Stereotaxis
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10-K
STEREOTAXIS, INC. filed this Form 10-K on 03/15/2019
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Sales and Marketing Expense. Sales and marketing expense decreased to $13.0 million for the year ended December 31, 2018, from $13.6 million for the year ended December 31, 2017, a decrease of approximately 5%. This decrease was primarily due to a more efficient distribution of clinical adoption and marketing resources which favorably impacted both headcount and contractor costs partially offset by higher commissions.

 

General and Administrative Expense. General and administrative expenses include finance, information systems, legal, and general management expenses. General and administrative expense decreased to $4.9 million for the year ended December 31, 2018, from $6.0 million for the year ended December 31, 2017, a decrease of approximately 18%. This decrease was primarily driven by reduced executive headcount costs and administrative expense.

 

Other Income (Expense). Other income (expense) represents the non-cash change in market value of certain warrants previously recorded as a current liability under general accounting principles for determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. The primary drivers of fluctuations in this balance are changes in the Company’s stock price from one period to the next. Other income was $2.6 million for the year ended December 31, 2018 and $0.2 million for the year ended December 31, 2017 due primarily to the adjustment in fair value of warrants. As of December 31, 2018, all such warrants have expired or been reclassified to equity.

 

Interest Expense. Interest expense in the current year period decreased approximately 90% from the twelve months ended December 31, 2017, due to lower loan commitment fees.

 

Income Taxes

 

Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. Accordingly, net deferred tax assets have been fully offset by valuation allowances as of December 31, 2018, and December 31, 2017 to reflect these uncertainties. As of December 31, 2018, we had gross federal net operating loss carryforwards of approximately $100.3 million which will expire between 2030 and 2037. As of December 31, 2018, we had state net operating loss deferred tax assets of approximately $1.9 million which will expire at various dates between 2019 and 2037 if not utilized. We may not be able to utilize all of these loss carryforwards prior to their expiration.

 

Capital Resources

 

As of December 31, 2018, our accumulated deficit was $476.7 million with cash and cash equivalents of $10.8 million. Since inception, we have financed our operations primarily through cash generated by operations, borrowings on our revolving line of credit and proceeds from our debt and stock offerings. As of December 31, 2018, our borrowing facility was comprised of a revolving line of credit with $3.3 million of unborrowed availability with our primary lender, Silicon Valley Bank.

 

Revolving line of credit

 

The Company has had a working capital line of credit with its primary lender, Silicon Valley Bank, since 2004. The revolving line of credit is secured by substantially all of the Company’s assets. The maximum available under the line is $5.0 million subject to the value of collateralized assets. The Company is required under the revolving line of credit to maintain its primary operating account and the majority of its cash and investment balances in accounts with its primary lender.

 

On 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.

 

As of December 31, 2018, the Company had no outstanding debt 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 December 31, 2018 the Company had a borrowing capacity of $3.3 million based on the Company’s collateralized assets. The Company’s total liquidity as of December 31, 2018, was $14.1 million which included cash and cash equivalents of $10.8 million.

 

Common Stock

 

The holders of common stock are entitled 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 prior rights of holders of all classes of stock having priority rights as dividends and certain conditions of our agreement with our primary lender. No dividends have been declared or paid as of December 31, 2018.

 

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