April 26, 2018, the Company entered into a First Amendment to Third Amended and Restated Loan and Security Agreement with Silicon
Valley Bank to extend the maturity of the revolving line of credit to April 25, 2019. The maximum availability under the revolving
line of credit remains at $5.0 million, and provides for an interest rate during a “streamline period” equal to the
prime rate subject to a floor of 4.5%. A “streamline period” occurs when the Company has, for each consecutive day
in the immediately preceding monthly period, maintained a liquidity ratio greater than 1.75:1.00, and continuing so long as the
streamline period has been maintained. Upon the termination of a streamline period, the Company must maintain the streamline threshold
each consecutive day for one fiscal quarter, prior to entering into a subsequent streamline period. During non-streamline periods,
the interest rate is the prime rate plus 1.5%, subject to a floor of 4.5%. In addition, the amendment requires that the liquidity
ratio shall at all times include not less than $1.5 million of the Borrower’s unrestricted cash and cash equivalents maintained
at the Bank prior to giving effect to any advance.
of June 30, 2018, the Company had no outstanding balance under the revolving line of credit. Draws on the line of credit are made
based on the borrowing capacity one week in arrears. As of June 30, 2018, the Company had a borrowing capacity of $3.1 million
based on the Company’s collateralized assets. The Company’s total liquidity as of June 30, 2018, was $15.1 million
which included cash and cash equivalents of $12.0 million.
holders of common stock are entitled to one vote for each share held and to receive dividends whenever funds are legally available
and when declared by the Board of Directors subject to the rights of holders of all classes of stock having priority rights as
dividends and the conditions of the revolving line of credit agreement. No dividends have been declared or paid as of June 30,
Preferred Stock and Warrants
September, 2016, the Company issued 24,000 shares of Series A Convertible Preferred Stock, par value $0.001 with a stated value
of $1,000 per share which are convertible into shares of the Company’s common stock at an initial conversion rate of $0.65
per share and (ii) warrants to purchase an aggregate of 36,923,078 shares of common stock. The convertible preferred shares are
entitled to vote on an as-converted basis with the common stock, subject to specified beneficial ownership issuance limitations.
The convertible preferred shares bear dividends at a rate of six percent (6%) 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 convertible preferred shares. Each holder of convertible preferred
shares has the right to require us to redeem such holder’s convertible preferred shares upon the occurrence of specified
events, which include certain business combinations, the sale of all or substantially all of the Company’s assets, or the
sale of more than 50% of the outstanding shares of the Company’s common stock. In addition, the Company has the right to
redeem the convertible preferred shares in the event of a defined change of control. The convertible preferred shares rank senior
to our common stock as to distributions and payments upon the liquidation, dissolution, and winding up of the Company. Since the
convertible preferred shares are subject to conditions for redemption that are outside the Company’s control, the convertible
preferred shares are presently reported in the mezzanine section of the balance sheet.
warrants issued in conjunction with the convertible preferred stock have an exercise price equal to $0.70 per share subject to
adjustments as provided under the terms of the warrants. The warrants are exercisable through September 29, 2021, subject to specified
beneficial ownership issuance limitations. Prior to their modification in February, 2018, the warrants were puttable upon the
occurrence of certain events outside of the Company’s control, and were classified as liabilities under ASC 480-10. The
calculated fair value of the warrants was periodically re-measured with any changes in value recognized in “Other income
(expense)” in the Statements of Operations. See Note 10 for additional details.
warrants were modified on February 28, 2018 to allow for a reduction in the exercise price from $0.70 per share to $0.28 per share
for a period between March 1, 2018 and March 5, 2018 to encourage early exercise. Additionally, the beneficial ownership limitation
related to the warrants was modified and the right of holders to require the Company to redeem their SPA Warrants in exchange
for cash in certain circumstances was eliminated. Following these modifications, the warrants are no longer subject to liability
accounting and were reclassified to equity. During the restricted exercise period, Stereotaxis received exercise notices for 35,791,927
warrants and received an aggregate of $10.0 million in cash from the warrant exercise. As a result of these transactions, total
stockholders’ equity increased by $27.0 million and common shares outstanding increased by 35,791,927 shares. The
Consent and Amendment and the Amended and Restated Form of Warrants are available in a Form 8-K filed with the Securities and
Exchange Commission on March 6, 2018.
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.