Stereotaxis Inc

Risks Related to our Recently Completed Acquisition of APT

We may be unable to successfully integrate APT into our business and may fail to realize any or all of the anticipated benefits of the acquisition, or those benefits may take longer to realize than expected.

Prior to the completion of our acquisition of APT, both companies previously operated independently and manufactured different products. The success of the acquisition will depend, in part, on our ability to (i) successfully integrate APT’s businesses into Stereotaxis, (ii) successfully manufacture, commercialize, develop and sell APT’s catheters and related products, and (iii) realize the anticipated benefits, including synergies, cost savings, innovation opportunities and operational efficiencies, from the acquisition, all in a manner that does not materially disrupt existing customer, supplier and employee relations. If we are unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully or at all, or may take longer to realize than expected, and the value of our common stock may decline.

The integration of APT into our business may result in material challenges, including, without limitation:

Many of these factors are outside of our control, and any one of them could result in delays, increased costs, decreases in the amount of expected cost savings or synergies and diversion of management’s time and energy, which could materially affect our financial position, results of operations and cash flows.

Our future results may be adversely impacted if we do not effectively manage APT’s catheter manufacturing business following the completion of the acquisition.

As a result of the acquisition, we will be managing APT’s ongoing business of manufacturing, commercializing, development and sales of APT’s catheters and related products and services. The manufacturing process of catheters is complex, highly technical, and our prior experience in this field is dated. The process can be subject to periodic worldwide supply chain disruptions, including labor shortages and inflationary pressures, and logistics delays which make it difficult for us to source parts and ship our products. We may require a higher level of overhead than currently anticipated. Our ability to successfully manage this new aspect of our business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of APT into us, but also the increased scope of the combined business with its associated increased costs and complexity. There can be no assurances that we will be successful in manufacturing catheter products or that we will realize the expected operating efficiencies, cost savings and other benefits anticipated from the acquisition.

The issuance of the Earnout Consideration will result in dilution to our stockholders and may adversely affect us, including the market price of our securities.

At the closing of the acquisition of APT on July 31, 2024, we issued 1,486,620 shares (the “Upfront Stock Consideration”) to the APT Holding Company, Inc. (the “Seller”). In addition, the Purchase Agreement requires us to issue additional shares (the “Additional Earnout Shares”) to the Seller upon achievement of the revenue and regulatory approval milestones. We are required to file a resale registration statement relating to the Upfront Stock Consideration and Additional Earnout Shares and anticipate it will cover an aggregate of approximately 6.1 million shares, which includes an estimated 4,613,380 Additional Earnout Shares. However, the actual number of Additional Earnout Shares issued to the Seller could be materially greater or less than thenumber we currently estimate, depending whether and to what extent the future revenue milestones are met and/or regulatory approvals are obtained, as well as the actual average closing price of our Common Stock calculated pursuant to a formula near the time such milestones are achieved. If such Additional Earnout Shares are issued under the Purchase Agreement, there will be significant additional dilution to the Company’s stockholders, and even in the event that the Additional Earnout Shares are not issued, the potential for the issuance of such shares may negatively affect the trading price of our Common Stock in anticipation of such dilution. Sales of a substantial number of shares comprising the Upfront Stock Consideration or any Additional Earnout Shares in the public market, or the perception that such sales may occur, could adversely affect the market price of our securities.

Under certain circumstances, we may take certain actions to achieve the milestones under the Purchase Agreement that we would not have undertaken if we had not completed the acquisition, which may have an adverse effect on the historical business of Stereotaxis.

During the revenue earnout periods under our Purchase Agreement, which end on September 30, 2029, we agreed to operate APT and its business in a commercially reasonable manner as conducted prior to the closing, taken as a whole, including maintaining relationships with customers, suppliers, independent contractors, governmental entities, and others having business dealings with it consistent with APT’s practice prior to the closing. We agreed not to take any action during the revenue earnout periods which has as its intended purpose the diminution of the earnout consideration.

While we retain the sole authority tooperate and control APT’s business and its operations, including without limitation, any and all decisions relating various aspects of their and our combined business, we may nevertheless take certain actions related to the milestones that we would not have undertaken if we had not completed the acquisition.