and secondarily in complex interventional cardiology procedures for the treatment of coronary artery disease. Our system potentially has broad applicability in other areas, such as structural heart repair, interventional neurosurgery, interventional neuroradiology, peripheral vascular, renal denervation, pulmonology, urology, gynecology and gastrointestinal medicine, and some of our patents may be applicable in these areas as well.
Electrophysiology
The rhythmic beating of the heart results from the transmission of electrical impulses. When these electrical impulses are mistimed or uncoordinated, the heart fails to function properly, resulting in symptoms that can range from fatigue to stroke or death. Over 5.0 million people in the U.S. currently suffer from abnormal heart rhythms, which are known as arrhythmias. The prevalence of arrhythmias is expected to continue to rise as the population ages, life expectancy increases, and lifestyle factors such as obesity become more prevalent. Arrhythmias are a major physical and economic burden and are associated with stroke, heart failure, and adverse symptoms causing patients to be motivated to seek treatment. The combination of symptoms, prevalence and comorbidities make arrhythmias a major economic factor in healthcare.
Drug therapies for arrhythmias often have limited efficacy, poor compliance, and side effects. Consequently, physicians have increasingly sought more permanent, non-pharmacological, solutions for arrhythmias. The most common interventional treatment for arrhythmias is an ablation procedure in which the diseased tissue giving rise to the arrhythmia is isolated or destroyed. Prior to performing an electrophysiology ablation, a physician typically performs a diagnostic procedure in which the electrical signal patterns of the heart wall are “mapped” to identify the heart tissue generating the aberrant electrical signals. Following the mapping, the physician may then use an ablation catheter to eliminate the aberrant signal or signal path, restoring the heart to its normal rhythm. These procedures may be performed separately but are more commonly performed at the same time.
We believe more than 7,000 interventional labs around the world are currently conducting nearly one and a half million cardiac ablation procedures annually. The market has grown rapidly over the last decade with annualized procedure growth of approximately 10%.
We believe that Robotic Magnetic Navigation is particularly well-suited for these electrophysiology procedures which are time consuming, or which can only be performed by highly experienced physicians. These procedures include:
| ● | Ventricular Tachycardia. Ventricular tachycardia is a malignant, potentially lethal arrhythmia that is extremely difficult and time consuming to treat. The magnetic catheter has been characterized as the ideal tool for this application. These arrhythmias can often be modified or interrupted by the pressure of a conventional catheter making it very difficult to identify the appropriate location for the ablation, whereas magnetic catheters produce fewer extra beats and provide for easier and more efficient mapping of the diseased tissue. Successful ablation of ventricular tachycardia can extend the useful life of an implantable defibrillator, reduce shocks to the patient, reduce the need for antiarrhythmic drugs or, in some cases, obviate the need for an expensive implantable device and its associated follow-up. | |
| ● | Atrial Fibrillation. The most commonly diagnosed abnormal heart rhythm, atrial fibrillation, is a particular type of arrhythmia characterized by rapid, disorganized contractions of the heart’s upper chambers, the atria, which lead to ineffective heart pumping and blood flow and can be a major risk factor for stroke. This chaotic electrical activity of the top chambers of the heart is estimated to be present in three million people in the United States and over seven million people worldwide. The number of potential patients for manual catheter-based procedures for atrial fibrillation has been limited because the procedures are extremely complex and are performed by only the most highly skilled electrophysiologists. They also typically have much longer procedure times than general ablation cases and the success rates have been lower and more variable. We believe that our system can allow these procedures to be performed by a broader range of electrophysiologists and, by automating some of the more complex catheter maneuvers, can standardize and reduce procedure times and significantly improve outcomes. |
| ● | General Mapping and Ablations. For the more routine mapping and ablation procedures, our system offers the unique benefit of precise catheter movement and consistent heart wall contact. Additionally, the system can control the procedure and direct catheter movement from the control room, saving the physician time and helping to avoid unnecessary exposure to high doses of radiation. |
We believe that our RMN can address the current challenges in electrophysiology by permitting the physician to remotely navigate disposable interventional devices from a control room outside the x-ray field. Additionally, we believe that our RMN allows for more predictable and efficient navigation of these devices to the treatment site and enables catheter contact to be consistently maintained to efficiently apply energy on the wall of the beating heart. We also believe that our RMN will significantly lower the skill barriers required for physicians to perform complex electrophysiology procedures and, additionally, improve interventional lab efficiency and reduce disposable interventional device utilization.
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Interventional Cardiology
More than half a million people die annually from coronary artery disease, a condition in which the formation of plaque in the coronary arteries obstructs the supply of blood to the heart, making this the leading cause of death in the U.S. Despite various attempts to reduce risk factors, each year over one million patients undergo interventional procedures in an attempt to open blocked vessels and another one half million patients undergo open heart surgery to bypass blocked coronary arteries.
Blockages within a coronary artery, often called lesions, are categorized by degree of obstruction as partial occlusions, non-chronic total occlusions and chronic total occlusions. Lesions are also categorized by the degree of difficulty with which they can be opened as simple or complex. Complex lesions, such as chronic total occlusions, longer lesions, and lesions located within smaller diameter vessels, are often very difficult or time consuming to open with manual interventional techniques.
We believe approximately 11,000 interventional labs worldwide are currently capable of conducting interventional cardiology. Over 4 million interventional cardiology procedures are performed annually in the U.S. alone. We estimate that approximately 10-15% of these interventional cardiology procedures currently being performed are complex and therefore require longer procedure times and may have sub-optimal outcomes. We believe that our system can substantially benefit this subset of complex interventional cardiology procedures.
Interventional Neuroradiology, Neurosurgery and Other Interventional Applications
Physicians used a predecessor to our Niobe System to conduct a number of procedures for the treatment of brain aneurysms, a condition in which a portion of a blood vessel wall balloons and which can result in debilitating or fatal bleeding and strokes. We believe the robotic magnetic navigation system also has a range of potential applications in minimally invasive neurosurgery, including biopsies and the treatment of tumors, treatment of vascular malformations and fetal interventions.
STRATEGIC RELATIONSHIPS
We have arrangements with technology leaders in the global interventional market, including manufacturers of fluoroscopy systems, ablation catheters, and electrophysiology mapping systems, that we believe are critical for us in commercializing our robotic magnetic navigation systems. These arrangements are important to us as they provide for the integration of our system with digital imaging and 3D catheter location sensing technology, as well as catheters compatible with our system.
With partners, we jointly developed electrophysiology mapping and ablation catheters that are navigable with our robotic magnetic navigation system. We believe that these products provide physicians with the elements required for effective complex electrophysiology procedures: accurate information as to the location of the catheter in the body and precise control over the working tip of the catheter.
Prior to regulatory clearance of a replacement device, our propriety MAGiC ablation catheter, in Europe in 2025 and regulatory approval in the U.S. in early 2026, the robotically enabled ablation catheters predominantly used with our RMN Systems were co-developed with Biosense Webster, a wholly owned subsidiary of Johnson and Johnson (the “J&J catheters”). The J&J catheters were solely manufactured and distributed by them and their obligation to supply those catheters ended on December 31, 2025. We do not know their plans for the continuation of the J&J catheters, and we have no guarantees that supply of those catheters will continue into 2026. Although we are ramping up production of the MAGiC ablation catheter as a replacement device, continued supply of the J&J catheters into 2026 remains of significant importance for some customers of our technology.
The maintenance of strategic relationships with technology leaders in the global interventional market, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. We cannot provide any assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
RESEARCH AND DEVELOPMENT
We have assembled an experienced group of engineers and physicists with recognized expertise in magnetics, software, control algorithms, mechanics, electronics, systems integration and disposable interventional device design.
Our research and development efforts are focused in the following areas:
| ● | development and enhancement of Robotic Magnetic Navigation Systems; | |
| ● | designing new proprietary disposable interventional devices for use in Electrophysiology and other clinical specialties with our robotic systems; and | |
| ● | software and other engineering efforts to enhance imaging integrations, user interface, automated navigation, and operating room connectivity. |
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Our research and development team collaborates with strategic third parties to integrate our robotic magnetic navigation system’s open architecture platform with key imaging, location sensing and information systems in the interventional lab. We have also collaborated with highly regarded interventional physicians in key clinical areas and have entered into agreements with universities and teaching hospitals, which serve to increase our access to world class physicians and to expand our name recognition in the medical community.
CUSTOMER SERVICE AND SUPPORT
We provide worldwide maintenance and support services to our customers’ products directly or with the assistance of outsourced product and service representatives. By utilizing these relationships, we provide direct, on-site technical support activities, including call center, customer support engineers and service parts logistics and delivery. In certain situations, we use these third parties as a single point of contact for the customer, allowing us to focus on providing installation, training and back-up technical support.
Our back-up technical support includes a combination of on-line, telephone and on-site technical assistance services 24 hours a day, seven days a week. We employ service and support engineers with networking and medical equipment expertise and outsource a portion of our installation and support services. We offer different levels of support to our customers, including basic hardware and software maintenance, extended product maintenance, and rapid response capability for both parts and service.
We have established a call center in our St. Louis facilities, which provides real-time clinical and technical support to our customers worldwide.
MANUFACTURING
Robotic Magnetic Navigation Systems and Odyssey and Synchrony & SynX Solutions
Our manufacturing strategy for our Robotic Magnetic Navigation Systems and Odyssey and Synchrony & SynX Solutions is to sub-contract many of the manufacture of major subassemblies of our systems to maximize manufacturing flexibility and lower fixed costs. We maintain quality control for all our systems by completing final system assembly and inspection in-house.
We purchase both custom and off-the-shelf components from many suppliers and subject them to quality specifications and processes. Some of the components necessary for the assembly of our products are currently provided to us by sole-sourced suppliers (the only recognized supply source available to us) or single-sourced suppliers (the only approved supply source for us among other sources). We purchase most of our components and major assemblies through purchase orders rather than long-term supply agreements and generally do not maintain large volumes of finished goods.
Disposable Interventional Devices
Our historical manufacturing strategy for disposable interventional devices was to outsource their manufacture through subcontracting and to expand partnerships for other interventional devices. We work closely with our contract manufacturers and have strong relationships with component suppliers. We have entered into manufacturing agreements to provide high volume capability for devices other than catheters. With the July of 2024 acquisition of APT, we have the ability to manufacture disposable interventional devices at our Rogers, Minnesota location as a complement to our primarily outsourced model.
Software
The software components of the robotic magnetic navigation system and the Odyssey and Synchrony & SynX Solutions , including control and application software, are developed both internally and with integrated modules we purchase or license. We perform final testing of software products in-house prior to their commercial release.
General
Our manufacturing facility operates under processes that meet the FDA’s requirements under the Quality System Regulation (QSR). Our ISO registrar and European notified British Standard Institution (BSI) has audited our facility annually since 2001 and found the facility to comply with relevant requirements. The most recent ISO 13485 and MDSAP Certificate of Registration were issued in 2025 and are valid through September 2028.
SALES AND MARKETING
We market our products in the U.S and internationally through a direct sales force of senior sales specialists, distributors and sales agents, supported by account managers and clinical specialists who provide training, clinical support, and other services to our customers.
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Our sales and marketing efforts include two important elements: (1) selling robotic magnetic systems, the Odyssey and Synchrony & SynX Solutions, and magnetically compatible x-ray systems directly and through distributors; and (2) leveraging our installed base of systems to drive recurring sales of disposable interventional devices, software and service.
REIMBURSEMENT
We believe that substantially all of the procedures, whether commercial or in clinical trials, conducted in the U.S. with the robotic magnetic navigation systems have been reimbursed to date. We expect that third-party payors will reimburse, under existing billing codes, procedures in which compatible ablation catheters are used. We expect healthcare facilities in the U.S. to bill various third-party payors, such as Medicare, Medicaid, other government programs and private insurers, for services performed with our products. We believe that procedures performed using our products or targeted for use by products that do not yet have regulatory clearance or approval, are generally already reimbursable under government programs and most private plans. Accordingly, we believe providers in the U.S. will generally not be required to obtain new billing authorizations or codes to be compensated for performing medically necessary procedures using our products on insured patients. We cannot guarantee that reimbursement policies of third-party payors will not change in the future with respect to some or all of the procedures using the robotic magnetic navigation system.
In countries outside the United States, reimbursement is obtained from various sources, including governmental authorities, private health insurance plans, and labor unions. In most foreign countries, private insurance systems may also offer payments for some therapies. Additionally, health maintenance organizations are emerging in certain European countries. In Europe, we believe that substantially all of the procedures, whether in commercial settings or clinical trials, conducted with the robotic magnetic navigation systems have been reimbursed to date. In other foreign countries, we may need to seek international reimbursement approvals, and we do not know if these required approvals will be obtained in a timely manner or at all.
See “Item 1A—Risk Factors” for a discussion of various risks associated with reimbursement from third-party payors.
INTELLECTUAL PROPERTY
The proprietary nature of, and protection for, our products, processes and know-how are important to our business. We seek patent protection in the United States and internationally for our systems and other technology where available and when appropriate.
We have an extensive patent portfolio that we believe protects the fundamental scope of our technology and systems, including our robotic magnetic technology, navigational methods, mapping system and procedural workflows, 3D integration technology, and disposable interventional devices. As of December 31, 2025, we had 43 issued U.S. patents and 3 pending U.S. patent application. In addition, we had 6 issued foreign patents and 5 pending foreign patent applications. The key patents that protect our technology and systems extend until 2028 and beyond.
We also have a number of invention disclosures under consideration and several applications that are being prepared for filing. We cannot be certain that any patents will be issued from any of our pending patent applications, nor can we be certain that any of our existing patents or any patents that may be granted in the future will provide us with protection.
We believe it would be difficult and costly to reverse engineer our robotic magnetic navigation system, which contains numerous complex algorithms that control our disposable devices inside the magnetic fields generated by the robotic magnetic navigation system. We further believe that our patent portfolio is broad enough in scope to enable us to obtain legal relief if any entity not licensed by us attempted to market disposable devices in the U.S. that can be navigated by the robotic magnetic navigation system. We can also utilize security keys, such as embedded smart chips or associated software that could allow our system to recognize specific disposable interventional devices to prevent unauthorized use of our system.
We have also developed substantial expertise in magnet design, magnet physics, and magnetic instrument control in connection with the development of the robotic magnetic navigation system, which we maintain as trade secrets. This expertise centers around our proprietary magnet design, which is a critical aspect of our ability to design, manufacture and install a cost-effective magnetic navigation system that is small enough to be installed in a standard interventional lab. Our Odyssey Solution contains numerous complex algorithms and proprietary software and hardware configurations, and requires substantial knowledge to design and assemble, which we maintain as trade secrets. This proprietary software and hardware, some of which is owned by Stereotaxis, and some of which is licensed to Stereotaxis, is a material aspect of the ability to design, manufacture and install cost-effective and efficient information integration, storage, and delivery platform.
In addition, we seek to protect our proprietary information by entering confidentiality, assignment of inventions or license agreements with our employees, consultants, contractors, advisers and other third parties. However, we believe that these measures afford only limited protection.
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COMPETITION
The markets for medical devices are intensely competitive and are characterized by rapid technological advances, frequent new product introductions, evolving industry standards, and price erosion.
In electrophysiology we consider the primary competition to our robotic magnetic navigation system to be traditional catheter-based electrophysiology ablation approaches including RF (radiofrequency) ablation and non-RF therapies. To our knowledge, we are the only company that has commercialized remote, digital, and direct control of the working tip of catheters for use in RF ablation procedures. Our success depends in part on convincing hospitals and physicians to convert traditional interventional procedures to procedures using our robotic magnetic navigation system.
We face competition from companies that are developing and marketing new products for use in electrophysiology. These products include next generation mapping systems and RF ablation devices with which our robotic magnetic navigation system is not currently compatible, as well as non-RF ablation devices including single-shot cryoablation devices and other new products, such as pulse field ablation, for use in other interventional therapies. Some of these products are marketed by companies that may have an established presence in the field of electrophysiology, including major imaging, capital equipment and disposables companies that are currently selling products in the interventional lab. In addition, we face competition from companies that currently market or are developing drugs, gene, or cellular therapies to treat the conditions for which our products are intended.
We also face competition from companies that are developing robotic technologies for electrophysiology and non-electrophysiology interventional procedures. We are aware of four companies that commercialized endovascular catheter navigation systems which have been cleared by the FDA for electrophysiology procedures as well as two companies with electromagnetic catheter navigation systems that received CE Mark approval in Europe. None of these companies seem to be active in catheter robotics with any current commercial activities. Outside of electrophysiology, there are at least two companies that have commercialized robotic systems for guidewire manipulation and can be viewed as potential competitors as we look to address additional clinical applications.
Our Map-iT family of devices competes directly with other companies that manufacture and sell traditional interventional devices. We also recently developed our own line of robotically enabled medical devices and are aware of two other companies that also produce and sell magnetically enabled catheters.
We face direct competition in certain products in our Odyssey/Synchrony Solution. These competitors include established imaging companies as well as dedicated solution providers. We expect to continue to face competitive pressure in this market in the future, based on the rapid pace of advancements with this technology.
We believe that the primary competitive factors in the market we address are capability, safety, efficacy, ease of use, price, quality, reliability and effective sales, support, training and service. The length of time required for products to be developed and to receive regulatory and reimbursement approval is also an important competitive factor. See “Item 1A—Risk Factors” for a discussion of other competitive risks facing our business.
GOVERNMENT REGULATION
Our products are medical devices that are subject to extensive regulation in the U.S. and in foreign countries where we do business. The FDA regulates the development, testing, manufacturing, labeling, storage, recordkeeping, promotion, marketing, distribution and service of medical devices in the U.S. to ensure that medical products distributed domestically are safe and effective for their intended uses. In addition, the FDA regulates the export of medical devices manufactured in the U.S. to international markets and the importation of medical devices manufactured abroad.
In many foreign countries in which we market our products, we are subject to regulations affecting, among other things, product standards, packaging requirements, labeling requirements, import restrictions, tariff regulations, duties and tax requirements. Many of these regulations are similar to those of the FDA or other U.S. regulations. In addition, our products must meet the requirements of a large and growing body of international standards which govern the design, manufacture, materials content and sourcing, testing, certification, packaging, installation, use and disposal of our products. Failure to meet these standards could limit the ability to market our products in those regions which require compliance to such standards. Examples of groups of such standards are electrical safety standards such as those of the International Electrotechnical Commission and composition standards such as the Reduction of Hazardous Substances (“RoHS”) and Waste Electrical and Electronic Equipment (“WEEE”) Directives.
U.S. Food and Drug Administration
Unless an exemption applies, each medical device we wish to commercially market in the United States will require 510(k) clearance, de novo approval, or pre-market approval (PMA) from the FDA. The FDA classifies medical devices into one of three classes. Devices deemed to pose lower risks are placed in either Class I or II, which requires the manufacturer to submit to the FDA a pre-market notification requesting permission to commercially distribute the device, known as 510(k) clearance. Some low-risk devices are exempted from this requirement. Devices deemed by the FDA to pose the greatest risks, such as life-sustaining, or life-supporting, or devices deemed not substantially equivalent to a previously cleared 510(k) device, are placed in Class III, requiring pre-market approval, or PMA. Most of our current products are Class II devices requiring 510(k) clearances. The J&J compatible catheters used with our magnetic navigation system, as well as the MAGiC catheter, are Class III therapeutic devices and are subject to the PMA process.
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If U.S. clinical data are needed to support clearance, approval or a marketing application for our devices, generally, an investigational device exemption, or IDE, is assembled and submitted to the FDA. The FDA reviews and must approve the IDE before the study can begin. In addition, the study must be approved by an Institutional Review Board covering each clinical site involved in the study. When all approvals are obtained, we initiate a clinical study to evaluate the device. Following completion of the study, we collect, analyze and present the data in an appropriate submission to the FDA (i.e., in support of a 510(k), de novo, or PMA).
When a 510(k) clearance is required, we must submit a pre-market notification demonstrating that our proposed device is substantially equivalent to a previously cleared and legally marketed 510(k) device, de novo approved device, or a device that was in commercial distribution before May 28, 1976, for which the FDA has not yet called for the submission of pre-market approval applications. To establish substantial equivalence, the applicant must show that the new device has the same intended use as the predicate device, and it either has the same technological characteristics or has been shown to be equally safe and effective and does not raise different questions of safety and effectiveness as compared to the predicate device. The FDA may require further information, including clinical trial results or product test data, to make a determination regarding substantial equivalence. The FDA’s 510(k) clearance process usually takes from (4) four to (12) twelve months but can take longer.
If a device is not eligible for the 510(k) clearance process, but the product is low or moderate risk, we may be able to obtain de novo review. The de novo process allows FDA to classify a low- to moderate-risk device not previously classified into Class I or II. If the device is not eligible for either the 510(k) or de novo processes, a PMA must be submitted to the FDA. A PMA must be supported by extensive data, including but not limited to technical, preclinical, clinical trials, manufacturing and labeling to demonstrate reasonable evidence of the device’s safety and efficacy to the FDA’s satisfaction. The PMA process is much more costly, lengthy and uncertain than the 510(k) clearance process, and it generally takes from one to three years, but can take longer. We cannot be sure that the FDA will ever grant 510(k) clearance, de novo approval or pre-market approval for any product we propose to market in the United States.
After a device receives 510(k) clearance or de novo approval, any modification that could significantly affect its safety or effectiveness, or that would constitute a significant change in its intended use, will require a new clearance. Modification to a PMA approved device or its labeling may require either a new PMA or PMA supplement approval, which could be a costly and lengthy process.
After a device is placed on the market, numerous regulatory requirements apply. These include, for example:
| ● | The Quality System Regulation, or QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, documentation and other quality assurance procedures during product design and throughout the manufacturing process; | |
| ● | Labeling requirements and the FDA prohibitions against promoting products for uncleared, unapproved or “off-label” uses; | |
| ● | Medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; and | |
| ● | Reports of Corrections and Removals regulation, which requires manufacturers to report recalls and field actions to the FDA if initiated to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act. |
The FDA has broad post-market and regulatory enforcement powers. We are subject to unannounced inspections by the FDA to determine our compliance with the QSR and other regulations. If we fail to comply with the QSR or other regulatory requirements, we may receive a warning or untitled letter from the FDA or be subject to other enforcement actions, including fines, injunctions, civil penalties, seizures, operating restrictions, partial suspension or total shutdown of production, refusing requests for 510(k) clearance, de novo petitions, or PMA approval of new products, withdrawing 510(k) clearance, de novo approvals, or PMA approvals already granted, and criminal prosecution. The FDA also has the authority to require us to repair, replace or refund the cost of any medical device that we have manufactured or distributed if there is a reasonable probability that the device would cause serious, adverse health consequences or death.
International Regulation
For us to market our products in other countries, we must obtain regulatory approvals and comply with extensive safety and quality regulations in other countries. These regulations, including the requirements for approvals or clearance and the time required for regulatory review, vary from country to country and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries may differ from that required to obtain FDA clearance or approval.
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The primary regulatory environment in Europe is that of the European Union (EU), which encompasses most of the major countries in Europe. The EU, along with other member countries of the European Economic Area, or EEA, requires that manufacturers of medical products obtain the right to affix the CE Mark to their products before selling them in member countries of the EEA. The CE Mark is an international symbol of adherence to quality assurance standards and compliance with applicable directives. To obtain the right to affix the CE Mark to products, a manufacturer must obtain certification that its processes meet certain quality standards. Compliance with the Medical Device Regulation (MDR), as certified by a recognized European Notified Body, permits the medical device manufacturer to affix the CE Mark on its products and commercially distribute those products throughout the EEA. We are subject to annual surveillance audits and periodic re-certification audits to maintain our CE Mark permissions. The MDR establishes a uniform, transparent, predictable, and sustainable regulatory framework across the EU for medical devices and ensures a high level of safety and health while supporting innovation. Regulations are directly applicable in EU member states without the need for member states to implement into national law. This aims at increasing harmonization across the EU. The MDR became effective on May 26, 2021.
We are subject to additional regulations in other foreign countries, including, but not limited to Canada, Taiwan, China, Japan, Korea, and Russia, to sell our products. We intend that either we or our distributors will receive any necessary approvals or clearance prior to marketing our products in these international markets.
Please refer to “Regulatory Approval” in Item 1 of this annual report for a description of the regulatory clearance, licensing and/or approvals we currently have or are pursuing.
Anti-Kickback and False Claims Laws
We are subject to various federal and state laws relating to healthcare fraud and abuse, including anti-kickback and false claims laws. The U.S. federal healthcare program Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or furnishing or arranging for a good or service, for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs. The definition of “remuneration” has been broadly interpreted to include anything of value, including for example, gifts, discounts, the furnishing of supplies or equipment, credit arrangements, payments of cash and waivers of payments, and providing anything of value at less than fair market value. Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid. In the past several years, several healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws.
Many states have adopted laws similar to the federal healthcare program Anti-Kickback Statute and the federal false claims laws. Some of these state prohibitions apply to healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs.
Transparency Laws
Under the Physician Payments Sunshine Act, or the Sunshine Act, which was enacted by Congress as part of the Patient Protection and Affordable Care Act, we are required to track and report to the federal government on an annual basis, subject to certain exceptions, all payments and other transfers of value to U.S. physicians and teaching hospitals, as well as ownership interests held by physicians. Such data is made available by the government on a publicly searchable website. In addition, we are subject to similar state laws related to the tracking and reporting of certain payments and other transfers of value to healthcare professionals.
HIPAA and Other Privacy Laws
We are subject to laws and regulations protecting the privacy and integrity of patient medical information, including the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information, and the applicable Privacy and Security Standards of HITECH, the Health Information Technology for Economic and Clinical Health Act. HIPAA also prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
In addition to federal regulations issued under HIPAA, some states and foreign countries have enacted privacy and security statutes or regulations that, in some cases, are more stringent than those issued under HIPAA. For example, the General Data Protection Regulation (the “GDPR”), which is in effect across the European Economic Area (the “EEA”), imposes several stringent requirements for controllers and processors of personal data and increased our obligations, for example, by imposing higher standards when obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information, increasing requirements pertaining to health data as well as pseudonymised data, and imposing additional obligations when we contract third-party processors in connection with the processing of personal data. The GDPR provides that EU member states may make their own further laws and regulations limiting the processing of genetic, biometric, or health data. Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20 million or 4% of the total worldwide annual turnover of the preceding financial year, whichever is greater, and other administrative penalties.
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In addition, effective January 1, 2020, California passed the California Consumer Privacy Act (the “CCPA”), which is considered by many to be the most far-reaching data privacy law introduced in the U.S. to date and which introduces new compliance burdens on many organizations doing business in California who collect Personal Information about California residents. The CCPA’s definition of Personal Information is very broad and specifically includes biometric information. The CCPA took effect in 2020 and will allow for significant fines by the state attorney general, as well as a private right of action from individuals in relation to certain security breaches. Further, the California Consumer Privacy Rights Act (“CPRA”), which took effect on January 1, 2023, revised and expanded the CCPA, adding new data protection obligations to covered business and rights for consumers. Similar data protection laws have also been enacted by other states, including Virginia, Colorado, Connecticut, and Utah.
As a result of any amendment or change to the foregoing, it may be necessary to modify our operations and procedures to comply with the more stringent state and foreign laws, which may entail significant and costly changes for us.
Certificate of Need Laws
Several states in the U.S., require a certificate of need or similar regulatory approval prior to a hospital’s acquisition of high-cost capital items or various types of advanced medical equipment, such as our robotic magnetic navigation system. Many of the states in which we sell robotic magnetic navigation systems have laws that require institutions located in those states to obtain a certificate of need in connection with the purchase of our system, and some of our purchase orders are conditioned upon our customer’s receipt of necessary certificate of need approval.
Anti-Corruption Laws
Our operations outside the U.S. require us to comply with a number of U.S. and international regulations, including the Foreign Corrupt Practices Act (“FCPA”). The FCPA prohibits U.S. corporations from offering, promising, authorizing, or making payments to foreign government officials for the purpose of obtaining or retaining business. In many countries, the scope of the FCPA could include interactions with certain healthcare professionals. Other countries have enacted similar anti-corruption laws.
Human Capital
Given the highly competitive nature of the medical device industry, the future success of our company depends on our ability to attract, retain, and further develop top talent. We value the skills of our employees and the contributions they make in helping us achieve our mission to discover, develop and deliver robotic systems, instruments, and information solutions for the interventional laboratory. We are committed to attracting, developing, and retaining the best talent.
Our global leadership represents a broad range of backgrounds and brings a wide array of perspectives and experiences that have helped us achieve our leadership in innovative robotic technologies designed to enhance the treatment of arrhythmias and to perform endovascular procedures.
As of December 31, 2025, our employees were based in 11 different countries around the world, including the U.S. Our global workforce consists of highly skilled talent and experience at all levels. We strongly believe that all employees should have a work environment free from discrimination, harassment, bias and prejudice. We strive to foster a culture where mutual respect and dignity are core to our individual expectations.
As of December 31, 2025, we had 131 employees, 40 of whom were engaged directly in research and development, 47 in sales and marketing activities, 26 in manufacturing and service, and 18 in general administrative activities including finance, information systems, legal and general management. A significant majority of our employees are not covered by a collective bargaining agreement, and we consider our relationship with our employees to be positive. We also engage the services of independent contractors and consultants as needed for special or temporary projects or specific expertise.
Health, Safety, and Wellness
The health, safety, and wellness of our employees is a priority in which we continue to invest. We provide our employees and their families with access to health and wellness programs that support employee wellbeing, time away from work, family care, mental health, and financial well-being. We also conduct on-site engagement activities that facilitate cross-team networking, collaboration, and innovation.
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We continue to evolve our programs to respond to the best interest of our workforce, as well as the communities in which we operate, in compliance with government regulations. We manage overall safety with guidance based on regional, country, and local regulations and best practices.
Compensation and Benefits
We strive to provide our employees with what we believe is a competitive and comprehensive total rewards package of compensation, benefits and services. In addition to base compensation, these packages, which vary by country and region, can include annual bonuses, sales commissions, 401(k) and/or pension plans, healthcare and insurance benefits for employees and family members, health savings and flexible spending accounts, paid time off, family leave, and flexible work schedules. In addition, we offer employees the benefit of equity ownership in the company through stock option grants and/or restricted stock units. Eligible employees can participate in an employee stock purchase plan, which offers the opportunity to purchase our common stock at a discount of 5%.
Training and Development
We recognize the importance of furthering education and development of our employees through the various stages of their careers. We are dedicated to promoting individual, leader, team, and organizational development through a number of tools and services. We offer a variety of professional development courses for our employees and support employee continuing education. In addition, our employees are required to complete compliance training applicable to our industry. We also have an annual global performance review process for reviewing all employees’ performance and pay.
Availability of Information
We make certain filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments and exhibits to those reports, available free of charge in the Investors section of our website, http://www.stereotaxis.com, as soon as reasonably practicable after they are filed with the SEC. Further, these filings are available on the Internet at http://www.sec.gov. Information contained on our website is not part of this report and such information is not incorporated by reference into this report.
Executive Officers
See Part III – Item 10 for information about our Executive Officers.
| ITEM 1A. | RISK FACTORS |
The following uncertainties and factors, among others, could affect future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements.
RISK FACTORS SUMMARY
Risks Related to Our Business and Business Operations
| ● | We may not generate cash from operations or be able to raise the necessary capital to continue operations. | |
| ● | Macroeconomic and geopolitical factors, as well as pandemics, epidemics or outbreaks of infectious disease could have an adverse effect on our supply chain, our hospital customer buying patterns, and our ability to raise capital and could otherwise disrupt our normal business operations. | |
| ● | We may not be able to fund our business operations in the same manner as we have done historically if we do not improve the operating performance of the Company or raise additional capital. | |
| ● | Hospital decision-makers may not purchase our robotic magnetic navigation systems or related products or may think that such systems and products are too expensive. | |
| ● | If we are unable to fulfill our current purchase orders and other commitments on a timely basis or at all, we may not be able to achieve future sales growth. | |
| ● | We will likely experience long and variable sales and installation cycles, which could result in substantial fluctuations in our quarterly results of operations. | |
| ● | Physicians may not use our products if they do not believe they are safe, efficient and effective. | |
| ● | Our collaborations with fluoroscopy system manufacturers and providers of catheters and electrophysiology mapping systems or other parties may fail, or we may not be able to enter additional collaborations in the future. | |
| ● | The complexity associated with selling, marketing, and distributing products could impair our ability to increase revenue. | |
| ● | Our marketing strategy is dependent on collaboration with physician “thought leaders.” | |
| ● | Physicians may not commit enough time to sufficiently learn our system. | |
| ● | Customers may choose to purchase competing products and not ours. |
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| ● | If the magnetic fields generated by our system are not compatible with, or interfere with, other widely used equipment in the interventional labs, sales of our products would be negatively affected. | |
| ● | The use of our products could result in product liability claims that could be expensive, divert management’s attention, and harm our reputation and business. | |
| ● | We have incurred substantial losses in the past and may not be profitable in the future. | |
| ● | Our reliance on contract manufacturers and on suppliers, and in some cases, a single supplier, could harm our ability to meet demand for our products in a timely manner or within budget. | |
| ● | Risks associated with international manufacturing and trade could negatively impact the availability and cost of our products because materials used to manufacture our magnets, one of our key system components, are sourced from overseas. | |
| ● | We may encounter problems at our manufacturing facilities or those of our subcontractors or otherwise experience manufacturing delays that could result in lost revenue. | |
| ● | Our growth may place a significant strain on our resources, and if we fail to manage our growth, our ability to develop, market, and sell our products will be harmed. |
Risks Related to our Recently Completed Acquisition of APT
| ● | We may be unable to successfully integrate APT into our business and may fail to realize any or all of the anticipated benefits of the acquisition, or those benefits may take longer to realize than expected. | |
| ● | Our future results may be adversely impacted if we do not effectively manage APT’s catheter manufacturing business following the completion of the acquisition. | |
| ● | The issuance of the Earnout Consideration will result in dilution to our stockholders and may adversely affect us, including the market price of our securities. | |
| ● | Under certain circumstances, we may take certain actions to achieve the milestones under the Purchase Agreement that we would not have undertaken if we had not completed the acquisition, which may have an adverse effect on the historical business of Stereotaxis. |
Risks Relating to Technology and Intellectual Property Matters
| ● | The rate of technological innovation of our products might not keep pace with the rest of the market. | |
| ● | Security breaches and other disruptions to our information technology infrastructure could interfere with our operations, compromise confidential information, and expose us to liability which could materially adversely impact our business and reputation. | |
| ● | We may be unable to protect our technology from use by third parties. | |
| ● | Third parties may assert that we are infringing their intellectual property rights. | |
| ● | Expensive intellectual property litigation is frequent in the medical device industry. | |
| ● | We may not be able to maintain all the licenses or rights from third parties necessary for the development, manufacture, or marketing of new and existing products. | |
| ● | Our products and related technologies can be applied in different medical applications, and we may fail to focus on the most profitable areas. | |
| ● | We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers. | |
| ● | Software errors or other defects may be discovered in our products. |
Risks Relating to Regulatory and Legal Matters
| ● | If we or the parties in our strategic collaborations fail to obtain or maintain necessary FDA clearances or approvals for our medical device products, or if such clearances or approvals are delayed, we will be unable to continue to commercially distribute and market our products. | |
| ● | If our strategic collaborations elect not to or we fail to obtain regulatory approvals in other countries for products under development, we will not be able to commercialize these products in those countries. | |
| ● | We may fail to comply with continuing regulatory requirements of the FDA and other authorities and become subject to enforcement action, which may include substantial penalties. | |
| ● | Our suppliers, subcontractors, or we may fail to comply with the FDA quality system regulation or other quality standards. | |
| ● | If we fail to comply with health care regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected. | |
| ● | Healthcare policy changes, including the potential repeal or amendment of any existing legislation, may have a material adverse effect on us. Such changes could, among other things, reduce reimbursement for procedures using our products, change coverage policies, increase compliance costs, and delay or reduce hospital capital spending. | |
| ● | The application of state certificate of need regulations and compliance by our customers with federal and state licensing or other international requirements could substantially limit our ability to sell our products and grow our business. | |
| ● | Hospitals or physicians may be unable to obtain reimbursement from third-party payors for procedures using our products, or reimbursement for procedures may be insufficient to recoup the costs of purchasing our products. | |
| ● | Our costs could substantially increase if we receive a significant number of warranty claims or have other significant, uninsured liabilities. |
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Risks Related to Our Common Stock
| ● | Our principal stockholders continue to own a large percentage of our voting stock, and they could substantially influence matters requiring stockholder approval. | |
| ● | Future issuances of our securities could dilute current stockholders’ ownership. | |
| ● | We have never paid dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. | |
| ● | Our certificate of incorporation and bylaws, Delaware law, and one of our collaboration agreements contain provisions that could discourage a takeover. | |
| ● | Evolving regulation of corporate governance and public disclosure may result in additional expenses and continuing uncertainty. | |
| ● | Our future operating results may be below securities analysts’ or investors’ expectations, which could cause our stock price to decline. | |
| ● | We expect that the price of our common stock could fluctuate substantially, possibly resulting in class action securities litigation. | |
| ● | If we fail to continue to meet all applicable NYSE American Market requirements and the NYSE American determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, which would impair the value of your investment and ultimately harm our business by limiting our access to equity markets for capital raising. |
Risks Related to the February 2021 CEO Performance Stock Unit Grant
| ● | We will incur significant additional stock-based compensation expense over the term of the CEO Performance Award regardless of whether any of the milestones are achieved. | |
| ● | Our stockholders may experience substantial dilution upon payout of shares under the CEO Performance Award. | |
| ● | Certain provisions in the PSU Agreement may discourage a change in control of the Company even if such a transaction would otherwise be beneficial to our stockholders. | |
| ● | We are highly dependent on the services of Mr. Fischel, and our compensation package, including the CEO Performance Award, may fail to retain him. |
Summary of General Risk Factors
| ● | General economic conditions could materially adversely impact us. | |
| ● | We maintain our cash at financial institutions, often in balances that exceed federally insured limits. | |
| ● | We may lose key personnel or fail to attract and retain replacement or additional personnel. | |
| ● | We face currency and other risks associated with international operations. |
Risks Related to Our Business and Business Operations
We may not generate cash from operations or be able to raise the necessary capital to continue operations.
We may require additional funds to meet our operational, working capital and capital expenditure needs in the future. We cannot be certain that we will be able to obtain additional funds on favorable terms or at all. If we cannot raise capital on acceptable terms, we will not be able to, among other things:
| ● | maintain customer and vendor relationships; | |
| ● | hire, train and retain employees; | |
| ● | maintain or expand our operations; | |
| ● | enhance our existing products or develop new ones; or | |
| ● | respond to competitive pressures. |
Our failure to do any of these things could result in lower revenue and adversely affect our financial condition and results of operations, and we may have to curtail or cease operations.
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Macroeconomic and geopolitical factors, as well as pandemics, epidemics or outbreaks of infectious disease could have an adverse effect on our supply chain, our hospital customers buying patterns, and our ability to raise capital and could otherwise disrupt our normal business operations.
Future results of operations and liquidity could be materially adversely impacted by uncertainties in macroeconomic and geopolitical factors in both the U.S. and globally including continuing introduction of new or modification of existing tariffs or trade barriers, supply chain challenges, inflationary pressures, elevated interest rates, and disruptions in commodity markets stemming from conflicts, such as those between Russia and Ukraine and conflicts in the Middle East, including Israel and Iran. The Company continues to experience difficulties with periodic worldwide supply chain disruptions, including shortages and inflationary pressures, tariffs and other trade regulations that are or may be imposed, and logistics delays which make it difficult for us to source parts and ship our products. We continue to evaluate the macroeconomics business environment, taking action to increase inventory levels where appropriate and engaging in discussions with our vendors on contractual obligations, but we cannot guarantee that our business activities will not be impacted more severely in the future. Our suppliers and contract manufacturers have experienced, and may continue to experience, similar difficulties. If our manufacturing operations or supply chains are materially interrupted, it may not be possible for us to timely manufacture or service our products at required levels, or at all. Changes in economic conditions, government shutdowns, tariff escalation, retaliatory measures and new import restrictions could lead to higher inflation than previously experienced or expected, which could, in turn create supply shortages as companies seek alternative sources of supply and adjust their logistics and transportation routes. As a result of these factors, we may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation, especially tariff-induced inflation. A material reduction or interruption in any of our manufacturing processes or a substantial increase in costs would have a material adverse effect on our business, operating results, and financial condition.
Many of our hospital customers, for whom the purchase of our system involves a significant capital purchase which may be part of a larger construction project at the customer site (typically the construction of a new building), may themselves be under similar pressures. Hospitals continue to experience challenges with staffing and cost pressures as supply chain constraints and inflation drive up operating costs. Hospitals may also be adversely affected by the liquidity concerns driven by elevated interest rates and the broader macroeconomic environment. These factors could cause delays or cancellations of current purchase orders and other commitments and may exacerbate the long and variable sales and installation cycles for our robotic magnetic navigation systems. Our hospital customers have also experienced challenges in sourcing supplies, such as catheters, needed to perform procedures. Such shortages have, and may continue to, put pressure on procedures and our disposable revenue. Delays in order placement, cancellation of existing orders and reduced demand or availability of our disposable products all would have a material adverse effect on our business, financial condition, and results of operations.
Any disruption to the capital markets could negatively impact our ability to raise capital. If the capital markets are disrupted for an extended period and we need to raise additional capital, such capital may not be available on acceptable terms, or at all. Disruptions to the capital markets and other financing sources could also negatively impact our hospital customers’ ability to raise capital or otherwise obtain financing to fund their operations and capital projects. Such could result in delayed spending on current projects, a longer sales cycle for new projects where a large capital commitment is required, and decreased demand for our disposable products as well as an increased risk of customer defaults or delays in payments for our system installations, service contracts and disposable products.
In addition to the macroeconomic factors, occurrences similar to the COVID-19 pandemic may negatively affect demand for both our systems and our disposable products. In the past, we have experienced business disruptions, including travel restrictions on us and our third-party distributors, which negatively affected our complex sales, marketing, installation, distribution and service network relating to our products and services. We also experienced reductions in demand for our disposable products as our healthcare customers (physicians and hospitals) re-prioritized the treatment of patients and diverted resources away from non-pandemic areas, leading to the performance of fewer procedures in which our disposable products are used. The impact varied widely over time by individual geography. For instance, in 2022, procedure volumes were challenged by periodic resurgences of COVID-19, ongoing hospital staffing issues and other factors. In the first quarter of 2023, COVID-19 resurgences in China continued to negatively impact our procedure volumes in that region, but as infections and hospitalization decreased, we saw a recovery of procedure volumes with no further impacts in the year. Significant decreases to our capital or recurring revenues could have a material adverse effect on our business, operating results, and financial condition. We continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements relating to new or ongoing periodic resurgences of pandemic-related issues, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
We may not be able to fund our business operations in the same manner as we have done historically if we do not improve the operating performance of the Company or raise additional capital.
The Company has sustained operating losses throughout its corporate history and expects that its 2026 operating expenses will exceed its 2026 gross margin. The Company expects to continue to incur operating losses and negative cash flows until revenues reach a level sufficient to support ongoing operations or expense reductions are in place. The Company’s liquidity needs will be largely determined by the success of clinical adoption within the installed base of our robotic magnetic navigation system as well as new placements of capital systems. The Company’s plans for improving the liquidity conditions primarily include its ability to control the timing and spending of its operating expenses and raising additional funds through debt or equity financing.
There can be no assurance that any of our plans will be successful or that additional capital will be available to us on reasonable terms, or at all, when needed. If we are unable to improve the operating performance of the Company or if we are unable to obtain sufficient additional capital, it may impair our ability to obtain new customers or hire and retain employees, any of which could force us to substantially revise our business plan or cease operations, which may reduce or negate the value of your investment.
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Hospital decision-makers may not purchase our robotic magnetic navigation systems or related products or may think that such systems and products are too expensive.
To achieve and grow sales, hospitals must purchase our products and, in particular, our robotic magnetic navigation systems. The robotic magnetic navigation system is a novel device, and hospitals and physicians are traditionally cautious in adopting new products and treatment practices. In addition, hospitals may delay their purchase or installation decision for the robotic magnetic navigation system based on the disposable interventional devices that have received regulatory clearance or approval. Moreover, the robotic magnetic navigation system is an expensive piece of capital equipment, representing a significant portion of the cost of a new or replacement interventional lab. Although priced significantly below a robotic magnetic navigation system, our Odyssey and Synchrony Solution are still expensive products. Further, while we have partnered with fluoroscopy manufacturers to reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice, this strategy may not be successful. If hospitals do not widely adopt our systems or partnered products or if they decide that our systems are too expensive, we may never become profitable. Any failure to sell as many systems as our business plan requires could also have a seriously detrimental impact on our results of operations, financial condition, liquidity position, and cash flow.
If we are unable to fulfill our current purchase orders and other commitments on a timely basis or at all, we may not be able to achieve future sales growth.
Our backlog, which consists of purchase orders and other commitments, is considered by some investors to be a significant indicator of future performance. Consequently, negative changes to this backlog or its failure to grow commensurate with expectations could negatively impact our future operating results or our share price. Our backlog includes those outstanding purchase orders and other commitments that management believes will result in recognition of revenue upon delivery or installation of our systems or other products. We cannot assure you that we will recognize revenue in any period or at all because some of our purchase orders and other commitments are subject to contingencies that are outside our control. In addition, these orders and commitments may be revised, modified or cancelled, either by their express terms, as a result of negotiations or by project changes or delays. System installation is, by its nature, subject to the interventional lab construction or renovation process which comprises multiple stages, all of which are outside of our control. Although the actual installation of our robotic magnetic navigation system requires only a few weeks and can be accomplished by either our staff or by subcontractors, successful installation of our system can be subjected to delays related to the overall construction or renovation process. If we experience any failures or delays in completing the installation of these systems, our reputation would suffer and we may not be able to sell additional systems. We have experienced situations in which our purchase orders and other commitments did not result in recognizing revenue. In addition to construction delays, there are risks that an institution will attempt to cancel a purchase order as a result of subsequent project review by the institution or the departure from the institution of physicians or physician groups who have expressed an interest in purchasing our products.
Decreases in our backlog have occurred in the past and could occur in the future, causing delays in revenue recognition or even removal of orders and other commitments from our backlog. Such events would have a negative effect on our revenue and results of operations.
We will likely experience long and variable sales and installation cycles, which could result in substantial fluctuations in our quarterly results of operations.
We anticipate that our robotic magnetic navigation system will continue to have a lengthy sales cycle because it consists of a relatively expensive piece of capital equipment, the purchase of which requires the approval of senior management at hospitals, inclusion in the hospitals’ interventional lab budget process for capital expenditures, and, in some instances, a certificate of need from the state or other regulatory approval. In addition, historically most of our products have been delivered less than one year after receipt of a purchase order from a hospital, with the timing being dependent on the construction cycle for the new or replacement interventional suite in which the equipment will be installed. In some cases, this time frame has been extended further because the interventional suite construction is part of a larger construction project at the customer site (typically the construction of a new building), which may occur with our existing and future purchase orders. We cannot assure you that the time from purchase order to delivery for systems to be delivered in the future will be consistent with our historical experience. Moreover, as noted above, the global macroeconomic and geopolitical factors have caused, and may continue to cause, our customers to delay construction or significant capital purchases, which could further lengthen our sales cycle. This may contribute to substantial fluctuations in our quarterly operating results. As a result, in future quarters our operating results could fall below the expectations of securities analysts or investors, in which event our stock price would likely decrease.
Physicians may not use our products if they do not believe they are safe, efficient and effective.
We believe that physicians will not use our products unless they determine that our products provide a safe, effective and preferable alternative to interventional methods in general use today. If longer-term patient studies or clinical experience indicate that treatment with our system or products is less effective, less efficient or less safe than our current data suggest, our sales would be harmed, and we could be subject to significant liability. Further, unsatisfactory patient outcomes or patient injury could cause negative publicity for our products, particularly in the early phases of product introduction. In addition, physicians may be slow to adopt our products if they perceive liability risks arising from the use of these new products. It is also possible that as our products become more widely used, latent defects could be identified, creating negative publicity and liability problems for us and adversely affecting demand for our products. If physicians do not use our products, we likely will not become profitable or generate sufficient cash to fund company operations going forward.
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Our collaborations with fluoroscopy system manufacturers and providers of catheters and electrophysiology mapping systems or other parties may fail, or we may not be able to enter into additional collaborations in the future.
We have collaborated with and are continuing to collaborate with fluoroscopy system manufacturers and providers of catheters and electrophysiology mapping systems and other parties to make our instrument control technology compatible with their respective imaging products or disposable interventional devices and to co-develop additional disposable interventional devices for use with our products. A significant portion of our revenue from system sales is derived from these compatible products. The maintenance of these collaborations, or the establishment of equivalent alternatives, is critical to our commercialization efforts.
In the past, we have experienced disruptions and changes in our strategic relationships. There are no guarantees that any existing strategic relationships will continue and efforts are ongoing to ensure the availability of compatible next generation systems and/or equivalent alternatives. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
Our product commercialization plans could be disrupted, leading to lower than expected revenue and a material and adverse impact on our results of operations and cash flow, if:
| ● | we fail to or are unable to maintain adequate compatibility of our products with the most prevalent imaging products or disposable interventional devices expected by our customers for their clinical practice; | |
| ● | any of our collaboration partners delays or fails in the integration of its technology or new products with our robotic magnetic navigation system; | |
| ● | any of our collaboration partners fails to develop, commercialize or support compatible products in a timely manner; | |
| ● | any of our collaboration partners fails to maintain required regulatory approvals for their own products and such failure impacts our ability to deliver compatible systems in a timely manner or at all; or | |
| ● | we become involved in, or cannot efficiently resolve, disputes with one or more of our collaboration partners regarding our collaborations or contractual rights and obligations related thereto. |
For example, supply chain disruptions have led to vendor discussions regarding contractual performance which we generally resolve through negotiations, although in one instance we have been required to assert performance issues under the vendor agreement. We may not be successful in our negotiations or claim, and even if we are successful, we may continue to experience supply disruptions. Our collaborators range from small and midsized organizations which may have limited resources to large, global organizations with diverse product lines and interests that may diverge from our interests in commercializing our products. Accordingly, our collaborators may not devote adequate resources to our products, or may experience financial difficulties, change their business strategy or undergo a business combination that may affect their willingness or ability to fulfill their obligations to us.
The termination or failure of one or more of our collaborations could have a material adverse effect on our financial condition, results of operations and cash flow. In addition, if we are unable to enter into additional collaborations in the future, or if these collaborations fail, our ability to develop and commercialize products could be impacted negatively and our revenue could be adversely affected. For example, our agreement with Johnson & Johnson expired by its terms on December 31, 2022 ending the receipt of royalty payments on the J&J catheters. While that agreement provided for a continuation of supply by Johnson & Johnson of the J&J catheters to us or our customers for three years following the termination, that obligation lapsed on December 31, 2025. Although we are in the process of establishing alternative catheter supply arrangements, including our proprietary magnetically enabled ablation catheter, we cannot guarantee that an adequate alternative catheter supply will be available in a timely manner. Failure to maintain an adequate supply of magnetically enabled ablation catheters may reduce the likelihood that physician users will continue to use our technology which will have a negative impact on our future revenue, cash flow and operations. Even if we are successful in establishing an adequate alternate supply, it is unlikely that those arrangements will replace the royalty revenue stream previously received from the sale of the J&J catheter.
The complexity associated with selling, marketing, and distributing products could impair our ability to increase revenue.
We currently market our products in the U.S., Europe and the rest of the world through a direct sales force of senior sales specialists, distributors and sales agents, supported by account managers and clinical specialists who provide training, clinical support, and other services to our customers. If we are unable to effectively utilize our existing sales force or increase our existing sales force in the foreseeable future, we may be unable to generate the revenue we have projected in our business plan. Factors that may inhibit our sales and marketing efforts include:
| ● | our inability to recruit and retain adequate numbers of qualified sales and marketing personnel; | |
| ● | our inability to accurately forecast future product sales and utilize resources accordingly; | |
| ● | the inability of sales personnel to obtain access to or persuade adequate numbers of hospitals and physicians to purchase and use our products; and | |
| ● | unforeseen costs associated with maintaining and expanding a sales and marketing organization. |
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In addition, if we fail to effectively use distributors or contract sales agents for distribution of our products where appropriate, our revenue and profitability would be adversely affected.
Our marketing strategy is dependent on collaboration with physician “thought leaders.”
Our research and development efforts and our marketing strategy depend heavily on obtaining support, physician training assistance, and collaboration from highly regarded physicians at leading commercial and research hospitals, particularly in the U.S. and Europe. If we are unable to gain and/or maintain such support, training services, and collaboration or if the reputation or standing of these physicians is impaired or otherwise adversely affected, our ability to market our products and, as a result, our financial condition, results of operations and cash flow could be materially and adversely affected.
Physicians may not commit enough time to sufficiently learn our system.
For physicians to learn to use the robotic magnetic navigation system, they must attend structured training sessions to familiarize themselves with a sophisticated user interface and they must be committed to learning the technology. Further, physicians must utilize the technology on a regular basis to ensure they maintain the skill set necessary to use the interface. Continued market acceptance could be delayed by lack of physician willingness to attend training sessions, by the time required to complete this training, or by state or institutional restrictions on our ability to provide training. An inability to train enough physicians to generate adequate demand for our products could have a material adverse impact on our financial condition and cash flow.
Customers may choose to purchase competing products and not ours.
Our products must compete with traditional interventional methods. These methods are widely accepted in the medical community, have a long history of use and do not require the purchase of an additional expensive piece of capital equipment. In addition, many of the medical conditions that can be treated using our products can also be treated with pharmaceuticals or other medical devices and procedures. Many of these alternative treatments are also widely accepted in the medical community and have a long history of use.
We also face competition from companies that are developing robotic technologies for electrophysiology and non-electrophysiology interventional procedures. We are aware of four companies that commercialized endovascular catheter navigation systems which have been cleared by the FDA for electrophysiology procedures as well as two companies with electromagnetic catheter navigation systems that received CE Mark approval in Europe. None of these companies seem to be active in catheter robotics with any current commercial activities. Outside of electrophysiology, there are at least two companies that have commercialized robotic systems for guidewire manipulation and can be viewed as potential competitors as we look to address additional clinical applications.
We have obtained the CE marking for us to market the Stereotaxis MAGiC catheter, a robotically-navigated magnetic ablation catheter, designed to perform minimally invasive cardiac ablation procedures, in Europe and are pursuing regulatory approval in the U.S. and various other global geographies. We are aware of two other companies that also produce and sell magnetically enabled catheters. Approval processes can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications could be denied.
We face competition from companies that are developing drugs, gene or cellular therapies or other medical devices or procedures to treat the conditions for which our products are intended. The medical device and pharmaceutical industries make significant investments in research and development, and innovation is rapid and continuous. Other companies in the medical device industry continue to develop new devices and technologies for traditional interventional methods.
If these or other new products or technologies emerge that provide the same or superior benefits as our products at equal or lesser cost, it could render our products obsolete or unmarketable. In addition, the presence of other competitors may cause potential customers to delay their purchasing decisions, resulting in a longer than expected sales cycle, even if they do not choose our competitors’ products. We cannot be certain that physicians will use our products to replace or supplement established treatments or that our products will be competitive with current or future products and technologies.
Many of our other competitors also have longer operating histories, significantly greater financial, technical, marketing and other resources, greater name recognition and a larger base of customers than we do. In addition, as the markets for medical devices develop, additional competitors could enter the market. We cannot assure you that we will be able to compete successfully against existing or new competitors. Our revenue would be reduced or eliminated if our competitors develop and market products that are more effective and less expensive than our products.
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If the magnetic fields generated by our system are not compatible with, or interfere with, other widely used equipment in the interventional labs, sales of our products would be negatively affected.
Our robotic magnetic navigation system generates magnetic fields that directly govern the motion of the internal, or working, tip of disposable interventional devices. If other equipment in the interventional labs or elsewhere in a hospital is incompatible with the magnetic fields generated by our system, or if our system interferes with such equipment, we may be required to install additional shielding, which may be expensive and which may not solve the problem. If magnetic interference becomes a significant issue at targeted institutions, it will increase our installation costs at those institutions and could limit the number of hospitals that would be willing to purchase and install our systems, either of which would adversely affect our financial condition, results of operations and cash flow.
The use of our products could result in product liability claims that could be expensive, divert management’s attention and harm our reputation and business.
Our business exposes us to significant risks of product liability claims. The medical device industry has historically been litigious, and we could face product liability claims if the use of our products were to cause injury or death. The coverage limits of our product liability insurance policies may not be adequate to cover future claims, and we may be unable to maintain product liability insurance in the future at satisfactory rates or adequate amounts. A product liability claim, regardless of its merit or eventual outcome, could divert management’s attention, and result in significant legal defense costs, significant harm to our reputation and a decline in revenue.
We have incurred substantial losses in the past and may not be profitable in the future.
We have incurred substantial net losses since inception, including incurring an accumulated deficit of $583.4 million as of December 31, 2025, and we expect to incur losses into the future as we continue the commercialization of our products. Moreover, the extent of our future losses and the timing of profitability are highly uncertain. Although we have achieved operating profitability during certain quarters, we may not achieve profitable operations on an annual basis, and if we achieve profitable operations, we may not sustain or increase profitability on a quarterly or annual basis. If we require more time than we expect to generate significant revenue and achieve annual profitability, or if we are unable to sustain profitability once achieved, we may not be able to continue our operations. Our failure to achieve annual profitability or sustain profitability on an annual or quarterly basis could negatively impact the market price of our common stock. Furthermore, even if we achieve significant revenue, we may choose to pursue a strategy of increasing market penetration and presence or expand or accelerate new product development or clinical research activities at the expense of profitability.
Our reliance on contract manufacturers and on suppliers, and in some cases, a single supplier, could harm our ability to meet demand for our products in a timely manner or within budget.
We depend on contract manufacturers to produce and assemble certain of the components of our systems and other products such as our electrophysiology catheter advancement device and other disposable devices. We also depend on various third-party suppliers for the magnets we use in our robotic magnetic navigation system and certain components of our Odyssey and Synchrony & SynX Solutions. In addition, some of the components necessary for the assembly of our products are currently provided to us by a single supplier, including the magnets for our robotic magnetic navigation system and certain components of our Odyssey Solution, and we generally do not maintain large volumes of inventory. Our reliance on these third parties involves a number of risks, including, among other things, the risk that:
| ● | we may not be able to control the quality and cost of our system or respond to unanticipated changes and increases in customer orders; | |
| ● | we may lose access to critical services, materials, or components, resulting in an interruption in the manufacture, assembly and shipment of our systems; and | |
| ● | we may not be able to find new or alternative components for our use or reconfigure our system and manufacturing processes in a timely manner if the components necessary for our system become unavailable. |
If any of these risks materialize, it could significantly increase our costs and impair product delivery.
Lead times for materials and components ordered by us and our contract manufacturers vary and depend on factors such as the specific supplier, contract terms and demand for a component at a given time. We, and our contract manufacturers, acquire materials, complete standard subassemblies and assemble fully configured systems based on sales forecasts. If orders do not match forecasts, we, as well as our contract manufacturers, may have excess or inadequate inventory of materials and components.
In the past, some critical suppliers have stopped providing us with the components and services necessary for the operation of our business, requiring us to identify alternate sources. We cannot guarantee that another manufacturer or supplier will not, in the future, stop providing us with components or services necessary for the operation of our business, and if that were to occur, we cannot guarantee that we would be able to identify alternate sources in a timely fashion or at all. In the past, transitions to alternate manufacturers and suppliers has resulted in operational problems, increased expenses, and limitations on our ability to provide our products. We cannot assure you that we would be able to enter into agreements with new manufacturers or suppliers on commercially reasonable terms or at all. Additionally, obtaining components from a new supplier may require a new or supplemental filing with applicable regulatory authorities and clearance or approval of the filing before we could resume product sales. Any disruptions in product flow may harm our ability to generate revenue, lead to customer dissatisfaction, damage our reputation and result in additional costs or cancellation of orders by our customers.
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We rely on other parties to manufacture, and in some cases to service, magnetically compatible x-ray systems, catheter sensing technology, and a number of disposable interventional devices for use with our robotic magnetic navigation system. If these parties experience, as some have had in the past, various challenges including the ability to manufacture sufficient quantities to meet customer demand, disruption of their manufacturing processes, or an inability to service or warrant their products, our revenue and profitability would be adversely affected.
Risks associated with international manufacturing and trade could negatively impact the availability and cost of our products because materials used to manufacture our magnets, one of our key system components, are sourced from overseas.
We purchase the permanent magnets for our robotic magnetic system from a manufacturer that uses material produced in Japan, and we anticipate that a certain amount of the production work for these magnets will be performed for this manufacturer in China. Given the complex relationships between China and the U.S., political, diplomatic, military, or other events could result in business disruptions, including increased regulatory enforcement against companies, tariffs, trade embargoes, and export restrictions relating to this production work. For example, in 2020, the U.S. government amended the Entity List rules to expand the requirement to obtain a license prior to the export of certain technologies. In addition, in 2020, a new U.S. regulation sought to prohibit the U.S. government from contracting with companies who use the products or services of certain Chinese companies.
While we believe that these regulations do not materially impact our business at this time, we cannot predict the impact that additional regulatory changes may have on our business in the future, which could adversely affect our business operations in China, or may otherwise limit our ability to offer our products and services in China and other parts of the world. In addition, our subcontractor may purchase magnets for our disposable interventional devices directly from a manufacturer in Japan. The relationships with these manufacturers and suppliers are generally on a purchase order basis and do not provide a contractual obligation to provide adequate supply or acceptable pricing on a long-term basis. These vendors could discontinue sourcing or supplying these magnets at any time. If any of our significant vendors were to discontinue their relationship with us or with our subcontractor, or if the factories were to suffer a disruption in their production, we may be unable to replace the vendors in a timely manner, which could result in short-term disruption to our supply of magnets as we transition our orders to new vendors or factories which could, in turn, cause a significant increase in price or a disruption of imports, including the imposition of import restrictions, could adversely affect our business, financial condition and results of operations. The flow of components from our vendors could also be adversely affected by financial or political instability or travel restrictions or bans in any of the countries in which the goods we purchase are manufactured, if the instability or restriction affects the production or export of product components from those countries.
Trade restrictions in the form of tariffs or quotas, or both, could also affect the importation of those product components and could increase the cost and reduce the supply of products available to us. For example, the U.S. federal government has implemented, or is considering the imposition of, tariffs on certain foreign goods, including on our products that emanate from China as described above and we cannot predict the implementation or effects of any such tariffs or proposed tariffs, or any potential legislation or actions taken by the U.S. federal government that restrict trade, such as additional tariffs, trade barriers, and other protectionist or retaliatory measures taken by governments in Europe, Asia, and other countries, could adversely impact our ability to sell products and services, which could increase the cost of our products and the components and raw materials that go into making them. Countries may also adopt other protectionist measures that could limit our ability to offer our products and services. In addition, decreases in the value of the U.S. dollar against foreign currencies, or significant price increase from these suppliers, could increase the cost of products we purchase from overseas vendors.
We may encounter problems at our manufacturing facilities or those of our subcontractors or otherwise experience manufacturing delays that could result in lost revenue.
We subcontract all or part of the manufacture and assembly of components of our products and devices. The products we design may not satisfy all the performance requirements of our customers and we may need to improve or modify the design or ask our subcontractors to modify their production process to do so. In addition, we, or our subcontractors, have in the past experienced and may continue to experience quality problems. We, or our subcontractors, may also experience substantial costs and unexpected delays related to efforts to upgrade and expand manufacturing, assembly and testing capabilities. If we incur delays due to quality problems or other unexpected events, our revenue may be impacted.
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Our growth may place a significant strain on our resources, and if we fail to manage our growth, our ability to develop, market, and sell our products will be harmed.
Our business plan contemplates a period of substantial growth and business activity. This growth and activity will likely result in new and increased responsibilities for management personnel and place significant strain upon our operating and financial systems and resources. To accommodate our growth and compete effectively, we will be required to improve our information systems, create additional procedures and controls and expand, train, motivate and manage our workforce. We cannot be certain that our personnel, systems, procedures, and controls will be adequate to support our future operations. Any failure to effectively manage our growth could impede our ability to successfully develop, market, and sell our products.
Risks Related to our Recently Completed Acquisition of APT
We may be unable to successfully integrate APT into our business and may fail to realize any or all of the anticipated benefits of the acquisition, or those benefits may take longer to realize than expected.
Prior to the completion of our acquisition of APT, both companies previously operated independently and manufactured different products. The success of the acquisition will depend, in part, on our ability to (i) successfully integrate APT’s businesses into Stereotaxis, (ii) successfully manufacture, commercialize, develop and sell APT’s catheters and related products, and (iii) realize the anticipated benefits, including synergies, cost savings, innovation opportunities and operational efficiencies, from the acquisition, all in a manner that does not materially disrupt existing customer, supplier and employee relations. If we are unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully or at all, or may take longer to realize than expected, and the value of our common stock may decline.
The integration of APT into our business may result in material challenges, including, without limitation:
| ● | the diversion of management’s attention from ongoing business concerns; | |
| ● | developing and managing internal financial and disclosure processes at APT, which has been a private company not subject to SEC reporting obligations; | |
| ● | managing a more complex combined business; | |
| ● | expanding operations to manufacture APT’s catheter products and overcoming our lack of manufacturing experience related to such products; | |
| ● | maintaining employee morale, retaining key APT employees and the possibility that the integration process and organizational changes may adversely impact the ability to maintain employee relationships; | |
| ● | transitioning and maintaining business and operational relationships of APT, including suppliers, collaboration partners, employees and other counterparties; | |
| ● | risks related to APT’s existing customer contracts and disputes with customers; | |
| ● | the integration process not proceeding as expected, including due to a possibility of faulty assumptions or expectations regarding the integration process or APT’s operations; | |
| ● | risks related to litigation, disputes, investigations or other events that could increase our expenses, result in liability or require that we take other action; | |
| ● | consolidating corporate, administrative and compliance infrastructures and eliminating duplicative operations; | |
| ● | coordinating geographically separate locations; | |
| ● | unanticipated issues in integrating information technology, communications and other systems; and | |
| ● | unforeseen expenses, costs, liabilities or delays associated with the acquisition or the integration. |
Many of these factors are outside of our control, and any one of them could result in delays, increased costs, decreases in the amount of expected cost savings or synergies and diversion of management’s time and energy, which could materially affect our financial position, results of operations and cash flows.
Our future results may be adversely impacted if we do not effectively manage APT’s catheter manufacturing business following the completion of the acquisition.
As a result of the acquisition of APT EP in July, 2024, we are managing APT’s ongoing business of manufacturing, commercializing, developing and selling APT’s catheters and related products and services. The manufacturing process of catheters is complex, highly technical, and our prior experience in this field is dated. The process can be subject to periodic worldwide supply chain disruptions, including labor shortages and inflationary pressures, tariffs or other trade restrictions, and logistics delays which make it difficult for us to source parts and ship our products. We may require a higher level of overhead than currently anticipated. Our ability to successfully manage this new aspect of our business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of APT into us, but also the increased scope of the combined business with its associated increased costs and complexity. We are still integrating the businesses and implementing safeguards to minimize any negative impacts on our financial position, results of operations and cash flows post-acquisition.
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The issuance of the Earnout Consideration will result in dilution to our stockholders and may adversely affect us, including the market price of our securities.
At the closing of the acquisition of APT on July 31, 2024, we issued 1,486,620 common shares to the selling stockholder of APT pursuant to the share purchase agreement. In addition, the share purchase agreement requires us to issue additional earnout common shares to the selling stockholder upon achievement of certain global and US revenue targets for APT products as well as US and Europe regulatory approvals of certain robotically navigated catheters that APT will develop.
Pursuant to the share purchase agreement, we filed a resale registration statement covering the upfront stock consideration of 1,486,620 common shares and an estimated 4,613,380 additional earnout common shares. As of the date of this report, we have issued an aggregate of 1,419,523 shares as earnout consideration, However, the exact number of earnout shares that may be issued under the share purchase agreement for future milestones will be calculated based on the average of the closing per share price of Stereotaxis common stock immediately prior to the dates such revenue performance and/or regulatory milestones are achieved, up to $24 million in total value through September 30, 2029, provided that the total number of shares issued under the share purchase agreement as upfront stock consideration and earnout consideration may not exceed 16,846,595, which is 19.9% of the total number of shares of the Company’s common stock issued and outstanding immediately prior to July 31, 2024 (the “Share Cap Limitation”). In addition, the vesting of the right to receive the earnout shares would be accelerated in the event of a change of control of Stereotaxis, based on a probability-weighted average estimate of the potential to achieve any remaining milestones, discounted to its net present value considering expected time when earnouts related to the milestones would become payable through September 30, 2029.
As a result, the actual number of additional earnout shares we may be required to issue could be materially greater or less than our estimate, depending whether and to what extent the future revenue milestones are met and/or regulatory approvals are obtained, as well as the actual average closing price of our common stock calculated pursuant to a formula near the time such milestones are achieved and/or whether a change of control occurs. If we are required to issue earnout shares under the share purchase agreement, there could be significant additional dilution to the Company’s stockholders. Moreover, even if we are not required to issue any earnout shares, the potential for the issuance of such shares may negatively affect the trading price of our common stock in anticipation of such potential dilution. Sales of a substantial number of shares comprising the Closing Shares or any earnout shares in the public market, or the perception that such sales may occur, could adversely affect the market price of our securities.
Under certain circumstances, we may take certain actions to achieve the milestones under the Purchase Agreement that we would not have undertaken if we had not completed the acquisition, which may have an adverse effect on the historical business of Stereotaxis.
During the revenue earnout periods under our Purchase Agreement, which end on September 30, 2029, we agreed to operate APT and its business in a commercially reasonable manner as conducted prior to the closing, taken as a whole, including maintaining relationships with customers, suppliers, independent contractors, governmental entities, and others having business dealings with it consistent with APT’s practice prior to the closing. We agreed not to take any action during the revenue earnout periods which has as its intended purpose the diminution of the earnout consideration.
While we retain the sole authority to operate and control APT’s business and its operations, including without limitation, any and all decisions relating various aspects of their and our combined business, we may nevertheless take certain actions related to the milestones that we would not have undertaken if we had not completed the acquisition.
Risks Relating to Technology and Intellectual Property Matters
The rate of technological innovation of our products might not keep pace with the rest of the market.
The rate of innovation for the market in which our products compete is fast-paced and requires significant resources and innovation. If other products and technologies are developed that compete with, or may compete with, our products, it could be difficult for us to maintain our advantages associated with being an early developer of this technology. Likewise, the innovation and development cycle of competitors may impact our research and development efforts and ultimately, commercial adoption of viable research and development efforts. In addition, connectivity with other devices in the electrophysiology lab is a key driver of value. If the Company is not able to continue to commit sufficient resources to ensure that its products are compatible with other products within the electrophysiology lab, this could have a negative impact on revenue.
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Security breaches and other disruptions to our information technology infrastructure could interfere with our operations, compromise confidential information, and expose us to liability which could materially adversely impact our business and reputation.
Security breaches and other disruptions to our information technology infrastructure could interfere with our operations; compromise information belonging to us, our employees, customers, and suppliers; and expose us to liability which could adversely impact our business and reputation. In the ordinary course of business, we rely on information technology networks and systems, some of which are managed by third parties, to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities. Additionally, we collect and store certain data, including proprietary business information and customer and employee data, and may have access to confidential or personal information in certain of our businesses that is subject to privacy and security laws, regulations, and customer-imposed controls. Despite our cyber-security measures (including employee and third-party training, use of user names and passwords for access to information technology systems, monitoring of networks and systems, and maintenance of backup and protective systems) which are continuously reviewed and upgraded, our information technology networks and infrastructure may still be vulnerable to damage, disruptions, or shutdowns due to attack by hackers, breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, war or other military conflicts, natural disasters, or other catastrophic events. We have programs in place to detect, contain, and respond to data security incidents, and we continually make improvements to our networks and systems to minimize or eliminate vulnerabilities. However, because the techniques used to exploit systems change frequently and can be difficult to detect, we may not be able to prevent these intrusions or mitigate them when and if they occur. Additionally, we rely on some information technology networks and systems managed by third parties, and we rely on these third parties to deploy appropriate measures to protect their systems and networks. Vulnerabilities in their systems could compromise the security of our own infrastructure. Any such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our reputation, which could materially adversely affect our business. While we have experienced, and expect to continue to experience, these types of threats to our information technology networks and infrastructure, to date none of these threats has had a material impact on our business or operations.
We may be unable to protect our technology from use by third parties, which may allow them to compete with us and harm our business.
Our commercial success depends in part on obtaining patent and other intellectual property right protection for the technologies contained in our products and on successfully defending these rights against third party challenges. The patent positions of medical device companies, including ours, can be highly uncertain and involve complex and evolving legal and factual questions. We cannot assure you that we will obtain the patent protection we seek, that any protection we do obtain will be found valid and enforceable if challenged or that it will confer any significant commercial advantage. U.S. patents and patent applications may also be subject to interference proceedings and U.S. patents may be subject to re-examination proceedings in the U.S. Patent and Trademark Office, and foreign patents may be subject to opposition or comparable proceedings in the corresponding foreign patent office, which proceedings could result in either loss of the patent, or denial of the patent application, or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such interference, re-examination, and opposition proceedings may be costly. Thus, any patents that we own or license from others may not provide any protection against competitors. Our pending patent applications, those we may file in the future, or those we may license from third parties may not result in patents being issued and certain foreign patent applications for medical related devices and methods may be found unpatentable. If issued, they may not provide us with proprietary protection or competitive advantages against competitors with similar technology.
Some of our technology was developed in conjunction with third parties, and thus there is a risk that a third party may claim rights in our intellectual property. Outside the U.S., we rely on third-party payment services for the payment of foreign patent annuities and other fees. Non-payment or delay in payment of such fees, whether intentional or unintentional, may result in loss of patents or patent rights important to our business. Many countries, including certain countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties (for example, the patent owner has failed to “work” the invention in that country, or the third party has patented improvements). In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of the patent. We also cannot assure you that we will be able to develop additional patentable technologies. If we fail to obtain adequate patent protection for our technology, or if any protection we obtain becomes limited or invalidated, others may be able to make and sell competing products, impairing our competitive position.
Our trade secrets, nondisclosure agreements and other contractual provisions to protect unpatented technology provide only limited and possibly inadequate protection of our rights. As a result, third parties may be able to use our unpatented technology, and our ability to compete in the market would be reduced. In addition, employees, consultants and others who participate in developing our products or in commercial relationships with us may breach their agreements with us regarding our intellectual property, and we may not have adequate remedies for the breach.
Our competitors may independently develop similar or alternative technologies or products that are equal or superior to our technology and products without infringing any of our patent or other intellectual property rights or may design around our proprietary technologies. Our competitors may acquire similar or even the same technology components that are utilized in our current offering eroding some differentiation in the marketplace. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent, as do the laws of the U.S., particularly in the field of medical products and procedures.
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Third parties may assert that we are infringing their intellectual property rights, and any defense of such assertions may be unsuccessful and expensive, even if we are successful.
Successfully commercializing our products depends in part on not infringing patents held by third parties. It is possible that one or more of our products, including those that we have developed in conjunction with third parties, infringes existing patents. We may also be liable for patent infringement by third parties whose products we use or combine with our own and for which we have no right to indemnification. In addition, because patent applications are maintained under conditions of confidentiality and can take many years to issue, there may be applications now pending of which we are unaware and which may later result in issued patents that our products infringe. Determining whether a product infringes a patent involves complex legal and factual issues and may not become clear until finally determined by a court in litigation. Our competitors may assert that our products infringe patents held by them. Moreover, as the number of competitors in our market grows the possibility of a patent infringement claim against us increases. If we were unsuccessful in obtaining a license or redesigning our products, we could be subject to litigation. If we lose in this kind of litigation, a court could require us to pay substantial damages or prohibit us from using technologies essential to our products covered by third-party patents. An inability to use technologies essential to our products would have a material adverse effect on our financial condition, results of operations and cash flow and could undermine our ability to continue our current business operations.
Expensive intellectual property litigation is frequent in the medical device industry and may cause us to incur substantial expenses to defend.
Infringement actions, validity challenges and other intellectual property claims and proceedings, whether with or without merit, can be expensive and time-consuming and would divert management’s attention from our business. We have incurred, and expect to continue to incur substantial costs in obtaining patents and may have to incur substantial costs defending our proprietary rights. Incurring such costs could have a material adverse effect on our financial condition, results of operations and cash flow.
We may not be able to maintain all the licenses or rights from third parties necessary for the development, manufacture, or marketing of new and existing products.
As we develop additional products and improve or maintain existing products, we may find it advisable or necessary to seek licenses or otherwise make payments in exchange for rights from third parties who hold patents covering certain technology. If we cannot obtain or maintain the desired licenses or rights for any of our products, we could be forced to try to design around those patents at additional cost or abandon the product altogether, which could adversely affect revenue and results of operations. If we must abandon a product, our ability to develop and grow our business in new directions and markets would be adversely affected.
Our products and related technologies can be applied in different medical applications, and we may fail to focus on the most profitable areas.
The robotic magnetic navigation system is designed to have the potential for expanded applications beyond electrophysiology and interventional cardiology, including congestive heart failure, structural heart repair, interventional neurosurgery, interventional neuroradiology, peripheral vascular, pulmonology, urology, gynecology and gastrointestinal medicine. However, we have limited financial and managerial resources and, therefore, may be required to focus on products in selected industries and sites and to forego efforts regarding to other products and industries. Our decisions may not produce viable commercial products and may divert our resources from more profitable market opportunities. Moreover, we may devote resources to developing products in these additional areas but may be unable to justify the value proposition or otherwise develop a commercial market for products we develop in these areas, if any. In that case, the return on investment in these additional areas may be limited, which could negatively affect our results of operations.
We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers.
Many of our employees were previously employed at hospitals, universities or other medical device companies, including our competitors or potential competitors. We could, in the future, be subject to claims that these employees or we have used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. Incurring such costs could have a material adverse effect on our financial condition, results of operations and cash flow.
Software errors or other defects may be discovered in our products and the resulting performance issues may damage our business and our reputation in the industry in which we operate.
Our products incorporate many components, including sophisticated computer software. Complex software frequently contains errors, especially when first introduced. Because our products are designed to be used to perform complex interventional procedures, we expect that physicians and hospitals will have an increased sensitivity to the potential for software defects. We cannot assure you that our software or other components will not experience errors or performance problems in the future. If we experience software errors or performance problems, we would likely also experience:
| ● | loss of revenue; | |
| ● | delay in market acceptance of our products; | |
| ● | damage to our reputation; | |
| ● | additional regulatory filings; |
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| ● | product recalls; | |
| ● | increased service or warranty costs; and/or | |
| ● | product liability claims relating to the software defects. |
Risks Related to Regulatory and Legal Matters
If we or the parties in our strategic collaborations fail to obtain or maintain necessary FDA clearances or approvals for our medical device products, or if such clearances or approvals are delayed, we will be unable to continue to commercially distribute and market our products.
Our products are medical devices that are subject to extensive regulation in the U.S. and in foreign countries where we do business. Each medical device that we wish to market in the U.S. must be designated as exempt from premarket approval or notification, or first receive either a 510(k) clearance, de novo approval, or a pre-market approval, or PMA, from the U.S. FDA pursuant to the Federal Food, Drug, and Cosmetic Act, or FD&C Act. The FDA’s 510(k) clearance process usually takes from four to 12 months, but it can take longer. The process of obtaining PMA approval is much more costly, lengthy, and uncertain, generally taking from one to three years or even longer. Although we have 510(k) clearance for many of our products, including disposable interventional devices, and we are able to market these products commercially in the U.S., our business model relies significantly on revenue from new disposable interventional devices, some of which may not achieve FDA clearance or approval. We cannot assure you that any of our devices will not be required to undergo the lengthier and more burdensome PMA process. We cannot commercially market any disposable interventional devices in the U.S. until the necessary clearances or approvals from the FDA have been received. In addition, we are working with third parties to co-develop disposable products. In some cases, these companies are responsible for obtaining appropriate regulatory clearance or approval to market these disposable devices. We also have arrangements with fluoroscopy system manufacturers to provide a complete solution for a robotic interventional operating room and these manufacturers have the obligation maintain appropriate regulatory clearance or approval to market and sell these systems. If these clearances or approvals are not received or are substantially delayed or if we are not able to offer either a sufficient array of approved disposable interventional devices or a fully integrated robotic magnetic navigation system, we may not be able to successfully market our system to as many institutions as we currently expect, which could have a material adverse impact on our financial condition, results of operations and cash flow.
Furthermore, obtaining 510(k) clearances, de novo approvals, PMAs or PMA supplement approvals, from the FDA could result in unexpected and significant costs for us and consume management’s time and other resources. The FDA could ask us to revise or supplement our submissions, collect non-clinical data, conduct clinical trials or engage in other time-consuming actions, or it could simply deny our applications. In addition, even if we obtain a 510(k) clearance, de novo approvals, or PMA or PMA supplement approval, the clearance or approval could be revoked or other restrictions imposed if post-market data demonstrates safety issues or lack of effectiveness. We cannot predict with certainty how, or when, the FDA will act on our marketing applications. If we are unable to obtain the necessary regulatory approvals, our financial condition and cash flow may be adversely affected. Also, a failure to obtain approvals may limit our ability to grow domestically and internationally.
If our strategic collaborations elect not to or we fail to obtain regulatory approvals in other countries for products under development, we will not be able to commercialize these products in those countries.
To market our products outside of the U.S., we and our strategic collaborations or distributors must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the U.S. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. Failure to obtain regulatory approval in other countries or any delay or setback in obtaining such approval could have the same adverse effects described above regarding FDA approval in the U.S. In addition, we may rely on our distributors and strategic collaborations, in some instances, to assist us in this regulatory approval process in countries outside the U.S. and Europe, for example, in China and Japan.
We may fail to comply with continuing regulatory requirements of the FDA and other authorities and become subject to enforcement action, which may include substantial penalties.
Even after product clearance or approval, we must comply with continuing regulation by the FDA and other authorities, including the FDA’s Quality System Regulation, or QSR, requirements, labeling and promotional requirements and medical device adverse event and other reporting requirements. Any failure to comply with continuing regulation by the FDA or other authorities could result in enforcement action that may include suspension or withdrawal of regulatory approvals, recalling products, ceasing product manufacture and/or marketing, seizure and detention of products, paying significant fines and penalties, criminal prosecution and similar actions that could limit product sales, delay product shipment and harm our profitability. Congress could amend the FD&C Act, and the FDA could modify its regulations promulgated under this law or its policies in a way to make ongoing regulatory compliance more burdensome and difficult.
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Additionally, any modification to an FDA 510(k) cleared or de novo-approved device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance. Modifications to a PMA approved device or its labeling may require either a new PMA or PMA supplement approval, which could be a costly and lengthy process. In addition, if we are unable to obtain approval for key applications, we may face product market adoption barriers that we cannot overcome. In the future, we may modify our products after they have received clearance or approval, and we may determine that new clearance or approval is unnecessary. We cannot assure you that the FDA would agree with any of our decisions not to seek new clearance or approval. If the FDA requires us to seek clearance or approval for any modification that we determined to not require clearance or approval in the first instance, we could be subject to enforcement sanctions and we also may be required to cease marketing or recall the modified product until we obtain FDA clearance or approval which could also limit product sales, delay product shipment and harm our profitability.
In many foreign countries in which we market our products, we are subject to regulations affecting, among other things, product standards, packaging requirements, labeling requirements, import restrictions, tariff regulations, duties and tax requirements. Many of these regulations are similar to those of the FDA or other U.S. regulations. In addition, in many countries the national health or social security organizations require our products to be qualified before procedures performed using our products become eligible for reimbursement. Failure to receive, or delays in the receipt of, relevant foreign qualifications could have a material adverse effect on our business, financial condition and results of operations. Due to the movement toward harmonization of standards in Europe, we expect a changing regulatory environment characterized by a shift from a country-by-country regulatory system to a Europe-wide single regulatory system. We cannot predict the timing of this harmonization and its effect on us. Adapting our business to changing regulatory systems could have a material adverse effect on our business, financial condition, and results of operations. If we fail to comply with applicable foreign regulatory requirements, we may be subject to fines, suspension, or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
In addition, we are subject to the U.S. Foreign Corrupt Practices Act, anti-bribery, antitrust and anti-competition laws, and similar laws in foreign countries. Any violation of these laws by our distributors or agents or by us could create a substantial liability for us and also cause a loss of reputation in the market. From time to time, we may face audits or investigations by one or more government agencies, compliance with which could be costly and time-consuming, and could divert our management and key personnel from our business operations. An adverse outcome under any such investigation or audit could subject us to fines or other penalties, which could adversely affect our business and financial results.
Our suppliers, subcontractors, or we may fail to comply with the FDA, EU and other state and foreign government authorities quality system regulation or other quality standards.
Our manufacturing processes must comply with the FDA’s QSR, which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging and shipping of our products. The FDA enforces the QSR through inspections. We cannot assure you that we or our suppliers or subcontractors would pass such an inspection. The European Union recently adopted new EN ISO 13485:2016 standards, and we have been certified to these standards. If we or our suppliers or subcontractors fail to comply with the FDA regulation or EN ISO 13485:2016 standards, we or they may be required to cease all or part of our operations for some period of time until we or they can demonstrate that appropriate steps have been taken to comply with such standards or face other enforcement action, such as a public warning letter, untitled letter, fines, injunctions, civil penalties, seizures, operating restrictions, partial suspension or total shutdown of production, refusing requests for 510(k) clearance, de novo petitions, or PMA approval of new products, withdrawing 510(k) clearance, de novo approvals, or PMA approvals already granted, and/or criminal prosecution. We cannot be certain that our facilities or those of our suppliers or subcontractors will comply with the FDA or EN ISO 13485:2016 standards in future audits by regulatory authorities. Failure to pass such an inspection could force a shutdown of manufacturing operations, a recall of our products or the imposition of other enforcement sanctions, which would significantly harm our revenue and profitability. Further, we cannot assure you that our key component suppliers are or will continue to be in compliance with applicable regulatory requirements and quality standards and will not encounter any manufacturing difficulties. Any failure to comply with the FDA’s QSR or EN ISO 13485:2016, by us or our suppliers, could significantly harm our available inventory and product sales. Further, any failure to comply with FDA’s QSR, by us or our suppliers, could result in the FDA refusing requests for and/or delays in 510(k) clearance, de novo approval, or PMA approval of new products.
If we fail to comply with health care regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
While we do not control referrals of health care services or bill directly to Medicare, Medicaid or other third-party payors, many health care laws and regulations apply to our business. We are subject to health care fraud and patient privacy regulation by the federal government, the states in which we conduct our business and internationally. The regulations that may affect our ability to operate include:
| ● | the federal healthcare program Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal health care programs such as the Medicare and Medicaid programs; |
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| ● | federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, and which may apply to entities like us if we provide coding and billing advice to customers; | |
| ● | the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibits executing a scheme to defraud any health care benefit program or making false statements relating to health care matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; and the applicable Privacy and Security Standards of HITECH, the Health Information Technology for Economic and Clinical Health Act, which is Title XIII of the American Recovery and Reinvestment Act; | |
| ● | state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts, including the California Consumer Privacy Act, or CCPA, which is introduces new and far-reaching law data privacy compliance burdens on many organizations doing business in California who collect personal information about California residents; | |
| ● | the General Data Protection Regulation, or GDPR, which imposes requirements for controllers and processors of personal data and is in effect across the European Economic Area, or EEA, such as imposing higher standards when obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information, increasing requirements pertaining to health data as well as pseudonymised data, and imposing additional obligations when we contract third-party processors in connection with the processing of personal data; | |
| ● | federal self-referral laws, such as the Stark Anti-Referral Law, which prohibits a physician from making a referral to a provider of certain health services with which the physician or the physician’s family member has a financial interest; | |
| ● | federal and state Sunshine laws, which require manufacturers of certain medical devices to collect and report information on payments or transfers of value to physicians and teaching hospitals, as well as investment interests held by physicians and their immediate family members; and | |
| ● | regulations pertaining to receipt of CE mark for our products marketed outside of the United States and submission to periodic regulatory audits in order to maintain these regulatory approvals. |
If our operations are found to be in violation of any of the laws described above or any other governmental laws or regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, loss of reimbursement for our products under federal or state government health programs such as Medicare and Medicaid and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment, or restructuring of our operations could adversely affect our ability to operate our business and our financial results. The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. Moreover, to achieve compliance with applicable federal and state privacy, security, and electronic transaction laws, we may be required to modify our operations with respect to the handling of patient information. Implementing these modifications may prove costly. At this time, we are not able to determine the full consequences to us, including the total cost of compliance, of these various federal and state laws.
Healthcare policy changes, including the potential repeal or amendment of any existing legislation, may have a material adverse effect on us. Such changes could, among other things, reduce reimbursement for procedures using our products, change coverage policies, increase compliance costs, and delay or reduce hospital capital spending.
In response to perceived increases in health care costs in recent years, there have been and continues to be proposals by the federal administration, members of Congress, state governments, regulators and third-party payors to control these costs and, more generally, to reform the U.S. healthcare system.
Decisions by both the federal and state governments on funding priorities for various healthcare programs impact the finances of our customers on an ongoing and recurring basis. Such decisions may impact purchasing decisions of a customer.
Changes to, or repeal of, the 2010 Patient Protection and Affordable Care Act (PPACA), which different administrations and certain members of Congress have affirmatively indicated that they will pursue, could materially and adversely affect our business and financial position, and results of operations. Even if the PPACA is not amended or repealed, the administration could propose changes impacting implementation of the PPACA, which could materially and adversely affect our financial position or operations. However, we cannot currently predict the content, timing or impact that any such future legislation will have on our business.
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The application of state certificate of need regulations and compliance by our customers with federal and state licensing or other international requirements could substantially limit our ability to sell our products and grow our business.
Some states require health care providers to obtain a certificate of need or similar regulatory approval prior to the acquisition of high-cost capital items such as our products. In many cases, a limited number of these certificates are available. As a result of this limited availability, hospitals and other health care providers may be unable to obtain a certificate of need for the purchase of our systems. Further, the sales and installation cycle of our robotic magnetic navigation systems may be longer in certificate of need states due to the time it takes our customers to obtain the required approvals. In addition, our customers must meet various federal and state regulatory and/or accreditation requirements in order to receive payments from government-sponsored health care programs such as Medicare and Medicaid, receive full reimbursement from third party payors, and maintain their customers. Our international customers may be required to meet similar or other requirements. Any lapse by our customers in maintaining appropriate licensure, certification or accreditation, or the failure of our customers to satisfy the other necessary requirements under government-sponsored health care programs or other requirements could cause our sales to decline.
Hospitals or physicians may be unable to obtain reimbursement from third-party payors for procedures using our products, or reimbursement for procedures may be insufficient to recoup the costs of purchasing our products.
We expect that U.S. hospitals will continue to bill various third-party payors, such as Medicare, Medicaid and other government programs and private insurance plans, for procedures performed with our products, including the costs of the disposable interventional devices used in these procedures. If, in the future, our disposable interventional devices do not fall within U.S. reimbursement categories and our procedures are not reimbursed, or if the reimbursement is insufficient to cover the costs of purchasing our system and related disposable interventional devices, the adoption of our systems and products would be significantly slowed or halted, and we may be unable to generate sufficient sales to support our business. Our success in international markets also depends upon the eligibility of our products for reimbursement through government-sponsored health care payment systems and third-party payors. In both the U.S. and foreign markets, health care cost-containment efforts are prevalent and are expected to continue. These efforts could reduce levels of reimbursement available for procedures involving our products and, therefore, reduce overall demand for our products as well. A failure to generate sufficient sales could have a material adverse impact on our financial condition, results of operations and cash flow.
Our costs could substantially increase if we receive a significant number of warranty claims or have other significant, uninsured liabilities.
We generally warrant each of our products against defects in materials and workmanship for a period of 12 months following the installation of our system. Additionally, we rely on the warranty provided by our third-party suppliers, including our fluoroscopy system providers. If product returns or warranty claims increase, or if, as has occurred in the past, our third-party suppliers do not honor their warranty obligations to us or certain claims are not covered thereunder, we could incur unanticipated additional expenditures for parts and service. In addition, our reputation and goodwill in the interventional lab market could be damaged. Unforeseen warranty exposure in excess of our established reserves for liabilities associated with product warranties could materially and adversely affect our financial condition, results of operations and cash flow.
Moreover, for certain risks, we do not maintain insurance coverage because of cost and/or availability. In addition, in the future, we may not continue to maintain certain existing insurance coverage or adequate levels of coverage. Premiums for many types of insurance have increased significantly in recent years and, depending on market conditions and our circumstances, in the future, certain types of insurance, such as directors’ and officers’ insurance, may not be available on acceptable terms or at all. Because we retain some portion of our insurable risks and, in some cases, we are entirely self-insured, unforeseen or catastrophic losses in excess of insurance coverage could require us to pay substantial amounts, which may have a material adverse impact on our business, financial condition, results of operations, or cash flows.
Risks Related to Our Common Stock
Our principal stockholders continue to own a large percentage of our voting stock, and they could substantially influence matters requiring stockholder approval.
Certain of our directors and individuals or entities affiliated with them as well as other principal stockholders beneficially own or control a substantial percentage of the outstanding shares of our common stock. Accordingly, these stockholders will have substantial influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transaction. These stockholders may also delay or prevent a change of control, even if such a change of control would benefit our other stockholders. This significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.
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Future issuances of our securities could dilute current stockholders’ ownership.
As of December 31, 2025, we had 50.3 million shares of our common stock issuable upon conversion of our Series A Convertible Preferred Stock. Our Series A Convertible Preferred Stock bears dividends at a rate of six percent (6.0%) per annum, which are cumulative and accrue daily from the date of issuance on the $1,000 stated value. Such dividends will not be paid in cash, except in connection with any liquidation, dissolution or winding up of the Company or any redemption of the Series A Convertible Preferred Stock. Instead, the value of the accrued dividends is added to the liquidation preference of the Series A Convertible Preferred Stock and will increase the number of shares of common stock issuable upon conversion, which will dilute the ownership of our common stockholders. In addition, we may be obligated to issue additional shares of our common stock in connection with our 2024 acquisition of APT, which could further dilute our current stockholders’ ownership. See “—Risks Related to our 2024 Acquisition of APT—Issuance of the Earnout Consideration will result in dilution to our stockholders and may adversely affect us, including the market price of our securities.”
In addition, a significant number of shares of our common stock are subject to issuance under our existing stock incentive plans and we may request the ability to issue additional such securities. We may also decide to raise additional funds through public or private debt or equity financing to fund our operations. We filed a universal shelf registration statement on Form S-3 with the SEC in May 2023, which was declared effective by the SEC on June 6, 2023, registering the sale up to $100.0 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine. While we cannot predict the effect, if any, that future sales of debt, our common stock, other equity securities or securities exercisable for or convertible into our common stock or other equity securities or the availability of any of the foregoing for future sale, will have on the market price of our common stock, it is likely that sales of substantial amounts of our common stock (including shares issued upon the exercise of stock options and stock appreciation rights, the vesting of the CEO Performance Share Unit Award and restricted stock units, the conversion of any convertible securities outstanding now or in the future, including the Series A Convertible Preferred Stock, or under our universal shelf registration statement), will dilute the ownership of our existing stockholders and that the perception that such sales could occur, will adversely affect prevailing market prices for our common stock.
We have never paid dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.
We have paid no cash dividends on any of our classes of common stock to date and we currently intend to retain our future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be an investor’s sole source of gain for the foreseeable future.
Further, the Series A Convertible Preferred Stock rank senior to our common stock as to distributions and payments upon the liquidation, dissolution and winding up of the Company. No such distributions or payments upon the liquidation, dissolution and winding up of the Company may be made to holders of common stock unless and until the holders of the Series A Convertible Preferred Stock have received the stated value of $1,000 per share plus any accrued and unpaid dividends. Until all Series A Convertible Preferred Stock have been converted or redeemed, no dividends may be paid on the common stock without the express written consent of the holders of a majority of the outstanding Series A Convertible Preferred Stock. If dividends or other distributions of assets are made or paid by the Company to the holders of the common stock, the holders of Series A Convertible Preferred Stock are entitled to participate in such dividend or distribution on an as-converted basis. Any such distributions or payments upon the liquidation, dissolution or winding up of the Company may dilute the ownership interests of our existing stockholders.
Our certificate of incorporation and bylaws, the Company’s Performance Share Unit Agreement with Our CEO, and Delaware law, contain provisions that could discourage a takeover.
Our certificate of incorporation and bylaws, the Performance Share Unit Agreement with our CEO, and Delaware law contain provisions that might enable our management to resist a takeover. These provisions may:
| ● | discourage, delay or prevent a change in the control of our company or a change in our management; | |
| ● | adversely affect the voting power of holders of common stock; and | |
| ● | limit the price that investors might be willing to pay in the future for shares of our common stock. |
Evolving regulation of corporate governance and public disclosure may result in additional expenses and continuing uncertainty.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including SEC regulations such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, have in the past created uncertainty for public companies. We continue to evaluate and monitor developments with respect to new and proposed rules, including potential recission of certain rules or proposed rules under the current administration, and cannot predict or estimate the amount of the additional compliance costs we may incur or the timing of such costs. These new or changed laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by courts and regulatory and governing bodies. This could result in uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Maintaining appropriate standards of corporate governance and public disclosure may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In addition, if we fail to comply with new or changed laws, regulations and standards, regulatory authorities may initiate legal proceedings against us and our business and reputation may be harmed.
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Our future operating results may be below securities analysts’ or investors’ expectations, which could cause our stock price to decline.
We may be unable to generate significant revenue or grow at the rate expected by securities analysts or investors. In addition, our costs may be higher than we, securities analysts, or investors expect. If we fail to generate sufficient revenue or our costs are higher than we expect, our results of operations will suffer, which in turn could cause our stock price to decline. Our results of operations will depend upon numerous factors, including:
| ● | demand for our products; | |
| ● | the performance of third-party contract manufacturers and component suppliers; | |
| ● | our ability to develop sales and marketing capabilities; | |
| ● | the success of our strategic relationships with multinational fluoroscopy system manufacturers providers of electrophysiology mapping systems and manufactures of catheters and other devices; | |
| ● | our ability to develop, introduce and market integrated next generation systems and/or alternatives to our current strategic relationships with fluoroscopy system manufacturers and the catheter and electrophysiology mapping system providers on a timely basis; | |
| ● | our ability to develop, introduce and market new or enhanced versions of our products on a timely basis; | |
| ● | our ability to obtain regulatory clearances or approvals for our new products; and | |
| ● | our ability to obtain and protect proprietary rights or revenue streams related thereto. |
Our operating results in any particular period may not be a reliable indication of our future performance. In some future quarters, our operating results may be below the expectations of securities analysts or investors. If this occurs the price of our common stock will likely decline.
We expect that the price of our common stock could fluctuate substantially, possibly resulting in class action securities litigation.
While our common stock is traded on the NYSE American Market, trading volume may be limited or sporadic. The market price of our common stock has experienced, and may continue to experience, substantial volatility. During 2025, our common stock traded between $1.54 and $3.59 per share, on trading volume ranging from approximately 75,600 to 6.0 million shares per day. The market price of our common stock will be affected by a number of factors, including:
| ● | actual or anticipated variations in our results of operations or those of our competitors; | |
| ● | the receipt or denial of regulatory approvals; | |
| ● | announcements of new products, technological innovations or product advancements by us or our competitors; | |
| ● | developments with respect to patents and other intellectual property rights; | |
| ● | changes in earnings estimates or recommendations by securities analysts or our failure to achieve analyst earnings estimates; | |
| ● | developments in our industry; and | |
| ● | participants in the market for our common stock may take short positions with respect to our common stock. |
These factors, as well as general economic, credit, political and market conditions, may materially adversely affect the market price of our common stock. As with the stock of many other public companies, the market price of our common stock has been particularly volatile during periods of upheaval in the capital markets and world economy. Furthermore, the stock prices of many companies in the medical device industry have experienced wide fluctuations that have often been unrelated to the operating performance of these companies. Volatility in the price of our common stock on the NYSE American Market may depress the trading price of our common stock, which could, among other things, allow a potential acquirer of the Company to purchase a significant amount of our common stock at low prices. In addition, the volatility of our stock price could lead to class action securities litigation being filed against us, which could result in substantial costs and a diversion of our management resources, which could significantly harm our business.
If we fail to continue to meet all applicable NYSE American Market requirements and the NYSE American determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, which would impair the value of your investment and ultimately harm our business by limiting our access to equity markets for capital raising.
Our common stock is currently listed on the NYSE American Market. We currently meet the continued listing standards of NYSE American. However, we cannot guarantee that we will be able to continue to comply with the required standards in order to maintain a listing of our common stock on the NYSE American. If we fail to continue to meet all applicable NYSE American requirements in the future and the NYSE American determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, which would adversely affect our ability to obtain financing for the continuation of our operations, as a result, harming our business. This delisting could also impair the value of your investment.
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Risks Related to the February 2021 CEO Performance Stock Unit Grant
We will incur significant additional stock-based compensation expense over the term of the CEO Performance Award regardless of whether any of the milestones are achieved.
As described in Note 11 of the accompanying notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K, on February 23, 2021, the Company`s Board of Directors, upon recommendation of the Compensation Committee, approved the grant of the Performance Share Unit Award (“CEO Performance Award”) pursuant to the CEO Performance Share Unit Award Agreement (the “PSU Agreement”), to David L. Fischel, the Company’s Chief Executive Officer. Under the terms of the PSU Agreement, the Company will incur significant additional stock-based compensation expense over the term of the award regardless of whether or not any of the milestones are achieved as the probability of meeting the ten market capitalization milestones is not considered in determining the timing of expense recognition. The expense will be recognized on an accelerated basis through 2030. Total stock-based compensation recorded as operating expense for the CEO Performance Award was $7.1 million and $7.2 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company had approximately $22.7 million of total unrecognized stock-based compensation expense remaining under the CEO Performance Award if Mr. Fischel continues to serve as CEO, or in a similar capacity, through 2030. This additional stock-based compensation expense, incurred regardless of whether any milestones are achieved, increases the difficulty for the Company to achieve a profitable position as measured by generally accepted accounting principles.
Our stockholders may experience substantial dilution upon payout of shares under the CEO Performance Award.
If Mr. Fischel achieves all the milestones specified in the CEO Performance Award, by increasing the Company’s market capitalization to $5.5 billion for the specified period, he will receive 13,000,000 shares of common stock subject to the vesting requirements in the agreement. If (i) all 13,000,000 shares of common stock subject to the PSU Agreement were to become fully vested, outstanding and held by Mr. Fischel; (ii) all other shares of common stock and stock units held by Mr. Fischel were fully vested and were outstanding; (iii) estimated dilution as a result of potential exercises or conversions from existing grants to employees and non-employee directors and the outstanding convertible preferred stock were to be considered; and (iv) there were no other dilutive events of any kind, Mr. Fischel would beneficially own approximately 10% of the outstanding shares of Stereotaxis common stock after the dilutive events described above and without considering the impact of any other potential future dilutive events or the potential sale of stock required to pay taxes upon the vesting of the restricted stock units.
Certain provisions in the PSU Agreement may discourage a change in control of the Company even if such a transaction would otherwise be beneficial to our stockholders.
Under the terms of the CEO Performance Award, in the event of a change in control of the Company, the market capitalization formula will be modified to equal the total amount of consideration paid to all equity holders of the Company, with the number of shares to be issued pursuant to the CEO Performance Grant giving effect to such valuation. For all valuations above $1.0 billion in connection with a change in control, partial credit for the next following tranche shall be allocated pro rata based on the market capitalization in such change in control. Any vested shares upon such a change in control will vest and be paid at the time of the consummation of the change in control, and the service component of the CEO Performance Award will otherwise be disregarded. These terms may discourage potential business partners from pursuing a merger or acquisition, even if the merger or acquisition would be viewed favorably by, or be beneficial to, our other stockholders.
We are highly dependent on the services of Mr. Fischel, and our compensation package, including the CEO Performance Award, may fail to retain him.
Since assuming the role of CEO in February 2017, Mr. Fischel has revitalized the Company’s commercial capabilities, strengthened its financial position, and led the development of a robust innovation strategy. However, between February 2017 and December 2020, Mr. Fischel served as CEO without drawing a salary or any other form of cash or equity compensation for his work as CEO, and currently his only compensation is an annual salary of $60,000, which is substantially below market. While the Board believes that the CEO Performance Award provides substantial future benefit to all its stockholders and incentivizes Mr. Fischel to serve as CEO for the long term, there is no assurance that Mr. Fischel will continue as CEO.
General Risk Factors
General economic conditions could materially adversely impact us.
Our operating performance is dependent upon economic conditions in the United States and in other countries in which we operate. Uncertainty about current global economic conditions and future global economic conditions may cause customers to delay purchasing or installation decisions or cancel existing orders. The robotic magnetic navigation systems, Odyssey Solution, and compatible x-ray systems are typically purchased as part of a larger overall capital project and an economic downturn or the lack of a robust recovery might make it more difficult for our customers, including distributors, to obtain adequate financing to support the project or to obtain requisite approvals. Any delay in purchasing decisions or cancellation of purchasing commitments may result in a decrease in our revenues. A credit crisis could further affect our business if key suppliers are unable to obtain financing to manufacture our products or become insolvent and we are unable to manufacture products to meet customer demand. If the United States and global economy becomes sluggish or deteriorates for a longer period than we anticipate, we may experience a material negative decrease on the demand for our products which may, in turn, have a material adverse effect on our revenue, profitability, financial condition, ability to raise additional capital and the market price of our stock.
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We maintain our cash at financial institutions, often in balances that exceed federally insured limits.
Adverse developments that affect financial institutions, transactional counterparties, or other third parties, or concerns or rumors about these events, have in the past and may in the future lead to market-wide liquidity problems. Most of our cash is held in accounts at U.S. banking institutions that we believe are of high quality. Cash held in depository accounts may exceed the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we could lose all or a portion of those amounts held in excess of such insurance limitations. On March 10, 2023, Silicon Valley Bank (“SVB”), where the Company maintained accounts with a cash balance of less than 6% of the Company’s total cash, cash equivalents and marketable securities, was closed by the California Department of Financial Protection and Innovation and the FDIC was appointed as receiver. On March 12, 2023, the U.S. Department of the Treasury, Federal Reserve Board, and FDIC released a joint statement announcing that the FDIC would complete its resolution of SVB in a manner that fully protected all depositors at SVB and that depositors would have access to all of their money starting March 13, 2023. On March 26, 2023, it was announced that First-Citizens Bank & Trust Company would assume all of SVB’s deposits and loans as of March 27, 2023. During the periods presented, the Company has not experienced any losses on its deposits of cash, cash equivalents or marketable securities. However, in the future, our access to our cash in amounts adequate to finance our operations could be significantly impaired by the financial institutions with which we have arrangements directly facing liquidity constraints or failures. Any material loss that we may experience in the future could have a material adverse effect on our business and our financial condition.
We may lose key personnel or fail to attract and retain replacement or additional personnel.
We are highly dependent on the principal members of our management, as well as our scientific and sales staff. Attracting and retaining qualified personnel will be critical to our success, and competition for qualified personnel is intense. We may not be able to attract and retain personnel on acceptable terms given the competition for qualified personnel among technology and healthcare companies and universities. The loss of personnel or our inability to attract and retain other qualified personnel could harm our business and our ability to compete. In addition, the loss of members of our scientific staff may significantly delay or prevent product development and other business objectives. A loss of key sales personnel could result in a reduction of revenue. In addition, if we outsource certain employee functions that were formerly handled in-house, our personnel costs could increase.
We face currency and other risks associated with international operations.
We intend to continue to devote significant efforts to marketing our systems and products outside of the U.S. This strategy will expose us to numerous risks associated with international operations, which could adversely affect our results of operations and financial condition, including the following:
| ● | currency fluctuations that could impact the demand for our products or result in currency exchange losses; | |
| ● | export restrictions, tariff and trade regulations and foreign tax laws; | |
| ● | customs duties, export quotas or other trade restrictions; | |
| ● | travel restrictions or bans; | |
| ● | economic and political instability; | |
| ● | war or other military conflicts, such as the on-going hostilities between Russia and Ukraine, and any related impact on macroeconomic conditions as a result of such conflict; and | |
| ● | shipping delays. |
In addition, contracts may be difficult to enforce and receivables may be difficult to collect through a foreign country’s legal system.
| ITEM 1B. | UNRESOLVED STAFF COMMENTS |
We have not received any written comments regarding our periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of our 2025 fiscal year and that remain unresolved.
| ITEM 1C. | CYBERSECURITY |
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
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We design and assess our program based on various cybersecurity frameworks, such as the National Institute of Standards and Technology (“NIST”) and the System and Organizational Controls (“SOC2”), as well as information security standards issued by the International Organization for Standardization, including ISO 27001 and ISO 27002. We use these cybersecurity frameworks and information security standards as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
We
also maintain
Our cybersecurity risk management program includes:
| ● | risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology (“IT”) environment; | |
| ● | a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; | |
| ● | the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls; | |
| ● | cybersecurity awareness training for our employees, incident response personnel, and senior management; and | |
| ● | a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents. |
We
have
Our management team has certifications from various organizations, such as ISC2 (Certified Information Security Systems Professional or “CISSP”), Global Information Assurance (“GIAC”), and the EC-Council.
| ITEM 2. | PROPERTIES |
On March 1, 2021, the Company entered into an office lease agreement (the “Globe Lease”) with Globe Building Company, under which the Company leases executive office space and manufacturing facilities of approximately 43,100 square feet of rentable space located at 710 N. Tucker Boulevard, St. Louis, Missouri that serves as the Company’s new principal executive and administrative offices and manufacturing facility. Lease payments commenced January 1, 2022 and the lease has a term of ten years, with two renewal options of five years each. The new lease space includes approximately 23,000 square feet of office space and 20,100 square feet of demonstration and assembly space. The Company gained access to the Premises in the third quarter 2021 to begin constructing leasehold improvements. In the fourth quarter of 2021, the Company received an occupancy permit and relocated its operations to the new leased space.
On July 31, 2024, the Company entered into a lease agreement (the “Talulla Lease”) with Talulla Group LLC, under which the Company will lease office space and manufacturing facilities of approximately 11,300 square feet of rentable space located at 12560 Fletcher Lane, Rogers, Minnesota that will continue to serve as the APT’s office and manufacturing facility. Lease payments commenced on August 1, 2024, and the lease has a term of four years, with two renewal options of four years each.
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The Company also has leased office space in Beijing, China under a lease agreement through November 29, 2026.
| ITEM 3. | LEGAL PROCEEDINGS |
The Company is involved from time to time in various lawsuits and claims arising in the normal course of business. Although the outcomes of these lawsuits and claims are uncertain, the Company does not believe any of them are presently likely to have a material adverse effect on our business, financial condition or results of operations.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
PART II
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
PRICE RANGE OF COMMON STOCK
Our common stock began trading on the NASDAQ Global Market under the symbol “STXS” on August 12, 2004, and was transferred to the NASDAQ Capital Market effective August 19, 2013. On August 4, 2016, our common stock was transferred to the OTCQX® Best Market and on September 6, 2019 our common stock was transferred to the NYSE American Market.
As of February 28, 2026, there were approximately 387 stockholders of record of our common stock, although we believe that there is a significantly larger number of beneficial owners of our common stock.
| ITEM 6. | [RESERVED] |
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included in this report on Form 10-K. Operating results are not necessarily indicative of results that may occur in future periods.
This report includes various forward-looking statements that are subject to risks and uncertainties, many of which are beyond our control. Our actual results could differ materially from those anticipated in these forward- looking statements as a result of various factors, including those set forth in Item 1A. “Risk Factors,” as well as various impacts related to our previously announced acquisition of Access Point Technologies EP, Inc. (“APT”). Forward-looking statements discuss matters that are not historical facts. Forward-looking statements include, but are not limited to, discussions regarding our operating strategy, sales and marketing strategy, regulatory strategy, industry, economic conditions, financial condition, liquidity, capital resources, results of operations, the impact of, and our response to the coronavirus (“COVID-19”) pandemic, pandemics similar to the coronavirus (“COVID-19”) pandemic, and statements relating to our recent acquisition of APT including any benefits expected from the acquisition, potential strategic implications as a result of the acquisition, and the potential for achievement of the regulatory and commercial milestones that would trigger contingent payments in the transaction. Such statements include, but are not limited to, statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “can,” “could,” “may,” “will,” “would,” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should not unduly rely on these forward-looking statements, which speak only as of the date on which they were made. They give our expectations regarding the future but are not guarantees. We undertake no obligation to update publicly or revise forward-looking statements, whether because of new information, future events or otherwise, unless required by law.
Overview
Stereotaxis designs, manufactures and markets robotic systems, instruments and information systems for the interventional laboratory. Our proprietary robotic technology, Robotic Magnetic Navigation, fundamentally transforms endovascular interventions using precise computer-controlled magnetic fields to directly control the tip of flexible interventional catheters or devices. Direct control of the tip of an interventional device, in contrast to all manual hand-held devices that are controlled from their handle, can improve the precision, stability, reach and safety of these devices during procedures.
Our primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias. Cardiac ablation has become a well-accepted therapy for arrhythmias and a multi-billion-dollar medical device market with expectations for substantial long-term growth. We have shared our aspiration and a product strategy to expand the clinical focus of our technology to several additional endovascular indications including coronary, neuro, and peripheral interventions.
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There is substantial real-world evidence and clinical literature for Robotic Magnetic Navigation in electrophysiology. Hundreds of electrophysiologists at over one hundred hospitals globally have treated over 150,000 arrhythmia patients with our robotic technology. Clinical use of our technology has been documented in over 500 clinical publications. Robotic Magnetic Navigation is designed to enable physicians to complete more complex interventional procedures with greater success and safety by providing image-guided delivery of catheters through the blood vessels and chambers of the heart to treatment sites. This is achieved using externally applied computer-controlled magnetic fields that govern the motion of the working tip of the catheter, resulting in improved navigation. The more flexible atraumatic design of catheters driven using magnetic fields may reduce the risk of patient harm and other adverse events. Performing the procedure from a control cockpit enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency. We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging or unsuccessful and generates significant x-ray exposure, and we are investing in research and development in these areas.
Our primary products include the Genesis RMN and the GenesisX RMN Systems, the Odyssey and Synchrony & SynX Solutions, various interventional devices under the Map-iT, MAGiC and EMAGIN brands, and other related devices. Through our strategic relationships with fluoroscopy system manufacturers, providers of catheters and electrophysiology mapping systems, and other parties, we offer our customers x-ray systems and other accessory diagnostic and therapeutic devices.
The Genesis RMN and the GenesisX RMN Systems are designed to enable physicians to complete complex interventional procedures by providing image-guided delivery of catheters through the blood vessels and chambers of the heart to treatment sites. This is achieved using externally applied magnetic fields that govern the motion of the working tip of the catheter, resulting in improved navigation, efficient procedures, and reduced x-ray exposure. The GenesisX RMN System, the latest generation of the Genesis RMN System, is designed to enhance the accessibility of Robotic Magnetic Navigation by reducing the lengthy construction cycle necessary to install prior generation RMN systems.
The Odyssey Solution consolidates lab information onto one large integrated display, enabling physicians to view and control all the key information in the operating room. This is designed to improve lab layout and procedure efficiency. The system also features a remote viewing and recording capability called Odyssey Cinema. The Odyssey Solution and Odyssey Cinema are being replaced by next generation innovative solutions branded Synchrony and SynX. Synchrony digitizes and modernizes the interventional cath lab with a 4K high-definition display that consolidates the viewing and control of disparate systems in the lab, offering enhanced procedure experience with custom layouts, streamlined workflows, an intuitive user interface, and a decluttered environment. Synchrony is made available with SynX a cloud-based HIPAA and GDPR-compliant browser and mobile-based app that allows for secure remote connectivity, collaboration, recording, and monitoring of the cath lab. As these technologies gain regulatory approvals they are being commercialized alongside RMN systems and as stand-alone solutions.
We pursue arrangements with fluoroscopy system manufacturers to provide RMN Systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms. An integrated x-ray system is critical for customer adoption of RMN Systems, and when offered as a bundled purchase offer with the RMN System, may reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.
We promote our full suite of products necessary for a typical hospital implementation, subject to regulatory approvals or clearances. This implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically includes equipment and installation charges. The recurring payments typically include disposable costs for each procedure, equipment service costs beyond the warranty period, and ongoing software updates. In hospitals where our full suite of products has not been implemented, equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.
Not all products have and/or require regulatory clearance in all the markets we serve. Please refer to “Regulatory Approval” in Item 1 for a description of the regulatory clearance, licensing, and/or approvals we currently have or are pursuing. Approval processes can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications could be denied.
As of December 31, 2025, we had approximately $9.1 million of system backlog, consisting of outstanding purchase orders and other commitments for these systems. Of the December 31, 2025 system backlog, we expect approximately 78% to be recognized as revenue over the course of 2026. We had system backlog of approximately $14.4 million as of December 31, 2024. There can be no assurance that we will recognize such revenue in any period or at all because some of our purchase orders and other commitments are subject to contingencies that are outside our control. These orders and commitments may be revised, modified or canceled, either by their express terms, because of negotiations or by project changes or delays. In addition, the sales cycle for the robotic magnetic navigation system is lengthy and generally involves construction or renovation activities at customer sites. Consequently, revenues and/or orders resulting from sales of our robotic magnetic navigation systems can vary significantly from one reporting period to the next.
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We have strategic relationships with technology leaders and innovators in the global interventional market. Through these strategic relationships we provide compatibility with our robotic magnetic navigation systems, integrated x-ray systems, digital imaging and 3D catheter location sensing technology, and compatible disposable interventional devices. The maintenance of these strategic relationships, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
Corporate Developments
On July 31, 2024, the Company completed its acquisition of all the shares of capital stock of Access Point Technologies EP, Inc., a Minnesota corporation (“APT”), from APT Holding Company, Inc., a Minnesota corporation. APT, based in Rogers, Minnesota, designs, manufactures, and commercializes a portfolio of differentiated high-quality diagnostic catheters, branded as Map-iT catheters, used during cardiac ablation procedures that are commercially available across key global geographies.
The transaction was concluded pursuant to that certain Share Purchase Agreement, dated May 11, 2024. The transaction consideration included an upfront payment of 1,486,620 shares of Company common stock issued at closing, as well as additional contingent payments of Company common stock based upon the achievement of specified product revenue and regulatory approval milestones through September 30, 2029. All consideration is payable in Stereotaxis common stock.
The integration with APT provides in-house catheter development, manufacturing expertise and specialized knowledge that will further Stereotaxis’ innovation efforts in developing a broad family of interventional devices navigated by our robots within electrophysiology and across a range of endovascular procedures.
Stereotaxis has continued to advance development and regulatory approval of its Robotic Magnetic Navigation systems and proprietary interventional devices.
In the third quarter of 2024, we attained CE Mark for the GenesisX RMN System, and in the fourth quarter of 2025 we received FDA 510(k) regulatory clearance within the United States. This latest generation of the RMN System is designed to significantly enhance the accessibility of Robotic Magnetic Navigation by eliminating the lengthy construction cycle necessary to install prior generation RMN systems. In November 2024, the Genesis RMN system, our current generation system, received regulatory approval from China’s National Medical Products Administration (NMPA), and our partner MicroPort received the regulatory clearances for their integrated mapping system and novel ablation catheter making available the most current advanced minimally invasive robotic technology to physicians and patients in China. In October, 2025, we attained CE Mark for the Synchrony Solution and are working towards FDA 510(k) regulatory clearance within the United States.
The Stereotaxis MAGiC catheter, a robotically navigated magnetic ablation catheter designed to perform minimally invasive cardiac ablation procedures, obtained the CE marking in Europe during the first quarter, 2025 and U.S. Food and Drug Administration (FDA) 510(k) clearance in January, 2026. MAGiC Sweep™, the first robotically navigated high-density EP mapping catheter, received U.S. Food and Drug Administration (FDA) 510(k) clearance in July 2025. We are in the process of obtaining necessary approvals for both devices in other geographies. We are also currently seeking regulatory clearances for the EMAGIN 5F catheter guide designed to robotically navigate tortuous venous and arterial vasculature.
Risks and Uncertainties
Future results of operations could be materially adversely impacted by macroeconomic and geopolitical factors. The Company continues to experience difficulties with periodic worldwide supply chain disruptions, including shortages and inflationary pressures, tariffs or other trade restrictions, and logistics delays which make it difficult for us to source parts and ship our products. We have generally been able to conduct normal business activities albeit in a more deliberate manner than prior to the COVID-19 pandemic, including taking action to increase inventory levels and engaging in discussions with our vendors on contractual obligations, but we cannot guarantee that they will not be impacted more severely in the future. Our suppliers and contract manufacturers have experienced, and may continue to experience, similar difficulties. If our manufacturing operations or supply chains are materially interrupted, it may not be possible for us to timely manufacture or service our products at required levels, or at all. Changes in economic conditions and supply chain constraints could lead to higher inflation than previously experienced or expected, which could, in turn, lead to an increase in costs. We may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation. A material reduction or interruption in any of our manufacturing processes or a substantial increase in costs would have a material adverse effect on our business, operating results, and financial condition.
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Many of our hospital customers, for whom the purchase of our system involves a significant capital purchase which may be part of a larger construction project at the customer site (typically the construction of a new building), may themselves be under economic pressures. Hospitals continue to experience challenges with staffing and cost pressures as supply chain constraints and inflation drive up operating costs. This may cause delays or cancellations of current purchase orders and other commitments and may exacerbate the long and variable sales and installation cycles for our robotic magnetic navigation systems. Our hospital customers have also experienced challenges in sourcing supplies, such as catheters, needed to perform procedures. Such shortages have, and may continue to, put pressure on procedures and our disposable revenue.
Any disruption to the capital markets could negatively impact our ability to raise capital. If the capital markets are disrupted for an extended period and we need to raise additional capital, such capital may not be available on acceptable terms, or at all. Disruptions to the capital markets and other financing sources could also negatively impact our hospital customers’ ability to raise capital or otherwise obtain financing to fund their operations and capital projects. Such could result in delayed spending on current projects, a longer sales cycle for new projects where a large capital commitment is required, and decreased demand for our disposable products as well as an increased risk of customer defaults or delays in payments for our system installations, service contracts and disposable products.
In addition to the aforementioned macroeconomic factors, occurrences similar to the COVID-19 pandemic may negatively affect demand for both our systems and our disposable products. In the past, we have experienced business disruptions, including travel restrictions on us and our third-party distributors, which negatively affected our complex sales, marketing, installation, distribution and service network relating to our products and services. We also experienced reductions in demand for our disposable products as our healthcare customers (physicians and hospitals) re-prioritized the treatment of patients and diverted resources away from non-pandemic areas, leading to the performance of fewer procedures in which our disposable products are used. The impact varied widely over time by individual geography. For instance, in 2022, procedure volumes were challenged by periodic resurgences of COVID-19, ongoing hospital staffing issues and other factors. In the first quarter of 2023, COVID-19 resurgences in China continued to negatively impact our procedure volumes in that region, but as infections and hospitalization decreased, we saw a recovery of procedure volumes with no further impacts in the current year. Significant decreases to our capital or recurring revenues could have a material adverse effect on our business, operating results, and financial condition. We continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements relating to new or ongoing periodic resurgences of pandemic-related issues, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
As a result of the acquisition, we will be managing APT’s ongoing business of manufacturing, commercializing, development and sales of APT’s catheters and related products and services. The manufacturing process of catheters is complex, highly technical, and our prior experience in this field is dated. The process can be subject to periodic worldwide supply chain disruptions, including labor shortages and inflationary pressures, tariffs or other trade restrictions, and logistics delays which make it difficult for us to source parts and ship our products. We may require a higher level of overhead than currently anticipated. Our ability to successfully manage this new aspect of our business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of APT into us, but also the increased scope of the combined business with its associated increased costs and complexity. We are still integrating the businesses and implementing safeguards to minimize any negative impacts on our financial position, results of operations and cash flows post-acquisition.
We have arrangements with technology leaders in the global interventional market, including manufacturers of fluoroscopy systems, ablation catheters, and electrophysiology mapping systems, that we believe are critical for us in commercializing our robotic magnetic navigation systems. These arrangements are important to us as they provide for the integration of our system with digital imaging and 3D catheter location sensing technology, as well as catheters compatible with our system.
Prior to regulatory clearance of a replacement device, our propriety MAGiC ablation catheter, in Europe in 2025 and regulatory approval in the U.S. in early 2026, the robotically enabled ablation catheters predominantly used with our RMN Systems were co-developed with Biosense Webster, a wholly owned subsidiary of Johnson and Johnson (the “J&J catheters”). The J&J catheters were solely manufactured and distributed by them and their obligation to supply those catheters ended on December 31, 2025. We do not know their plans for the continuation of the J&J catheters, and we have no guarantees that supply of those catheters will continue into 2026. Although we are ramping up production of the MAGiC ablation catheter as a replacement device, continued supply of the J&J catheters into 2026 remains of significant importance for many customers of our technology.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and marketable securities. Our investments may include, at any time, a diversified portfolio of cash equivalents and short-term and long-term investments in a variety of high-quality securities, including money market funds, U.S. treasury and U.S. government agency securities, corporate notes and bonds, commercial paper, non-U.S. government agency securities, and municipal notes. The Company’s exposure to any individual corporate entity is limited by policy. Deposits may exceed federally insured limits, and the Company is exposed to credit risk on deposits in the event of default by the financial institutions to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation (FDIC). The Company closely monitors events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally.
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Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures. We review our estimates and judgments on an ongoing basis. We base our estimates and judgments on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. We believe the following accounting policies are critical to the judgments and estimates we use in preparing our consolidated financial statements.
Revenue Recognition
The Company accounts for revenue in accordance with Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers.
We generate revenue from the initial capital sales of systems as well as recurring revenue from the sale of our proprietary disposable devices, from royalties paid to the Company on the sale of various devices as provided by co-development and co-placement arrangements, and from other recurring revenue including ongoing software updates and service contracts.
We account for a contract with a customer when there is a legally enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. We record our revenue based on consideration specified in the contract with each customer, net of any taxes collected from customers that are remitted to government authorities.
For contracts containing multiple products and services the Company accounts for individual products and services as separate performance obligations if they are distinct, which is if a product or service is separately identifiable from other items in the bundled package, and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company recognizes revenues as the performance obligations are satisfied by transferring control of the product or service to a customer.
For arrangements with multiple performance obligations, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. If a standalone selling price is not directly observable, then the Company estimates the standalone selling price considering market conditions and entity-specific factors including, but not limited to, features and functionality of the products and services and market conditions. The Company regularly reviews standalone selling prices and updates these estimates as necessary.
Our revenue recognition policy affects the following revenue streams in our business as follows:
Systems:
| Contracts related to the sale of systems typically contain separate obligations for the delivery of system(s), installation, and a service-type warranty for one year following installation. Revenue is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement. Revenue from service-type warranties is included in Other Recurring Revenue and is recognized ratably typically over the first year following installation of the system as the customer receives the service-type warranty throughout the period. The Company’s system contracts generally do not provide a right of return. Systems may be covered by a one-year assurance-type warranty in lieu of a service-type warranty. Assurance-type warranty costs were less than $0.1 million for the years ended December 31, 2025 and 2024. |
Disposables:
| Revenue from sales of disposable products is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but can also occur at the time of delivery depending on the customer arrangement. Disposable products are covered by an assurance-type warranty that provides for the return of defective products. Warranty costs were not material for the periods presented. |
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Royalty:
| The Company receives royalties on the sale of various devices as provided by co-development and co-placement arrangements with various manufacturers. |
Other Recurring Revenue:
| Other recurring revenue includes revenue from product maintenance plans, service-type warranties, and other post warranty maintenance. Revenue from services and software enhancements, including service-type warranties, are deferred and amortized over the service or update period, which is typically one year. Revenue related to services performed on a time-and-materials basis is recognized when performed. |
The Company invoices its customers based on the billing schedules in its sales arrangements. Contract assets primarily represent the difference between the revenue that was earned but not billed on service contracts and revenue from system contracts that was recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements. Customer deposits primarily relate to future system sales but can also include deposits on disposable sales. Deferred revenue is primarily related to service contracts, for which the service fees are billed up-front, generally quarterly or annually, and for amounts billed in advance for system contracts for which some performance obligations remain outstanding. For service contracts, the associated deferred revenue is generally recognized ratably over the service period. For system contracts, the associated deferred revenue is recognized when the remaining performance obligations are satisfied. See Note 2 to the consolidated financial statements for additional details on deferred revenue. The Company did not have any impairment losses on its contract assets for the periods presented.
Assets Recognized from the Costs to Obtain a Contract with a Customer
The Company has determined that sales incentive programs for the Company’s sales team meet the requirements to be capitalized as the Company expects to generate future economic benefits from the related revenue generating contracts after the initial capital sales transaction. The costs capitalized as contract acquisition costs included in prepaid expenses and other assets in the Company’s balance sheets were approximately $0.1 million as of December 31, 2025 and 2024, respectively. The Company did not incur any impairment losses during any of the periods presented.
Cost of Contracts
Costs of systems revenue include direct product costs, installation labor and other costs, estimated warranty costs, initial training costs and product maintenance costs. These costs are recorded at the time of sale. Costs of disposable revenue include direct product costs and estimated warranty costs and are recorded at the time of sale. Cost of revenue from services and license fees are recorded when incurred.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired. Goodwill is not amortized; rather, it is evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided. See Note 3, Acquisitions for further discussion of the goodwill and intangible assets recorded as of the acquisition date and as of December 31, 2025.
Contingent Liabilities- Earnout Consideration
The Company has determined that the contingent consideration due under the terms of its July 31, 2024, acquisition agreement with APT Holding Company, Inc. represents a contingent liability in accordance with the provisions of Accounting Standard 805, Business Combinations. The Company has established short-term and long-term contingent liabilities for the net present fair value of contingent payments which are both probable of occurrence and reasonably estimable. The initial fair value of the contingent consideration both at the acquisition date and subsequent reporting periods was determined by a third-party valuation firm using both a Monte Carlo simulation and probability based approaches. The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. Changes in fair value are recognized in the Company’s earnings as a charge to General and Administrative expenses. See Note 3, Acquisitions for further discussion of the contingent consideration recorded as of the acquisition date and as of December 31, 2025 and 2024.
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Stock-based Compensation
Stock compensation expense, which is a non-cash charge, results from stock, stock option, non-qualified stock options, stock appreciation rights, and restricted share grants made to employees, directors, and third-party consultants at the fair value of the grants. For time-based awards, the fair value of options and stock appreciation rights granted was determined using the Black-Scholes valuation method which gives consideration to the estimated value of the underlying stock at the date of grant, the exercise price of the option, the expected dividend yield and volatility of the underlying stock, the expected life of the option and the corresponding risk-free interest rate. The fair value of the grants of stock and restricted shares and units was determined based on the closing price of our stock on the date of grant. Stock compensation expense for options, stock appreciation rights and for time-based restricted share grants and units is amortized on a straight-line basis over the vesting period of the underlying issue, generally over four years except for grants to directors which are generally earned over a period of six months. Stock compensation expense for performance-based restricted shares, if any, is amortized on a straight-line basis over the anticipated vesting period and is subject to adjustment based on the actual achievement of objectives. Compensation expense is recognized only for those awards expected to vest, net of actual forfeitures. Estimates of the expected life of options have been based on the average of the vesting and expiration periods, which is the simplified method under general accounting principles for share-based payments. Estimates of volatility utilized in calculating stock-based compensation have been prepared based on historical data. Actual experience to date has been consistent with these estimates.
For market-based awards, stock-based compensation expense is recognized over the minimum service period regardless of whether the market target is probable of being achieved. The fair value of such awards is estimated on the grant date using Monte Carlo simulations.
The amount of compensation expense to be recorded in future periods may increase if we make additional grants of options, stock appreciation rights or restricted shares. The amount of expense to be recorded in future periods may decrease if the requisite service periods are not completed or if performance targets are not achieved.
Valuation of Inventory
We value our inventory at the lower of: (1) the actual cost of our inventory, determined using the first-in, first-out (FIFO) method, or (2) its net realizable value. We periodically review our physical inventory for excess, obsolete, and potentially impaired items and reserve accordingly. Our reserve estimate for excess and obsolete is based on expected future use. Excess manufacturing overhead costs attributable to idle facility expenses or abnormally low production volumes are excluded from inventory and recorded as an expense in the period incurred.
Income Taxes
Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. We have established a valuation allowance against the entire amount of our deferred tax assets net of liabilities because we are not able to conclude, due to our history of operating losses, that it is more likely than not that we will be able to realize any portion of the deferred tax assets.
In assessing whether and to what extent deferred tax assets are realizable, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable losses, limitations imposed by Section 382 of the Internal Revenue Code and projections for future losses over periods which the deferred tax assets are deductible, we determined that a 100% valuation allowance of deferred tax assets net of liabilities was appropriate.
Results of Operations
Comparison of the Years ended December 31, 2025 and 2024
Revenue. Revenue increased from $26.9 million for the year ended December 31, 2024, to $32.4 million for the year ended December 31, 2025, an increase of 20%. Revenue from sales of systems increased from $8.6 million for the year ended December 31, 2024, to $10.2 million for the year ended December 31, 2025, an increase of approximately 18%, driven by increased system sales volumes in the current year period. Revenue from sales of disposable interventional devices, service and accessories increased to $22.2 million for the year ended December 31, 2025, from $18.3 million for the year ended December 31, 2024, an increase of approximately 21%. The increase was primarily driven by the full year contribution from our 2024 acquisition of APT and increased service revenue in the current year period.
Cost of Revenue. Cost of revenue increased from $12.3 million for the year ended December 31, 2024, to $15.3 million for the year ended December 31, 2025, an increase of approximately 24%. As a percentage of our total revenue, overall gross margin was 53% and 54% for the years ended December 31, 2025, and December 31, 2024, respectively. The decrease was primarily due to changes in product mix. Cost of revenue for systems sold increased from $6.9 million for the year ended December 31, 2024, to $8.0 million for the year ended December 31, 2025, primarily due to increased system sales volume in the current year period. Gross margin for systems increased from $1.8 million for the year ended December 31, 2024, to $2.2 million for the year ended December 31, 2025. Cost of revenue for disposables, service, and accessories increased from $5.4 million for the year ended December 31, 2024, to $7.3 million for the year ended December 31, 2025. Gross margin for disposables, service and accessories was 67% for the current year period compared to 70% for the year ended December 31, 2024, primarily driven by product mix.
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Research and Development Expense. Research and development expenses decreased from $9.8 million for the year ended December 31, 2024, to $9.4 million for the year ended December 31, 2025, a decrease of approximately 4%. This decrease was primarily driven by the attainment of technological feasibility and regulatory approval of the GenesisX in 2025 offset by acquired headcount expense from our acquisition.
Sales and Marketing Expense. Sales and marketing expenses remained consistent at $12.4 million for the years ended December 31, 2025 and 2024.
General and Administrative Expense. General and administrative expenses include finance, information systems, legal, and general management expenses, amortization of acquisition related intangible assets, and the gain or loss associated with the remeasurement of the acquisition related contingent consideration. General and administrative expenses increased from $17.2 million for the year ended December 31, 2024, to $17.8 million for the year ended December 31, 2025, an increase of approximately 4%. This increase was primarily driven by the change in contingent consideration expense and amortization of acquisition related intangible assets offset by lower administrative expenses in the current year period.
Other Operating Expense. The Company received approximately $0.5 million in an employee retention tax credit in the second quarter of 2025.
Interest Income. Net interest income was $0.5 million for the year ended December 31, 2025, and $0.7 million for the year ended December 31, 2024. The decrease was driven by lower invested balances and declining interest rates in the current year period.
Income Taxes
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable losses, and projections for future periods over which the deferred tax assets are deductible, the Company determined that a 100% valuation allowance of net deferred tax assets was appropriate.
As of December 31, 2025, we had gross federal net operating loss carryforwards arising from our operations of approximately $159.1 million. The federal net operating loss carryforwards reflect accumulated book losses reduced for the 2013 IRC Section 382 ownership change limitation of $144.4 million, book/tax differences and expiration of carryforwards. The federal net operating loss carryforwards generated prior to the 2018 tax year of approximately $98.8 million will expire between 2030 and 2037. The federal net operating losses generated in 2018 and thereafter will be carried forward indefinitely as a result of changes in the tax law following the Tax Cuts and Jobs Act (“TCJA”). As of December 31, 2025, we had gross state net operating loss carryforward of approximately $50.2 million which will expire at various dates between 2026 and 2043 if not utilized.
In addition to the net operating loss carryovers related to our operations, in connection with our 2024 acquisition of APT as discussed in Note 3, we acquired federal and state net operating loss and tax credit carryovers of APT. Our ability to utilize those carryovers and credits will be limited under IRC Section 382. The Section 382 limited net operating loss carryovers total approximately $9.2 million, of which $0.6 million was incurred prior to the 2018 effective date of the TCJA and will expire between 2035 and 2037 with the remainder available for indefinite carryforward. The applicable state net operating loss carryforwards related to APT are approximately $9.6 million with $9.2 million expiring at various dates between 2030 - 2038 with the remaining carried forward indefinitely. The acquired tax credit carryforwards total $0.3 million for federal income tax purposes, which expire between 2036 and 2043, and state credit carryovers of $0.3 million, which expire between 2031 and 2038. Consistent with our conclusion with respect to the need for valuation allowances associated with our other deferred tax assets, the net deferred tax assets related to APT of $1.6 million at the acquisition date as well as those at December 31, 2025 were fully included in our valuation allowance.
Liquidity and Capital Resources
Liquidity refers to the liquid financial assets available to fund our business operations and pay for near-term obligations. These liquid financial assets consist of cash, cash equivalents, and investments.
As of December 31, 2025, our accumulated deficit was $583.4 million with cash and cash equivalents of $13.4 million. Since inception, we have financed our operations primarily through cash generated by operations and proceeds from our debt and stock offerings.
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Capital Resources
As of December 31, 2025 and 2024, the Company did not have any debt.
In July 2025, we closed a registered direct offering of our common stock for $8.5 million in gross proceeds before deducting offering expenses. In November 2025, we completed the Additional Closing from the July direct registering offering for $4.0 million in gross proceeds deducting offering expenses.
In addition, in August 2025, we entered into a sales agreement with Roth Capital Markets (“Roth”), as sales agent and/or principal, under which we may issue up to $50.0 million of our common stock (the “ATM Program”). During the twelve months ended December 31, 2025, the Company sold an aggregate of 963,723 shares of common stock under the Sales Agreement, at an average price of approximately $3.17 per share for gross proceeds of $3.1 million and net proceeds of $2.9 million, after deducting Roth’s commission and other expenses. As of December 31, 2025, $46.9 million of common stock remained available to be sold under this facility, subject to certain conditions as specified in the sales agreement.
For additional information on the 2025 registered direct offering and our “at-the-market” facility, refer to Note 11, Convertible Preferred Stock and Stockholders’ Equity of the notes to the consolidated financial statements, under the subheadings Controlled Equity Offering and 2025 Equity Financing, included within this report.
Liquidity
The following table summarizes our cash flow by operating, investing and financing activities for years ended December 31, 2025 and 2024 (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flow used in operating activities | $ | (13,685 | ) | $ | (8,497 | ) | ||
| Cash flow (used in) provided by investing activities | (93 | ) | 74 | |||||
| Cash flow provided by financing activities | 14,763 | 297 | ||||||
Net cash used in operating activities. We used approximately $13.7 million and $8.5 million of cash in operating activities during the years ended December 31, 2025 and 2024, respectively. The increase in cash used in operating activities was primarily driven by changes in working capital.
Net cash used in/provided by investing activities. We used less than $0.1 million of cash for investing activities during the year ended December 31, 2025 for the purchase of equipment. We generated approximately $0.1 million for investing activities during the year ended December 2024 from the acquisition of Access Point Technologies EP, Inc.
Net cash provided by financing activities. We generated approximately $14.8 million and $0.3 million of cash from financing activities for the years ended December 31, 2025 and 2024, respectively. The cash generated in 2025 was primarily driven by the proceeds from the registered direct offering and the controlled equity offering during the third and fourth quarters. The cash generated in 2024 was driven by the proceeds from issuance of stock from the exercise of options, net of issuance costs, and from our employee stock purchase program.
At December 31, 2025, we had working capital of approximately $11.5 million, compared to working capital of approximately $4.8 million at December 31, 2024. The increase in working capital was primarily driven by the proceeds from our equity offerings in 2025.
Our principal source of liquidity is cash provided by operations and by the issuance of common stock through the exercise of stock options and our employee stock purchase program as well as cash received from past equity raises. In addition, the Company filed a universal shelf registration statement on Form S-3 with the SEC in May 2023, which was declared effective by the SEC on June 6, 2023, registering for sale up to $100.0 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine. The net proceeds of any securities we sell under our shelf registration statement may be used for general corporate purposes, including among other possible uses, the acquisition of companies or businesses, repayment and refinancing of debt, working capital and capital expenditures.
The Company believes the cash, and cash equivalents on hand as of December 31, 2025, will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date of the consolidated financial statements included in this Annual Report on Form 10-K, as well as for periods beyond that 12-month period. Our cash requirements depend on numerous factors, including success of clinical adoption within the installed base of robotic magnetic systems, new placements of capital systems, the resources we devote to developing and supporting our products, and other factors. We expect to continue to fund our operations with cash resources primarily generated from the proceeds of our past equity raises and from our working capital. In the future, we may finance cash needs through the sale of other equity securities or non-core assets, strategic collaboration agreements, debt financings or through distribution rights.
Off-Balance Sheet Arrangements
We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As a result, we are not materially exposed to any financing, liquidity, market or credit risk that could have arisen if we had engaged in these relationships.
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| ITEM 8. | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Consolidated Financial Statements
Index To Consolidated Financial Statements
All other schedules have been omitted because they are not applicable, or the required information is shown in the Consolidated Financial Statements or the Notes thereto.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Stereotaxis, Inc.
Opinion on the Financial Statements
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Systems Revenue Recognition
| Description of the Matter | As discussed in Note 2 to the consolidated financial statements, the Company generates revenue from initial sales of systems as well as recurring revenue from the sale of proprietary disposable devices, and revenue from ongoing software updates and service contracts. The Company’s contracts for system sales generally have multiple performance obligations.
Auditing the timing and amount of revenue recognized for system sales required significant auditor judgment because it involves several subjective management assumptions and estimates including the identification of performance obligations within the contracts, the estimation of the standalone selling price of each performance obligation, the allocation of transaction price to each performance obligation, and a determination of the timing of the satisfaction of the performance obligation. | |
How We Addressed the Matter in Our Audit |
To test system revenue, our audit procedures included, among others, testing management’s identification of the performance obligations and the allocation of the transaction price to each performance obligation by performing an independent assessment of customer contracts and comparing our assessment to that of management. We also tested management’s estimated standalone selling prices for its identified performance obligations based on actual prices charged for similar products and services sold on a standalone basis, and cost and margin analyses. We also tested management’s assertion that control was transferred to the customer by inspecting documentation supporting the transfer of control on contracts. |
We have served as the Company’s auditor since 2002.
March 12, 2026
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STEREOTAXIS, INC.
CONSOLIDATED BALANCE SHEETS
| (in thousands, except share amounts) | December 31, 2025 | December 31, 2024 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash - current | ||||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Insurance receivable | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Prepaid and other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Accrued legal liabilities | ||||||||
| Deferred revenue | ||||||||
| Current contingent consideration | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term deferred revenue | ||||||||
| Long term contingent consideration | ||||||||
| Operating lease liabilities | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Series A - Convertible preferred stock: | ||||||||
| Convertible preferred stock, Series A, par value $; shares authorized; and shares outstanding at 2025 and 2024, respectively | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, par value $; shares authorized, and shares issued at 2025 and 2024, respectively | ||||||||
| Additional paid in capital | ||||||||
| Treasury stock, shares at 2025 and 2024 | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes.
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STEREOTAXIS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended December 31, | ||||||||
| (in thousands, except share and per share amounts) | 2025 | 2024 | ||||||
| Revenue: | ||||||||
| Systems | $ | $ | ||||||
| Disposables, service and accessories | ||||||||
| Total revenue | ||||||||
| Cost of revenue: | ||||||||
| Systems | ||||||||
| Disposables, service and accessories | ||||||||
| Total cost of revenue | ||||||||
| Gross margin | ||||||||
| Operating expenses: | ||||||||
| Research and development | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Other | ( | ) | ||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Interest income, net | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Cumulative dividend on convertible preferred stock | ( | ) | ( | ) | ||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per share attributable to common stockholders: | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares and equivalents: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
See accompanying notes.
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STEREOTAXIS, INC.
CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Year Ended December 31, 2024
| Convertible Preferred Stock Series A (Mezzanine) | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | |||||||||||||||||||||||||||
| (in thousands, except share amounts) | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock issued for the exercise of stock options | ||||||||||||||||||||||||||||||||
| Stock issued in APT acquisition | ||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||
| Components of net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Employee stock purchase plan | ||||||||||||||||||||||||||||||||
| Preferred stock conversion | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
Year Ended December 31, 2025
| Convertible Preferred Stock Series A (Mezzanine) | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | |||||||||||||||||||||||||||
| (in thousands, except share amounts) | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Stock issued for the exercise of stock options | ||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||
| Issuance of common stock through the direct offering and regulatory milestone achievement | ||||||||||||||||||||||||||||||||
| Issuance of common stock through at-the-market offering | ||||||||||||||||||||||||||||||||
| Components of net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Employee stock purchase plan | ||||||||||||||||||||||||||||||||
| Preferred stock conversion | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
See accompanying notes.
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STEREOTAXIS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||
| (in thousands) | 2025 | 2024 | ||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of intangibles | ||||||||
| Loss on revaluation of contingent consideration | ||||||||
| Non-cash lease expense | ||||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Other liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Cash acquired in business acquisitions | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of stock | ||||||||
| Equity issuance costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | ||||||
| Cash, cash equivalents, and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Fair value of shares of common stock issued for contingent consideration earnouts | $ | |||||||
| Reconciliation of cash, cash equivalents, and restricted cash to consolidated balance sheet as of December 31st: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash - current | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
See accompanying notes.
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STEREOTAXIS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
In this report, “Stereotaxis”, the “Company”, “Registrant”, “we”, “us”, and “our” refer to Stereotaxis, Inc. and its wholly owned subsidiaries. GenesisX RMN®, Genesis RMN®, Niobe®, Navigant®, Synchrony™, SynX™, Odyssey®, Odyssey Cinema™, MAGiC™, MAGiC Sweep™, EMAGIN™, Map-iT™, QuikCAS™, Cardiodrive®, Vdrive®, Vdrive Duo™, V-CAS™, V-Loop™, V-Sono™, and NuVizion™ are trademarks of Stereotaxis, Inc. All other trademarks that appear in this report are the property of their respective owners.
1. Description of Business
Stereotaxis designs, manufactures and markets robotic systems, instruments and information systems for the interventional laboratory. Our proprietary robotic technology, Robotic Magnetic Navigation, fundamentally transforms endovascular interventions using precise computer-controlled magnetic fields to directly control the tip of flexible interventional catheters or devices. Direct control of the tip of an interventional device, in contrast to all manual hand-held devices that are controlled from their handle, can improve the precision, stability, reach and safety of these devices during procedures.
Our primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias. Cardiac ablation has become a well-accepted therapy for arrhythmias and a multi-billion-dollar medical device market with expectations for substantial long-term growth. We have shared our aspiration and a product strategy to expand the clinical focus of our technology to several additional endovascular indications including coronary, neuro, and peripheral interventions.
There is substantial real-world evidence and clinical literature for Robotic Magnetic Navigation in electrophysiology. Hundreds of electrophysiologists at over one hundred hospitals globally have treated over 150,000 arrhythmia patients with our robotic technology. Clinical use of our technology has been documented in over 500 clinical publications. Robotic Magnetic Navigation is designed to enable physicians to complete more complex interventional procedures with greater success and safety by providing image-guided delivery of catheters through the blood vessels and chambers of the heart to treatment sites. This is achieved using externally applied computer-controlled magnetic fields that govern the motion of the working tip of the catheter, resulting in improved navigation. The more flexible atraumatic design of catheters driven using magnetic fields may reduce the risk of patient harm and other adverse events. Performing the procedure from a control cockpit enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency. We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging or unsuccessful and generates significant x-ray exposure.
Our primary products include the Genesis RMN and the GenesisX RMN Systems, the Odyssey and Synchrony & SynX Solutions, various interventional devices under the Map-iT, MAGiC and EMAGIN brands, and other related devices. Through our strategic relationships with fluoroscopy system manufacturers, providers of catheters and electrophysiology mapping systems, and other parties, we offer our customers x-ray systems and other accessory diagnostic and therapeutic devices.
The Genesis RMN and the Genesis X RMN Systems are designed to enable physicians to complete more complex interventional procedures by providing image-guided delivery of catheters through the blood vessels and chambers of the heart to treatment sites. This is achieved using externally applied magnetic fields that govern the motion of the working tip of the catheter, resulting in improved navigation, efficient procedures, and reduced x-ray exposure. The GenesisX RMN System, the latest generation of the Genesis RMN System, is designed to significantly enhance the accessibility of Robotic Magnetic Navigation by eliminating the lengthy construction cycle necessary to install prior generation RMN systems.
The Odyssey Solution consolidates lab information onto one large integrated display, enabling physicians to view and control all the key information in the operating room. This is designed to improve lab layout and procedure efficiency. The system also features a remote viewing and recording capability called Odyssey Cinema. The Odyssey Solution and Odyssey Cinema are being replaced by next generation innovative solutions branded Synchrony and SynX. Synchrony digitizes and modernizes the interventional cath lab with a 4K high-definition display that consolidates the viewing and control of disparate systems in the lab, offering enhanced procedure experience with custom layouts, streamlined workflows, an intuitive user interface, and a decluttered environment. Synchrony is made available with SynX a cloud-based HIPAA and GDPR-compliant browser and mobile-based app that allows for secure remote connectivity, collaboration, recording, and monitoring of the cath lab. As these technologies gain regulatory approvals they are being commercialized alongside RMN systems and as stand-alone solutions.
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We pursue arrangements with fluoroscopy system manufacturers to provide such systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms. An integrated x-ray system is critical for customer adoption of RMN systems, and when offered as a bundled purchase offer with the RMN System, may reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.
We promote our full suite of products necessary for a typical hospital implementation, subject to regulatory approvals or clearances. This implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically includes equipment and installation charges. The recurring payments typically include disposable costs for each procedure, equipment service costs beyond the warranty period, and ongoing software updates. In hospitals where our full suite of products has not been implemented, equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.
Not all products have and/or require regulatory clearance in all the markets we serve. Please refer to “Regulatory Approval” in Item 1 for a description of the regulatory clearance, licensing, and/or approvals we currently have or are pursuing. Approval processes can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications could be denied.
We have strategic relationships with technology leaders and innovators in the global interventional market. Through these strategic relationships we provide compatibility with our robotic magnetic navigation system, integrated x-ray systems, digital imaging and 3D catheter location sensing technology, and compatible disposable interventional devices. The maintenance of these strategic relationships, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
Prior to regulatory clearance of a replacement device, our propriety MAGiC ablation catheter, in Europe in 2025 and regulatory approval in the U.S. in early 2026, the robotically enabled ablation catheters predominantly used with our RMN Systems were co-developed with Biosense Webster, a wholly owned subsidiary of Johnson and Johnson (the “J&J catheters”). The J&J catheters were solely manufactured and distributed by them and their obligation to supply those catheters ended on December 31, 2025. We do not know their plans for the continuation of the J&J catheters, and we have no guarantees that supply of those catheters will continue into 2026. Although we are ramping up production of the MAGiC ablation catheter as a replacement device, continued supply of the J&J catheters into 2026 remains of significant importance for many customers of our technology.
On July 31, 2024, the Company completed its acquisition of all the shares of capital stock of Access Point Technologies EP, Inc., a Minnesota corporation (“APT”), from APT Holding Company, Inc., a Minnesota corporation. APT, based in Rogers, Minnesota, designs, manufactures, and commercializes a portfolio of differentiated high-quality diagnostic catheters, branded as Map-iT catheters, used during cardiac ablation procedures that are commercially available across key global geographies.
The integration with APT provides in-house catheter development, manufacturing expertise and specialized knowledge that will further Stereotaxis’ innovation efforts in developing a broad family of interventional devices navigated by our robots within electrophysiology and across a range of endovascular procedures.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and marketable securities. Our investments may include, at any time, a diversified portfolio of cash equivalents and short-term and long-term investments in a variety of high-quality securities, including money market funds, U.S. treasury and U.S. government agency securities, corporate notes and bonds, commercial paper, non-U.S. government agency securities, and municipal notes. The Company’s exposure to any individual corporate entity is limited by policy. Deposits may exceed federally insured limits, and the Company is exposed to credit risk on deposits in the event of default by the financial institutions to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation (FDIC). The Company closely monitors events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally. During the periods presented, the Company has not experienced any losses on its deposits of cash, cash equivalents or marketable securities.
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Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments, and other highly liquid investments with original maturities of three months or less from the date of purchase.
Restricted Cash
Restricted cash primarily consists of cash that the Company is obligated to maintain in accordance with contractual obligations.
Investments
Our investments may include, at any time, a diversified portfolio of cash equivalents and short-and long-term investments in a variety of high-quality securities, including money market funds, U.S. treasury and U.S. government agency securities, corporate notes and bonds, commercial paper, non-U.S. government agency securities, and municipal notes. As of December 31, 2025 and 2024, the Company had short-term investments.
Amortized
cost of U.S. treasury securities and marketable debt securities are based on the Company’s purchase price adjusted for accrual
of discount, or amortization of premium, and recognition of impairment charges, if any. The amortized cost of securities the Company
purchases at a discount or premium will equal the face or par value at maturity or the call date, if applicable. Stated interest on investments
is reported as income when earned and is adjusted for amortization or accretion of any premium or discount. Accrued interest receivable
on investments, included in other current assets was less than $
Fair Value Measurements
Financial instruments consist of cash and cash equivalents, restricted cash, investments, accounts receivable, and accounts payable.
The Company measures certain financial assets and liabilities at fair value on a recurring basis. General accounting principles for fair value measurement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (“Level 1”) and the lowest priority to unobservable inputs (“Level 3”). The three levels of the fair value hierarchy are described below:
| Level 1: | Values are based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
| Level 2: | Values are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or other model-based valuation techniques for which all significant assumptions are observable in the market. | |
| Level 3: | Values are generated from model-based techniques that use significant assumptions not observable in the market. |
As of December 31, 2025, and December 31, 2024 financial assets classified as Level 2 consisted of money market funds. The Company reviews trading activity and pricing for these investments as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data. This approach results in the Level 2 classification of these securities within the fair value hierarchy.
As of December 31, 2025, financial liabilities classified as Level 3 consisted of the contingent consideration due to the APT acquisition. The Company reviews the change in the fair value of contingent consideration, which is performed by a third-party valuation firm. See Note 3 for further information regarding the valuation methods used by the third-party valuation firm. The approach results in the Level 3 classification of the contingent consideration within the fair value hierarchy.
Accounts Receivable, Contract Assets, and Allowance for Credit Losses
Accounts receivable primarily include amounts due from hospitals and distributors for acquisition of robotic magnetic navigation systems, associated disposable device sales and service contracts, net of allowances for expected credit losses. Credit is granted on a limited basis, with balances due generally within 30 days of billing. Contract assets primarily represent the difference between the revenue that was earned but not billed on service contracts and revenue from system contracts that was recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements. Effective January 1, 2023, the Company reports accounts receivable and contract assets net of an allowance for expected credit losses in accordance with Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses (“ASC 326”). The provision for credit loss is based upon management’s assessment of historical and expected net collections considering business and economic conditions and other collection indicators. We assess collectability by reviewing the accounts receivable aging schedule on an aggregated basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues. Amounts deemed uncollectible are recorded as an allowance for expected credit losses.
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Inventory
The Company values its inventory at the lower of; (1) cost, as determined using the first-in, first-out (FIFO) method, or (2) net realizable value. The Company periodically reviews its physical inventory and provides a reserve upon identification of potential excess or obsolete items. Excess manufacturing overhead costs attributable to idle facility expenses or abnormally low production volumes are excluded from inventory and recorded as an expense in the period incurred.
Property and Equipment
Property and equipment consist primarily of leasehold improvements, computer, office, research and demonstration equipment, and equipment held for lease and are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives or life of the base lease term, ranging from three to ten years.
Long-Lived Assets
If facts and circumstances suggest that a long-lived asset may be impaired, the carrying value is reviewed. If this review indicates that the carrying value of the asset will not be recovered, as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value, which in most cases is estimated based upon Level 3 inputs.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and loss during the reporting period. Actual results could differ from those estimates.
Revenue and Costs of Revenue
Revenue Recognition
The Company accounts for revenue in accordance with Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers.
We generate revenue from initial capital sales of systems as well as recurring revenue from the sale of our proprietary disposable devices, from royalties paid to the Company on the sale of various devices as provided by co-development and co-placement arrangements, and from other recurring revenue including ongoing software updates and service contracts.
We account for a contract with a customer when there is a legally enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. We record our revenue based on consideration specified in the contract with each customer, net of any taxes collected from customers that are remitted to government authorities.
For contracts containing multiple products and services the Company accounts for individual products and services as separate performance obligations if they are distinct, which is if a product or service is separately identifiable from other items in the bundled package, and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company recognizes revenues as the performance obligations are satisfied by transferring control of the product or service to a customer.
For arrangements with multiple performance obligations, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. If a standalone selling price is not directly observable, then the Company estimates the standalone selling price considering market conditions and entity-specific factors including, but not limited to, features and functionality of the products and services and market conditions. The Company regularly reviews standalone selling prices and updates these estimates if necessary.
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Our revenue recognition policy affects the following revenue streams in our business as follows:
Systems:
Contracts related
to the sale of systems typically contain separate obligations for the delivery of system(s), installation, and service-type warranty
for one year following installation. Revenue is recognized when the Company transfers control to the customer, which is generally at
the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement.
Revenue from service-type warranties is included in Other Recurring Revenue and is recognized ratably typically over the first year following
installation of the system as the customer receives the service-type warranty throughout the period. The Company’s system contracts
generally do not provide a right of return. Systems may be covered by a one-year assurance-type warranty in lieu of a service-type warranty.
Assurance-type warranty costs were less than $
Disposables:
Revenue from sales
of disposable products is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but
can also occur at the time of delivery depending on the customer arrangement. Disposable products are covered by an assurance-type warranty
that provides for the return of defective products. Warranty costs were not material for the periods presented. Disposable revenue represented
Royalty:
The Company receives
royalties on the sale of various devices as provided by co-development and co-placement arrangements with various manufacturers. There
was no royalty revenue for the year ended December 31, 2025, and there was less than
Other Recurring Revenue:
Other recurring revenue
includes revenue from product maintenance plans, service-type warranties, and other post warranty maintenance. Revenue from services
and software enhancements is deferred and amortized over the service or update period, which is typically one year. Revenue related to
services performed on a time-and-materials basis is recognized when performed. Other recurring revenue represented
The following table summarizes the Company’s revenue for systems and disposables, service and accessories for the years ended December 31, 2025 and 2024 (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Systems | $ | $ | ||||||
| Disposables, service and accessories | ||||||||
| Total revenue | $ | $ | ||||||
Transaction
price allocated to remaining performance obligations relates to amounts allocated to products and services for which the revenue has
not yet been recognized. A significant portion of this amount relates to the Company’s systems contracts and obligations that will
be recognized as revenue in future periods. These obligations are generally satisfied within two years after contract inception but may
occasionally extend longer. Transaction price representing revenue to be earned on remaining performance obligations on system contracts
was approximately $
The following information summarizes the Company’s contract assets and liabilities (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Contract Assets - unbilled receivables | $ | $ | ||||||
| Total unbilled receivables | $ | $ | ||||||
| Customer deposits | $ | $ | ||||||
| Product shipped, revenue deferred | ||||||||
| Deferred service and license fees | ||||||||
| Total deferred revenue | $ | $ | ||||||
| Less: Long-term deferred revenue | ( | ) | ( | ) | ||||
| Total current deferred revenue | $ | $ | ||||||
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The Company invoices its customers based on the billing schedules in its sales arrangements. Contract assets primarily represent the difference between the revenue that was earned but not billed on service contracts and revenue from system contracts that was recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements. Customer deposits primarily relate to future system sales but can also include deposits on disposable sales. Deferred revenue is primarily related to service contracts, for which the service fees are billed up-front, generally quarterly or annually, and for amounts billed in advance for system contracts for which some performance obligations remain outstanding. For service contracts, the associated deferred revenue is generally recognized ratably over the service period. For system contracts, the associated deferred revenue is recognized when the remaining performance obligations are satisfied. The Company did not have any impairment losses on its contract assets for the periods presented.
Revenue
recognized for the years ended December 31, 2025 and 2024, that was included in the deferred revenue balance at the beginning of each
reporting period was $
Assets Recognized from the Costs to Obtain a Contract with a Customer
The
Company has determined that sales incentive programs for the Company’s sales team meet the requirements to be capitalized as the
Company expects to generate future economic benefits from the related revenue generating contracts after the initial capital sales transaction.
The costs capitalized as contract acquisition costs included in prepaid expenses and other assets in the Company’s balance sheets
were $
Cost of Contracts
Costs of systems revenue include direct product costs, installation labor and other costs, estimated warranty costs, initial training costs and product maintenance costs. These costs are recorded at the time of sale. Costs of disposable revenue include direct product costs and estimated warranty costs and are recorded at the time of sale. Cost of revenue from services and license fees are recorded when incurred.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired. Goodwill is not amortized; rather, it is evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided. See Note 3, Acquisitions for further discussion of the goodwill and intangible assets recorded as of the acquisition date and as of December 31, 2025.
Contingent Liabilities- Earnout Consideration
The Company has determined that the contingent consideration due under the terms of its July 31, 2024, acquisition agreement with APT Holding Company, Inc. represents a contingent liability in accordance with the provisions of Accounting Standard 805, Business Combinations. The Company has established short-term and long-term contingent liabilities for the net present fair value of contingent payments which are both probable of occurrence and reasonably estimable. The initial fair value of the contingent consideration both at the acquisition date and subsequent reporting periods was determined by a third-party valuation firm using both a Monte Carlo simulation and probability-based approaches. The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. Changes in fair value are recognized in the Company’s earnings as a charge to General and Administrative expenses. See Note 3, Acquisitions for further discussion of the contingent consideration recorded as of the acquisition date and as of December 31, 2025 and 2024.
Leasing Arrangements
A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period in exchange for consideration. The Company accounts for leases in accordance with Accounting Standards Update No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842 (“ASC 842”). The Company determines if an arrangement contains a lease at inception.
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The Company leases its facilities under operating leases. In accordance with ASC 842, operating lease agreements are recognized on the balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability. These leases generally do not have significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the leases do not contain contingent rent provisions. Many of our leases include both lease (i.e., fixed payments including rent, taxes, and insurance costs) and non-lease components (i.e., common-area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases.
The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less) on the balance sheet.
The calculated amounts of the ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of the minimum lease payments. ASC 842 requires the use of the discount rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception.
Research and Development Costs
Internal research and development costs are expensed in the period incurred. Amounts receivable from strategic relationships under research reimbursement agreements are recorded as a contra-research and development expense in the period reimbursable costs are incurred. There were no material receivables as of December 31, 2025 or 2024, under these types of agreements. Advance receipts or other unearned reimbursements are included in accrued liabilities on the accompanying balance sheet until earned.
The Company accounts for its grants of stock options, non-qualified stock options, stock appreciation rights, restricted shares, and restricted stock units and for its employee stock purchase plan in accordance with the provisions of general accounting principles for share-based payments. These accounting principles require the determination of the fair value of the stock-based compensation at the grant date and the recognition of the related expense over the period in which the stock-based compensation vests.
For time-based awards, the Company utilizes the Black-Scholes valuation model to determine the fair value of stock options and stock appreciation rights at the date of grant. The weighted average assumptions and fair value for options granted during the year ended December 31, 2025, were 1) expected dividend rate of %; 2) expected volatility of % based on the Company’s historical volatility over the expected term; 3) risk-free interest rate based on the Treasury yield on the date of grant; and 4) expected term of years. The resulting compensation expense is recognized over the requisite service period, which is generally four years, net of actual forfeitures. Restricted shares and units granted to employees and non-employee directors are valued at the fair market value at the date of grant. The Company amortizes the fair market value to expense over the service period. If the shares are subject to performance objectives, the resulting compensation expense is amortized over the anticipated vesting period and is subject to adjustment based on the actual achievement of objectives.
For market-based awards, stock-based compensation expense is recognized over the minimum service period regardless of whether or not the market target is probable of being achieved. The fair value of such awards is estimated on the grant date using Monte Carlo simulations.
Shares purchased by employees under the 2022 Employee Stock Purchase Plan are considered to be non-compensatory.
Basic earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. In periods where there is net income, we apply the two-class method to calculate basic and diluted net income (loss) per share of common stock, as our convertible preferred stock is a participating security. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. In periods where there is a net loss, the two-class method of computing earnings per share does not apply as our convertible preferred stock does not contractually participate in our losses. We compute diluted net income (loss) per common share using net income (loss) as the “control number” in determining whether potential common shares are dilutive, after giving consideration to all potentially dilutive common shares, including stock options, unvested restricted stock units outstanding during the period, and potential issuance of stock upon the conversion of our convertible preferred stock issued and outstanding during the period, except where the effect of such securities would be antidilutive.
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The Company did not include any portion of unearned restricted shares, outstanding options, stock appreciation rights, or convertible preferred stock in the calculation of diluted loss per common share because all such securities are anti-dilutive for all periods presented. The application of the two-class method of computing earnings per share under general accounting principles for participating securities is not applicable during these periods because those securities do not contractually participate in its losses.
As of December 31, 2025, the Company had shares of common stock issuable upon the exercise of outstanding options and stock appreciation rights at a weighted average exercise price of $ per share, shares of our common stock issuable upon conversion of our Series A Convertible Preferred Stock, and shares of unvested restricted share units. awarded under the 2022 Stock Purchase Plan, and unvested share units relating to the 2021 CEO Performance Award Unit Grant. The Company had no unearned restricted shares outstanding as of December 31, 2025.
Income Taxes
In accordance with general accounting principles for income taxes, a deferred income tax asset or liability is determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred income tax assets unless, based upon available evidence, it is more likely than not that the deferred income tax assets will be realized.
Product Warranty Provisions
The Company’s standard policy is to warrant all products against defects in material or workmanship for one year following sale or installation. Contracts related to the sale of systems typically contain a service-type warranty which is accounted for as a separate performance obligation in ASC 606, Revenue from Contracts with Customers. For assurance-type warranties, the Company’s estimate of costs to service the warranty obligations is based on historical experience and current product performance trends. A regular review of warranty obligations is performed to determine the adequacy of the reserve and adjustments are made to the estimated warranty liability (included in other accrued liabilities) as appropriate.
Patent Costs
Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is uncertain.
Concentrations of Risk
No
single customer accounted for more than
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires enhanced income tax disclosures, primarily related to the effective tax rate reconciliation and income taxes paid. The Company retrospectively adopted the standard in the fourth quarter of 2025 and adoption of the standard did not have a significant impact to its income tax disclosures.
3. Acquisitions
Acquisition of Access Point Technologies EP, Inc. (“APT”):
On July 31, 2024, the Company acquired all the shares of capital stock of Access Point Technologies EP, Inc. (“APT”), a Minnesota corporation, from APT Holding Company, Inc., a Minnesota corporation. APT designs, manufactures, and commercializes a portfolio of differentiated high-quality diagnostic catheters used during cardiac ablation procedures that are commercially available across key global geographies.
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The
acquisition of APT was accounted for as a business combination using the acquisition method of accounting. The consideration
included an upfront payment and additional contingent payments based upon the achievement of key regulatory and commercial
milestones. At closing, the Company issued
shares of its common stock (the “Upfront Stock Consideration”) with a fair value of $
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for APT as of the acquisition date (in thousands):
| Assets acquired: | ||||
| Current assets | ||||
| Cash | $ | |||
| Accounts receivable, net of allowance of $ | ||||
| Inventories, net | ||||
| Prepaid expenses and other current assets | ||||
| Total current assets | ||||
| Property and equipment | ||||
| Goodwill | ||||
| Intangible assets | ||||
| Total assets acquired | $ | |||
| Liabilities assumed: | ||||
| Current liabilities | ||||
| Accounts payable | $ | |||
| Accrued liabilities | ||||
| Total liabilities assumed | $ | |||
| Net assets acquired | $ | |||
The above purchase price allocation was final as of June 30, 2025. No measurement period adjustments were recognized during the six months ended June 30, 2025. For purposes of the above allocation, we based our estimate of the fair values for contingent consideration, intangible assets, and property and equipment on valuation studies performed by third-party valuation firms. We used various valuation methods, including discounted cash flows, distributor method, excess earnings, and relief from royalty method to estimate the fair value of the identified intangible assets. The fair value of the contingent consideration was determined using a Monte Carlo simulation and probability based approaches. The Cost approach was utilized to determine the fair value of property and equipment. Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to APT’s in-house research and development team versus using third party developers and the expansion of manufacturing capacity. The tax basis in the acquired goodwill is zero.
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The
following represents the pro forma consolidated revenue as if APT had been included in the consolidated results of the Company.
Revenue was $
The intangible assets related to the acquisition consisted of the following:
| (in thousands) | Fair Value | Amortization Period | ||||||
| Intangible assets subject to amortization: | (in thousands) | (in years) | ||||||
| Developed technology | $ | |||||||
| Customer relationships | ||||||||
| Trademark | ||||||||
| Total intangible assets subject to amortization | $ | |||||||
| Intangible assets not subject to amortization | ||||||||
| In process research and development | N/A | |||||||
| Goodwill | $ | N/A | ||||||
| Total intangible assets not subject to amortization | ||||||||
| Total intangible assets | $ | |||||||
| Weighted average amortization period | ||||||||
On August 7, 2025, Stereotaxis, Inc, in accordance with Section 2.5(b) of the May 11, 2024, Share Purchase Agreement among Stereotaxis, Inc, Access Point Technologies EP, Inc. and APT Holding Company, Inc., issued shares of common stock as payment of a part of the earnout consideration payable to APT Holding, Inc.
On October 29, 2025, Stereotaxis, Inc, in accordance with Section 2.5(c) of the May 11, 2024, Share Purchase Agreement among Stereotaxis, Inc, Access Point Technologies EP, Inc. and APT Holding Company, Inc., issued shares of common stock as payment of a part of the earnout consideration payable to APT Holding, Inc.
The Company recognized expense of $
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4. Financial Instruments
The following table summarizes the Company’s cash and cash equivalents, amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant category reported as cash and cash equivalents and restricted cash as of December 31, 2025 and 2024:
| December 31, 2025 | ||||||||
| Reported as: | ||||||||
| (in thousands) | Cash and Cash Equivalents | Restricted Cash- current | ||||||
| Cash | $ | $ | ||||||
| Level 2 | ||||||||
| Money market funds | ||||||||
| Subtotal | ||||||||
| Total assets measured at fair value | $ | $ | ||||||
| December 31, 2024 | ||||||||
| Reported as: | ||||||||
| (in thousands) | Cash and Cash Equivalents | Restricted Cash- current | ||||||
| Cash | $ | $ | ||||||
| Level 2 | ||||||||
| Money market funds | ||||||||
| Subtotal | ||||||||
| Total assets measured at fair value | $ | $ | ||||||
Interest
income recorded for these cash and investments was $
As of December 31, 2025 and 2024, the Company did not have any financial assets classified as Level 1.
5. Inventory
Inventory consists of the following (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Reserve for excess and obsolescence | ( | ) | ( | ) | ||||
| Total inventory | $ | $ | ||||||
At the closing of the APT acquisition, the Company recorded all inventory at its market value in accordance with GAAP.
The
Company had approximately $
6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other assets consist of the following (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Prepaid commissions | ||||||||
| Deposits | ||||||||
| Deferred cost of revenue | ||||||||
| Long-term accounts receivable | ||||||||
| Other assets | ||||||||
| Total prepaid expenses and other assets | ||||||||
| Less: Noncurrent prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Total current prepaid expenses and other assets | $ | $ | ||||||
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Deferred cost of revenue represents the cost of systems for which the system has been delivered to the customer but for which revenue has not been recognized.
7. Property and Equipment
Property and equipment consist of the following (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Equipment | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Net property and equipment | $ | $ | ||||||
The
Company retired approximately $
8. Intangible Assets
Intangible Assets consist of the following (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Goodwill | $ | $ | ||||||
| Developed technology | $ | $ | ||||||
| In process research and development | ||||||||
| Customer relationships | ||||||||
| Trademark | ||||||||
| Total intangibles | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Net intangibles | $ | $ | ||||||
We
recognized amortization expense of $
The Company operates as a single reporting segment which is considered to be a sole reporting unit, and therefore, Goodwill was assessed at the enterprise level.
9. Leases
On
March 1, 2021, the Company entered into an office lease agreement (the “Globe Lease”) with Globe Building Company, under
which the Company leases executive office space and manufacturing facilities of approximately
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On
July 31, 2024, the Company entered into a lease agreement (the “Talulla Lease”) with Talulla Group LLC, under which the Company
leases office space and manufacturing facilities of approximately
The Company also has leased office space in Beijing, China under a lease agreement through November 29, 2026.
As
of December 31, 2025, the weighted average discount rate for operating leases was
The following table represents lease costs and other lease information (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease cost | $ | $ | ||||||
| Short-term lease cost | ||||||||
| Total net lease cost | $ | $ | ||||||
| Cash paid within operating cash flows | $ | $ | ||||||
Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our leased facilities and equipment which are paid based on actual costs incurred.
Future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31, 2025, were as follows (in thousands):
December 31, 2025 | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 and thereafter | ||||
| Total lease payments | ||||
| Less: Interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
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10. Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Accrued salaries, bonus, and benefits | $ | $ | ||||||
| Accrued warranties | ||||||||
| Accrued professional services | ||||||||
| Accrued taxes | ||||||||
| Deferred contract obligation | ||||||||
| Other | ||||||||
| Total accrued liabilities | ||||||||
| Less: Long term accrued liabilities | ( | ) | ( | ) | ||||
| Total current accrued liabilities | $ | $ | ||||||
Certain prior year amounts have been reclassified to conform to the 2025 presentation.
Controlled Equity Offering
On
August 29, 2025, the Company entered into a Controlled Equity Offering sales agreement (the “Sales Agreement”) with Roth
Capital Markets (“Roth”), as sales agent and/or principal, pursuant to which the Company may issue and sell, from time to
time, through Roth as sales agent and/or principal, shares of its common stock having an aggregate gross sales price of up to $
During
the year ended December 31, 2025, the Company sold an aggregate of shares of common stock under the Sales Agreement, at an average
price of approximately $
2025 Equity Financing
On
July 17, 2025, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Lake Street
Capital Markets, LLC (“Placement Agent”) and a securities purchase agreement (the “Purchase Agreement”) with
certain investors (the “Investors”) pursuant to which the Company agreed to sell, in a registered direct offering (the “Offering”),
$
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Series A Convertible Preferred Stock and Warrants
In
September 2016, the Company issued (i)
shares of Series A Convertible Preferred Stock, par value $
per share, with a stated value of $
per share (the “Series A Preferred Stock”), which are convertible into shares of the Company’s common stock at an
initial conversion rate of $
The SPA Warrants were modified on February 28, 2018 to allow for a reduction in the exercise price from $ per share to $ per share for a period between March 1, 2018 and March 5, 2018 and to modify certain beneficial ownership limitations and to eliminate certain redemption rights, resulting in, among other things, the exercise of a substantial number of the SPA Warrants for cash. The remaining unexercised Warrants expired on September 29, 2021.
2021 CEO Performance Award Unit Grant
On February 23, 2021, the Company`s Board of Directors, upon recommendation of the Compensation Committee, approved the grant of the CEO Performance Award to the Company’s Chief Executive Officer. The CEO Performance award is a -year performance award of up to shares, tied to the achievement of market capitalization milestones and subject to minimum service requirements.
As detailed in the table below, the CEO Performance Award consists of ten vesting tranches. The first market capitalization milestone is $ billion, and each of the remaining nine market capitalization milestones are in additional $ million increments, up to $ billion.
| Tranche # | No. of Shares Subject to PSU | Market Capitalization Milestones | ||||||
| 1 | $ | |||||||
| 2 | $ | |||||||
| 3 | $ | |||||||
| 4 | $ | |||||||
| 5 | $ | |||||||
| 6 | $ | |||||||
| 7 | $ | |||||||
| 8 | $ | |||||||
| 9 | $ | |||||||
| 10 | $ | |||||||
| Total: | ||||||||
The Company received Shareholder approval at its annual meeting on May 20, 2021, for shares to be issued under the award.
The market capitalization requirement is considered a market condition under FASB Accounting Standards Codification Topic 718 “Compensation – Stock Compensation” and is estimated on the grant date using Monte Carlo simulations. Recognition of stock-based compensation expense of all the tranches commenced on February 23, 2021, the date of grant, as the probability of meeting the ten market capitalization milestones is not considered in determining the timing of expense recognition. The expense will be recognized on an accelerated basis through 2030. Key assumptions for estimating the performance-based awards fair value at the date of grant included share price on grant date, volatility of the Company’s common stock price, risk free interest rate, and grant term.
Total stock-based compensation recorded as operating expense for the CEO Performance Award was $ million and $ million for the years ended December 31, 2025 and 2024, respectively. The Company had approximately $ million and $ million of total unrecognized stock-based compensation expense remaining as of December 31, 2025 and 2024, respectively, under the CEO Performance Award assuming the grantee’s continued employment as CEO of the Company, or in a similar capacity, through 2030. As of December 31, 2025, none of the performance milestones established by the 2021 CEO Incentive Program have been achieved and no awards have been earned.
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Stock Award Plans
The Company has various stock plans that permit the Company to provide incentives to employees, directors, and third-party consultants of the Company in the form of equity compensation. In February 2022, the Compensation Committee of the Board of Directors adopted the 2022 Stock Incentive Plan (the “Plan”) which was subsequently approved by the Company’s shareholders. This plan replaced the 2012 Stock Incentive Plan which expired on .
As of December 31, 2025, the Company had remaining shares of the Company’s common stock to provide for current and future grants under its various equity plans.
The 2022 Stock Incentive Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, stock, restricted shares and restricted share units to employees, directors, and third-party consultants. Options granted under the 2022 Stock Incentive Plan expire no later than from the date of grant. The exercise price of each incentive stock option shall not be less than % of the fair value of the stock subject to the option on the date the option is granted. Stock appreciation rights are rights to acquire a calculated number of shares of the Company’s common stock upon exercise of the rights. The number of shares to be issued is calculated as the difference between the exercise price of the right and the aggregate market value of the underlying shares on the exercise date divided by the market value as of the exercise date. The Company generally issues new shares upon the exercise of stock options and stock appreciation rights.
The fair value of the grants for stock, restricted shares and units is determined based on the closing price of our stock on the date of grant. Restricted stock unit grants are time-based and generally vest over a period of except for grants to directors which are generally earned over a period of six months. Stock compensation expense for performance-based restricted shares is amortized on a straight-line basis over the anticipated vesting period and is subject to adjustment based on the actual achievement of objectives. Compensation expense is recognized only for those awards instruments expected to vest, net of actual forfeitures.
As of December 31, 2025, the total compensation cost related to options, stock appreciation rights, and non-vested stock granted to employees and non-employees under the Company’s stock award plans but not yet recognized was approximately $ million, excluding compensation not yet recognized related to the CEO Performance Award discussed above. This cost will be amortized over a period of up to over the underlying estimated service periods and will be adjusted for subsequent changes in performance achievement, actual forfeitures and anticipated vesting periods.
| Number of Options/SARs | Range of Exercise Price | Weighted Average Exercise Price per Share | ||||||||||
| Outstanding, December 31, 2024 | $ - $ | $ | ||||||||||
| Granted | $ - $ | |||||||||||
| Exercised | ( | ) | $ - $ | |||||||||
| Forfeited | ( | ) | $ - $ | |||||||||
| Outstanding, December 31, 2025 | $ - $ | $ | ||||||||||
As of December 31, 2025, the weighted average remaining contractual life of the options and stock appreciation rights outstanding was years. Of the options and stock appreciation rights that were outstanding as of December 31, 2025, were vested and exercisable with a weighted average exercise price of $ per share and a weighted average remaining term of years.
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| Year Ended December 31, 2025 | ||||||||||||||||||||
| Range of Exercise Prices | Options Outstanding | Weighted Average Remaining Life | Weighted Average Exercise Price | Number of Options Currently Exercisable | Weighted Average Exercise Price Per Vested Share | |||||||||||||||
| $ - $ | $ | $ | ||||||||||||||||||
| $ - $ | $ | $ | ||||||||||||||||||
| $ - $ | $ | $ | ||||||||||||||||||
| $ - $ | $ | $ | ||||||||||||||||||
| $ | $ | |||||||||||||||||||
The intrinsic value of options and stock appreciation rights is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for the options and stock appreciation rights that were in-the-money as of December 31, 2025. The intrinsic value of the options and stock appreciation rights outstanding as of December 31, 2025, was approximately $ million based on a closing share price of $ on December 31, 2025. There were fully vested options or stock appreciation rights outstanding as of December 31, 2025, with an exercise price lower than the closing stock price on December 31, 2025. During the year ended December 31, 2025, the aggregate intrinsic value of options and stock appreciation rights exercised under the Company’s stock option plans was less than $ million.
The intrinsic value of the options and stock appreciation rights outstanding as of December 31, 2024, was approximately $ million based on a closing share price of $ on December 31, 2024. There were fully vested options or stock appreciation rights outstanding as of December 31, 2024, with an exercise price lower than the closing stock price on December 31, 2024. During the year ended December 31, 2024, the aggregate intrinsic value of options and stock appreciation rights exercised under the Company’s stock option plans was $ million.
The weighted average grant date fair value of options granted during the years ended December 31, 2025 and 2024, was $ per share and $ per share, respectively.
| Number of Restricted Stock Units | Weighted Average Grant Date Fair Value per Unit | |||||||
| Outstanding, December 31, 2024 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Outstanding, December 31, 2025 | $ | |||||||
The intrinsic value of restricted stock units outstanding as of December 31, 2025, was $million based on a closing share price of $ as of December 31, 2025. The intrinsic value of restricted stock units outstanding as of December 31, 2024, was $ million based on a closing share price of $ as of December 31, 2024. During the year ended December 31, 2025, the aggregate intrinsic value of restricted stock units vested was $ million determined at the date of vesting.
2022 Employee Stock Purchase Plan
In
2022, the Company adopted its 2022 Employee Stock Purchase Plan (“ESPP”). Eligible employees can participate in a new purchase
period every 3 months. Under the terms of the plan, employees can purchase up to
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| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Series A Convertible Preferred Stock | ||||||||
| Performance Share Unit Plan | ||||||||
| Stock award plans | ||||||||
| APT additional earnout shares | ||||||||
| Employee Stock Purchase Plan | ||||||||
12. Income Taxes
The provision for income taxes consists of the following (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred: | ||||||||
| Federal | $ | ( | ) | $ | ( | ) | ||
| State and local | ||||||||
| ( | ) | ( | ) | |||||
| Valuation allowance | ||||||||
| $ | $ | |||||||
The provision for income taxes varies from the amount determined by applying the U.S. federal statutory rate to income before income taxes as a result of the following (in thousands):
| Year Ended December 31, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||
| U.S. Federal statutory income tax rate | $ | ( | ) | % | $ | ( | ) | % | ||||||||
| State and local income taxes, net of federal tax effect | - | % | % | |||||||||||||
| Changes in U.S. federal tax valuation allowance | - | % | - | % | ||||||||||||
| Nontaxable or nondeductible items | ` | |||||||||||||||
| Performance share unit award | - | % | - | % | ||||||||||||
| Stock compensation permanent differences | - | % | - | % | ||||||||||||
| Contingent consideration permanent differences | - | % | - | % | ||||||||||||
| Other | - | % | - | % | ||||||||||||
| Other adjustments | ( | ) | % | % | ||||||||||||
| $ | % | $ | % | |||||||||||||
State and local income taxes in California and New Jersey comprised the majority (greater than 50 percent) of the tax in that category. The performance share unit award nondeductible item relates to the February 3, 2021 Board approved grant of Performance Share Unit Award pursuant to the CEO Performance Share Unit Award Agreement (the “PSU Agreement”) to David L. Fischel, the Company’s Chief Executive Officer. Total stock based compensation attributed to the PSU Agreement was $ million and $ million for the years ended December 31, 2025 and 2024, respectively, of which only a portion was allowed as a tax deduction in those years due to Internal Revenue Code Section 162(m) limitations. The nondeductible item in the foregoing table related to contingent consideration represents expense recognized for financial reporting purposes associated with the APT acquisition that is not deductible for income tax purposes. Other nondeductible items in the table above are differences such as nondeductible meals and entertainment and, in 2024, transaction costs related to the APT acquisition.
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The components of net deferred tax assets and liabilities are as follows (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Current accruals | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Deferred revenue | ||||||||
| Depreciation and amortization | ||||||||
| Deferred compensation | ||||||||
| Net operating loss carryovers | ||||||||
| Tax credit carryovers | ||||||||
| Deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets before deferred tax liabilities | ||||||||
| Operating lease right-of-use assets | ( | ) | ( | ) | ||||
| Amortization of intangibles | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Capitalized compensation costs | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Following significant ownership changes during 2013, the Company initiated a review of the availability of its U.S. net operating loss carryforwards. As a result of this review, it was determined that a large portion of the Company’s net operating loss carryovers would expire unused due to the limitation under IRC Section 382. The Company reduced the net operating loss carryover and corresponding valuation allowance as a result of these limitations as reflected in the net operating loss carryovers in the table above. The remaining net operating loss carryforwards following the ownership change have been assigned a full valuation allowance against all deferred tax assets.
In
assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future
taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable losses, and projections
for future periods over which the deferred tax assets are deductible, the Company determined that a
As
of December 31, 2025, we had gross federal net operating loss carryforwards arising from our operations of approximately $
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In
addition to the net operating loss carryovers related to our operations, in connection with our 2024 acquisition of APT as discussed
in Note 3, we acquired federal and state net operating loss and tax credit carryovers of APT. Our ability to utilize those carryovers
and credits will be limited under IRC Section 382. The Section 382 limited net operating loss carryovers total approximately $
The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. As the Company has a federal net operating loss carryforward from the year ended December 31, 2003 forward, all tax years from 2003 forward are subject to examination. As states have varying carryforward periods, and the Company has recently entered into additional states, the states are generally subject to examination for the previous 10 years or less.
At December 31, 2025 and 2024,
the Company had less than $
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Cumulative dividend on convertible preferred stock | ( | ) | ( | ) | ||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares and equivalents: | ||||||||
| Basic EPS | $ | ( | ) | $ | ( | ) | ||
| Diluted EPS | $ | ( | ) | $ | ( | ) | ||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Shares issuable upon vesting/exercise of: | ||||||||
| Options to purchase common stock | ||||||||
| Series A Convertible Preferred Stock and Accumulated Dividends | ||||||||
| Restricted stock units | ||||||||
14. Employee Benefit Plan
The
Company offers employees the opportunity to participate in a 401(k) plan and matches employee contributions up to
15. Commitments and Contingencies
The Company at times becomes a party to various claims, disputes, and administrative and legal matters in the ordinary course of our past and current business activities. As a result, contingencies can arise resulting from an existing condition, situation, or set of circumstances involving an uncertainty as to the realization of a possible loss.
We
have in place insurance coverage for litigation defense and claim settlement costs incurred in connection with these claims. We estimate
the value of probable payments under these claims and probable insurance recoveries associated with existing claims based on management’s
interpretations and estimates surrounding the claims and available or applicable insurance coverage. At December 31, 2025, Stereotaxis
had $
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In
February 2024, a vendor filed financing statements under the Uniform Commercial Code (“UCC”) on underlying inventory for
approximately $
In
April 2021, the Company entered into a letter of credit pursuant to the Lease agreement totaling approximately $
Estimated loss contingencies are accrued only if the loss is probable and the amount of the loss can be reasonably estimated. With respect to a particular loss contingency, it may be probable that a loss has occurred but the estimate of the loss is a wide range. If we deem an amount within the range to be a better estimate than any other amount within the range, that amount will be accrued. However, if no amount within the range is a better estimate than any other amount, the minimum amount of the range is accrued. While we believe that none of these claims, disputes, or administrative and legal matters will have a material adverse effect on our financial position, these matters are uncertain and we cannot at this time determine whether the financial impact, if any, of these matters will be material to our results of operations in the period in which such matters are resolved or a better estimate becomes available.
16. Segment Information
Stereotaxis’ mission is to improve endovascular care by delivering precise, magnetically enabled, computer-guided control of interventional devices combined with advanced imaging and information systems. Our products work in an integrated ecosystem of systems, instruments and devices to enhance patient outcomes, improve clinical workflows, increase procedure efficiency and enable hospitals to provide safer, more effective patient treatment. Our systems and integrated instruments and devices are primarily developed and manufactured by Stereotaxis and are marketed to a broad base of hospitals in the United States and internationally. The Company manages the business activities on a consolidated basis and operates in one operating and reportable segment.
The Company’s Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). The CODM utilizes the Company’s long-range strategic plan, including product development targets, as a key input to resource allocation. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors actual results using income from operations.
Significant expenses within income from operations, as well as within net income/loss, include cost of revenue, research and development, and selling, general and administrative expenses, which are each separately presented on the Company’s Consolidated Statements of Operations.
Geographic revenues for the years ended December 31, 2025 and 2024 were as follows (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| United States | $ | $ | ||||||
| International | ||||||||
| Total | $ | $ | ||||||
Revenues are attributed to countries based on the location of the customer.
The Company’s long-lived assets consist primarily of property, plant, and equipment, and intangible assets. As of December 31, 2025 and 2024, no individual country other than the U.S. accounted for 10% or more of these assets.
17. Subsequent Events
None.
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES |
Report on Internal Control Over Financial Reporting
As of December 31, 2025, the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective.
| 74 |
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. The Company’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making the assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) in Internal Control—Integrated Framework. Based on our assessment, our management has concluded that our internal control over financial reporting is effective as of December 31, 2025.
A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Based on the evaluation of internal control over financial reporting, the Chief Executive Officer and Chief Financial Officer have concluded that there have been no changes in the Company’s internal controls over financial reporting during the period that is covered by this report that has materially affected or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
| ITEM 9B. | OTHER INFORMATION |
We
inadvertently omitted the disclosure of a Rule 10b5-1 Plan
| ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Not Applicable.
PART III
Certain information required by Part III is omitted from this Report on Form 10-K since we intend to file our definitive Proxy Statement for our next Annual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Proxy Statement”), within 120 days after December 31, 2025, and certain information to be included in the Proxy Statement is incorporated herein by reference.
| ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
Information required by this item concerning our directors is incorporated by reference to the information set forth in the section titled “Information About the Board of Directors” in our Proxy Statement. Information regarding Section 16 reporting compliance is incorporated by reference to the information set forth in the section titled “Delinquent Section 16(a) Reports” in our Proxy Statement. Information about our audit committee members and audit committee financial expert is incorporated by reference to the information set forth in the section titled “Board Meetings and Committees” in our Proxy Statement. Information about our insider trading policy is incorporated by reference to the information set forth in the section titled “Insider Trading Policy” in our Proxy Statement.
Our
Board of Directors
Stereotaxis, Inc.
Attn: Kimberly R. Peery
710 North Tucker Boulevard, Suite 110
St. Louis, MO 63101
314-678-6100
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We intend to promptly disclose any amendments to, or waivers from, any provision of the Code of Business Conduct and Ethics by posting the relevant material on our website (www.stereotaxis.com) in accordance with SEC rules.
The following is information with respect to our executive officers:
David L. Fischel
Chief Executive Officer and Chairman of the Board since February 2017
Director since September 2016
Mr. Fischel, 39, has served as a director of Stereotaxis since leading the equity investment and positive strategic initiatives announced in September 2016. He has served for over ten years as Principal and portfolio manager for medical device investments at DAFNA Capital Management, LLC. Prior to joining DAFNA Capital, he was a research analyst at SCP Vitalife, a healthcare venture capital fund. Mr. Fischel completed his B.S. magna cum laude in Applied Mathematics with a minor in Accounting at the University of California at Los Angeles and received his MBA from Bar-Ilan University in Tel Aviv. He is a Certified Public Accountant, Chartered Financial Analyst and Chartered Alternative Investment Analyst. Mr. Fischel’s extensive understanding of our business, operations and strategy, as well as financial and medical device industry experience, enable him to make valuable contributions to the Board of Directors.
Kimberly R. Peery
Chief Financial Officer
Officer since October 2019
Ms. Peery, 57, was appointed as the Chief Financial Officer in October 2019. She joined the Company in 2003 and has held various positions of increasing responsibilities including Vice President of Finance and Information Systems since November 2016 and Controller from April 2013 to November 2016. Prior to joining the Company, she served as a controller at various private companies. Ms. Peery is a Certified Public Accountant.
| ITEM 11. | EXECUTIVE COMPENSATION |
The information required by this item regarding executive compensation is incorporated by reference to the information set forth in the section titled “Executive Compensation” in our Proxy Statement.
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement. The information required by this item regarding securities authorized for issuance under equity plans is incorporated by reference to the information set forth in the section titled “Executive Compensation” in our Proxy Statement.
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS AND DIRECTOR INDEPENDENCE |
The information required by this item regarding certain relationships and related transactions is incorporated by reference to the information set forth in the section titled “Certain Relationships and Related Party Transactions” in our Proxy Statement. The information required by this item regarding director independence is incorporated by reference to the information set forth in the section titled “Corporate Governance Information” in our Proxy Statement.
| ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
The information required by this item regarding principal accounting fees and services is incorporated by reference to the information set forth in the section titled “Principal Accounting Fees and Services” in our Proxy Statement.
PART IV
| ITEM 15. | EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES |
| (a) | The following documents are filed as part of this Annual Report on Form 10-K. |
| (1) | Consolidated Financial Statements—See Index to the Consolidated Financial Statements at Item 8 of this Report on Form 10-K. | |
| (2) | The following consolidated financial statement schedule of Stereotaxis, Inc. is filed as part of this Report and should be read in conjunction with the consolidated financial statements of Stereotaxis, Inc.: | |
| — | Schedule II: Valuation and Qualifying Accounts. | |
| All other schedules have been omitted because they are not applicable, not required under the instructions, or the information requested is set forth in the consolidated financial statements or related notes thereto. |
| (3) | Exhibits |
See Exhibit Index appearing on page 66 herein.
SCHEDULE II
CONSOLIIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
| Additions | ||||||||||||||||
| Balance at | Charged to | |||||||||||||||
| Beginning of | Cost and | Balance at the | ||||||||||||||
| (in thousands) | Year | Expenses | Deductions | End of Year | ||||||||||||
| Allowance for doubtful accounts and returns: | ||||||||||||||||
| Year ended December 31, 2025 | $ | 582 | 162 | (203 | ) | $ | 541 | |||||||||
| Year ended December 31, 2024 | $ | 672 | 402 | (492 | ) | $ | 582 | |||||||||
| Allowance for inventories valuation: | ||||||||||||||||
| Year ended December 31, 2025 | $ | 2,377 | 330 | (116 | ) | $ | 2,591 | |||||||||
| Year ended December 31, 2024 | $ | 1,939 | 444 | (6 | ) | $ | 2,377 | |||||||||
| 76 |
EXHIBIT INDEX
| 77 |
| 78 |
| 32.1 | Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Chief Executive Officer). | |
| 32.2 | Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Chief Financial Officer). | |
| 97.1 | Policy for Recovery of Erroneously Awarded Compensation incorporated by reference to Exhibit 97.1 of the Registrant’s Form 10-K (File No. 001-36159) filed on March 8, 2024. | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
| # | Indicates management contract or compensatory plan. | |
| † | Confidential treatment granted as to certain portions, which portions are omitted and filed separately with the Securities and Exchange Commission. | |
| †† | As permitted by Regulation S-K, Item 601(b)(2)(ii) of the Securities Exchange Act of 1934, as amended, certain confidential portions of this exhibit have been redacted from the publicly filed document. | |
| * | This filing excludes certain schedules and exhibits pursuant to Item 601(a)(5) of Regulation S-K, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon request; provided, however, that the registrant may request confidential treatment for any schedules or exhibits so furnished. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| STEREOTAXIS, INC. (Registrant) | ||
| Date: March 12, 2026 | By: | /s/ David L. Fischel |
| David L. Fischel | ||
| Chief Executive Officer | ||
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David L. Fischel and Kimberly R. Peery, and each of them, his true and lawful attorneys-in-fact and agents, with full Power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to this Annual Report on Form 10-K and any other documents and instruments incidental thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full Power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and/or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ David L. Fischel | Chairman of the Board of Directors and Chief Executive Officer | March 12, 2026 | ||
| David L. Fischel | (principal executive officer) | |||
| /s/ Kimberly R. Peery | Chief Financial Officer | March 12, 2026 | ||
| Kimberly R. Peery | (principal financial officer and principal accounting officer) | |||
| /s/ David W. Benfer | Director | March 12, 2026 | ||
| David W. Benfer | ||||
| /s/ Nathan Fischel | Director | March 12, 2026 | ||
| Nathan Fischel | ||||
| /s/ Myriam J. Curet | Director | March 12, 2026 | ||
| Myriam J. Curet | ||||
| /s/ Arun Menawat | Director | March 12, 2026 | ||
| Arun Menawat | ||||
| /s/ Nachum Shamir | Director | March 12, 2026 | ||
| Nachum Shamir | ||||
| /s/ Ross B. Levin | Director | March 12, 2026 | ||
| Ross B. Levin |
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