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

NOTES TO FINANCIAL STATEMENTS — (Continued)

(Information as of March 31, 2004 and for the three months ended
March 31, 2003 and 2004 is unaudited)

upon management’s assessment of historical and expected net collections considering business and economic conditions and other collection indicators.

 
Financial Instruments

       Financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and long-term debt. The carrying value of such amounts reported at the applicable balance sheet dates approximates fair value.

 
Inventory

       The Company values its inventory at the lower of cost, as determined using the first-in, first-out (FIFO) method, or market. The Company periodically reviews its physical inventory for obsolete items and provides a reserve upon identification of potential obsolete items. Inventory consists of:

                         
December 31

March 31
2002 2003 2004



(Unaudited)
Raw materials
  $ 694,928     $ 975,052     $ 1,133,623  
Work in process
    821,363       487,344       528,477  
Finished goods
    928,896       3,073,584       3,081,988  
Reserve for obsolescence
    (84,580 )     (105,752 )     (117,091 )
     
     
     
 
    $ 2,360,607     $ 4,430,228     $ 4,626,997  
     
     
     
 
 
Property and Equipment

       Property and equipment consist primarily of laboratory, office, and computer equipment and leasehold improvements and are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives or life of lease, ranging from two to seven years. Depreciation expense for the years ended December 31, 2001, 2002, and 2003, is $253,441, $406,766, and $447,786, respectively, and for the three months ended March 31, 2003 and 2004 is $104,855 and $193,721, respectively.

 
Long-Lived Assets

       If facts and circumstances suggest that a long-lived asset may be impaired, the carrying value is reviewed. If this review indicates that the carrying value of the asset will not be recovered, as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value.

 
Intangible Assets

       Intangible assets consist of purchased technology arising out of a collaboration with a strategic investor valued at the cost of acquisition on the acquisition date and amortized over its estimated useful life of 15 years. Accumulated amortization at December 31, 2003 and March 31, 2004 is $55,556 and $88,889, respectively. Amortization expense in 2003 is $55,556 and for the three months ended March 31, 2004, is $33,333, as determined under the straight-line method. The estimated future amortization of intangible assets is $133,333 annually through June 2019.

F-11


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