Stereotaxis
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S-1/A
STEREOTAXIS, INC. filed this Form S-1/A on 06/17/2004
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       The following table shows net revenue by product line in the U.S. and Europe for the three months ended March 31, 2003 and 2004.

                     
March 31,

2003 2004


(unaudited)
(in thousands)
U.S.
               
 
Systems
  $ 365     $ 1,118  
 
Disposables, service and accessories
    21       325  
 
Other
           
     
     
 
   
U.S. Total
    386       1,443  
Europe
               
 
Systems
  $     $ 1,554  
 
Disposables, service and accessories
          77  
 
Other
           
     
     
 
   
Europe Total
          1,631  
Total
               
 
Systems
  $ 365     $ 2,672  
 
Disposables, service and accessories
    21       402  
 
Other
           
     
     
 
   
Total
  $ 386     $ 3,074  
     
     
 

       Cost of Revenues. Cost of revenues increased from $501,000 for the three months ended March 31, 2003 to $2.5 million for the three months ended March 31, 2004, an increase of nearly 400%. This increase in cost of revenues was attributable primarily to the increased volume of sales of our systems and associated cost of goods sold for those systems. As a percentage of our revenues, cost of revenues were 130% in the three months ended March 31, 2003 compared to 81% in the three months ended March 31, 2004. The improvement in the cost of revenue as a percentage of revenues was primarily a result of an increase in average selling price per system.

       Research and Development Expenses. Research and development expenses increased from $2.5 million for the three months ended March 31, 2003 to $4.6 million for the three months ended March 31, 2004, an increase of approximately 84% from the three months ended March 31, 2003. The increase was due principally to an increase in the number of research and development projects with our strategic partners principally related to disposable interventional devices and salary and benefits for additional personnel. Our research and development expenditures under our alliance agreements with our strategic partners are primarily to cover the costs of integrating our system with Philips and J&J, and for co-developing a line of electrophysiology catheters with J&J. As these are non-recurring expenses, we do not expect that the rate of our expenditures pursuant to these agreements will materially increase in the future. In addition, during the three months ended March 31, 2004 we received a payment for development expenditures under our agreement with Philips relating to the integration of our system with Philip’s digital x-ray fluoroscopy system, of which a portion was considered earned and was recognized as an offset to the corresponding development expenditure.

       General and Administrative Expenses. General and administrative expenses increased from $1.0 million for the three months ended March 31, 2003 to $1.3 million for the three months ended March 31, 2004, an increase of approximately 30% from the three months ended March 31, 2003. The increase was due to an increase in our business activity related to the commercialization of our products.

       Sales and Marketing Expenses. Sales and marketing expenses increased from $1.1 million for the three months ended March 31, 2003 to $2.4 million for the three months ended March 31, 2004, an increase of approximately 118% from the three months ended March 31, 2003. The increase

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