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)
 
4. Property and Equipment

       Property and equipment consist of the following:

                         
December 31

March 31
2002 2003 2004



(Unaudited)
Equipment
  $ 1,336,377     $ 1,806,186     $ 2,183,607  
Equipment held for lease
          1,533,094       1,533,094  
Leasehold improvements
    254,445       309,213       325,548  
     
     
     
 
      1,590,822       3,648,493       4,042,249  
Less accumulated depreciation
    891,240       1,339,026       1,532,746  
     
     
     
 
    $ 699,582     $ 2,309,467     $ 2,509,503  
     
     
     
 

       Equipment held for lease consists of medical devices provided to customers under prepaid operating lease arrangements, whereby the Company is the lessor. Amounts prepaid under the five-year operating leases are included in deferred revenue until earned over the term of the lease.

 
5. Related-Party Transactions

       For the years ended December 31, 2001, 2002, and 2003, the Company incurred expenses of $125,298, $85,332, and $20,330, respectively, and for the three-month periods ended March 31, 2003 and 2004 the Company incurred expenses of $4,175, and $2,833, respectively, to affiliates of one of its significant investors for reimbursement of various consulting services performed on behalf of the Company and for reimbursement of out-of-pocket expenses.

       For the years ended December 31, 2001, 2002, and 2003, the Company made payments of $48,000, $70,000, and $25,000, respectively, and for the three month periods ended March 31, 2003 and 2004 the Company incurred expenses of $10,000 and $5,000, respectively, to certain members of the Board of Directors as compensation for consulting services to the Company unrelated to their services as directors.

       In the normal course of business, the Company has entered into an agreement with Biosense Webster, Inc., a subsidiary of Johnson & Johnson and a strategic investor, under which the Company jointly develops integrated systems and certain disposable interventional devices. Amounts paid to this investor under this agreement totaled $972,190 in 2003, and $2,190 and $869,282 during the three months ended March 31, 2003 and 2004, respectively. In addition, the Company is entitled to receive royalty payments from the strategic investor based on a profit formula pertaining to sales of certain disposable devices. The Company has not received any royalty payments to date under this agreement. In the event that the Company elects to terminate this agreement in certain specified change of control situations, the strategic investor would be entitled to a termination payment of 5% of the total equity value of the Company in the change of control transaction up to a maximum of $10 million.

       In the normal course of business, the Company has made system sales to certain other investors or their affiliated medical institutions. These sales totaled $633,333 in 2003 and $375,000 during the three months ended March 31, 2004. Costs of these sales totaled $400,178 in 2003 and $484,004 during the three months ended March 31, 2004.

F-15


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