Stereotaxis
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S-1/A
STEREOTAXIS, INC. filed this Form S-1/A on 06/17/2004
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Warrants

       As of March 31, 2004, there were warrants outstanding to purchase 4,189,835 shares of common stock at a weighted average exercise price of $2.37 per share, and warrants to purchase 105,560 shares of our Series D-1 preferred stock at an exercise price of $2.17 per share.

       The common stock warrants were issued in connection with our Series D-1, D-2 and E-2 preferred stock financings. Each of the warrant agreements provides that if the warrants have not been exercised as of the date of any “Senior Preferred Qualified IPO,” then the warrantholder will be deemed to have made an election to effect a cashless exercise as of that date for all shares issuable under the warrant agreements. Under the cashless exercise, in lieu of paying the exercise price in cash, the warrantholder will surrender the warrant for the number of shares of common stock determined by multiplying the number of shares to which the warrantholder would otherwise be entitled by a fraction, with a numerator equal to the difference between the then current “fair market value” per share of common stock and the then current exercise price and with a denominator equal to the then current fair market value per share of our common stock. A “Senior Preferred Qualified IPO” means a firm commitment underwritten initial public offering by us pursuant to an effective registration statement under the Securities Act at a public offering price per share of not less than $4.34 (subject to adjustment in specified instances) with aggregate gross proceeds to us of over $20 million, prior to deduction of underwriters’ commissions and expenses. In the event of such a deemed exercise, the “fair market value” will be equal to the net per share proceeds to us in a Senior Preferred Qualified IPO, after deduction of underwriting commissions and discounts. Unless we state otherwise, the information in this prospectus does not give effect to any deemed cashless exercise.

       The preferred stock warrants were issued to Silicon Valley Bank in January, March and September of 2002 in connection with various credit facilities we entered into with them. The warrants will remain outstanding following the completion of the offering and will be exercisable for shares of our common stock. Silicon Valley Bank will be afforded registration rights for shares of common stock issuable upon exercise of the warrants under the terms of our existing investor rights agreement, the terms of which are described below under “— Registration Rights”.

Options

       As of March 31, 2004, additional options to purchase a total of 1,693,257 shares of our common stock may be granted under our 2002 Stock Incentive Plan and our 2002 Non-Employee Directors’ Stock Plan. As of March 31, 2004, there are outstanding options to purchase a total of 2,863,810 shares of our common stock under the 1994 Stock Option Plan, 4,049,500 shares under our 2002 Stock Incentive Plan and 505,000 shares under our 2002 Non-Employee Directors Plan. Any shares issued upon exercise of these options will be immediately available for sale in the public market upon our filing, after the offering, of a registration statement relating to the options, subject to the terms of lock-up agreements entered into between certain of our option holders and the underwriters.

Registration Rights

       After the closing of this offering, the holders of approximately                      shares of our common stock, including shares issuable upon conversion of outstanding shares of our preferred stock and upon conversion or exercise of outstanding warrants and a conversion of a convertible note, at an assumed offering price of $           per share in this offering, will be entitled to certain rights with respect to the registration of such shares under the Securities Act. In the event that we propose to register any of our securities under the Securities Act, either for our own account or for the account of other security holders, these holders are entitled to notice of such registration and are entitled to include their common stock in such registration, subject to certain marketing and other limitations. Beginning six months after the closing of this offering, the holders of at least 20% of these securities

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