2005. The 2005 operating expenses include a one-time charge of $2.9 million in the second quarter of 2005 for the royalty settlement relating to an in-licensed patent. The increase in quarterly and year to date expenses relates primarily to incremental sales and marketing headcount and related costs, additional research and development expenses devoted to system-associated enhancements and device development, and to the impact of additional stock compensation expense required under the newly implemented accounting standard.

Net loss for the third quarter ended September 30, 2006 was approximately $11.4 million, compared to the $11.9 million reported in the prior year quarter. Net Loss per diluted share for the current quarter was $0.34 on 33.5 million weighted average shares outstanding versus a net loss of $0.44 reported for the prior year quarter on 27.4 million weighted average shares outstanding. The significant change in weighted average shares relates to the issuance of approximately 5.5 million shares in the Company’s first quarter of 2006.

For the nine months ended September 30, 2006, net loss was approximately $39.6 million, as compared to a net loss of $30.6 million during the corresponding period of the prior year. The increase in net loss compared to the prior year period is due principally to the increase in operating expenses. The prior period to date expenses included the $2.9 million impact of the royalty claim settlement. For the first nine months of 2006, net loss per diluted share was $1.21, as compared to the $1.12 loss reported for the nine months ended September 30, 2005. Diluted earnings per share were based on 32.6 million and 27.3 million weighted average shares outstanding, respectively, for the two nine month periods.

At September 30, 2006, Stereotaxis had purchase orders and other commitments for its Niobe systems of approximately $44 million. The Company does not include orders for disposables, service or other accessories in its backlog data. These purchase orders are subject to contingencies that are outside the Company’s control and may be revised, modified or cancelled.

Stereotaxis ended the third quarter with cash and investments of approximately $39.8 million compared to $10.7 million at year-end 2005. Total debt at September 30, 2006 amounted to approximately $2.2 million with approximately $9 million of funds available under a $10 million working capital line of credit.

The Company continues to expect total revenue for the year ended December 31, 2006 to be between $26 million and $30 million. To reiterate, Stereotaxis’ sales cycle, similar to other companies selling capital equipment to hospitals, is relatively long and can be subject to lumpiness from quarter to quarter, as hospital budget decisions and equipment installation schedules are often subject to last-minute delays. Prudence dictates that investors should anticipate the occasional impact on the Company’s quarterly results of such unexpected delays.

“For the second consecutive quarter we achieved an order rate of more than $10 million, resulting in a record backlog of $44 million at the end of this quarter. At the same time we are beginning to recognize significant movement of orders to revenue, as evidenced by the systems recognized in this third quarter. We are gratified both by the continued order momentum and the revenue improvement and remain confident that we will achieve our previously communicated guidance for revenue for the full year 2006 setting the stage for significant growth in 2007 and beyond”, commented Bevil Hogg, President and Chief Executive Officer.