Stereotaxis Reports Third Quarter 2013 Financial Results

Stereotaxis Reports Third Quarter 2013 Financial Results

     -Increases System Revenue 34% Sequentially from Second Quarter 2013-

 -Improves Balance Sheet through Capital Transactions and Renewal of Silicon
                         Valley Bank Credit Facility-

         -Receives Reimbursement Classification for Niobe® in Japan-

         -Receives FDA Clearance of Vdrive^TM with V-Sono^TM System-

-Incurs One-Time, Non-Cash Expense Related to Capital Transactions, Impacting
                                  Net Loss-

ST. LOUIS, Nov. 14, 2013 (GLOBE NEWSWIRE) -- Stereotaxis, Inc. (Nasdaq:STXS)
today reported financial results for the third quarter ended September 30,
2013. In light of the Company's current rights offering and preceding
preliminary earnings release, the Company will not be holding a conference
call in conjunction with this release, but refers stockholders to the results
and comments contained herein along with Form 10-Q for the quarter ended
September 30, 2013.

Management Comments

"We achieved two important milestones during the third quarter, receiving FDA
clearance to market our Vdrive™ Robotic Navigation System with V-Sono™
Intracardiac Echocardiography catheter manipulator in the U.S. and
reimbursement approval of our Niobe® Magnetic Navigation System in Japan,"
said William Mills, Stereotaxis Board Chairman and interim Chief Executive
Officer. "Our immediate priorities now are to secure an in-country distributor
in Japan and establish reference sites in both countries to enhance our
marketing efforts. Initial users of the Vdrive with V-Sono system in the U.S.
are already sharing among their peers the positive outcomes they are
experiencing with the system, including improved productivity and catheter
stability." 

Mr. Mills continued, "During the quarter, we also increased capital revenue by
34% sequentially on three Niobe ES systems, one of which represented a second
system sale to a particular hospital. With continued challenges in growing
utilization, we remain committed to optimizing the full scope of our clinical
resources to accelerate activity with the Niobe platform and are seeing
incremental improvements in several targeted accounts." 

"Our operational goals depend on a solid financial footing, and we made
substantial progress in deleveraging our balance sheet in the third quarter,"
said Mr. Mills. "Through a series of transactions with investors and a
renegotiation of our credit agreement with Silicon Valley Bank, we
significantly reduced our short-term obligations and improved our cash
position. Additionally, we have initiated a rights offering for stockholders
and eligible warrant holders, which we expect to end on November 21."

Third Quarter Financial Results

Revenue for the third quarter 2013 totaled $10.8 million, compared to $9.7
million in the second quarter of 2013, an 11.2% sequential increase, and $11.6
million in the prior year third quarter.System revenue improved 33.9%
sequentially to $4.4 million, as the Company recognized revenue of $2.7
million on three Niobe ES systems, $0.1 million in Vdrive systemsales and $1.6
million in Odyssey® system sales in the third quarter 2013. Recurring revenue
of $6.4 million in the quarter was consistent with $6.5 million in the prior
year third quarter and $6.4 million in the 2013 second quarter. Utilization
declined 12% both sequentially and compared to the same quarter last year.

The Company generated new capital orders of $1.8 million, which includes one
Niobe ES order, one ES upgrade, two Vdrive orders and three Odyssey system
orders, compared to $7.1 million in the third quarter of 2012 and $4.0 million
in the second quarter of 2013. Ending capital backlog for the 2013 third
quarter was $5.3 million.

Gross margin in the quarter was $7.3 million, or 67.7% of revenue, versus $8.1
million, or 69.8% of revenue, in the third quarter 2012 and $7.3 million, or
74.6% of revenue, in the second quarter 2013. Operating expenses in the third
quarter were $8.4 million, a 6.9% improvement from both the year ago period
and previous quarter.

Operating loss in the third quarter was $(1.1) million, an increase of 14.4%
compared to $(0.9) million in the prior year quarter, and a 39% sequential
reduction compared to $(1.8) million in the second quarter. Interest expense
increased $6.0 million year over year and $5.5 million sequentially, primarily
due to a one-time, non-cash expense related to recent capital transactions. 

The 2013 third quarter results included a $53.4 million expense related to a
non-cash, mark-to-market adjustment and accelerated amortization of
convertible debt discount as a result of transactions with convertible note
holders and other equity investors in August 2013.Including this charge, the
net loss for the third quarter was $(56.9) million, or $(4.49) per share,
compared to a net loss of $(1.9) million, or $(0.25) per share, reported in
the third quarter 2012 and a net loss of $(3.0) million, or $(0.37) per share,
reported for the second quarter 2013. Excluding this charge, the net loss for
the 2013 third quarter would have been $(3.3) million, or $(0.26) per share.
Excluding mark-to-market warrant revaluation and amortization of convertible
debt discount related to financing in May 2012, the third quarter 2012
adjusted net loss would have been $(2.3) million, or $(0.29) per adjusted
share, and the second quarter 2013 net loss would have been $(3.2) million, or
$(0.39) per share.The weighted average diluted shares outstanding for the
third quarters of 2013 and 2012 totaled 12.7 million and 7.7 million,
respectively, and 8.2 million for the second quarter of 2013.

Cash burn for the third quarter of 2013 was $1.6 million, compared to $3.6
million for the third quarter of 2012 and $2.2 million for the second quarter
of 2013. 

Financial Position

At September 30, 2013, Stereotaxis had cash and cash equivalents of $8.4
million, compared to $4.1 million at June 30, 2013. During the quarter, the
Company received gross proceeds of approximately $11.7 million in additional
capital and extinguished its subordinated convertible debentures through the
exercise of warrants by its convertible subordinated note holders, as well as
by certain other equity investors.

At quarter end, total debt was $21.5 million, including $18.5 million related
to HealthCare Royalty Partners debt. Due to extinguishment of convertible debt
during the third quarter, non-cash interest expense is expected to be minimal
in future quarters with the majority of the interest expense driven by the
HealthCare Royalty Partners debt. Under an amended credit agreement with
Silicon Valley Bank, completed on August 30, 2013, Stereotaxis extended its $3
million asset based revolving line of credit through March 31, 2014, and
terminated the $3 million of available advances guaranteed by Alafi Capital
Company and an affiliate of Sanderling Venture Partners. Furthermore, the
prepayment premium on its term note was eliminated from the agreement,
allowing the Company to repay the outstanding amount under this facility prior
to its maturity date of December 2013, without penalty.

Clinical Update

As previously announced, the government of Japan has classified the Niobe
system as a C2 medical device, the highest of five reimbursement categories
for medical devices in Japan, and authorized a temporary fee per Niobe
procedure. A more permanent reimbursement structure will be established by
April 1, 2014. Additionally, the Company continues its clinical study for the
Vdrive™ with V-Loop™ circular catheter manipulator and has completed over 90%
enrollment to date. This five-center 120-patient clinical study will be part
of a future Vdrive with 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:

  oExpand global footprint through entry of the Niobe platform in Japan
  oContinue to manage operating expenses at a prudent level
  oStrengthen balance sheet through proceeds received from rights offering

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
consumables.

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
www.stereotaxis.com

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, 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.

STEREOTAXIS, INC.
BALANCE SHEETS
(Unaudited)

                                                September 30,  December 31,
                                                 2013          2012
                                                (Unaudited)    
Assets                                                         
Current assets:                                                
Cash and cash equivalents                        $8,386,605   $7,777,718
Accounts receivable, net of allowance of
$301,459 and $640,183 in 2013 and 2012,          8,096,385     11,570,489
respectively
Inventories                                      4,738,032     5,098,241
Prepaid expenses and other current assets        1,918,412     3,492,067
Total current assets                             23,139,434    27,938,515
Property and equipment, net                      1,419,320     2,141,923
Intangible assets, net                           1,754,445     1,979,320
Long-term receivables                            19,975        73,199
Other assets                                     33,815        32,987
Total assets                                     $26,366,989  $32,165,944
                                                              
Liabilities and stockholders' equity (deficit)                 
Current liabilities:                                           
Current maturities of long-term debt             $3,242,800   $12,264,490
Accounts payable                                 3,193,816     3,556,688
Accrued liabilities                              6,839,797     5,361,810
Deferred contract revenue                        7,399,431     9,502,939
Warrants                                         4,955,588     2,968,348
Total current liabilities                        25,631,432    33,654,275
                                                              
Long-term debt, less current maturities          18,242,083    16,824,736
Long-term deferred contract revenue              293,047       477,159
Other liabilities                                --           --
                                                              
Stockholders' equity (deficit):                                
Preferred stock,par value $0.001; 10,000,000
shares authorized, none outstanding at 2013 and  --           --
2012
                                                              
Common stock, par value $0.001; 300,000,000
shares authorized, 15,925,480 and 8,018,615      15,925        8,019
shares issued at 2013 and 2012, respectively
Additional paid-in capital                       431,831,756   366,053,627
Treasury stock, 4,015 shares at 2013 and 2012    (205,999)     (205,999)
Accumulated deficit                              (449,441,255) (384,645,873)
Total stockholders' equity (deficit)             (17,799,573)  (18,790,226)
Total liabilities and stockholders' equity       $26,366,989  $32,165,944
(deficit)
                                                              

STEREOTAXIS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
                                                            
                Three Months Ended             Nine Months Ended
                 Sept 30,                       Sept 30,
                2013            2012           2013            2012
                                                            
Revenue                                                      
System           $4,449,598    $5,040,025   $10,000,926   $14,082,637
Disposables,
service and      6,371,846      6,521,374     18,962,129     20,274,888
accessories
Total revenue    10,821,444     11,561,399    28,963,055     34,357,525
                                                            
Cost of revenue                                              
System           2,338,175      2,429,764     5,132,007      6,948,145
Disposables,
service and      1,161,449      1,057,057     3,032,150      3,560,585
accessories
Total cost of    3,499,624      3,486,821     8,164,157      10,508,730
revenue
                                                            
Gross margin     7,321,820      8,074,578     20,798,898     23,848,795
                                                            
Operating                                                    
expenses:
Research and     1,300,287      1,904,648     4,313,590      6,925,928
development
Sales and        4,102,968      4,096,842     13,213,528     16,318,911
marketing
General and      2,987,408      3,007,598     9,688,116      10,349,817
administration
Total operating  8,390,663      9,009,088     27,215,234     33,594,656
expenses
Operating loss   (1,068,843)    (934,510)     (6,416,336)    (9,745,861)
                                                            
Other income     (48,160,084)   598,494       (46,660,340)   9,679,848
(expense)
Interest income  1,306          1,982         3,973          5,353
Interest expense (7,640,821)    (1,581,247)   (11,722,679)   (4,861,106)
Net loss         $(56,868,442) $(1,915,281) $(64,795,382) $(4,921,766)
                                                            
Net loss per                                                 
common share:
Basic            $(4.49)       $(0.25)      $(6.72)       $(0.74)
Diluted          $(4.49)       $(0.25)      $(6.72)       $(0.74)
                                                            
Weighted average
shares used in
computing net                                                
loss per common
share:
Basic           12,666,414     7,701,332     9,640,249      6,651,255
                                                            
Diluted         12,666,414     7,701,332     9,640,249      6,651,255

CONTACT: Company Contact:
         Marty Stammer
         Chief Financial Officer
         314-678-6155
        
         Investor Contact:
         Todd Kehrli / Jim Byers
         MKR Group, Inc.
         323-468-2300
         stxs@mkr-group.com
 
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