Stereotaxis
    Print Page  Close Window
10-K
STEREOTAXIS, INC. filed this Form 10-K on 03/15/2019
Entire Document
 << Previous Page | Next Page >>

 

Level 2

 

The Company does not have any financial assets or liabilities classified as Level 2.

 

Level 3

 

In conjunction with the Company’s August 2013 and September 2016 financing transactions, the Company issued warrants to purchase shares of the Company’s common stock. Due to the provisions included in the warrant agreements at the time of issuance, the warrants did not meet the exemptions for equity classification and as such, the Company accounted for these warrants as derivative instruments. The calculated fair value of the warrants issued in conjunction with the August 2013 financing transactions was classified as a liability and periodically re-measured with any changes in value recognized in “Other income (expense)” in the Statements of Operations until their expiration in November 2018. As detailed in Note 10, the remaining warrants from the September 2016 transaction were modified on February 28, 2018 and reclassified to equity.

 

The remaining warrants from the August 2013 transaction (Exchange Warrants) expired November 2018 and were last revalued as of September 30, 2018 using the following assumptions: 1) volatility of 70.17%; 2) risk-free interest rate of 2.19%; and 3) a closing stock price of $1.21.

 

Using the same option pricing model, the Exchange warrants were valued as of December 31, 2017 using the following assumptions: 1) volatility of 70.56%; 2) risk-free interest rate of 1.76%; and 3) a closing stock price of $0.80.

 

The significant unobservable input used in the fair value measurement of the Company’s warrants is volatility. Significant increases (decreases) in the volatility in isolation would result in a significantly higher (lower) liability fair value measurement.

 

The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities for the year ended December 31, 2018:

 

   Warrants issued
August 2013
   Warrants issued
September 2016
   Total Liabilities 
Balance at beginning of period  $5,746   $19,569,231   $19,574,977 
Issues   -    -    - 
Settlements   -    (16,984,616)   (16,984,616)
Revaluation   (5,746)   (2,584,615)   (2,590,361)
Balance at end of period  $-   $-   $- 

 

The Company currently does not have derivative instruments to manage its exposure to currency fluctuations or other business risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. All derivative financial instruments are recognized in the balance sheet at fair value.

 

12. Income Taxes

 

The provision for income taxes consists of the following:

 

   Year Ended December 31, 
   2018   2017 
Deferred:        
Federal  $(236,779)  $13,308,196 
State and local   (238,946)   (263,860)
    (475,725)   13,044,336 
Valuation allowance   475,725    (13,044,336)
   $   $ 

 

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:

 

   Year Ended December 31, 
   2018   2017 
U.S. statutory income tax rate   21.0%   34.0%
State and local taxes, net of federal tax benefit   (42.8)%   1.8%
Permanent differences between book and tax   (390.5)%   (1.5)%
Deferred tax adjustments   293.5%   (6.1)%
Tax cuts & jobs act   0.0%   (244.9)%
State rate adjustments   (292.9)%   (4.0)%
Prior year return-to-provision adjustment   4.3%   0.0%
Valuation allowance   407.4%   220.7%
Effective income tax rate   %   %

 

51
 << Previous Page | Next Page >>