Stereotaxis Reports Second Quarter 2013 Financial Results; Announces Capital Transactions

Stereotaxis Reports Second Quarter 2013 Financial Results; Announces Capital

           -Achieves 49% Sequential Improvement in System Revenue-

                        -Secures Two Niobe® ES Orders-

                  -Narrows Operating Loss to $(1.8) Million-

         -Obtains U.S. FDA Clearance of Vdrive™ with V-Sono™ System-

-Receives Cash Infusion of Approximately $8.5 Million from Warrant Exercises-

           -Hosts Conference Call Today at 9:00 a.m. Eastern Time-

ST. LOUIS, Aug. 8, 2013 (GLOBE NEWSWIRE) -- Stereotaxis, Inc. (Nasdaq:STXS)
today reported financial results for the second quarter ended June 30, 2013.
In addition, the Company disclosed recent business developments, including
financing transactions to improve its current liquidity position.

Management Comments

William Mills, Stereotaxis Board Chairman and interim Chief Executive Officer,
said, "In the second quarter, we achieved sequential improvement in revenue,
gross margin and operating loss and secured two orders for our Niobe® ES
system. One of these orders was a second system sale to a leading U.S.
healthcare provider, which is one of four major integrated delivery networks
in the country to invest in the Epoch™ platform. 

"Furthermore, we saw improved utilization rates in certain strategic regions
through a targeted physician plan and the implementation of territory
assistants focused on driving clinical adoption. Our plan involves engaging
those physicians that represent the greatest potential for volume growth and
facilitating a faster pace of adoption within our installed base." 

Mr. Mills continued, "At the end of July, we achieved an important milestone
with FDA clearance of our Vdrive™ with V-Sono™ system, representing a
potentially significant boost to our U.S. market opportunities. The Vdrive
system enables a single operator to control all catheters used in complex
electrophysiology (EP) procedures and improves navigation to specific sites.
The unique, diverse capabilities of the Vdrive system have enhanced the
performance of Niobe labs in Europe, and we believe its entry in the U.S. will
accelerate volume in our existing sites as well as potentially open doors to
the wider EP market." 

"Finally, we are pleased to announce that we have entered into transactions
with each of our existing convertible note holders, which will result in a
cash infusion of $8.475 million. While we believe these transactions alleviate
our liquidity concerns over the next few months, they do not represent a
long-term solution. To that end, we have engaged Gordian Group, LLC, a
financial advisory firm with special expertise in banking and advisory
services for businesses in challenging liquidity situations, to assist us in
evaluating various strategic and financing alternatives," he concluded.

Capital Transactions

On August 8, 2013, holders of all of the Company's convertible subordinated
notes exercised outstanding warrants to purchase an aggregate of 2.5 million
shares of common stock for cash at an exercise price of $3.361 per share and
converted a portion of their notes into shares of common stock. In a separate
transaction, the holders exchanged the balance of their convertible notes for
shares and additional warrants to purchase 2.5 million shares, also having an
exercise price of $3.361 per share. The convertible notes held by these
holders were extinguished, and the Company issued shares at a combined rate of
$3.00 per share in these transactions. As a result of these transactions, the
Company is issuing a total of 5.2 million shares of common stock and will
receive an aggregate of $8.475 million in cash from the warrant exercise. In
addition, $8.1 million of convertible subordinated notes have been retired.

In connection with the exchange, the holders and the Company amended the terms
of the original securities purchase agreement under which the notes and
warrants were issued to remove certain ongoing covenants. The Company also
intends to conduct a rights offering to all existing stockholders, pursuant to
which its stockholders may elect to purchase a specified fraction of a share
for each share of stock held as of the record date for the offering, at a
price of $3.00 per share.The Company currently anticipates that fraction
would not be less than 0.25 per share for each share of common stock held. The
Company will register the rights offering with the Securities and Exchange
Commission, and as a result, the record date for the rights offering has not
been set at this time.

Stereotaxis entered into these transactions with the assistance of Gordian
Group in order to help alleviate its immediate liquidity concerns, which have
been previously disclosed. The Company continues to work on a long-term
resolution of these liquidity issues with its financial advisors in order to
mitigate the operational and financial risks that it faces.

Second Quarter Financial Results

Revenue for the second quarter 2013 totaled $9.7 million compared to $8.4
million in the first quarter of 2013, a 15.8% sequential increase, and $10.5
million in the prior year second quarter.System revenue improved 49%
sequentially to $3.3 million, as the Company recognized revenue of $2.2
million on two Niobe ES systems and two Niobe ES upgrades, along with $1.1
million in Odyssey® system sales in the second quarter 2013. Recurring revenue
of $6.4 million in the quarter was relatively unchanged from $6.6 million in
the prior year second quarter and $6.2 million in the 2013 first quarter.
Utilization declined 11% compared to the same quarter last year and was down
slightly on a sequential basis.

The Company generated new capital orders of $4.0 million, which included two
Niobe ES orders, compared to $3.1 million in the second quarter of 2012 and
$2.4 million in the first quarter of 2013. Ending capital backlog for the
second quarter was $8.4 million. During the quarter, one Niobe ES order was
removed from backlog. The order was expected to go to revenue in 2014 but was
cancelled due to changes in ownership at the hospital.

Gross margin in the quarter was $7.3 million, or 74.6% of revenue, versus $7.3
million, or 69.0% of revenue, in the second quarter 2012 and $6.2 million, or
73.9% of revenue, in the first quarter 2013. Operating expenses in the second
quarter were $9.0 million, a 24% improvement from the year ago period and an
8% sequential improvement. 

Operating loss in the second quarter was $(1.8) million, a 62% reduction
compared to $(4.6) million in the prior year quarter and a 51% reduction
compared to $(3.6) million in the first quarter. Interest expense increased
$0.3 million year over year and $0.2 million sequentially, primarily due to
the non-cash amortization of the convertible debt discount. 

The net loss for the second quarter was $(3.0) million, or $(0.37) per share,
compared to net income of $2.8 million, or $0.32 per diluted share, reported
in the second quarter 2012 and a net loss of $(4.9) million, or $(0.61) per
share, reported for the first quarter 2013. The weighted average diluted
shares outstanding for the second quarters of 2013 and 2012 totaled 8.2
million and 9.3 million, respectively, and 8.0 million for the first quarter
of 2013. The 2012 second quarter results included a $9.0 million gain related
to mark-to-market conversion features of the warrants and subordinated
convertible debt associated with the $18.5 million financing in May 2012.
Excluding this, the adjusted net loss for the 2012 second quarter would have
been $(6.2) million, or $(0.91) per adjusted diluted share with 6.7 million
adjusted average diluted shares outstanding. Excluding mark-to-market warrant
revaluation and amortization of convertible debt discount related to the
financing, the net loss for the 2013 second quarter would have been $(3.2)
million, or $(0.39) per share, and $(5.0) million, or $(0.63) per share, for
the first quarter.

Cash burn for the second quarter of 2013 was $2.2 million, compared to $4.2
million for the second quarter of 2012 and $1.1 million for the first quarter
of 2013. The sequential increase in cash burn was primarily due to lower
revenues and receivables in the first quarter resulting in lower collections
in the second quarter. 

Six- Month Financial Results

Revenue for the first six months of 2013 was $18.1 million, down 20.4%
compared to $22.8 million in the first six months of 2012. System and
recurring revenues were $5.5 million and $12.6 million, respectively, during
the first half of 2013, compared to $9.0 million and $13.8 million for system
and recurring revenues during the same period of 2012. Overall utilization
declined 11% from the same period last year.

Gross margin was $13.5 million, or 74.3% of revenue, compared with $15.8
million, or 69.2% of revenue, in the first six months of the prior year.
Operating expenses were $18.8 million year to date on June 30, 2013, compared
with $24.6 million in the same period of 2012, a 23.4% reduction. Operating
loss was $(5.3) million versus $(8.8) million in the first six months of 2012,
a 39.3% decrease.

Interest expense increased to $4.1 million for the first six months of 2013,
compared to $3.3 million in the first six months of 2012. The increase was
primarily related to non-cash amortization of the convertible debt discount
related to the $18.5 million financing in May 2012.

The net loss was $(7.9) million for the first six months of 2013 versus $(3.0)
million for the comparable period in 2012. The results for the first six
months of 2012 included a $9.0 million gain related to mark-to-market
conversion features of subordinated convertible debt and the warrants
associated with the May 2012 financing. Cash burn was $3.3 million, compared
to $8.5 million in the first six months of 2012.

Financial Position

At June 30, 2013, Stereotaxis had cash and cash equivalents of $4.1 million,
compared to $9.6 million at March 31, 2013. At quarter end, total debt was
$29.9 million, including $18.5 million related to HealthCare Royalty Partners
debt. On July 31, 2013, the Company secured an extension of its revolving line
of credit with Silicon Valley Bank through August 31, 2013, and was granted a
waiver of covenant testing as of July 31, 2013.

While Stereotaxis has increased its cash position as a result of the
transactions with convertible debt holders, it expects to have negative cash
flow from operations throughout 2013. Therefore, the Company will continue to
evaluate operating expense levels and cash burn, while exploring various
strategic and financing alternatives with multiple entities to strengthen its
balance sheet.


On July 25, Company representatives appeared before the NASDAQ Listing
Qualifications Panel to request a transfer from the NASDAQ Global Market to
the NASDAQ Capital Market and to present a compliance plan. The hearing was
granted following a determination letter by the NASDAQ staff which denied the
Company's request for an extension to achieve compliance with Global Market
requirements. If the Panel decides to continue Stereotaxis' listing on the
Capital Market, the Company could have until December 16, 2013, to achieve
compliance with applicable listing requirements. The Company does not have the
results of the hearing at this time, but intends to continue to pursue its
plans to achieve compliance with Capital Market criteria and to report to the
Panel on its progress no later than August 15, 2013, as requested by the

Clinical Update

As previously announced, the Company has received 510(k) clearance by the Food
and Drug Administration to market the Vdrive with V-Sono ICE catheter
manipulator in the U.S. Additionally, the clinical study for the V-Loop™
circular catheter manipulator has completed 60% enrollment. This five-center,
120-patient clinical study will be part of a future V-Loop 510(k) submission
that the Company intends to file upon completion of the study.

2013 Objectives

Stereotaxis does not provide revenue and earnings per share guidance, but
reiterates the following goals for the full year 2013:

  *Expand global footprint through Japanese approval of Niobe technology
  *Manage operating expenses at current level
  *Strengthen balance sheet through strategic and financing alternatives

Conference Call and Webcast

Stereotaxis will host a conference call and webcast today, August 8, 2013, at
9:00 a.m. Eastern Time, to discuss second quarter results and announced
capital transactions. The dial-in number for the conference call is
1-877-941-1429 for domestic participants and 1-480-629-9857 for international
participants.Participants are asked to call the above numbers 5-10 minutes
prior to the start time. To access the live and replay webcast, please visit
the investor relations section of the Stereotaxis website at

About Stereotaxis

Stereotaxis is a healthcare technology and innovation leader in the
development of robotic cardiology instrument navigation systems designed to
enhance the treatment of arrhythmias and coronary disease, as well as
information management solutions for the interventional lab. With over 100
patents for use in a hospital's interventional surgical suite, Stereotaxis
helps physicians around the world provide unsurpassed patient care with
robotic precision and safety, improved lab efficiency and productivity, and
enhanced collaboration of life-saving information. Stereotaxis' core Epoch™
Solution includes the Niobe^® ES Remote Magnetic Navigation system, the
Odyssey^® portfolio of lab optimization, networking and patient information
management systems and the Vdrive^™ Robotic Mechanical Navigation system and

The core components of Stereotaxis systems have received regulatory clearance
in the U.S., Europe, Canada and elsewhere. The V-Sono^™ ICE catheter
manipulator has received U.S. clearance, and the V-Loop™ circular catheter
manipulator is currently in clinical trials in order to obtain clearance by
the U.S. Food and Drug Administration. For more information, please visit

This press release includes statements that may constitute "forward-looking"
statements, usually containing the words "believe," "estimate," "project,"
"expect" or similar expressions. Forward-looking statements inherently involve
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause or contribute to
such differences include, but are not limited to, the Company's ability to
raise additional capital or otherwise address ongoing liquidity challenges on
a timely basis and on terms that are acceptable, its ability to continue to
manage expenses and cash burn rate at sustainable levels, its ability to
continue to work with lenders to extend, repay or refinance indebtedness on
acceptable terms or at all, the Company's continued listing on the NASDAQ
Global Market or ability to satisfy the criteria for listing on the NASDAQ
Capital Market, continued acceptance of the Company's products in the
marketplace, the effect of global economic conditions on the ability and
willingness of customers to purchase its systems and the timing of such
purchases, the outcome of various shareholder litigation filed against
Stereotaxis, competitive factors, changes resulting from the recently enacted
healthcare reform in the U.S., including changes in government reimbursement
procedures, dependence upon third-party vendors, timing of regulatory
approvals, and other risks discussed in the Company's periodic and other
filings with the Securities and Exchange Commission. By making these
forward-looking statements, the Company undertakes no obligation to update
these statements for revisions or changes after the date of this release.
There can be no assurance that the Company will recognize revenue related to
its purchase orders and other commitments in any particular period or at all
because some of these purchase orders and other commitments are subject to
contingencies that are outside of the Company's control. In addition, these
orders and commitments may be revised, modified, delayed or canceled, either
by their express terms, as a result of negotiations, or by overall project
changes or delays.

                    Three Months Ended          Six Months Ended
                     June 30,                    June 30,
                    2013           2012         2013           2012
System               $3,323,251   $3,863,107 $5,551,328   $9,042,612
Disposables, service 6,410,156     6,649,791   12,590,284    13,753,514
and accessories
Total revenue        9,733,407     10,512,898  18,141,612    22,796,126
Cost of revenue                                              
System               1,602,480     2,175,971   2,793,833     4,518,381
Disposables, service 869,408       1,084,107   1,870,701     2,503,528
and accessories
Total cost of        2,471,888     3,260,078   4,664,534     7,021,909
Gross margin         7,261,519     7,252,820   13,477,078    15,774,217
Operating expenses:                                          
Research and         1,484,096     2,196,073   3,013,303     5,021,280
Sales and marketing  4,254,546     6,223,330   9,110,560     12,222,069
General and          3,276,967     3,469,346   6,700,708     7,342,219
Total operating      9,015,609     11,888,749  18,824,571    24,585,568
Operating loss       (1,754,090)   (4,635,929) (5,347,493)   (8,811,351)
Other income        893,642       9,269,424   1,499,744     9,081,354
Interest income      1,256         2,008       2,668         3,371
Interest expense     (2,147,600)   (1,829,076) (4,081,858)   (3,279,859)
Net income (loss)    $(3,006,792) $2,806,427 $(7,926,939) $(3,006,485)
Net earnings (loss)                                          
per common share:
Basic                $(0.37)      $0.42      $(0.98)      $(0.49)
Diluted              $(0.37)      $0.32      $(0.98)      $(0.49)
Weighted average
shares used in
computing net                                                
earnings (loss) per
common share:
Basic              8,188,837     6,741,578   8,102,087     6,120,447
Diluted            8,188,837     9,263,149   8,102,087     6,120,447

                                                June 30,       December 31,
                                                 2013          2012
Current assets:                                                
Cash and cash equivalents                        $4,113,768   $7,777,718
Accounts receivable, net of allowance of
$338,419 and $640,183 in 2013 and 2012,          8,466,808     11,551,651
Current portion of long-term receivables         19,299        18,838
Inventories                                      5,580,167     5,098,241
Prepaid expenses and other current assets        2,294,529     3,492,067
Total current assets                             20,474,571    27,938,515
Property and equipment, net                      1,639,398     2,141,923
Intangible assets, net                           1,829,403     1,979,320
Long-term receivables                            19,521        73,199
Other assets                                     32,525        32,987
Total assets                                     $23,995,418  $32,165,944
Liabilities and stockholders' equity (deficit)                 
Current liabilities:                                           
Current maturities of long-term debt             $12,061,454  $12,264,490
Accounts payable                                 3,944,680     3,556,688
Accrued liabilities                              5,637,004     5,361,810
Deferred contract revenue                        8,376,807     9,502,939
Warrants                                         1,469,042     2,968,348
Total current liabilities                        31,488,987    33,654,275
Long-term debt, less current maturities          17,809,026    16,824,736
Long-term deferred contract revenue              334,664       477,159
Other liabilities                                --           --
Stockholders' equity (deficit):                                
Preferred stock,par value $0.001; 10,000,000
shares authorized, none outstanding at 2013 and  --           --
Common stock, par value $0.001; 300,000,000
shares authorized, 8,320,790 and 8,018,615       8,321         8,019
shares issued at 2013 and 2012, respectively
Additional paid-in capital                       367,133,231   366,053,627
Treasury stock, 4,015 shares at 2013 and 2012    (205,999)     (205,999)
Accumulated deficit                              (392,572,812) (384,645,873)
Total stockholders' equity (deficit)             (25,637,259)  (18,790,226)
Total liabilities and stockholders' equity       $23,995,418  $32,165,944

CONTACT: Company Contact:
         Marty Stammer
         Chief Financial Officer
         Investor Contact:
         Todd Kehrli / Jim Byers
         MKR Group, Inc.
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