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What changed in Stereotaxis, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Stereotaxis, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+255 added−239 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-09)

Top changes in Stereotaxis, Inc.'s 2023 10-K

255 paragraphs added · 239 removed · 186 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

62 edited+14 added−17 removed165 unchanged
Biggest changeWarranty costs were not material for the periods presented. We also manufacture and market various disposable (the V-Loop , V-Sono , and V-CAS ) components which can be manipulated by our Vdrive™ Robotic Navigation System a complimentary product that provides navigation and stability for diagnostic and therapeutic devices designed to improve interventional procedures.
Biggest changeWithin this toolkit, we manufacture and distribute: ● the QuikCAS, an automated catheter advancement disposable device designed to provide precise remote advancement of magnetically enabled electrophysiology catheters, ● the iCONNECT, a module designed to provide impedance data from a catheter while also allowing for the connection of a variety of catheters and systems, and ● the V-CAS which can be manipulated by our Vdrive™ Robotic Navigation System, a complimentary product that provides navigation and stability for diagnostic and therapeutic devices designed to improve interventional procedures.
There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of integrated systems and devices and/or equivalent alternatives. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
In addition, we had 15 issued foreign patents and 2 pending foreign patent applications. The key patents that protect our technology and systems extend until 2028 and beyond. 11 We also have a number of invention disclosures under consideration and several applications that are being prepared for filing.
In addition, we had 15 issued foreign patents and 2 pending foreign patent applications. The key patents that protect our technology and systems extend until 2028 and beyond. We also have a number of invention disclosures under consideration and several applications that are being prepared for filing.
We believe that our system can allow these procedures to be performed by a broader range of electrophysiologists and, by automating some of the more complex catheter maneuvers, can standardize and reduce procedure times and significantly improve outcomes. ● General Mapping and Ablations .
We believe that our system can allow these procedures to be performed by a broader range of electrophysiologists and, by automating some of the more complex catheter maneuvers, can standardize and reduce procedure times and significantly improve outcomes. 8 ● General Mapping and Ablations .
See “Item 1A—Risk Factors” for a discussion of other competitive risks facing our business. 12 GOVERNMENT REGULATION Our products are medical devices that are subject to extensive regulation in the U.S. and in foreign countries where we do business. The U.S.
See “Item 1A—Risk Factors” for a discussion of other competitive risks facing our business. GOVERNMENT REGULATION Our products are medical devices that are subject to extensive regulation in the U.S. and in foreign countries where we do business. The U.S.
CUSTOMER SERVICE AND SUPPORT We provide worldwide maintenance and support services to our customers for our integrated products directly or with the assistance of outsourced product and service representatives. By utilizing these relationships, we provide direct, on-site technical support activities, including call center, customer support engineers and service parts logistics and delivery.
CUSTOMER SERVICE AND SUPPORT We provide worldwide maintenance and support services to our customers for our compatible products directly or with the assistance of outsourced product and service representatives. By utilizing these relationships, we provide direct, on-site technical support activities, including call center, customer support engineers and service parts logistics and delivery.
The maintenance of these arrangements, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of integrated next generation systems and/or equivalent alternatives.
The maintenance of these arrangements, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible next generation systems and/or equivalent alternatives.
We have received regulatory clearances and registration necessary for us to market the Genesis RMN System in the U.S. and Europe, and we are in the process of obtaining necessary registrations for extending our markets in other countries.
We have received regulatory clearances and approvals necessary for us to market the Genesis RMN System in the U.S. and Europe, and we are in the process of obtaining necessary registrations for extending our markets in other countries.
We are aware of three companies that commercialized endovascular catheter navigation systems which have been cleared by the FDA for electrophysiology procedures as well as two companies with electromagnetic catheter navigation systems that received CE Mark approval in Europe. None of these companies seem to be active with any current commercial activities.
We are aware of four companies that commercialized endovascular catheter navigation systems which have been cleared by the FDA for electrophysiology procedures as well as two companies with electromagnetic catheter navigation systems that received CE Mark approval in Europe. None of these companies seem to be active in catheter robotics with any current commercial activities.
Through these strategic relationships we provide compatibility between our robotic magnetic navigation system and digital imaging and 3D catheter location sensing technology, as well as disposable interventional devices. The maintenance of these strategic relationships, or the establishment of equivalent alternatives, is critical to our commercialization efforts.
Through these strategic relationships we provide compatibility between our robotic magnetic navigation system, x-ray systems, and digital imaging and 3D catheter location sensing technology, as well as disposable interventional devices. The maintenance of these strategic relationships, or the establishment of equivalent alternatives, is critical to our commercialization efforts.
Other Recurring Revenue Other recurring revenue includes revenue from product maintenance plans, other post warranty maintenance, and the implied obligation to provide software enhancements if and when available for a specified period, typically one year following installation of our systems.
Other Recurring Revenue Other recurring revenue includes revenue from product maintenance plans, service-type warranties, other post warranty maintenance, and the implied obligation to provide software enhancements if and when available for a specified period, typically one year following installation of our systems.
Compliance with the Medical Device Directive (MDD), as certified by a recognized European Notified Body, permits the medical device manufacturer to affix the CE Mark on its products and commercially distribute those products throughout the EEA. We are subject to annual surveillance audits and periodic re-certification audits in order to maintain our CE Mark permissions.
Compliance with the Medical Device Regulation (MDR), as certified by a recognized European Notified Body, permits the medical device manufacturer to affix the CE Mark on its products and commercially distribute those products throughout the EEA. We are subject to annual surveillance audits and periodic re-certification audits in order to maintain our CE Mark permissions.
Devices lawfully placed on the market pursuant to the MDD prior to May 26, 2021, may generally continue to be made available on the market or put into service until and including May 26, 2025, provided that the requirements of the transitional provisions are fulfilled (referred to as the “sell-off” provision).
Devices lawfully placed on the market pursuant to the EU Medical Device Directive (MDD) prior to May 26, 2021, may generally continue to be made available on the market or put into service until and including May 26, 2025, provided that the requirements of the transitional provisions are fulfilled (referred to as the “sell-off” provision).
These statements relate to, among other things: ● our business, operating, sales and marketing, and regulatory strategies; ● our value proposition; ● the impact of the coronavirus (“COVID-19”) pandemic and our responses to it; ● our overall liquidity and our ability to fund operations; ● our ability to convert backlog to revenue; ● the ability of physicians to perform certain medical procedures with our products safely, effectively and efficiently; ● the adoption of our products by hospitals and physicians; ● the market opportunity for our products, including expected demand for our products; ● the timing and prospects for regulatory approval of our additional disposable interventional devices; ● the success of our business partnerships and strategic relationships; ● our industry generally, and overall economic conditions; ● our estimates regarding our capital requirements; ● our plans for hiring additional personnel; and ● any of our other plans, objectives, expectations and intentions contained in this annual report that are not historical facts.
These statements relate to, among other things: ● our business, operating, sales and marketing, and regulatory strategies; ● our value proposition; ● our overall liquidity and our ability to fund operations; ● our ability to convert backlog to revenue; ● the ability of physicians to perform certain medical procedures with our products safely, effectively and efficiently; ● the adoption of our products by hospitals and physicians; ● the market opportunity for our products, including expected demand for our products; ● the timing and prospects for regulatory approval of our additional disposable interventional devices; ● the success of our business partnerships and strategic relationships; ● our industry generally, and overall macroeconomic conditions; ● our estimates regarding our capital requirements; ● our plans for hiring additional personnel; and ● any of our other plans, objectives, expectations and intentions contained in this annual report that are not historical facts.
Disposables Devices We have entered into strategic relationships and successfully integrated with diagnostic mapping and imaging technologies to provide an ecosystem where physicians and patients benefit from the integration of procedure data. With Biosense Webster, we have jointly developed associated location and non-location sensing electrophysiology mapping and ablation catheters that are navigable with our robotic magnetic navigation system.
We have entered into strategic relationships and successfully integrated with diagnostic mapping and imaging technologies to provide an ecosystem where physicians and patients benefit from the integration of procedure data. With our partners, we have jointly developed associated location and non-location sensing electrophysiology mapping and ablation catheters that are navigable with our robotic magnetic navigation system.
We have an extensive patent portfolio that we believe protects the fundamental scope of our technology and systems, including our robotic magnetic technology, navigational methods, mapping system and procedural workflows, 3D integration technology, and disposable interventional devices. As of December 31, 2022, we had 50 issued U.S. patents and 2 pending U.S. patent applications.
We have an extensive patent portfolio that we believe protects the fundamental scope of our technology and systems, including our robotic magnetic technology, navigational methods, mapping system and procedural workflows, 3D integration technology, and disposable interventional devices. As of December 31, 2023, we had 44 issued U.S. patents and 2 pending U.S. patent application.
Diversity, Equity & Inclusion Diversity, equity and inclusion are integral parts of our culture. We strongly believe in a diverse workplace where all employees can thrive in an inclusive environment free from discrimination, harassment, bias and prejudice. We strive to foster a culture where mutual respect, inclusive behavior, and dignity are core to our individual expectations.
We strongly believe in a diverse workplace where all employees can thrive in an inclusive environment free from discrimination, harassment, bias and prejudice. We strive to foster a culture where mutual respect, inclusive behavior, and dignity are core to our individual expectations.
Our prior generation robotic magnetic navigation system, the Niobe System, and the Odyssey Solution, Cardiodrive , and various disposable interventional devices have received regulatory clearance in the U.S., Europe, Canada, China, Japan and various other countries.
The Niobe System, our prior generation robotic magnetic navigation system, the Odyssey Solution, Cardiodrive , e-Contact, and various disposable interventional devices have received regulatory clearances and approvals in the U.S., Europe, Canada, China, Japan and various other countries.
Our sales and marketing efforts include two important elements: (1) selling robotic magnetic systems, Odyssey Solutions, and Stereotaxis Imaging Model S x-ray Systems directly and through distributors; and (2) leveraging our installed base of systems to drive recurring sales of disposable interventional devices, software and service.
Our sales and marketing efforts include two important elements: (1) selling robotic magnetic systems, Odyssey Solutions, and magnetically compatible x-ray systems directly and through distributors; and (2) leveraging our installed base of systems to drive recurring sales of disposable interventional devices, software and service.
Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the EU member states may result in fines of up to 4% of the total worldwide annual turnover of the preceding financial year and other administrative penalties.
Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20 million or 4% of the total worldwide annual turnover of the preceding financial year, whichever is greater, and other administrative penalties.
FDA regulates the development, testing, manufacturing, labeling, storage, recordkeeping, promotion, marketing, distribution and service of medical devices in the U.S. to ensure that medical products distributed domestically are safe and effective for their intended uses. In addition, the FDA regulates the export of medical devices manufactured in the U.S. to international markets and the importation of medical devices manufactured abroad.
FDA regulates the development, testing, manufacturing, labeling, storage, recordkeeping, promotion, marketing, distribution and service of medical devices in the U.S. to ensure that medical products distributed domestically are safe and effective for their intended uses.
In addition, we also market and distribute other disposable and related devices that can be use with our robotic magnetic navigation systems.
In addition, we also market and distribute other disposable and related devices that can be used with our robotic magnetic navigation systems and in traditional, manual procedures.
HIPAA and Other Privacy Laws We are subject to laws and regulations protecting the privacy and integrity of patient medical information, including the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information, and the applicable Privacy and Security Standards of HITECH, the Health Information Technology for Economic and Clinical Health Act.
In addition, we are subject to similar state laws related to the tracking and reporting of certain payments and other transfers of value to healthcare professionals. 14 HIPAA and Other Privacy Laws We are subject to laws and regulations protecting the privacy and integrity of patient medical information, including the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information, and the applicable Privacy and Security Standards of HITECH, the Health Information Technology for Economic and Clinical Health Act.
No other single country, other than the U.S., accounted for more than 10% of total revenue for the years ended December 31, 2022 and 2021.
FINANCIAL INFORMATION ABOUT CUSTOMERS No single customer accounted for more than 10% of total revenue for the years ended December 31, 2023 and 2022. No single country, other than the U.S., accounted for more than 10% of total revenue for the years ended December 31, 2023 and 2022.
Some of these state prohibitions apply to healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs. 14 Transparency Laws Under the Physician Payments Sunshine Act, or the Sunshine Act, which was enacted by Congress as part of the Patient Protection and Affordable Care Act, we are required to track and report to the federal government on an annual basis, subject to certain exceptions, all payments and other transfers of value to U.S. physicians and teaching hospitals, as well as ownership interests held by physicians.
Transparency Laws Under the Physician Payments Sunshine Act, or the Sunshine Act, which was enacted by Congress as part of the Patient Protection and Affordable Care Act, we are required to track and report to the federal government on an annual basis, subject to certain exceptions, all payments and other transfers of value to U.S. physicians and teaching hospitals, as well as ownership interests held by physicians.
As of December 31, 2022, we had 130 employees, 37 of whom were engaged directly in research and development, 58 in sales and marketing activities, 16 in manufacturing and service, and 19 in general administrative activities including finance, information systems, legal and general management.
As of December 31, 2023, we had 122 employees, 35 of whom were engaged directly in research and development, 53 in sales and marketing activities, 16 in manufacturing and service, and 18 in general administrative activities including finance, information systems, legal and general management.
FORWARD-LOOKING STATEMENTS This annual report on Form 10-K, including the sections entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements.
All other trademarks that appear in this report are the property of their respective owners. FORWARD-LOOKING STATEMENTS This annual report on Form 10-K, including the sections entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements.
In many foreign countries in which we market our products, we are subject to regulations affecting, among other things, product standards, packaging requirements, labeling requirements, import restrictions, tariff regulations, duties and tax requirements. Many of these regulations are similar to those of the FDA or other U.S. regulations.
In addition, the FDA regulates the export of medical devices manufactured in the U.S. to international markets and the importation of medical devices manufactured abroad. 12 In many foreign countries in which we market our products, we are subject to regulations affecting, among other things, product standards, packaging requirements, labeling requirements, import restrictions, tariff regulations, duties and tax requirements.
OVERVIEW Stereotaxis is a pioneer and global leader in surgical robotics for minimally invasive endovascular intervention. We design, manufacture and market robotic systems, instruments and information systems for the interventional laboratory. Our proprietary robotic technology, Robotic Magnetic Navigation, fundamentally transforms endovascular interventions using precise computer-controlled magnetic fields to directly control the tip of flexible interventional catheters or devices.
OVERVIEW Stereotaxis designs, manufactures and markets robotic systems, instruments and information systems for the interventional laboratory. Our proprietary robotic technology, Robotic Magnetic Navigation, fundamentally transforms endovascular interventions using precise computer-controlled magnetic fields to directly control the tip of flexible interventional catheters or devices.
Examples of groups of such standards are electrical safety standards such as those of the International Electrotechnical Commission and composition standards such as the Reduction of Hazardous Substances (“RoHS”) and Waste Electrical and Electronic Equipment (“WEEE”) Directives. U.S.
Failure to meet these standards could limit the ability to market our products in those regions which require compliance to such standards. Examples of groups of such standards are electrical safety standards such as those of the International Electrotechnical Commission and composition standards such as the Reduction of Hazardous Substances (“RoHS”) and Waste Electrical and Electronic Equipment (“WEEE”) Directives. U.S.
In addition, our products must meet the requirements of a large and growing body of international standards which govern the design, manufacture, materials content and sourcing, testing, certification, packaging, installation, use and disposal of our products. Failure to meet these standards could limit the ability to market our products in those regions which require compliance to such standards.
Many of these regulations are similar to those of the FDA or other U.S. regulations. In addition, our products must meet the requirements of a large and growing body of international standards which govern the design, manufacture, materials content and sourcing, testing, certification, packaging, installation, use and disposal of our products.
Additionally, the system can control the procedure and direct catheter movement from the control room, saving the physician time and helping to avoid unnecessary exposure to high doses of radiation. 8 We believe that our system can address the current challenges in electrophysiology by permitting the physician to remotely navigate disposable interventional devices from a control room outside the x-ray field.
We believe that our system can address the current challenges in electrophysiology by permitting the physician to remotely navigate disposable interventional devices from a control room outside the x-ray field.
We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. We cannot provide any assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
Genesis RMN ® , Niobe ® , Navigant ® , Odyssey ® , Odyssey Cinema ™ , Vdrive ® , Vdrive Duo ™ , V-CAS ™ , V-Loop ™ , V-Sono ™ , QuikCAS ™ and Cardiodrive ® are trademarks of Stereotaxis, Inc. All other trademarks that appear in this report are the property of their respective owners.
Genesis RMN ® , Niobe ® , Navigant ® , Odyssey ® , Odyssey Cinema ™ , Vdrive ® , Vdrive Duo ™ , V-CAS ™ , V-Loop ™ , V-Sono ™ , QuikCAS ™, Cardiodrive ® , and MAGiC ™ are trademarks of Stereotaxis, Inc.
Regulatory Approval We have received regulatory clearance, licensing and/or CE Mark approvals necessary for us to market the Genesis RMN System in the U.S. and Europe, and we are in the process of obtaining necessary registrations for extending our markets in other countries.
Revenue related to services performed on a time-and-materials basis is recognized when performed. 7 Regulatory Approval We have received regulatory clearance, licensing and/or approvals necessary for us to market the Genesis System with Cardiodrive, iCONNECT, Navigant, Odyssey and QuikCAS in the U.S. and Europe, and we are in the process of obtaining necessary registrations for extending our markets in other countries.
Human Capital Given the highly competitive nature of the medical device industry, the future success of our company depends on our ability to attract, retain, and further develop top talent.
In many countries, the scope of the FCPA could include interactions with certain healthcare professionals. Other countries have enacted similar anti-corruption laws. Human Capital Given the highly competitive nature of the medical device industry, the future success of our company depends on our ability to attract, retain, and further develop top talent.
The Odyssey Solution further enables procedures to be observed remotely around the world with high speed Internet access over a hospital VPN, even wirelessly using a standard laptop or Windows tablet computer.
The Odyssey Solution further enables procedures to be observed remotely around the world with high-speed Internet access over a hospital VPN, even wirelessly using a standard laptop or Windows tablet computer. X-ray systems We have arrangements with fluoroscopy system manufacturers to provide such systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms.
These arrangements are important to us as they provide for the integration of our system with digital imaging and 3D catheter location sensing technology, as well as catheters compatible with our system. Imaging We have successfully integrated our robotic magnetic navigation system with digital fluoroscopy systems to provide advanced interventional lab visualization and instrument control through user-friendly computerized interfaces.
These arrangements are important to us as they provide for the integration of our system with digital imaging and 3D catheter location sensing technology, as well as catheters compatible with our system. We have arrangements with fluoroscopy system manufacturers to provide such systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms.
As of December 31, 2022, we had approximately $14.8 million of backlog, consisting of outstanding purchase orders and other commitments for these systems. Of the December 31, 2022 backlog, we expect approximately 89% to be recognized as revenue over the course of 2023. We had backlog of approximately $10.1 million as of December 31, 2021.
Of the December 31, 2023 backlog, we expect approximately 81% to be recognized as revenue over the course of 2024. We had backlog of approximately $14.8 million as of December 31, 2022.
A significant majority of our employees are not covered by a collective bargaining agreement, and we consider our relationship with our employees to be positive.
A significant majority of our employees are not covered by a collective bargaining agreement, and we consider our relationship with our employees to be positive. We also engage the services of independent contractors and consultants as needed for special or temporary projects or specific expertise.
In hospitals where our full suite of products has not been implemented, equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.
The recurring payments typically include disposable costs for each procedure, equipment service costs beyond the warranty period, and ongoing software updates. In hospitals where our full suite of products has not been implemented, equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.
We also engage the services of independent contractors and consultants as needed for special or temporary projects or specific expertise. 15 As of December 31, 2022, our employees were based in 11 different countries around the world, including the U.S. Our global workforce consists of diverse, highly skilled talent at all levels.
As of December 31, 2023, our employees were based in 11 different countries around the world, including the U.S. Our global workforce consists of diverse, highly skilled talent at all levels. 15 Diversity, Equity & Inclusion Diversity, equity and inclusion are integral parts of our culture.
For the more routine mapping and ablation procedures, our system offers the unique benefit of precise catheter movement and consistent heart wall contact.
For the more routine mapping and ablation procedures, our system offers the unique benefit of precise catheter movement and consistent heart wall contact. Additionally, the system can control the procedure and direct catheter movement from the control room, saving the physician time and helping to avoid unnecessary exposure to high doses of radiation.
It would be technically difficult and costly to reverse engineer our robotic magnetic navigation system, which contains numerous complex algorithms that control our disposable devices inside the magnetic fields generated by the robotic magnetic navigation system.
We cannot be certain that any patents will be issued from any of our pending patent applications, nor can we be certain that any of our existing patents or any patents that may be granted in the future will provide us with protection. 11 It would be technically difficult and costly to reverse engineer our robotic magnetic navigation system, which contains numerous complex algorithms that control our disposable devices inside the magnetic fields generated by the robotic magnetic navigation system.
This information can be accessed from locations throughout the hospital local area network and over the global Odyssey Network providing physicians with a tool for clinical collaboration, remote consultation, and training. The Stereotaxis Imaging Model S provides an integrated complete solution for a robotic interventional operating room.
This information can be accessed from locations throughout the hospital local area network and over the global Odyssey Network providing physicians with a tool for clinical collaboration, remote consultation, and training. We have arrangements with fluoroscopy system manufacturers to provide such systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms.
Performing the procedure from a control cockpit enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency. We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging or unsuccessful and generates significant x-ray exposure.
Performing the procedure from a control cockpit enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency.
Not all products have and/or require regulatory clearance in all of the markets we serve. Please refer to “Regulatory Approval” in Item 1 for a description of the regulatory clearance, licensing, and/or approvals we currently have or are pursuing.
Please refer to “Regulatory Approval” in Item 1 of this annual report for a description of the regulatory clearance, licensing and/or approvals we currently have or are pursuing. Anti-Kickback and False Claims Laws We are subject to various federal and state laws relating to healthcare fraud and abuse, including anti-kickback and false claims laws.
Biosense Webster’s distribution rights for co-developed catheters were nonexclusive until December 31, 2022. We received royalty payments from Biosense Webster during the term of the agreement. The royalty payments were payable quarterly based on net revenues from sales of the co-developed catheters.
Biosense Webster’s distribution rights for co-developed catheters were nonexclusive until December 31, 2022. We received royalty payments from Biosense Webster during the term of the agreement. The agreement expired in December, 2022, and provides for a continuation of supply by Biosense Webster of the co-developed catheters to us or our customers for three years following the termination.
We have received regulatory clearance, licensing and/or CE Mark approvals necessary for us to market the Niobe System, Cardiodrive , and various disposable devices in the U.S., Canada, Europe, China, Japan, and various other countries. The Stereotaxis Imaging Model S x-ray System is CE marked and cleared by the FDA.
We have received regulatory clearance, licensing and/or approvals necessary for us to market the Niobe System with Cardiodrive, e-Contact, Navigant, Odyssey and QuikCAS in the U.S., Canada, China, Japan, and various other countries. We have received regulatory clearance, licensing and/or approvals necessary for us to market the Vdrive and Vdrive Duo Systems with the V-CAS in the U.S. and Canada.
Revenue from services and software enhancements is deferred and amortized over the service or update period, which is typically one year. Revenue related to services performed on a time-and-materials basis is recognized when performed.
Revenue from product maintenance plans and software enhancements, service-type warranties, and the implied obligation to provide software enhancements are deferred and amortized over the service or update period, which is typically one year.
The length of time required for products to be developed and to receive regulatory and reimbursement approval is also an important competitive factor.
We believe that the primary competitive factors in the market we address are capability, safety, efficacy, ease of use, price, quality, reliability and effective sales, support, training and service. The length of time required for products to be developed and to receive regulatory and reimbursement approval is also an important competitive factor.
The maintenance of these arrangements, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships or collaborations will continue. RESEARCH AND DEVELOPMENT We have assembled an experienced group of engineers and physicists with recognized expertise in magnetics, software, control algorithms, mechanics, electronics, systems integration and disposable interventional device design.
We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all. RESEARCH AND DEVELOPMENT We have assembled an experienced group of engineers and physicists with recognized expertise in magnetics, software, control algorithms, mechanics, electronics, systems integration and disposable interventional device design.
Many states have adopted laws similar to the federal healthcare program Anti-Kickback Statute and the federal false claims laws.
Many states have adopted laws similar to the federal healthcare program Anti-Kickback Statute and the federal false claims laws. Some of these state prohibitions apply to healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs.
Outside of electrophysiology, there are at least two companies that have commercialized robotic systems for guidewire manipulation and can be viewed as potential competitors as we look to address additional clinical applications. We face direct competition to certain products in our Odyssey Solution. These competitors include established imaging companies as well as dedicated solution providers.
Outside of electrophysiology, there are at least two companies that have commercialized robotic systems for guidewire manipulation and can be viewed as potential competitors as we look to address additional clinical applications. We are pursuing regulatory approvals for the Stereotaxis MAGiC catheter, a robotically-navigated magnetic ablation catheter designed to perform minimally invasive cardiac ablation procedures, in various global geographies.
Unlike directives, regulations are directly applicable in EU member states without the need for member states to implement into national law. This aims at increasing harmonization across the EU. The MDR became effective on May 26, 2021.
The MDR establishes a uniform, transparent, predictable, and sustainable regulatory framework across the EU for medical devices and ensures a high level of safety and health while supporting innovation. Regulations are directly applicable in EU member states without the need for member states to implement into national law. This aims at increasing harmonization across the EU.
To be sold in Japan, most medical devices must undergo thorough safety examinations and demonstrate medical efficacy before they receive regulatory (“Shonin”) approval. We are subject to additional regulations in other foreign countries, including, but not limited to, Canada, Taiwan, China, Korea, and Russia, in order to sell our products.
We are subject to additional regulations in other foreign countries, including, but not limited to Canada, Taiwan, China, Japan, Korea, and Russia, in order to sell our products. We intend that either we or our distributors will receive any necessary approvals or clearance prior to marketing our products in these international markets.
This implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically includes equipment and installation charges. The recurring payments typically include disposable costs for each procedure, equipment service costs beyond the warranty period, and ongoing software updates.
We promote our full suite of products in a typical hospital implementation, subject to regulatory approvals or clearances. This implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically includes equipment and installation charges.
We intend that either we or our distributors will receive any necessary approvals or clearance prior to marketing our products in these international markets. Please refer to “Regulatory Approval” in Item 1 of this annual report for a description of the regulatory clearance, licensing and/or approvals we currently have or are pursuing.
Please refer to “Regulatory Approval” in Item 1 for a description of the regulatory clearance, licensing, and/or approvals we currently have or are pursuing. As of December 31, 2023, we had approximately $14.7 million of backlog, consisting of outstanding purchase orders and other commitments for these systems.
Such data are made available by the government on a publicly searchable website. In addition, we are subject to similar state laws related to the tracking and reporting of certain payments and other transfers of value to healthcare professionals.
Such data are made available by the government on a publicly searchable website.
We expect to continue to face competitive pressure in this market in the future, based on the rapid pace of advancements with this technology. We believe that the primary competitive factors in the market we address are capability, safety, efficacy, ease of use, price, quality, reliability and effective sales, support, training and service.
These competitors include established imaging companies as well as dedicated solution providers. We expect to continue to face competitive pressure in this market in the future, based on the rapid pace of advancements with this technology.
We have received the regulatory clearance, licensing and/or CE Mark approvals that allow us to market the Vdrive and Vdrive Duo Systems with the V-CAS , V-Loop and V-Sono devices in the U.S., Canada and Europe. The Stereotaxis Imaging Model S x-ray System is CE marked and cleared by the FDA.
We have received the regulatory clearances and approvals that allow us to market the Vdrive and Vdrive Duo Systems with the V-CAS device in the U.S. and Canada. We are pursuing regulatory approvals for the Stereotaxis MAGiC catheter, a robotically-navigated magnetic ablation catheter designed to perform minimally invasive cardiac ablation procedures, in various global geographies.
The combination of RMN Systems with Stereotaxis Imaging Model S is designed to reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice. We promote our full suite of products in a typical hospital implementation, subject to regulatory approvals or clearances.
These are single-plane, full-power x-ray systems and include the c-arm and powered table. The combination of RMN Systems with our partnered x-ray systems reduces the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.
Removed
Our primary products include the Genesis RMN System, the Odyssey Solution, and other related devices. We also offer to our customers the Stereotaxis Imaging Model S x-ray System and other accessory devices.
Added
We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging or unsuccessful and generates significant x-ray exposure, and we are investing in research and development in these areas. Our primary products include the Genesis RMN System, the Odyssey Solution, and other related devices.
Removed
It is a single-plane, full-power x-ray system and includes the c-arm, powered table, motorized boom, and large high-definition monitors. Stereotaxis Imaging Model S incorporates modern fluoroscopy technology to support high quality imaging while minimizing radiation exposure for patients and physicians.
Added
Through our strategic relationships with fluoroscopy system manufacturers, providers of catheters and electrophysiology mapping systems, and other parties, we offer our customers x-ray systems and other accessory devices.
Removed
Stereotaxis Imaging Model S X-ray System Developed in collaboration with Omega Medical Imaging, and designed to be specifically available with RMN Systems, the Stereotaxis Imaging Model S provides an integrated complete solution for a robotic interventional operating room. It is a single-plane, full-power x-ray system and includes the c-arm, powered table, motorized boom, and large high-definition monitors.
Added
Approval processes can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications could be denied. Not all products have and/or require regulatory clearance in all of the markets we serve.
Removed
Stereotaxis Imaging Model S incorporates modern fluoroscopy technology to support high quality imaging while minimizing radiation exposure for patients and physicians. The combination of RMN Systems with Stereotaxis Imaging Model S is designed to reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.
Added
These are single-plane, full-power x-ray systems and include the c-arm and powered table. The combination of RMN Systems with our partnered x-ray systems reduces the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.
Removed
The toolkit currently consists of: ● Our QuikCAS automated catheter advancement disposables designed to provide precise remote advancement of proprietary electrophysiology catheters; and ● Biosense Webster’s CARTO® RMT navigation and ablation system, CELSIUS® RMT, NAVISTAR® RMT, NAVISTAR® RMT DS, NAVISTAR® RMT THERMOCOOL® and CELSIUS® RMT THERMOCOOL® Irrigated Tip Diagnostic/Ablation Steerable Tip Catheters co-developed by Biosense Webster and Stereotaxis, as described below.
Added
Warranty costs were not material for the periods presented. With our partners, we have jointly developed associated location and non-location sensing electrophysiology mapping and ablation catheters that are navigable with our robotic magnetic navigation system.
Removed
We have received regulatory clearance, licensing and/or CE Mark approvals necessary for us to market the Vdrive and Vdrive Duo Systems with the V-CAS, V-Loop and V-Sono devices in the U.S., Canada and Europe. 7 Biosense Webster has received FDA approval, and CE Mark for the CARTO ® RMT navigation system for use with the Niobe System, the 4mm CELSIUS ® RMT Diagnostic/Ablation Steerable Tip Catheter, the 4mm NAVISTAR ® RMT Diagnostic/Ablation Steerable Tip Catheter, the 8mm Navistar RMT DS Diagnostic/Ablation Steerable Tip Catheter, and the 3.5mm NAVISTAR ® RMT THERMOCOOL ® Irrigated Tip Catheter.
Added
We believe that these products provide physicians with the elements required for effective complex electrophysiology procedures: highly accurate information as to the exact location of the catheter in the body and highly precise control over the working tip of the catheter.
Removed
In addition, Biosense Webster has received FDA approval and CE Mark for the 3.5mm CELSIUS ® RMT THERMOCOOL ® Irrigated Tip Catheter. Biosense Webster also received China CFDA approval and Japan PMDA approval for the CARTO ® RMT navigation system for use with the Niobe System, and the 3.5mm NAVISTAR ® RMT THERMOCOOL ® Irrigated Tip Catheter.
Added
Additionally, we have other broad strategic collaborations, including the development of the Stereotaxis MAGiC catheter, our next-generation robotically-navigated magnetic ablation catheter designed to perform cardiac ablation procedures. Stereotaxis is the owner of the catheter and we are pursuing regulatory approvals for the MAGiC catheter in various global geographies.
Removed
Our strategic relationship with Biosense Webster provided for co-development of catheters that can be navigated with our system, both with and without Biosense Webster’s 3D catheter location sensing technology. In addition, we can utilize technology which allows our system to recognize specific disposable interventional devices in order to prevent unauthorized use of our system.
Added
Approval processes can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications could be denied. The maintenance of these strategic relationships, or the establishment of equivalent alternatives, is critical to our commercialization efforts.
Removed
See “Strategic Relationships” below for a description of our arrangements with Biosense Webster. FINANCIAL INFORMATION ABOUT CUSTOMERS No single customer accounted for more than 10% of total revenue for the years ended December 31, 2022 and 2021. Revenue from customers in China accounted for $3.7 million, or 10%, of total revenue for the year ended December 31, 2021.
Added
The royalty payments were payable quarterly based on net revenues from sales of the co-developed catheters. Royalty revenue from the co-developed catheters represented 7% of revenue for the year ended December 31, 2022. Additionally, we have other broad strategic collaborations, including the development of the Stereotaxis MAGiC catheter, our next-generation robotically-navigated magnetic ablation catheter designed to perform cardiac ablation procedures.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

58 edited+24 added−9 removed231 unchanged
Biggest changeThe regulations that may affect our ability to operate include: ● the federal healthcare program Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal health care programs such as the Medicare and Medicaid programs; ● federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, and which may apply to entities like us if we provide coding and billing advice to customers; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibits executing a scheme to defraud any health care benefit program or making false statements relating to health care matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; and the applicable Privacy and Security Standards of HITECH, the Health Information Technology for Economic and Clinical Health Act, which is Title XIII of the American Recovery and Reinvestment Act; ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts, including the California Consumer Privacy Act, or CCPA, which is introduces new and far-reaching law data privacy compliance burdens on many organizations doing business in California who collect personal information about California residents; ● the General Data Protection Regulation, or GDPR, which imposes requirements for controllers and processors of personal data and is in effect across the European Economic Area, or EEA, such as imposing higher standards when obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information, increasing requirements pertaining to health data as well as pseudonymised data, and imposing additional obligations when we contract third-party processors in connection with the processing of personal data; ● federal self-referral laws, such as the Stark Anti-Referral Law, which prohibits a physician from making a referral to a provider of certain health services with which the physician or the physician’s family member has a financial interest; ● federal and state Sunshine laws, which require manufacturers of certain medical devices to collect and report information on payments or transfers of value to physicians and teaching hospitals, as well as investment interests held by physicians and their immediate family members; and ● regulations pertaining to receipt of CE mark for our products marketed outside of the United States and submission to periodic regulatory audits in order to maintain these regulatory approvals. 28 If our operations are found to be in violation of any of the laws described above or any other governmental laws or regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, loss of reimbursement for our products under federal or state government health programs such as Medicare and Medicaid and the curtailment or restructuring of our operations.
Biggest changeThe regulations that may affect our ability to operate include: ● the federal healthcare program Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal health care programs such as the Medicare and Medicaid programs; ● federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, and which may apply to entities like us if we provide coding and billing advice to customers; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibits executing a scheme to defraud any health care benefit program or making false statements relating to health care matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; and the applicable Privacy and Security Standards of HITECH, the Health Information Technology for Economic and Clinical Health Act, which is Title XIII of the American Recovery and Reinvestment Act; ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts, including the California Consumer Privacy Act, or CCPA, which is introduces new and far-reaching law data privacy compliance burdens on many organizations doing business in California who collect personal information about California residents; ● the General Data Protection Regulation, or GDPR, which imposes requirements for controllers and processors of personal data and is in effect across the European Economic Area, or EEA, such as imposing higher standards when obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information, increasing requirements pertaining to health data as well as pseudonymised data, and imposing additional obligations when we contract third-party processors in connection with the processing of personal data; ● federal self-referral laws, such as the Stark Anti-Referral Law, which prohibits a physician from making a referral to a provider of certain health services with which the physician or the physician’s family member has a financial interest; ● federal and state Sunshine laws, which require manufacturers of certain medical devices to collect and report information on payments or transfers of value to physicians and teaching hospitals, as well as investment interests held by physicians and their immediate family members; and ● regulations pertaining to receipt of CE mark for our products marketed outside of the United States and submission to periodic regulatory audits in order to maintain these regulatory approvals.
We subcontract all or part of the manufacture and assembly of components of our products and devices. The products we design may not satisfy all of the performance requirements of our customers and we may need to improve or modify the design or ask our subcontractors to modify their production process in order to do so.
We subcontract all or part of the manufacture and assembly of components of our products and devices. The products we design may not satisfy all the performance requirements of our customers and we may need to improve or modify the design or ask our subcontractors to modify their production process in order to do so.
As described in Note 10 of the accompanying notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K, on February 23, 2021, the Company`s Board of Directors, upon recommendation of the Compensation Committee, approved the grant of the Performance Share Unit Award (“CEO Performance Award”) pursuant to the CEO Performance Share Unit Award Agreement (the “PSU Agreement”), to David L.
As described in Note 9 of the accompanying notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K, on February 23, 2021, the Company`s Board of Directors, upon recommendation of the Compensation Committee, approved the grant of the Performance Share Unit Award (“CEO Performance Award”) pursuant to the CEO Performance Share Unit Award Agreement (the “PSU Agreement”), to David L.
Incurring such costs could have a material adverse effect on our financial condition, results of operations and cash flow. 25 We may not be able to maintain all the licenses or rights from third parties necessary for the development, manufacture, or marketing of new and existing products.
Incurring such costs could have a material adverse effect on our financial condition, results of operations and cash flow. We may not be able to maintain all the licenses or rights from third parties necessary for the development, manufacture, or marketing of new and existing products.
At this time, we are not able to determine the full consequences to us, including the total cost of compliance, of these various federal and state laws. Healthcare policy changes, including the potential repeal or amendment of any existing legislation, may have a material adverse effect on us.
At this time, we are not able to determine the full consequences to us, including the total cost of compliance, of these various federal and state laws. 28 Healthcare policy changes, including the potential repeal or amendment of any existing legislation, may have a material adverse effect on us.
Any delay in purchasing decisions or cancellation of purchasing commitments may result in a decrease in our revenues. A credit crisis could further affect our business if key suppliers are unable to obtain financing to manufacture our products or become insolvent and we are unable to manufacture product to meet customer demand.
Any delay in purchasing decisions or cancellation of purchasing commitments may result in a decrease in our revenues. A credit crisis could further affect our business if key suppliers are unable to obtain financing to manufacture our products or become insolvent and we are unable to manufacture products to meet customer demand.
If we have to abandon a product, our ability to develop and grow our business in new directions and markets would be adversely affected. Our products and related technologies can be applied in different medical applications, and we may fail to focus on the most profitable areas.
If we have to abandon a product, our ability to develop and grow our business in new directions and markets would be adversely affected. 25 Our products and related technologies can be applied in different medical applications, and we may fail to focus on the most profitable areas.
Continued disruptions to the capital markets and other financing sources could also negatively impact our hospital customers’ ability to raise capital or otherwise obtain financing to fund their operations and capital projects.
Disruptions to the capital markets and other financing sources could also negatively impact our hospital customers’ ability to raise capital or otherwise obtain financing to fund their operations and capital projects.
We may not be able to fund our business operations in the same manner as we have done historically if we do not improve the operating performance of the Company or raise additional capital. The Company has sustained operating losses throughout its corporate history and expects that its 2023 operating expenses will exceed its 2023 gross margin.
We may not be able to fund our business operations in the same manner as we have done historically if we do not improve the operating performance of the Company or raise additional capital. The Company has sustained operating losses throughout its corporate history and expects that its 2024 operating expenses will exceed its 2024 gross margin.
This could result in uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Maintaining appropriate standards of corporate governance and public disclosure may result in increased general and administrative expense and a diversion of management time and attention from revenue-generating activities to compliance activities.
This could result in uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Maintaining appropriate standards of corporate governance and public disclosure may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
We are aware of three companies that commercialized endovascular catheter navigation systems which have been cleared by the FDA for electrophysiology procedures as well as two companies with electromagnetic catheter navigation systems that received CE Mark approval in Europe. None of these companies seem to be active with any current commercial activities.
We are aware of four companies that commercialized endovascular catheter navigation systems which have been cleared by the FDA for electrophysiology procedures as well as two companies with electromagnetic catheter navigation systems that received CE Mark approval in Europe. None of these companies seem to be active in catheter robotics with any current commercial activities.
This growth and activity will likely result in new and increased responsibilities for management personnel and place significant strain upon our operating and financial systems and resources. To accommodate our growth and compete effectively, we will be required to improve our information systems, create additional procedures and controls and expand, train, motivate and manage our work force.
This growth and activity will likely result in new and increased responsibilities for management personnel and place significant strain upon our operating and financial systems and resources. To accommodate our growth and compete effectively, we will be required to improve our information systems, create additional procedures and controls and expand, train, motivate and manage our workforce.
While we cannot predict the effect, if any, that future sales of debt, our common stock, other equity securities or securities exercisable for or convertible into our common stock or other equity securities or the availability of any of the foregoing for future sale, will have on the market price of our common stock, it is likely that sales of substantial amounts of our common stock (including shares issued upon the exercise of stock options and stock appreciation rights, the vesting of the CEO Performance Share Unit Award and restricted stock units, or the conversion of any convertible securities outstanding now or in the future, including the Series A and Series B Convertible Preferred Stock), will dilute the ownership of our existing stockholders and that the perception that such sales could occur, will adversely affect prevailing market prices for our common stock.
While we cannot predict the effect, if any, that future sales of debt, our common stock, other equity securities or securities exercisable for or convertible into our common stock or other equity securities or the availability of any of the foregoing for future sale, will have on the market price of our common stock, it is likely that sales of substantial amounts of our common stock (including shares issued upon the exercise of stock options and stock appreciation rights, the vesting of the CEO Performance Share Unit Award and restricted stock units, the conversion of any convertible securities outstanding now or in the future, including the Series A Convertible Preferred Stock, or under our universal shelf registration statement), will dilute the ownership of our existing stockholders and that the perception that such sales could occur, will adversely affect prevailing market prices for our common stock.
While we cannot reliably estimate the ultimate duration of the impact or the severity of ongoing periodic resurgences thereof, we continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
While we cannot reliably estimate the ultimate duration of the impact or the severity of ongoing periodic resurgences of pandemic-related issues, we continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
If these clearances or approvals are not received or are substantially delayed or if we are not able to offer a sufficient array of approved disposable interventional devices, we may not be able to successfully market our system to as many institutions as we currently expect, which could have a material adverse impact on our financial condition, results of operations and cash flow. 26 Furthermore, obtaining 510(k) clearances, de novo approvals, PMAs or PMA supplement approvals, from the FDA could result in unexpected and significant costs for us and consume management’s time and other resources.
If these clearances or approvals are not received or are substantially delayed or if we are not able to offer either a sufficient array of approved disposable interventional devices or a fully integrated robotic magnetic navigation system, we may not be able to successfully market our system to as many institutions as we currently expect, which could have a material adverse impact on our financial condition, results of operations and cash flow. 26 Furthermore, obtaining 510(k) clearances, de novo approvals, PMAs or PMA supplement approvals, from the FDA could result in unexpected and significant costs for us and consume management’s time and other resources.
The robotic magnetic navigation systems, Model S x-ray System, and Odyssey Solution are typically purchased as part of a larger overall capital project and an economic downturn or the lack of a robust recovery might make it more difficult for our customers, including distributors, to obtain adequate financing to support the project or to obtain requisite approvals.
The robotic magnetic navigation systems, Odyssey Solution, and compatible x-ray systems are typically purchased as part of a larger overall capital project and an economic downturn or the lack of a robust recovery might make it more difficult for our customers, including distributors, to obtain adequate financing to support the project or to obtain requisite approvals.
Such could result in delayed spending on current projects, a longer sales cycle for new projects where a large capital commitment is required, and decreased demand for our disposable products as well as an increased risk of customer defaults or delays in payments for our systems installation, service contracts and disposable products.
Such could result in delayed spending on current projects, a longer sales cycle for new projects where a large capital commitment is required, and decreased demand for our disposable products as well as an increased risk of customer defaults or delays in payments for our system installations, service contracts and disposable products.
The expense will be recognized on an accelerated basis through 2030. Total stock-based compensation recorded as operating expense for the CEO Performance Award was $7.1 million for the year ended December 31, 2022. As of December 31, 2022, the Company had approximately $44.1 million of total unrecognized stock-based compensation expense remaining under the CEO Performance Award if Mr.
The expense will be recognized on an accelerated basis through 2030. Total stock-based compensation recorded as operating expense for the CEO Performance Award was $7.1 million for the year ended December 31, 2023. As of December 31, 2023, the Company had approximately $37.0 million of total unrecognized stock-based compensation expense remaining under the CEO Performance Award if Mr.
This may contribute to substantial fluctuations in our quarterly operating results. As a result, in future quarters our operating results could fall below the expectations of securities analysts or investors, in which event our stock price would likely decrease. Physicians may not use our products if they do not believe they are safe, efficient and effective.
As a result, in future quarters our operating results could fall below the expectations of securities analysts or investors, in which event our stock price would likely decrease. Physicians may not use our products if they do not believe they are safe, efficient and effective.
RISK FACTORS The following uncertainties and factors, among others, could affect future performance and cause actual results to differ materially from those expressed or implied by forward looking statements. 16 RISK FACTORS SUMMARY Risks Related to Our Business and Business Operations ● We may not generate cash from operations or be able to raise the necessary capital to continue operations. ● A pandemic, epidemic or outbreak of infectious disease could have an adverse effect our business, operating results or financial condition. ● We may not be able to fund our business operations in the same manner as we have done historically if we do not improve the operating performance of the Company or raise additional capital. ● Hospital decision-makers may not purchase our Robotic Magnetic Navigation Systems or related products or may think that such systems and products are too expensive. ● If we are unable to fulfill our current purchase orders and other commitments on a timely basis or at all, we may not be able to achieve future sales growth. ● We will likely experience long and variable sales and installation cycles, which could result in substantial fluctuations in our quarterly results of operations. ● Physicians may not use our products if they do not believe they are safe, efficient and effective. ● Our collaborations with fluoroscopy system manufacturers and providers of catheters and electrophysiology mapping systems or other parties may fail, or we may not be able to enter into additional collaborations in the future. ● The complexity associated with selling, marketing, and distributing products could impair our ability to increase revenue. ● Our marketing strategy is dependent on collaboration with physician “thought leaders.” ● Physicians may not commit enough time to sufficiently learn our system. ● Customers may choose to purchase competing products and not ours. ● If the magnetic fields generated by our system are not compatible with, or interfere with, other widely used equipment in the interventional labs, sales of our products would be negatively affected. ● The use of our products could result in product liability claims that could be expensive, divert management’s attention, and harm our reputation and business. ● We have incurred substantial losses in the past and may not be profitable in the future. ● Our reliance on contract manufacturers and on suppliers, and in some cases, a single supplier, could harm our ability to meet demand for our products in a timely manner or within budget. ● Risks associated with international manufacturing and trade could negatively impact the availability and cost of our products because materials used to manufacture our magnets, one of our key system components, are sourced from overseas. ● We may encounter problems at our manufacturing facilities or those of our subcontractors or otherwise experience manufacturing delays that could result in lost revenue. ● Our growth may place a significant strain on our resources, and if we fail to manage our growth, our ability to develop, market, and sell our products will be harmed.
RISK FACTORS SUMMARY Risks Related to Our Business and Business Operations ● We may not generate cash from operations or be able to raise the necessary capital to continue operations. ● Macroeconomic and geopolitical factors, as well as pandemics, epidemics or outbreaks of infectious disease could have an adverse effect our supply chain, our hospital customer buying patterns, and our ability to raise capital and could otherwise disrupt our normal business operations. 16 ● We may not be able to fund our business operations in the same manner as we have done historically if we do not improve the operating performance of the Company or raise additional capital. ● Hospital decision-makers may not purchase our robotic magnetic navigation systems or related products or may think that such systems and products are too expensive. ● If we are unable to fulfill our current purchase orders and other commitments on a timely basis or at all, we may not be able to achieve future sales growth. ● We will likely experience long and variable sales and installation cycles, which could result in substantial fluctuations in our quarterly results of operations. ● Physicians may not use our products if they do not believe they are safe, efficient and effective. ● Our collaborations with fluoroscopy system manufacturers and providers of catheters and electrophysiology mapping systems or other parties may fail, or we may not be able to enter into additional collaborations in the future. ● The complexity associated with selling, marketing, and distributing products could impair our ability to increase revenue. ● Our marketing strategy is dependent on collaboration with physician “thought leaders.” ● Physicians may not commit enough time to sufficiently learn our system. ● Customers may choose to purchase competing products and not ours. ● If the magnetic fields generated by our system are not compatible with, or interfere with, other widely used equipment in the interventional labs, sales of our products would be negatively affected. ● The use of our products could result in product liability claims that could be expensive, divert management’s attention, and harm our reputation and business. ● We have incurred substantial losses in the past and may not be profitable in the future. ● Our reliance on contract manufacturers and on suppliers, and in some cases, a single supplier, could harm our ability to meet demand for our products in a timely manner or within budget. ● Risks associated with international manufacturing and trade could negatively impact the availability and cost of our products because materials used to manufacture our magnets, one of our key system components, are sourced from overseas. ● We may encounter problems at our manufacturing facilities or those of our subcontractors or otherwise experience manufacturing delays that could result in lost revenue. ● Our growth may place a significant strain on our resources, and if we fail to manage our growth, our ability to develop, market, and sell our products will be harmed.
If we cannot raise capital on acceptable terms, we will not be able to, among other things: ● maintain customer and vendor relationships; ● hire, train and retain employees; ● maintain or expand our operations; ● enhance our existing products or develop new ones; ● respond to competitive pressures; or ● service our debt obligations and meet our financial covenants.
If we cannot raise capital on acceptable terms, we will not be able to, among other things: ● maintain customer and vendor relationships; ● hire, train and retain employees; ● maintain or expand our operations; ● enhance our existing products or develop new ones; or ● respond to competitive pressures.
We have incurred substantial net losses since inception, including incurring an accumulated deficit of $517.0 million as of December 31, 2022, and we expect to incur losses into the future as we continue the commercialization of our products. Moreover, the extent of our future losses and the timing of profitability are highly uncertain.
We have incurred substantial net losses since inception, including incurring an accumulated deficit of 537.7 million as of December 31, 2023, and we expect to incur losses into the future as we continue the commercialization of our products. Moreover, the extent of our future losses and the timing of profitability are highly uncertain.
If these parties cannot or do not manufacture sufficient quantities to meet customer demand, or if their manufacturing processes are disrupted, our revenue and profitability would be adversely affected.
If these parties cannot or do not manufacture sufficient quantities to meet customer demand, or if their manufacturing processes are disrupted, or if they are not able to service or warrant their products, our revenue and profitability would be adversely affected.
Our product commercialization plans could be disrupted, leading to lower than expected revenue and a material and adverse impact on our results of operations and cash flow, if: ● we fail to or are unable to maintain adequate compatibility of our products with the most prevalent imaging products or disposable interventional devices expected by our customers for their clinical practice; ● any of our collaboration partners delays or fails in the integration of its technology or new products with our robotic magnetic navigation system; ● any of our collaboration partners fails to develop or commercialize the integrated products in a timely manner; or ● we become involved in disputes with one or more of our collaboration partners regarding our collaborations or contractual rights and obligations related thereto.
Our product commercialization plans could be disrupted, leading to lower than expected revenue and a material and adverse impact on our results of operations and cash flow, if: 20 ● we fail to or are unable to maintain adequate compatibility of our products with the most prevalent imaging products or disposable interventional devices expected by our customers for their clinical practice; ● any of our collaboration partners delays or fails in the integration of its technology or new products with our robotic magnetic navigation system; ● any of our collaboration partners fails to develop, commercialize or support compatible products in a timely manner; ● any of our collaboration partners fails to maintain required regulatory approvals for their own products and such failure impacts our ability to deliver compatible systems in a timely manner or at all; or ● we become involved in disputes with one or more of our collaboration partners regarding our collaborations or contractual rights and obligations related thereto.
Any disruption to the capital markets could negatively impact our ability to raise capital. If the capital markets are disrupted for an extended period of time and we need to raise additional capital, such capital may not be available on acceptable terms, or at all.
If the capital markets are disrupted for an extended period of time and we need to raise additional capital, such capital may not be available on acceptable terms, or at all.
Unforeseen warranty exposure in excess of our established reserves for liabilities associated with product warranties could materially and adversely affect our financial condition, results of operations and cash flow. 29 Moreover, for certain risks, we do not maintain insurance coverage because of cost and/or availability.
In addition, our reputation and goodwill in the interventional lab market could be damaged. Unforeseen warranty exposure in excess of our established reserves for liabilities associated with product warranties could materially and adversely affect our financial condition, results of operations and cash flow. Moreover, for certain risks, we do not maintain insurance coverage because of cost and/or availability.
To-date, we have been generally able to conduct normal business activities albeit in a more deliberate manner than prior to the pandemic, including taking action to increase inventory levels, but we cannot guarantee that they will not be impacted more severely in the future.
We have generally been able to conduct normal business activities albeit in a more deliberate manner than prior to the pandemic, including taking action to increase inventory levels and engaging in discussions with our vendors on contractual obligations, but we cannot guarantee that they will not be impacted more severely in the future.
Future issuances of our securities could dilute current stockholders’ ownership. As of December 31, 2022, we had 5.6 million shares of our common stock issuable upon conversion of our Series B Convertible Preferred Stock and 47.4 million shares of our common stock issuable upon conversion of our Series A Convertible Preferred Stock.
Future issuances of our securities could dilute current stockholders’ ownership. As of December 31, 2023, we had 49.4 million shares of our common stock issuable upon conversion of our Series A Convertible Preferred Stock.
If we are unable to improve the operating performance of the Company or if we are unable to obtain sufficient additional capital, it may impair our ability to obtain new customers or hire and retain employees, any of which could force us to substantially revise our business plan or cease operations, which may reduce or negate the value of your investment. 19 Hospital decision-makers may not purchase our Robotic Magnetic Navigation Systems or related products or may think that such systems and products are too expensive.
If we are unable to improve the operating performance of the Company or if we are unable to obtain sufficient additional capital, it may impair our ability to obtain new customers or hire and retain employees, any of which could force us to substantially revise our business plan or cease operations, which may reduce or negate the value of your investment.
We cannot assure you that we will recognize revenue in any particular period or at all because some of our purchase orders and other commitments are subject to contingencies that are outside our control.
Our backlog includes those outstanding purchase orders and other commitments that management believes will result in recognition of revenue upon delivery or installation of our systems. We cannot assure you that we will recognize revenue in any particular period or at all because some of our purchase orders and other commitments are subject to contingencies that are outside our control.
Our failure to do any of these things could result in lower revenue and adversely affect our financial condition and results of operations, and we may have to curtail or cease operations. A pandemic, epidemic or outbreak of infectious disease could have an adverse effect our business, operating results or financial condition.
Our failure to do any of these things could result in lower revenue and adversely affect our financial condition and results of operations, and we may have to curtail or cease operations.
We may also experience significant reductions in demand for our disposable products if our healthcare customers (physicians and hospitals) re-prioritize the treatment of patients and divert resources away from non-coronavirus areas, which we anticipate could lead to the performance of fewer procedures in which our disposable products are used.
We also experienced reductions in demand for our disposable products as our healthcare customers (physicians and hospitals) re-prioritized the treatment of patients and diverted resources away from non-coronavirus areas, leading to the performance of fewer procedures in which our disposable products are used.
Because we retain some portion of our insurable risks and, in some cases, we are entirely self-insured, unforeseen or catastrophic losses in excess of insurance coverage could require us to pay substantial amounts, which may have a material adverse impact on our business, financial condition, results of operations, or cash flows.
Because we retain some portion of our insurable risks and, in some cases, we are entirely self-insured, unforeseen or catastrophic losses in excess of insurance coverage could require us to pay substantial amounts, which may have a material adverse impact on our business, financial condition, results of operations, or cash flows. 29 Risks Related to Our Common Stock Our principal stockholders continue to own a large percentage of our voting stock, and they have the ability to substantially influence matters requiring stockholder approval.
Some of our collaborators are large , global organizations with diverse product lines and interests that may diverge from our interests in commercializing our products.
Our collaborators range from small and midsized organizations which may have limited resources to large , global organizations with diverse product lines and interests that may diverge from our interests in commercializing our products.
If physicians do not use our products, we likely will not become profitable or generate sufficient cash to fund company operations going forward. 20 Our collaborations with fluoroscopy system manufacturers and providers of catheters and electrophysiology mapping systems or other parties may fail, or we may not be able to enter into additional collaborations in the future.
Our collaborations with fluoroscopy system manufacturers and providers of catheters and electrophysiology mapping systems or other parties may fail, or we may not be able to enter into additional collaborations in the future.
In addition, we may rely on our distributors and strategic collaborations, in some instances, to assist us in this regulatory approval process in countries outside the U.S. and Europe, for example, in Japan. We may fail to comply with continuing regulatory requirements of the FDA and other authorities and become subject to enforcement action, which may include substantial penalties.
In addition, we may rely on our distributors and strategic collaborations, in some instances, to assist us in this regulatory approval process in countries outside the U.S. and Europe, for example, in China and Japan.
We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
There are no guarantees that any existing strategic relationships will continue and efforts are ongoing to ensure the availability of compatible next generation systems and/or equivalent alternatives. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
Fischel, and our compensation package, including the CEO Performance Award, may fail to retain him. Summary of General Risk Factors ● General economic conditions could materially adversely impact us. ● We may lose key personnel or fail to attract and retain replacement or additional personnel. ● We face currency and other risks associated with international operations.
Summary of General Risk Factors ● General economic conditions could materially adversely impact us. ● We maintain our cash at financial institutions, often in balances that exceed federally insured limits. ● We may lose key personnel or fail to attract and retain replacement or additional personnel. ● We face currency and other risks associated with international operations.
In addition, if we are unable to enter into additional collaborations in the future, or if these collaborations fail, our ability to develop and commercialize products could be impacted negatively and our revenue could be adversely affected. The complexity associated with selling, marketing, and distributing products could impair our ability to increase revenue.
In addition, if we are unable to enter into additional collaborations in the future, or if these collaborations fail, our ability to develop and commercialize products could be impacted negatively and our revenue could be adversely affected. For example, our agreement with Biosense Webster expired by its terms on December 31, 2022.
During 2022, our common stock traded between $1.55 and $7.22 per share, on trading volume ranging from approximately 42,900 to 5.9 million shares per day.
During 2023, our common stock traded between $1.33 and $2.75 per share, on trading volume ranging from approximately 44,500 to 5.0 million shares per day.
It is also possible that as our products become more widely used, latent defects could be identified, creating negative publicity and liability problems for us and adversely affecting demand for our products.
It is also possible that as our products become more widely used, latent defects could be identified, creating negative publicity and liability problems for us and adversely affecting demand for our products. If physicians do not use our products, we likely will not become profitable or generate sufficient cash to fund company operations going forward.
This may cause delays or cancellations of current purchase orders and other commitments and may exacerbate the long and variable sales and installation cycles for our robotic magnetic navigation systems.
Hospitals continue to experience challenges with staffing and cost pressures as supply chain constraints and inflation drive up operating costs. This may cause delays or cancellations of current purchase orders and other commitments and may exacerbate the long and variable sales and installation cycles for our robotic magnetic navigation systems.
Outside of electrophysiology, there are at least two companies that have commercialized robotic systems for guidewire manipulation and can be viewed as potential competitors as we look to address additional clinical applications.
Outside of electrophysiology, there are at least two companies that have commercialized robotic systems for guidewire manipulation and can be viewed as potential competitors as we look to address additional clinical applications. We are pursuing regulatory approvals for the Stereotaxis MAGiC catheter, a robotically-navigated magnetic ablation catheter designed to perform minimally invasive cardiac ablation procedures, in various global geographies.
In addition, many of our hospital customers, for whom the purchase of our system involves a significant capital purchase which may be part of a larger construction project at the customer site (typically the construction of a new building), may themselves be under economic pressures.
A material reduction or interruption in any of our manufacturing processes or a substantial increase in costs would have a material adverse effect on our business, operating results, and financial condition. 18 Many of our hospital customers, for whom the purchase of our system involves a significant capital purchase which may be part of a larger construction project at the customer site (typically the construction of a new building), may themselves be under economic pressures.
Any disruptions in product flow may harm our ability to generate revenue, lead to customer dissatisfaction, damage our reputation and result in additional costs or cancellation of orders by our customers. We rely on other parties to manufacture our Model S x-ray system and a number of disposable interventional devices for use with our robotic magnetic navigation system.
Any disruptions in product flow may harm our ability to generate revenue, lead to customer dissatisfaction, damage our reputation and result in additional costs or cancellation of orders by our customers.
In addition, hospitals may delay their purchase or installation decision for the robotic magnetic navigation system based on the disposable interventional devices that have received regulatory clearance or approval. Moreover, the robotic magnetic navigation system is an expensive piece of capital equipment, representing a significant portion of the cost of a new or replacement interventional lab.
The robotic magnetic navigation system is a novel device, and hospitals and physicians are traditionally slow to adopt new products and treatment practices. In addition, hospitals may delay their purchase or installation decision for the robotic magnetic navigation system based on the disposable interventional devices that have received regulatory clearance or approval.
If hospitals do not widely adopt our systems, or if they decide that they are too expensive, we may never become profitable. Any failure to sell as many systems as our business plan requires could also have a seriously detrimental impact on our results of operations, financial condition, liquidity position, and cash flow.
Any failure to sell as many systems as our business plan requires could also have a seriously detrimental impact on our results of operations, financial condition, liquidity position, and cash flow. 19 If we are unable to fulfill our current purchase orders and other commitments on a timely basis or at all, we may not be able to achieve future sales growth.
Similarly, in 2022, procedure volumes continued to be challenged by periodic resurgences of COVID-19, ongoing hospital staffing issues and other factors. 18 We have experienced business disruptions, including travel restrictions on us and our third-party distributors, which have negatively affected our complex sales, marketing, installation, distribution and service network relating to our products and services.
During the COVID-19 pandemic, we experienced business disruptions, including travel restrictions on us and our third-party distributors, which negatively affected our complex sales, marketing, installation, distribution and service network relating to our products and services, and that may occur again in the future.
A significant portion of our revenue from system sales is derived from these integrated products. The maintenance of these collaborations, or the establishment of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of integrated next generation systems and/or equivalent alternatives.
A significant portion of our revenue from system sales is derived from these compatible products. The maintenance of these collaborations, or the establishment of equivalent alternatives, is critical to our commercialization efforts. In the past, we have experienced disruptions and changes in our strategic relationships.
Consequently, negative changes to this backlog or its failure to grow commensurate with expectations could negatively impact our future operating results or our share price. Our backlog includes those outstanding purchase orders and other commitments that management believes will result in recognition of revenue upon delivery or installation of our systems.
Our backlog, which consists of purchase orders and other commitments, is considered by some investors to be a significant indicator of future performance. Consequently, negative changes to this backlog or its failure to grow commensurate with expectations could negatively impact our future operating results or our share price.
If our manufacturing operations or supply chains are materially interrupted, it may not be possible for us to timely manufacture relevant products at required levels, or at all. Changes in economic conditions and supply chain constraints could lead to higher inflation than previously experienced or expected, which could, in turn, lead to an increase in costs.
Our suppliers and contract manufacturers have experienced, and may continue to experience, similar difficulties. If our manufacturing operations or supply chains are materially interrupted, it may not be possible for us to timely manufacture or service our products at required levels, or at all.
As of the date of the filing of this Annual Report on Form 10-K, we have experienced challenges and disruptions due to the pandemic such as periodic worldwide supply chain disruptions, including shortages and inflationary pressures, and logistics delays which makes it difficult for us to source parts and ship our products.
The Company continues to experience difficulties with periodic worldwide supply chain disruptions, including shortages and inflationary pressures, and logistics delays which make it difficult for us to source parts and ship our products.
We cannot assure you that the time from purchase order to delivery for systems to be delivered in the future will be consistent with our historical experience. Moreover, the continuation of the current global economic slowdown has caused, and may continue to cause, our customers to delay construction or significant capital purchases, which could further lengthen our sales cycle.
We cannot assure you that the time from purchase order to delivery for systems to be delivered in the future will be consistent with our historical experience.
In some cases, these companies are responsible for obtaining appropriate regulatory clearance or approval to market these disposable devices.
In some cases, these companies are responsible for obtaining appropriate regulatory clearance or approval to market these disposable devices. We also have arrangements with fluoroscopy system manufacturers to provide a complete solution for a robotic interventional operating room and these manufacturers have the obligation maintain appropriate regulatory clearance or approval to market and sell these systems.
We may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation. A material reduction or interruption to any of our manufacturing processes or a substantial increase in costs would have a material adverse effect on our business, operating results, and financial condition.
Changes in economic conditions and supply chain constraints could lead to higher inflation than previously experienced or expected, which could, in turn, lead to an increase in costs. We may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation.
Although priced significantly below a robotic magnetic navigation system, the Odyssey Solution is still an expensive product. While we have developed and designed the Stereotaxis Imaging Model S System to reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice, this strategy may not be successful.
While we have partnered with fluoroscopy manufacturers to reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice, this strategy may not be successful. If hospitals do not widely adopt our systems or partnered products or if they decide that our systems are too expensive, we may never become profitable.
To achieve and grow sales, hospitals must purchase our products, and in particular, our robotic magnetic navigation system. The robotic magnetic navigation system is a novel device, and hospitals and physicians are traditionally slow to adopt new products and treatment practices.
Hospital decision-makers may not purchase our robotic magnetic navigation systems or related products or may think that such systems and products are too expensive. To achieve and grow sales, hospitals must purchase our products, and in particular, our robotic magnetic navigation systems.
If product returns or warranty claims increase, we could incur unanticipated additional expenditures for parts and service. In addition, our reputation and goodwill in the interventional lab market could be damaged.
Additionally, we rely on the warranty provided by our third-party suppliers, including our fluoroscopy system providers. If product returns or warranty claims increase, or if our third-party suppliers do not honor their warranty obligations to us or certain claims are not covered thereunder, we could incur unanticipated additional expenditures for parts and service.
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The global healthcare system is continuing to respond to the unprecedented challenges posed by the COVID-19 pandemic.
Added
ITEM 1A. RISK FACTORS The following uncertainties and factors, among others, could affect future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements.
Removed
While we cannot reliably estimate the duration of the impact, or the severity of ongoing resurgences, we continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Added
Fischel, and our compensation package, including the CEO Performance Award, may fail to retain him.
Removed
For example, in 2021, resurgences of COVID-19 as well as hospital staffing shortages depressed procedure volumes at various times throughout the year. After such resurgences procedure volumes would generally stabilize or recover.
Added
Macroeconomic and geopolitical factors, as well as pandemics, epidemics or outbreaks of infectious disease could have an adverse effect our supply chain, our hospital customer buying patterns, and our ability to raise capital and could otherwise disrupt our normal business operations. Future results of operations could be materially adversely impacted by macroeconomic and geopolitical factors.
Removed
The COVID-19 pandemic may continue to negatively affect demand for both our systems and our disposable products by limiting the ability of our sales personnel to maintain their customary contacts with customers as a result of preventative and precautionary measures that we, our customers, other businesses and governments have taken and may continue to take.
Added
Our hospital customers have also experienced challenges in sourcing supplies, such as catheters, needed to perform procedures. Such shortages have, and may continue to, put pressure on procedures and our disposable revenue. Any disruption to the capital markets could negatively impact our ability to raise capital.
Removed
Our customers have also experienced similar supply chain issues as well as labor shortages, both of which have contributed to delayed hospital construction project timelines.
Added
In addition to the aforementioned macroeconomic factors, the COVID-19 pandemic negatively affected demand for both our systems and our disposable products, and future similar occurrences may do so in the future.
Removed
If governmental authorities around the world reinstitute preventative and precautionary measures such as prolonged mandatory closures, social distancing protocols and shelter-in-place orders, or as private parties on whom we rely to operate our business put in place their own protocols that go beyond those instituted by relevant governmental authorities, our ability to adequately staff and maintain our operations or further our product development could be negatively impacted.
Added
Significant decreases to our capital or recurring revenues could have a material adverse effect on our business, operating results, and financial condition.
Removed
The global healthcare system is continuing to respond to the unprecedented challenges posed by the COVID-19 pandemic.
Added
Moreover, the robotic magnetic navigation system is an expensive piece of capital equipment, representing a significant portion of the cost of a new or replacement interventional lab. Although priced significantly below a robotic magnetic navigation system, the Odyssey Solution is still an expensive product.
Removed
If we are unable to fulfill our current purchase orders and other commitments on a timely basis or at all, we may not be able to achieve future sales growth. Our backlog, which consists of purchase orders and other commitments, is considered by some investors to be a significant indicator of future performance.
Added
Moreover, as noted above, the global macroeconomic and geopolitical factors, including those related to the COVID-19 pandemic, have caused, and may continue to cause, our customers to delay construction or significant capital purchases, which could further lengthen our sales cycle. This may contribute to substantial fluctuations in our quarterly operating results.
Removed
Risks Related to Our Common Stock Our principal stockholders continue to own a large percentage of our voting stock, and they have the ability to substantially influence matters requiring stockholder approval.
Added
For example, supply chain disruptions have led to vendor discussions regarding contractual performance which we intend to resolve through continued negotiations but may require us to assert performance issues under our vendor agreements; in such event, we may not be successful in our claims, and even if we are successful, we may experience supply disruptions.
Added
While the agreement provides for a continuation of supply by Biosense Webster of the co-developed catheters to us or our customers for three years following the termination, we no longer receive royalty payments from Biosense Webster.
Added
Although we are in the process of establishing alternative catheter supply arrangements, including the development of a fully owned magnetically enabled ablation catheter, we cannot guarantee that those arrangements will be successful.
Added
Failure to establish alternatives may reduce the likelihood that physician users will continue to use our technology which will have a negative impact on our future revenue, cash flow and operations.
Added
Even if we are successful in establishing one or more alternatives, we cannot guarantee that those arrangements will replace the royalty revenue stream previously received from the sale of the Biosense Webster catheter. The complexity associated with selling, marketing, and distributing products could impair our ability to increase revenue.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company leased approximately 2,200 square feet of office space in Maple Grove, Minnesota, under a lease agreement that ended August 31, 2022. The Company also has leased office space in Amsterdam, The Netherlands through August 31, 2023. In addition, we lease an office space in Beijing, China under a lease agreement through November 29, 2023.
Biggest changeThe Company leased approximately 2,200 square feet of office space in Maple Grove, Minnesota, under a lease agreement that ended August 31, 2022. The Company also has leased office space in Amsterdam, The Netherlands through June 30, 2024. In addition, we lease an office space in Beijing, China under a lease agreement through November 29, 2026.
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The Company’s previous primary facilities were also located in St. Louis, Missouri and the Company leased approximately 52,000 square feet of office space and 12,000 square feet of demonstration and assembly space under a lease agreement that ended December 31, 2021.
Removed
In August 2016, the Company entered into an agreement to sublease approximately 11,000 square feet of office space immediately and an additional 16,000 square feet of office space beginning in January of 2017. The sublease ended December 31, 2021.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeChanges in and Disagreements With Accountants on Accounting and Financial Disclosure 64 Item 9A. Controls and Procedures 64 Item 9B. Other Information 65 PART III Item 10. Directors and Executive Officers of the Registrant 65 Item 11. Executive Compensation 65 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 65 Item 13.
Biggest changeChanges in and Disagreements With Accountants on Accounting and Financial Disclosure 63 Item 9A. Controls and Procedures 63 Item 9B. Other Information 64 PART III Item 10. Directors and Executive Officers of the Registrant 64 Item 11. Executive Compensation 64 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 64 Item 13.
Item 4. Mine Safety Disclosures 34 Part II Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6. Selected Financial Data 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 8. Financial Statements and Supplementary Data 42 Item 9.
Item 4. Mine Safety Disclosures 34 Part II Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6. Selected Financial Data 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 8. Financial Statements and Supplementary Data 41 Item 9.
Certain Relationships and Related Person Transactions and Director Independence 66 Item 14. Principal Accounting Fees and Services 66 PART IV Item 15. Exhibits and Financial Statement Schedules 6 6 2 PART I
Certain Relationships and Related Person Transactions and Director Independence 65 Item 14. Principal Accounting Fees and Services 65 PART IV Item 15. Exhibits and Financial Statement Schedules 65 2 PART I

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of February 28, 2023, there were approximately 415 stockholders of record of our common stock, although we believe that there is a significantly larger number of beneficial owners of our common stock.
Biggest changeAs of February 29, 2024, there were approximately 419 stockholders of record of our common stock, although we believe that there is a significantly larger number of beneficial owners of our common stock. 34

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

61 edited+31 added−25 removed45 unchanged
Biggest changeWe used less than $1.4 million of cash in investing activities during the year ended December 31, 2021 for the purchase of equipment, design and construction costs associated with our new facility . Net cash provided by financing activities . We generated approximately $0.2 million and $0.5 million of cash for the years ended December 31, 2022 and 2021, respectively.
Biggest changeCash provided by investing activities for the year ended December 31, 2023, consisted of $19.8 million. The cash generated during the year ended December 31, 2023, was from proceeds received from the maturity of short-term investments of $20.1 million, partially offset by $0.4 million of cash paid for equipment, construction and design costs associated with our new facility .
Direct control of the tip of an interventional device, in contrast to all manual hand-held devices that are controlled from their handle, can improve the precision, stability, reach and safety of these devices during procedures. 34 Our primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias.
Direct control of the tip of an interventional device, in contrast to all manual hand-held devices that are controlled from their handle, can improve the precision, stability, reach and safety of these devices during procedures. Our primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias.
Income Taxes Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. Accordingly, net deferred tax assets have been fully offset by valuation allowances as of December 31, 2022 and December 31, 2021 to reflect these uncertainties.
Income Taxes Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. Accordingly, net deferred tax assets have been fully offset by valuation allowances as of December 31, 2023, and December 31, 2022, to reflect these uncertainties.
In addition, we do not engage in trading activities involving non-exchange traded contracts. As a result, we are not materially exposed to any financing, liquidity, market or credit risk that could have arisen if we had engaged in these relationships. 41
In addition, we do not engage in trading activities involving non-exchange traded contracts. As a result, we are not materially exposed to any financing, liquidity, market or credit risk that could have arisen if we had engaged in these relationships. 40
Consequently, revenues and/or orders resulting from sales of our robotic magnetic navigation system can vary significantly from one reporting period to the next. 35 We have strategic relationships with technology leaders in the global interventional market.
Consequently, revenues and/or orders resulting from sales of our robotic magnetic navigation system can vary significantly from one reporting period to the next. We have strategic relationships with technology leaders and innovators in the global interventional market.
The Company believes the cash, cash equivalents, and investments on hand as of December 31, 2022, will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date of the financial statements included in this Annual Report on Form 10-K, as well as for periods beyond that 12-month period.
The Company believes the cash, and cash equivalents on hand as of December 31, 2023, will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date of the financial statements included in this Annual Report on Form 10-K, as well as for periods beyond that 12-month period.
We have received regulatory clearances and registration necessary for us to market the Genesis RMN System in the U.S. and Europe, and we are in the process of obtaining necessary registrations for extending our markets in other countries.
We have received regulatory clearances and approvals necessary for us to market the Genesis RMN System in the U.S. and Europe, and we are in the process of obtaining necessary registrations for extending our markets in other countries.
Our revenue recognition policy affects the following revenue streams in our business as follows: Systems: Contracts related to the sale of systems typically contain separate obligations for the delivery of system(s), installation and an implied obligation to provide software enhancements if and when available for one year following installation.
Our revenue recognition policy affects the following revenue streams in our business as follows: Systems: Contracts related to the sale of systems typically contain separate obligations for the delivery of system(s), installation, service-type warranty, and an implied obligation to provide software enhancements if and when available for one year following installation.
Through these strategic relationships we provide compatibility between our robotic magnetic navigation system and digital imaging and 3D catheter location sensing technology, as well as disposable interventional devices. The maintenance of these strategic relationships, or the establishment of equivalent alternatives, is critical to our commercialization efforts.
Through these strategic relationships we provide compatibility between our robotic magnetic navigation system, x-ray systems, and digital imaging and 3D catheter location sensing technology, as well as disposable interventional devices. The maintenance of these strategic relationships, or the establishment of equivalent alternatives, is critical to our commercialization efforts.
While we cannot reliably estimate the ultimate duration of the impact or the severity of ongoing periodic resurgences thereof, we continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
While we cannot reliably estimate the ultimate duration of the impact or the severity of ongoing periodic resurgences of pandemic-related issues, we continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities, and capital system orders and placements, any of which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Other Recurring Revenue: Other recurring revenue includes revenue from product maintenance plans, other post warranty maintenance, and the implied obligation to provide software enhancements if and when available for a specified period, typically one year following installation of our systems.
Other Recurring Revenue: Other recurring revenue includes revenue from product maintenance plans, service-type warranties, other post warranty maintenance, and the implied obligation to provide software enhancements if and when available for a specified period, typically one year following installation of our systems.
The costs capitalized as contract acquisition costs included in prepaid expenses and other assets in the Company’s balance sheets were $0.2 million as of December 31, 2022 and 2021. The Company did not incur any impairment losses during any of the periods presented.
The costs capitalized as contract acquisition costs included in prepaid expenses and other assets in the Company’s balance sheets were $0.1 million and $0.2 million as of December 31, 2023 and 2022, respectively. The Company did not incur any impairment losses during any of the periods presented.
Cash used in investing activities for the year ended December 31, 2022, consisted primarily of purchases of investments of $19.7 million and $2.4 million paid for equipment, design and construction costs associated with our new facility.
Cash used in investing activities for the year ended December 31, 2022, consisted primarily of purchases of investments of $19.7 million and $2.4 million paid for equipment, design and construction costs associated with our new facility. Net cash provided by financing activities .
As of December 31, 2022, we had gross state net operating loss carryforward of approximately $32.8 million which will expire at various dates between 2023 and 2042 if not utilized. Liquidity and Capital Resources Liquidity refers to the liquid financial assets available to fund our business operations and pay for near-term obligations.
As of December 31, 2023, we had gross state net operating loss carryforward of approximately $40.2 million which will expire at various dates between 2024 and 2042 if not utilized. Liquidity and Capital Resources Liquidity refers to the liquid financial assets available to fund our business operations and pay for near-term obligations.
Level 2: Values are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or other model-based valuation techniques for which all significant assumptions are observable in the market. Level 3: Values are generated from model-based techniques that use significant assumptions not observable in the market.
Level 2: Values are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or other model-based valuation techniques for which all significant assumptions are observable in the market.
Our prior generation robotic magnetic navigation system, the Niobe System, and the Odyssey Solution, Cardiodrive , and various disposable interventional devices have received regulatory clearance in the U.S., Europe, Canada, China, Japan and various other countries.
The Niobe System, our prior generation robotic magnetic navigation system, the Odyssey Solution, Cardiodrive , e-Contact, and various disposable interventional devices have received regulatory clearances and approvals in the U.S., Europe, Canada, China, Japan and various other countries.
Estimates of the expected life of options have been based on the average of the vesting and expiration periods, which is the simplified method under general accounting principles for share-based payments. Estimates of volatility utilized in calculating stock-based compensation have been prepared based on historical data.
Estimates of the expected life of options have been based on the average of the vesting and expiration periods, which is the simplified method under general accounting principles for share-based payments. Estimates of volatility utilized in calculating stock-based compensation have been prepared based on historical data. Actual experience to date has been consistent with these estimates.
We used approximately $8.4 million and $2.9 million of cash in operating activities during the years ended December 31, 2022 and 2021, respectively. The increase in cash used in operating activities was driven by the increased operating loss and use of working capital in the current year period. Net cash used in investing activities .
We used approximately $9.1 million and $8.4 million of cash in operating activities during the years ended December 31, 2023 and 2022, respectively. The increase in cash used in operating activities was driven by the increased operating loss offset by changes in working capital in the current year period. Net cash provided by (used in) investing activities .
To-date, we have been generally able to conduct normal business activities albeit in a more deliberate manner than prior to the pandemic, including taking action to increase inventory levels, but we cannot guarantee that they will not be impacted more severely in the future.
We have generally been able to conduct normal business activities albeit in a more deliberate manner than prior to the pandemic, including taking action to increase inventory levels and engaging in discussions with our vendors on contractual obligations, but we cannot guarantee that they will not be impacted more severely in the future.
Stock-based Compensation Stock compensation expense, which is a non-cash charge, results from stock option, non-qualified stock options, stock appreciation rights, and restricted share grants made to employees, directors, and third-party consultants at the fair value of the grants.
Cost of revenue from services and license fees are recorded when incurred. Stock-based Compensation Stock compensation expense, which is a non-cash charge, results from stock option, non-qualified stock options, stock appreciation rights, and restricted share grants made to employees, directors, and third-party consultants at the fair value of the grants.
The Company did not have any impairment losses on its contract assets for the periods presented. 37 Assets Recognized from the Costs to Obtain a Contract with a Customer The Company has determined that sales incentive programs for the Company’s sales team meet the requirements to be capitalized as the Company expects to generate future economic benefits from the related revenue generating contracts after the initial capital sales transaction.
Assets Recognized from the Costs to Obtain a Contract with a Customer The Company has determined that sales incentive programs for the Company’s sales team meet the requirements to be capitalized as the Company expects to generate future economic benefits from the related revenue generating contracts after the initial capital sales transaction.
Actual experience to date has been consistent with these estimates. 38 For market-based awards, stock-based compensation expense is recognized over the minimum service period regardless of whether or not the market target is probable of being achieved. The fair value of such awards is estimated on the grant date using Monte Carlo simulations.
For market-based awards, stock-based compensation expense is recognized over the minimum service period regardless of whether or not the market target is probable of being achieved. The fair value of such awards is estimated on the grant date using Monte Carlo simulations.
Revenue from the implied obligation to deliver software enhancements if and when available is recognized ratably typically over the first year following installation of the system as the customer receives the right to software updates throughout the period and is included in Other Recurring Revenue. The Company’s system contracts generally do not provide a right of return.
Revenue from service-type warranties and the implied obligation to deliver software enhancements if and when available is included in Other Recurring Revenue and is recognized ratably typically over the first year following installation of the system as the customer receives the service-type warranty and right to software updates throughout the period.
Results of Operations Comparison of the Years ended December 31, 2022 and 2021 Revenue . Revenue decreased from $35.0 million for the year ended December 31, 2021, to $28.1 million for the year ended December 31, 2022, a decrease of approximately 20%.
Results of Operations Comparison of the Years ended December 31, 2023 and 2022 Revenue . Revenue decreased from $28.1 million for the year ended December 31, 2022, to $26.8 million for the year ended December 31, 2023, a decrease of approximately 5%.
Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers . 36 We generate revenue from the initial capital sales of systems as well as recurring revenue from the sale of our proprietary disposable devices, from royalties paid to the Company on the sale of various devices as provided by co-development and co-placement arrangements, and from other recurring revenue including ongoing software updates and service contracts.
We generate revenue from the initial capital sales of systems as well as recurring revenue from the sale of our proprietary disposable devices, from royalties paid to the Company on the sale of various devices as provided by co-development and co-placement arrangements, and from other recurring revenue including ongoing software updates and service contracts.
Liquidity The following table summarizes our cash flow by operating, investing and financing activities for years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, 2022 2021 Cash flow used in operating activities $ (8,415 ) $ (2,946 ) Cash flow used in investing activities (22,094 ) (1,397 ) Cash flow provided by financing activities 220 547 40 Net cash used in operating activities .
Liquidity The following table summarizes our cash flow by operating, investing and financing activities for years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Cash flow used in operating activities $ (9,139 ) $ (8,415 ) Cash flow provided by (used in) investing activities 19,765 (22,094 ) Cash flow provided by financing activities 81 220 Net cash used in operating activities .
Each level of input has different levels of subjectivity and difficulty involved in determining fair value. Valuation of Level 1 and 2 instruments generally do not require significant management judgment, and the estimation is not difficult.
Level 3: Values are generated from model-based techniques that use significant assumptions not observable in the market. 37 Each level of input has different levels of subjectivity and difficulty involved in determining fair value. Valuation of Level 1 and 2 instruments generally do not require significant management judgment, and the estimation is not difficult.
The federal net operating losses generated in 2018 and thereafter will be carried forward indefinitely as a result of changes in the tax law following the Tax Cuts and Jobs Act.
The federal net operating loss carryforwards generated prior to the 2018 tax year of approximately $98.8 million will expire between 2030 and 2037. The federal net operating losses generated in 2018 and thereafter will be carried forward indefinitely as a result to changes in the tax law following the Tax Cuts and Jobs Act.
Cost of revenue for systems sold decreased from $7.5 million for the year ended December 31, 2021 to $5.8 million for the year ended December 31, 2022, primarily due to decreased system sales volumes in the current year period.
The decrease was primarily due to changes in product mix. Cost of revenue for systems sold increased from $5.8 million for the year ended December 31, 2022, to $8.1 million for the year ended December 31, 2023, primarily due to increased system sales volumes and period costs in the current year period.
Deferred revenue is primarily related to service contracts, for which the service fees are billed up-front, generally quarterly or annually, and for amounts billed in advance for system contracts for which some performance obligations remain outstanding. For service contracts, the associated deferred revenue is generally recognized ratably over the service period.
Customer deposits primarily relate to future system sales but can also include deposits on disposable sales. Deferred revenue is primarily related to service contracts, for which the service fees are billed up-front, generally quarterly or annually, and for amounts billed in advance for system contracts for which some performance obligations remain outstanding.
Revenue from sales of systems decreased from $11.2 million for the year ended December 31, 2021, to $6.8 million for the year ended December 31, 2022, a decrease of approximately 39%, driven by decreased system sales volumes in the current year period.
Revenue from sales of systems increased from $6.8 million for the year ended December 31, 2022, to $8.7 million for the year ended December 31, 2023, an increase of approximately 28%, driven by increased system sales volumes in the current year period.
Overview Stereotaxis is a pioneer and global leader in surgical robotics for minimally invasive endovascular intervention. We design, manufacture and market robotic systems, instruments and information systems for the interventional laboratory. Our proprietary robotic technology, Robotic Magnetic Navigation (RMN), fundamentally transforms endovascular interventions using precise computer-controlled magnetic fields to directly control the tip of flexible interventional catheters or devices.
Overview Stereotaxis designs, manufactures and markets robotic systems, instruments and information systems for the interventional laboratory. Our proprietary robotic technology, Robotic Magnetic Navigation, fundamentally transforms endovascular interventions using precise computer-controlled magnetic fields to directly control the tip of flexible interventional catheters or devices.
Contract assets primarily represent the difference between the revenue that was recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements. Customer deposits primarily relate to future system sales but can also include deposits on disposable sales.
Contract assets primarily represent the difference between the revenue that was earned but not billed on service contracts and revenue from system contracts that was recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements.
The decrease in working capital was primarily driven by the net loss incurred during the year ended December 31, 2022. Our principal source of liquidity is cash provided by operations and by the issuance of common stock through the exercise of stock options and our employee stock purchase program as well as cash received from past equity raises.
Our principal source of liquidity is cash provided by operations and by the issuance of common stock through the exercise of stock options and our employee stock purchase program as well as cash received from past equity raises.
Systems are generally covered by a one-year assurance type warranty; warranty costs were approximately $0.1 million and $0.2 million for the years ended December 31, 2022 and 2021, respectively.
The Company’s system contracts generally do not provide a right of return. Systems are generally covered by a one-year service-type warranty or a one-year assurance-type warranty. Warranty costs for assurance-type warranty arrangements were approximately $0.5 million and $0.1 million for the years ended December 31, 2023 and 2022, respectively.
The cash generated in both periods was driven by the exercise of stock options and our employee stock purchase program. At December 31, 2022, we had working capital of approximately $29.0 million, compared to a working capital of approximately $38.1 million at December 31, 2021.
We generated approximately $0.1 million and $0.2 million of cash for the years ended December 31, 2023 and 2022, respectively. The cash generated in both periods was driven by the exercise of stock options and our employee stock purchase program.
Research and development expense increased from $10.2 million for the year ended December 31, 2021, to $10.6 million for the year ended December 31, 2022, an increase of approximately 4%. This increase was primarily due to higher project spending and measured hiring in the current year period. 39 Sales and Marketing Expense.
Research and development expenses decreased from $10.6 million for the year ended December 31, 2022, to $10.3 million for the year ended December 31, 2023, a decrease of approximately 3%. This decrease was primarily due to project timing in the current year period. Sales and Marketing Expense.
As of December 31, 2022, we had approximately $14.8 million of backlog, consisting of outstanding purchase orders and other commitments for these systems. Of the December 31, 2022 backlog, we expect approximately 89% to be recognized as revenue over the course of 2023. We had backlog of approximately $10.1 million as of December 31, 2021.
Of the December 31, 2023 backlog, we expect approximately 81% to be recognized as revenue over the course of 2024. We had backlog of approximately $14.8 million as of December 31, 2022.
In hospitals where our full suite of products has not been implemented, equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.
The recurring payments typically include disposable costs for each procedure, equipment service costs beyond the warranty period, and ongoing software updates. In hospitals where our full suite of products has not been implemented, equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.
General and administrative expenses include finance, information systems, legal, and general management expenses. General and administrative expenses increased from $14.0 million for the year ended December 31, 2021 to $14.4 million for the year ended December 31, 2022, an increase of approximately 3%.
Sales and marketing expenses remained consistent with $12.4 million for the year ended December 31, 2023, as compared to $12.3 million for the year ended December 31, 2022, an increase of less than 1%. General and Administrative Expense . General and administrative expenses include finance, information systems, legal, and general management expenses.
The federal net operating loss carryforwards reflect accumulated book losses reduced for the 2013 IRC Section 382 ownership change limitation of $236.4 million and approximately $159.2 million of book/tax differences and expiration of unused carryforwards. The federal net operating loss carryforwards generated prior to the 2018 tax year will expire between 2030 and 2037.
As of December 31, 2023, we had gross federal net operating loss carryforwards of approximately $127.4 million. The federal net operating loss carryforwards reflect accumulated book losses reduced for the 2013 IRC Section 382 ownership change limitation of $213.7 million, book/tax differences and expiration of unused carryforwards.
For system contracts, the associated deferred revenue is recognized when the remaining performance obligations are satisfied. See Note 2 to the financial statements for additional detail on deferred revenue.
For service contracts, the associated deferred revenue is generally recognized ratably over the service period. For system contracts, the associated deferred revenue is recognized when the remaining performance obligations are satisfied. See Note 2 to the financial statements for additional details on deferred revenue. The Company did not have any impairment losses on its contract assets for the periods presented.
Net i nterest income was $0.5 million for the year ended December 31, 2022, and net interest expense was less than $0.1 million for the year ended December 31, 2021. The increase for the year ended December 31, 2022 was driven by interest earned from investments.
Net i nterest income was $1.1 million for the year ended December 31, 2023, and $0.5 million for the year ended December 31, 2022. The increase was driven by increased interest rates and higher return on invested balances in the current year period.
Performing the procedure from a control cockpit enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency. We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging or unsuccessful and generates significant x-ray exposure.
Performing the procedure from a control cockpit enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency.
Revenue from sales of disposable interventional devices, service and accessories decreased to $21.3 million for the year ended December 31, 2022, from $22.9 million for the year ended December 31, 2021, a decrease of approximately 7%, driven by timing of service contract revenue, lower procedure volumes, and the strengthening of the U.S. dollar during the current year period.
Revenue from sales of disposable interventional devices, service and accessories decreased to $18.0 million for the year ended December 31, 2023, from $21.3 million for the year ended December 31, 2022, a decrease of approximately 15%.
This information can be accessed from locations throughout the hospital local area network and over the global Odyssey Network providing physicians with a tool for clinical collaboration, remote consultation, and training. The Stereotaxis Imaging Model S provides an integrated complete solution for a robotic interventional operating room.
This information can be accessed from locations throughout the hospital local area network and over the global Odyssey Network providing physicians with a tool for clinical collaboration, remote consultation, and training. 35 We have arrangements with fluoroscopy system manufacturers to provide such systems in a bundled purchase offer for hospitals establishing robotic interventional operating rooms.
Gross margin for systems decreased from $3.6 million for the year ended December 31, 2021 to $1.0 million for the year ended December 31, 2022.
Gross margin for systems decreased from $1.0 million for the year ended December 31, 2022, to $0.7 million for the year ended December 31, 2023. Cost of revenue for disposables, service, and accessories remained consistent at $3.9 million for years ended December 31, 2022, and 2023.
Not all products have and/or require regulatory clearance in all of the markets we serve. Please refer to “Regulatory Approval” in Item 1 for a description of the regulatory clearance, licensing, and/or approvals we currently have or are pursuing.
Please refer to “Regulatory Approval” in Item 1 for a description of the regulatory clearance, licensing, and/or approvals we currently have or are pursuing. As of December 31, 2023, we had approximately $14.7 million of backlog, consisting of outstanding purchase orders and other commitments for these systems.
Gross margin for disposables, service and accessories was 82% for the current year period compared to 86% for the year ended December 31, 2021. Cost of sublease revenue was $1.0 million the year ended December 31, 2021. The sublease ended December 31, 2021. Research and Development Expense .
Gross margin for disposables, service and accessories was 79% for the current year period compared to 82% for the year ended December 31, 2022, driven by changes in product mix and higher costs under service contracts in the current year period. Research and Development Expense .
As a percentage of our total revenue, overall gross margin remained consistent at 66% for the years ended December 31, 2022 and December 31, 2021.
Cost of revenue increased from $9.7 million for the year ended December 31, 2022, to $11.9 million for the year ended December 31, 2023, an increase of approximately 23%. As a percentage of our total revenue, overall gross margin was 56% and 66% for the years ended December 31, 2023, and December 31, 2022, respectively.
Warranty costs were not material for the periods presented. Royalty: The Company received royalty payments from Biosense Webster, payable quarterly based on net revenues from sales of the co-developed catheters.
The Company was entitled to royalty payments from Biosense Webster, payable quarterly based on net revenues from sales of the co-developed catheters, during the term of the agreement, which expired December 31, 2022.
Revenue from services and software enhancements is deferred and amortized over the service or update period, which is typically one year. Revenue related to services performed on a time-and-materials basis is recognized when performed. Sublease Revenue: A portion of our principal executive office was subleased to a third party through 2021. The sublease ended December 31, 2021.
Revenue from services and software enhancements, service-type warranties, and the implied obligation to provide software enhancements are deferred and amortized over the service or update period, which is typically one year. Revenue related to services performed on a time-and-materials basis is recognized when performed. 38 The Company invoices its customers based on the billing schedules in its sales arrangements.
These costs are recorded at the time of sale. Costs of disposable revenue include direct product costs and estimated warranty costs and are recorded at the time of sale. Cost of revenue from services and license fees are recorded when incurred. Cost of sublease revenue is recorded on a straight-line basis.
Cost of Contracts Costs of systems revenue include direct product costs, installation labor and other costs, estimated warranty costs, initial training costs and product maintenance costs. These costs are recorded at the time of sale. Costs of disposable revenue include direct product costs and estimated warranty costs and are recorded at the time of sale.
There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of integrated systems and devices and/or equivalent alternatives. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all.
There are no guarantees that any existing strategic relationships will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. For example, prior to the expiration of our agreement Biosense Webster on December 31. 2022, we received quarterly royalty payments based on net revenues from sales of co-developed catheters with Biosense Webster.
This implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically includes equipment and installation charges. The recurring payments typically include disposable costs for each procedure, equipment service costs beyond the warranty period, and ongoing software updates.
We promote our full suite of products in a typical hospital implementation, subject to regulatory approvals or clearances. This implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically includes equipment and installation charges.
Similarly, in 2022, procedure volumes continued to be challenged by periodic resurgences of COVID-19, ongoing hospital staffing issues and other factors. We have experienced challenges and disruptions due to the pandemic such as worldwide supply chain disruptions, including shortages and inflationary pressures, and logistics delays which makes it difficult for us to source parts and ship our products.
The Company continues to experience difficulties with periodic worldwide supply chain disruptions, including shortages and inflationary pressures, and logistics delays which make it difficult for us to source parts and ship our products.
COVID-19 Pandemic The impact of the COVID-19 pandemic has varied widely over time by individual geography. In 2021, resurgences of COVID-19 as well as hospital staffing shortages depressed procedure volumes at various times throughout the year. After such resurgences procedure volumes would generally stabilize or recover.
The impact has varied widely over time by individual geography. In 2022, procedure volumes were challenged by periodic resurgences of COVID-19, ongoing hospital staffing issues and other factors.
These liquid financial assets consist of cash, cash equivalents, and investments. As of December 31, 2022, our accumulated deficit was $517.0 million with cash and cash equivalents of $9.9 million, inclusive of restricted cash, and $19.8 million in short-term investments.
These liquid financial assets consist of cash, cash equivalents, and investments. 39 As of December 31, 2023, our accumulated deficit was $537.7 million with cash and cash equivalents of $20.6 million, inclusive of restricted cash. Since inception, we have financed our operations primarily through cash generated by operations and proceeds from our debt and stock offerings.
Sales and marketing expense increased from $11.9 million for the year ended December 31, 2021 to $12.3 million for the year ended December 31, 2022, an increase of approximately 3%. This increase was primarily due to higher travel expenses in the current year period. General and Administrative Expense .
General and administrative expenses decreased from $14.4 million for the year ended December 31, 2022, to $14.1 million for the year ended December 31, 2023, a decrease of approximately 2%. This decrease was primarily driven by lower administrative expenses, professional service fees and reduced currency loss in the current year period. Interest Income.
We have received the regulatory clearance, licensing and/or CE Mark approvals that allow us to market the Vdrive and Vdrive Duo Systems with the V-CAS , V-Loop and V-Sono devices in the U.S., Canada and Europe. The Stereotaxis Imaging Model S x-ray System is CE marked and cleared by the FDA.
We have received the regulatory clearances and approvals that allow us to market the Vdrive and Vdrive Duo Systems with the V-CAS device in the U.S. and Canada. We are pursuing regulatory approvals for the Stereotaxis MAGiC catheter, a robotically-navigated magnetic ablation catheter designed to perform minimally invasive cardiac ablation procedures, in various global geographies.
The combination of RMN Systems with Stereotaxis Imaging Model S is designed to reduce the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice. We promote our full suite of products in a typical hospital implementation, subject to regulatory approvals or clearances.
These are single-plane, full-power x-ray systems and include the c-arm and powered table. The combination of RMN Systems with our partnered x-ray systems reduces the cost of acquisition, the ongoing cost of ownership, and the complexity of installation of a robotic electrophysiology practice.
Removed
Our primary products include the Genesis RMN System, the Odyssey Solution, and other related devices. We also offer to our customers the Stereotaxis Imaging Model S x-ray System and other accessory devices.
Added
We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging or unsuccessful and generates significant x-ray exposure, and we are investing in research and development in these areas. Our primary products include the Genesis RMN System, the Odyssey Solution, and other related devices.
Removed
It is a single-plane, full-power x-ray system and includes the c-arm, powered table, motorized boom, and large high-definition monitors. The Stereotaxis Imaging Model S x-ray System incorporates modern fluoroscopy technology to support high quality imaging while minimizing radiation exposure for patients and physicians.
Added
Through our strategic relationships with fluoroscopy system manufacturers, providers of catheters and electrophysiology mapping systems, and other parties, we offer our customers magnetically compatible x-ray systems and other accessory devices.
Removed
Our customers have also experienced similar supply chain issues as well as labor shortages, both of which have contributed to delayed hospital construction project timelines.
Added
Approval processes can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications could be denied. Not all products have and/or require regulatory clearance in all of the markets we serve.
Removed
The global healthcare system is continuing to respond to the unprecedented challenges posed by the COVID-19 pandemic.
Added
Such royalty payments represented 7% of revenue for the year ended December 31, 2022. We cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent alternatives on competitive terms or at all. Risks and Uncertainties Future results of operations could be materially adversely impacted by macroeconomic and geopolitical factors.
Removed
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) , the Company recorded sublease income as revenue. The Company invoices its customers based on the billing schedules in its sales arrangements.
Added
Our suppliers and contract manufacturers have experienced, and may continue to experience, similar difficulties. If our manufacturing operations or supply chains are materially interrupted, it may not be possible for us to timely manufacture or service our products at required levels, or at all.
Removed
Leases The Company accounts for leases in accordance with ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.
Added
Changes in economic conditions and supply chain constraints could lead to higher inflation than previously experienced or expected, which could, in turn, lead to an increase in costs. We may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation.
Removed
The Company determines if a contract contains a lease at inception. For contracts where the Company is the lessee, operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liability on the Company’s balance sheet. The Company currently does not have any finance leases.
Added
A material reduction or interruption in any of our manufacturing processes or a substantial increase in costs would have a material adverse effect on our business, operating results, and financial condition.
Removed
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received.
Added
Many of our hospital customers, for whom the purchase of our system involves a significant capital purchase which may be part of a larger construction project at the customer site (typically the construction of a new building), may themselves be under economic pressures.
Removed
The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised.
Added
Hospitals continue to experience challenges with staffing and cost pressures as supply chain constraints and inflation drive up operating costs. This may cause delays or cancellations of current purchase orders and other commitments and may exacerbate the long and variable sales and installation cycles for our robotic magnetic navigation systems.
Removed
Lease expense is recognized on a straight-line basis over the lease term. The Company also has lease arrangements with lease and non-lease components. The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s operating leases.

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