Stereotaxis
    Print Page  Close Window
S-1/A
STEREOTAXIS, INC. filed this Form S-1/A on 06/17/2004
Entire Document
 << Previous Page | Next Page >>
Table of Contents

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)

Company’s Series D-1 preferred stock at a price per share of $2.17. The Revolving Credit Agreement was amended in July 2003 to increase the maximum borrowing capacity to $3,000,000. Borrowings under the Revolving Credit Agreement are subject to monthly interest at the lender’s prime rate plus 1.25%, subject to a minimum interest rate of 6.75%, and are due in full in April 2004. Remaining available borrowing capacity at March 31, 2004 is $1,750,000.

       The warrants issued in conjunction with the Revolving Credit Agreement expire after five years and can be exercised at any time. The fair value assigned to the warrants of $67,264 is reflected in additional paid-in capital on the balance sheet and is included in debt issuance costs, which are being amortized to interest expense over the 12-month life of the Revolving Credit Agreement. Fair value was determined utilizing the Black-Scholes valuation method, assuming a volatility of 120%, a risk-free interest rate of 3% and an expected life of five years.

       In October 2002, the Company entered into a term note with its primary lender for $1,000,000 (October 2002 term note). In conjunction with the October 2002 term note, the Company issued its primary lender warrants to purchase 18,000 shares of the Company’s Series D-1 preferred stock at a price equal to the price per share of $2.17. The total proceeds under the October 2002 term note of $1,000,000 were allocated between the term note and the warrants based on an estimate of each security’s fair value at the date of issuance. Under the October 2002 term note, the Company is required to make equal payments of principal and interest, at 10%, through September 2005.

       The warrants expire after five years and can be exercised at any time. The fair value assigned to the warrants of $32,580 was reflected in additional paid-in capital on the balance sheet and is included in debt issuance costs, which are being amortized to interest expense over the life of the October 2002 term note. Fair value was determined utilizing the Black-Scholes valuation method, assuming a volatility of 120%, a risk-free interest rate of 3% and an expected life of five years.

       The January 2002 term note, Revolving Credit Agreement, and October 2002 term note (collectively, the Credit Agreements) are secured by substantially all of the Company’s assets. The Credit Agreements also include certain operating performance covenants and require the Company to maintain minimum liquidity levels. The Company is also required under the Credit Agreements to maintain its primary operating account and the majority of its cash and investment balances in accounts with the primary lender.

       In August 2003, the Company issued a $2,000,000 cumulative convertible pay-in-kind 8%, three-year note to a strategic partner pursuant to an agreement between the parties to transfer certain purchased technology to the Company, which is treated as a noncash activity in the accompanying statement of cash flows. The balance of the note, including accrued and unpaid interest, automatically converts into shares of common stock immediately prior to the closing of a public offering pursuant to a registration statement filed under the Securities Act with aggregate gross proceeds in excess of $20,000,000, at a conversion price equal to the gross per share proceeds to such offering, prior to deduction of underwriting commissions and discounts. As of December 31, 2003, $67,561 of interest was accrued.

       Contractual principal maturities of long-term debt at December 31, 2003 are as follows:

         
2004
  $ 2,289,314  
2005
    243,768  
2006
    2,000,000  
     
 
    $ 4,533,082  
     
 

F-17


 << Previous Page | Next Page >>