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 11 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. 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 were 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.
Company has reserved shares of common stock for conversion of convertible preferred stock, exercise of warrants, and the issuance
of options granted under the Company’s stock option plan and its stock purchase plan as follows:
31, 2018|| ||
31, 2017|| |
|| ||1,131,151|| ||
|| ||38,779,119|| |
|Series A Convertible Preferred Stock
|| ||47,844,562|| ||
|| ||47,844,562|| |
|Stock award plans||
|| ||4,438,503|| ||
|| ||5,573,046|| |
|| ||51,251|| ||
|| ||125,618|| |
|| ||53,465,467|| ||
|| ||92,322,345|| |
Company has various stock plans that permit the Company to provide incentives to employees and directors of the Company in the
form of equity compensation. In August 2012, the Board of Directors adopted a stock incentive plan (the 2012 Stock Incentive Plan)
which was subsequently approved by the Company’s stockholders. This plan replaces the 2002 Stock Incentive Plan which expired
on March 25, 2012.
2012 Stock Incentive Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights,
restricted shares and restricted share units to employees, directors, and consultants. Options granted under the 2012 Stock Incentive
Plan expire no later than ten years from the date of grant. The exercise price of each incentive stock option shall not be less
than 100% of the fair value of the stock subject to the option on the date the option is granted. The vesting provisions of individual
options may vary, but incentive stock options generally vest 25% on the first anniversary of each grant and 1/48 per month over
the next three years. 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. Stock appreciation rights granted under the 2012 Stock Incentive Plan generally vest 25% on the first anniversary
of such grant and 1/48 per month over the next three years and expire no later than ten years from the date of grant. The Company
generally issues new shares upon the exercise of stock options and stock appreciation rights.
share grants are either time-based or performance-based. Time-based restricted shares generally cliff vest three years after grant.
Performance-based restricted shares vest upon the achievement of performance objectives which are determined by the Company’s
Board of Directors.