Stereotaxis, Inc. (STXS) Risk Factors

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.

RISK
FACTORS SUMMARY

Risks
Related to Our Business and Business Operations

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Risks
Related to our Recently Completed Acquisition of APT

Risks
Relating to Technology and Intellectual Property Matters

Risks
Relating to Regulatory and Legal Matters

18

Risks
Related to Our Common Stock

Risks
Related to the February 2021 CEO Performance Stock Unit Grant

Summary
of General Risk Factors

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.

We
may require additional funds to meet our operational, working capital and capital expenditure needs in the future. We cannot be certain
that we will be able to obtain additional funds on favorable terms or at all. If we cannot raise capital on acceptable terms, we will
not be able to, among other things:

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.

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Macroeconomic
and geopolitical factors, as well as pandemics, epidemics or outbreaks of infectious disease could have an adverse effect on our supply
chain, our hospital customers buying patterns, and our ability to raise capital and could otherwise disrupt our normal business operations.

Future
results of operations and liquidity could be materially adversely impacted by uncertainties in macroeconomic and geopolitical factors
in both the U.S. and globally including continuing introduction of new or modification of existing tariffs or trade barriers, supply
chain challenges, inflationary pressures, elevated interest rates, and disruptions in commodity markets stemming from conflicts, such
as those between Russia and Ukraine and conflicts in the Middle East, including Israel and Iran. The Company continues to experience
difficulties with periodic worldwide supply chain disruptions, including shortages and inflationary pressures, tariffs and other trade
regulations that are or may be imposed, and logistics delays which make it difficult for us to source parts and ship our products. We
continue to evaluate the macroeconomics business environment, taking action to increase inventory levels where appropriate and engaging
in discussions with our vendors on contractual obligations, but we cannot guarantee that our business activities will not be impacted
more severely in the future. 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. Changes in economic conditions, government shutdowns, tariff escalation, retaliatory measures
and new import restrictions could lead to higher inflation than previously experienced or expected, which could, in turn create supply
shortages as companies seek alternative sources of supply and adjust their logistics and transportation routes. As a result of these
factors, we may be unable to raise the prices of our products sufficiently to keep up with the rate of inflation, especially tariff-induced
inflation. 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.

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 similar pressures.
Hospitals continue to experience challenges with staffing and cost pressures as supply chain constraints and inflation drive up operating
costs. Hospitals may also be adversely affected by the liquidity concerns driven by elevated interest rates and the broader macroeconomic
environment. These factors could 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. 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. Delays in order placement, cancellation of existing orders and reduced demand or availability
of our disposable products all would have a material adverse effect on our business, financial condition, and results of operations.

Any
disruption to the capital markets could negatively impact our ability to raise capital. If the capital markets are disrupted for an extended
period and we need to raise additional capital, such capital may not be available on acceptable terms, or at all. 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. 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.

In
addition to the macroeconomic factors, occurrences similar to the COVID-19 pandemic may negatively affect demand for both our systems
and our disposable products. In the past, we have 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. 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-pandemic areas, leading to the performance of
fewer procedures in which our disposable products are used. The impact varied widely over time by individual geography. For instance,
in 2022, procedure volumes were challenged by periodic resurgences of COVID-19, ongoing hospital staffing issues and other factors. In
the first quarter of 2023, COVID-19 resurgences in China continued to negatively impact our procedure volumes in that region, but as
infections and hospitalization decreased, we saw a recovery of procedure volumes with no further impacts in the year. Significant decreases
to our capital or recurring revenues could have a material adverse effect on our business, operating results, and financial condition.
We continue to anticipate periodic disruptions to our manufacturing operations, supply chains, procedures volumes, service activities,
and capital system orders and placements relating to new or ongoing periodic resurgences of pandemic-related issues, any of which could
have a material adverse effect on our business, financial condition, results of operations, or cash flows.

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 2026 operating expenses will exceed its
2026 gross margin. The Company expects to continue to incur operating losses and negative cash flows until revenues reach a level sufficient
to support ongoing operations or expense reductions are in place. The Company’s liquidity needs will be largely determined by the
success of clinical adoption within the installed base of our robotic magnetic navigation system as well as new placements of capital
systems. The Company’s plans for improving the liquidity conditions primarily include its ability to control the timing and spending
of its operating expenses and raising additional funds through debt or equity financing.

There
can be no assurance that any of our plans will be successful or that additional capital will be available to us on reasonable terms,
or at all, when needed. 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.

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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. The robotic
magnetic navigation system is a novel device, and hospitals and physicians are traditionally cautious in adopting 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. 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, our Odyssey and Synchrony Solution are still expensive
products. Further, 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.
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.

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. 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 or other products. We cannot assure you that
we will recognize revenue in any period or at all because some of our purchase orders and other commitments are subject to contingencies
that are outside our control. In addition, these orders and commitments may be revised, modified or cancelled, either by their express
terms, as a result of negotiations or by project changes or delays. System installation is, by its nature, subject to the interventional
lab construction or renovation process which comprises multiple stages, all of which are outside of our control. Although the actual
installation of our robotic magnetic navigation system requires only a few weeks and can be accomplished by either our staff or by subcontractors,
successful installation of our system can be subjected to delays related to the overall construction or renovation process. If we experience
any failures or delays in completing the installation of these systems, our reputation would suffer and we may not be able to sell additional
systems. We have experienced situations in which our purchase orders and other commitments did not result in recognizing revenue. In
addition to construction delays, there are risks that an institution will attempt to cancel a purchase order as a result of subsequent
project review by the institution or the departure from the institution of physicians or physician groups who have expressed an interest
in purchasing our products.

Decreases
in our backlog have occurred in the past and could occur in the future, causing delays in revenue recognition or even removal of orders
and other commitments from our backlog. Such events would have a negative effect on our revenue and results of operations.

We
will likely experience long and variable sales and installation cycles, which could result in substantial fluctuations in our quarterly
results of operations.

We
anticipate that our robotic magnetic navigation system will continue to have a lengthy sales cycle because it consists of a relatively
expensive piece of capital equipment, the purchase of which requires the approval of senior management at hospitals, inclusion in the
hospitals’ interventional lab budget process for capital expenditures, and, in some instances, a certificate of need from the state
or other regulatory approval. In addition, historically most of our products have been delivered less than one year after receipt of
a purchase order from a hospital, with the timing being dependent on the construction cycle for the new or replacement interventional
suite in which the equipment will be installed. In some cases, this time frame has been extended further because the interventional suite
construction is part of a larger construction project at the customer site (typically the construction of a new building), which may
occur with our existing and future purchase orders. 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, as noted above, the global macroeconomic and
geopolitical factors 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. 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.

We
believe that physicians will not use our products unless they determine that our products provide a safe, effective and preferable alternative
to interventional methods in general use today. If longer-term patient studies or clinical experience indicate that treatment with our
system or products is less effective, less efficient or less safe than our current data suggest, our sales would be harmed, and we could
be subject to significant liability. Further, unsatisfactory patient outcomes or patient injury could cause negative publicity for our
products, particularly in the early phases of product introduction. In addition, physicians may be slow to adopt our products if they
perceive liability risks arising from the use of these new 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.

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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.

We
have collaborated with and are continuing to collaborate with fluoroscopy system manufacturers and providers of catheters and electrophysiology
mapping systems and other parties to make our instrument control technology compatible with their respective imaging products or disposable
interventional devices and to co-develop additional disposable interventional devices for use with our products. 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. 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.

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:

For
example, supply chain disruptions have led to vendor discussions regarding contractual performance which we generally resolve through
negotiations, although in one instance we have been required to assert performance issues under the vendor agreement. We may not be successful
in our negotiations or claim, and even if we are successful, we may continue to experience supply disruptions. 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. Accordingly, our collaborators may not devote adequate
resources to our products, or may experience financial difficulties, change their business strategy or undergo a business combination
that may affect their willingness or ability to fulfill their obligations to us.

The
termination or failure of one or more of our collaborations could have a material adverse effect on our financial condition, results
of operations and cash flow. 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 Johnson & Johnson expired by its terms on December 31, 2022 ending the receipt of royalty payments on
the J&J catheters. While that agreement provided for a continuation of supply by Johnson & Johnson of the J&J catheters to
us or our customers for three years following the termination, that obligation lapsed on December 31, 2025. Although we are in the process
of establishing alternative catheter supply arrangements, including our proprietary magnetically enabled ablation catheter, we cannot
guarantee that an adequate alternative catheter supply will be available in a timely manner. Failure to maintain an adequate supply of
magnetically enabled ablation catheters 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. Even if we are successful in establishing an adequate alternate
supply, it is unlikely that those arrangements will replace the royalty revenue stream previously received from the sale of the J&J
catheter.

The
complexity associated with selling, marketing, and distributing products could impair our ability to increase revenue.

We
currently market our products in the U.S., Europe and the rest of the world through a direct sales force of senior sales specialists,
distributors and sales agents, supported by account managers and clinical specialists who provide training, clinical support, and other
services to our customers. If we are unable to effectively utilize our existing sales force or increase our existing sales force in the
foreseeable future, we may be unable to generate the revenue we have projected in our business plan. Factors that may inhibit our sales
and marketing efforts include:

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In
addition, if we fail to effectively use distributors or contract sales agents for distribution of our products where appropriate, our
revenue and profitability would be adversely affected.

Our
marketing strategy is dependent on collaboration with physician “thought leaders.”

Our
research and development efforts and our marketing strategy depend heavily on obtaining support, physician training assistance, and collaboration
from highly regarded physicians at leading commercial and research hospitals, particularly in the U.S. and Europe. If we are unable to
gain and/or maintain such support, training services, and collaboration or if the reputation or standing of these physicians is impaired
or otherwise adversely affected, our ability to market our products and, as a result, our financial condition, results of operations
and cash flow could be materially and adversely affected.

Physicians
may not commit enough time to sufficiently learn our system.

For
physicians to learn to use the robotic magnetic navigation system, they must attend structured training sessions to familiarize themselves
with a sophisticated user interface and they must be committed to learning the technology. Further, physicians must utilize the technology
on a regular basis to ensure they maintain the skill set necessary to use the interface. Continued market acceptance could be delayed
by lack of physician willingness to attend training sessions, by the time required to complete this training, or by state or institutional
restrictions on our ability to provide training. An inability to train enough physicians to generate adequate demand for our products
could have a material adverse impact on our financial condition and cash flow.

Customers
may choose to purchase competing products and not ours.

Our
products must compete with traditional interventional methods. These methods are widely accepted in the medical community, have a long
history of use and do not require the purchase of an additional expensive piece of capital equipment. In addition, many of the medical
conditions that can be treated using our products can also be treated with pharmaceuticals or other medical devices and procedures. Many
of these alternative treatments are also widely accepted in the medical community and have a long history of use.

We
also face competition from companies that are developing robotic technologies for electrophysiology and non-electrophysiology interventional
procedures. 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. 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
have obtained the CE marking for us to market the Stereotaxis MAGiC catheter, a robotically-navigated magnetic ablation catheter,
designed to perform minimally invasive cardiac ablation procedures, in Europe and are pursuing regulatory approval in the U.S. and various
other global geographies. We are aware of two other companies that also produce and sell magnetically enabled catheters. Approval processes
can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications
could be denied.

We
face competition from companies that are developing drugs, gene or cellular therapies or other medical devices or procedures to treat
the conditions for which our products are intended. The medical device and pharmaceutical industries make significant investments in
research and development, and innovation is rapid and continuous. Other companies in the medical device industry continue to develop
new devices and technologies for traditional interventional methods.

If
these or other new products or technologies emerge that provide the same or superior benefits as our products at equal or lesser cost,
it could render our products obsolete or unmarketable. In addition, the presence of other competitors may cause potential customers to
delay their purchasing decisions, resulting in a longer than expected sales cycle, even if they do not choose our competitors’
products. We cannot be certain that physicians will use our products to replace or supplement established treatments or that our products
will be competitive with current or future products and technologies.

Many
of our other competitors also have longer operating histories, significantly greater financial, technical, marketing and other resources,
greater name recognition and a larger base of customers than we do. In addition, as the markets for medical devices develop, additional
competitors could enter the market. We cannot assure you that we will be able to compete successfully against existing or new competitors.
Our revenue would be reduced or eliminated if our competitors develop and market products that are more effective and less expensive
than our products.

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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.

Our
robotic magnetic navigation system generates magnetic fields that directly govern the motion of the internal, or working, tip of disposable
interventional devices. If other equipment in the interventional labs or elsewhere in a hospital is incompatible with the magnetic fields
generated by our system, or if our system interferes with such equipment, we may be required to install additional shielding, which may
be expensive and which may not solve the problem. If magnetic interference becomes a significant issue at targeted institutions, it will
increase our installation costs at those institutions and could limit the number of hospitals that would be willing to purchase and install
our systems, either of which would adversely affect our financial condition, results of operations and cash flow.

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.

Our
business exposes us to significant risks of product liability claims. The medical device industry has historically been litigious, and
we could face product liability claims if the use of our products were to cause injury or death. The coverage limits of our product liability
insurance policies may not be adequate to cover future claims, and we may be unable to maintain product liability insurance in the future
at satisfactory rates or adequate amounts. A product liability claim, regardless of its merit or eventual outcome, could divert management’s
attention, and result in significant legal defense costs, significant harm to our reputation and a decline in revenue.

We
have incurred substantial losses in the past and may not be profitable in the future.

We
have incurred substantial net losses since inception, including incurring an accumulated deficit of $583.4 million as of December 31,
2025, 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. Although we have achieved operating profitability during certain
quarters, we may not achieve profitable operations on an annual basis, and if we achieve profitable operations, we may not sustain or
increase profitability on a quarterly or annual basis. If we require more time than we expect to generate significant revenue and achieve
annual profitability, or if we are unable to sustain profitability once achieved, we may not be able to continue our operations. Our
failure to achieve annual profitability or sustain profitability on an annual or quarterly basis could negatively impact the market price
of our common stock. Furthermore, even if we achieve significant revenue, we may choose to pursue a strategy of increasing market penetration
and presence or expand or accelerate new product development or clinical research activities at the expense of profitability.

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.

We
depend on contract manufacturers to produce and assemble certain of the components of our systems and other products such as our electrophysiology
catheter advancement device and other disposable devices. We also depend on various third-party suppliers for the magnets we use in our
robotic magnetic navigation system and certain components of our Odyssey and Synchrony & SynX Solutions. In addition,
some of the components necessary for the assembly of our products are currently provided to us by a single supplier, including the magnets
for our robotic magnetic navigation system and certain components of our Odyssey Solution, and we generally do not maintain large
volumes of inventory. Our reliance on these third parties involves a number of risks, including, among other things, the risk that:

If
any of these risks materialize, it could significantly increase our costs and impair product delivery.

Lead
times for materials and components ordered by us and our contract manufacturers vary and depend on factors such as the specific supplier,
contract terms and demand for a component at a given time. We, and our contract manufacturers, acquire materials, complete standard subassemblies
and assemble fully configured systems based on sales forecasts. If orders do not match forecasts, we, as well as our contract manufacturers,
may have excess or inadequate inventory of materials and components.

In
the past, some critical suppliers have stopped providing us with the components and services necessary for the operation of our business,
requiring us to identify alternate sources. We cannot guarantee that another manufacturer or supplier will not, in the future, stop providing
us with components or services necessary for the operation of our business, and if that were to occur, we cannot guarantee that we would
be able to identify alternate sources in a timely fashion or at all. In the past, transitions to alternate manufacturers and suppliers
has resulted in operational problems, increased expenses, and limitations on our ability to provide our products. We cannot assure you
that we would be able to enter into agreements with new manufacturers or suppliers on commercially reasonable terms or at all. Additionally,
obtaining components from a new supplier may require a new or supplemental filing with applicable regulatory authorities and clearance
or approval of the filing before we could resume product sales. 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.

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We
rely on other parties to manufacture, and in some cases to service, magnetically compatible x-ray systems, catheter sensing technology,
and a number of disposable interventional devices for use with our robotic magnetic navigation system. If these parties experience, as
some have had in the past, various challenges including the ability to manufacture sufficient quantities to meet customer demand, disruption
of their manufacturing processes, or an inability to service or warrant their products, our revenue and profitability would be adversely
affected.

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
purchase the permanent magnets for our robotic magnetic system from a manufacturer that uses material produced in Japan, and we anticipate
that a certain amount of the production work for these magnets will be performed for this manufacturer in China. Given the complex relationships
between China and the U.S., political, diplomatic, military, or other events could result in business disruptions, including increased
regulatory enforcement against companies, tariffs, trade embargoes, and export restrictions relating to this production work. For example,
in 2020, the U.S. government amended the Entity List rules to expand the requirement to obtain a license prior to the export of certain
technologies. In addition, in 2020, a new U.S. regulation sought to prohibit the U.S. government from contracting with companies who
use the products or services of certain Chinese companies.

While
we believe that these regulations do not materially impact our business at this time, we cannot predict the impact that additional regulatory
changes may have on our business in the future, which could adversely affect our business operations in China, or may otherwise limit
our ability to offer our products and services in China and other parts of the world. In addition, our subcontractor may purchase magnets
for our disposable interventional devices directly from a manufacturer in Japan. The relationships with these manufacturers and suppliers
are generally on a purchase order basis and do not provide a contractual obligation to provide adequate supply or acceptable pricing
on a long-term basis. These vendors could discontinue sourcing or supplying these magnets at any time. If any of our significant vendors
were to discontinue their relationship with us or with our subcontractor, or if the factories were to suffer a disruption in their production,
we may be unable to replace the vendors in a timely manner, which could result in short-term disruption to our supply of magnets as we
transition our orders to new vendors or factories which could, in turn, cause a significant increase in price or a disruption of imports,
including the imposition of import restrictions, could adversely affect our business, financial condition and results of operations.
The flow of components from our vendors could also be adversely affected by financial or political instability or travel restrictions
or bans in any of the countries in which the goods we purchase are manufactured, if the instability or restriction affects the production
or export of product components from those countries.

Trade
restrictions in the form of tariffs or quotas, or both, could also affect the importation of those product components and could increase
the cost and reduce the supply of products available to us. For example, the U.S. federal government has implemented, or is considering
the imposition of, tariffs on certain foreign goods, including on our products that emanate from China as described above and we cannot
predict the implementation or effects of any such tariffs or proposed tariffs, or any potential legislation or actions taken by the U.S.
federal government that restrict trade, such as additional tariffs, trade barriers, and other protectionist or retaliatory measures taken
by governments in Europe, Asia, and other countries, could adversely impact our ability to sell products and services, which could increase
the cost of our products and the components and raw materials that go into making them. Countries may also adopt other protectionist
measures that could limit our ability to offer our products and services. In addition, decreases in the value of the U.S. dollar against
foreign currencies, or significant price increase from these suppliers, could increase the cost of products we purchase from overseas
vendors.

We
may encounter problems at our manufacturing facilities or those of our subcontractors or otherwise experience manufacturing delays that
could result in lost revenue.

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 to do so. In addition, we, or our subcontractors, have in the past experienced and may continue to experience
quality problems. We, or our subcontractors, may also experience substantial costs and unexpected delays related to efforts to upgrade
and expand manufacturing, assembly and testing capabilities. If we incur delays due to quality problems or other unexpected events, our
revenue may be impacted.

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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.

Our
business plan contemplates a period of substantial growth and business activity. 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. We cannot be certain that our personnel, systems, procedures, and
controls will be adequate to support our future operations. Any failure to effectively manage our growth could impede our ability to
successfully develop, market, and sell our products.

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 of APT EP in July, 2024, we are managing APT’s ongoing business of manufacturing, commercializing,
developing and selling 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, tariffs or other trade restrictions, 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. We are still integrating the businesses and implementing safeguards to minimize any negative impacts on our financial
position, results of operations and cash flows post-acquisition.

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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 common shares to the selling stockholder of APT pursuant
to the share purchase agreement. In addition, the share purchase agreement requires us to issue additional earnout common shares to the
selling stockholder upon achievement of certain global and US revenue targets for APT products as well as US and Europe regulatory approvals
of certain robotically navigated catheters that APT will develop.

Pursuant
to the share purchase agreement, we filed a resale registration statement covering the upfront stock consideration of 1,486,620 common
shares and an estimated 4,613,380 additional earnout common shares. As of the date of this report, we have issued an aggregate of 1,419,523
shares as earnout consideration, However, the exact number of earnout shares that may be issued under the share purchase agreement for
future milestones will be calculated based on the average of the closing per share price of Stereotaxis common stock immediately prior
to the dates such revenue performance and/or regulatory milestones are achieved, up to $24 million in total value through September 30,
2029, provided that the total number of shares issued under the share purchase agreement as upfront stock consideration and earnout consideration
may not exceed 16,846,595, which is 19.9% of the total number of shares of the Company’s common stock issued and outstanding immediately
prior to July 31, 2024 (the “Share Cap Limitation”). In addition, the vesting of the right to receive the earnout shares
would be accelerated in the event of a change of control of Stereotaxis, based on a probability-weighted average estimate of the potential
to achieve any remaining milestones, discounted to its net present value considering expected time when earnouts related to the milestones
would become payable through September 30, 2029.

As
a result, the actual number of additional earnout shares we may be required to issue could be materially greater or less than our 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 and/or whether
a change of control occurs. If we are required to issue earnout shares under the share purchase agreement, there could be significant
additional dilution to the Company’s stockholders. Moreover, even if we are not required to issue any earnout shares, the potential
for the issuance of such shares may negatively affect the trading price of our common stock in anticipation of such potential dilution.
Sales of a substantial number of shares comprising the Closing Shares or any 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 to operate 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.

Risks
Relating to Technology and Intellectual Property Matters

The
rate of technological innovation of our products might not keep pace with the rest of the market.

The
rate of innovation for the market in which our products compete is fast-paced and requires significant resources and innovation. If other
products and technologies are developed that compete with, or may compete with, our products, it could be difficult for us to maintain
our advantages associated with being an early developer of this technology. Likewise, the innovation and development cycle of competitors
may impact our research and development efforts and ultimately, commercial adoption of viable research and development efforts. In addition,
connectivity with other devices in the electrophysiology lab is a key driver of value. If the Company is not able to continue to commit
sufficient resources to ensure that its products are compatible with other products within the electrophysiology lab, this could have
a negative impact on revenue.

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Security
breaches and other disruptions to our information technology infrastructure could interfere with our operations, compromise confidential
information, and expose us to liability which could materially adversely impact our business and reputation.

Security
breaches and other disruptions to our information technology infrastructure could interfere with our operations; compromise information
belonging to us, our employees, customers, and suppliers; and expose us to liability which could adversely impact our business and reputation.
In the ordinary course of business, we rely on information technology networks and systems, some of which are managed by third parties,
to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities. Additionally,
we collect and store certain data, including proprietary business information and customer and employee data, and may have access to
confidential or personal information in certain of our businesses that is subject to privacy and security laws, regulations, and customer-imposed
controls. Despite our cyber-security measures (including employee and third-party training, use of user names and passwords for access
to information technology systems, monitoring of networks and systems, and maintenance of backup and protective systems) which are continuously
reviewed and upgraded, our information technology networks and infrastructure may still be vulnerable to damage, disruptions, or shutdowns
due to attack by hackers, breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures,
systems failures, war or other military conflicts, natural disasters, or other catastrophic events. We have programs in place to detect,
contain, and respond to data security incidents, and we continually make improvements to our networks and systems to minimize or eliminate
vulnerabilities. However, because the techniques used to exploit systems change frequently and can be difficult to detect, we may not
be able to prevent these intrusions or mitigate them when and if they occur. Additionally, we rely on some information technology networks
and systems managed by third parties, and we rely on these third parties to deploy appropriate measures to protect their systems and
networks. Vulnerabilities in their systems could compromise the security of our own infrastructure. Any such events could result in legal
claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our reputation, which could
materially adversely affect our business. While we have experienced, and expect to continue to experience, these types of threats to
our information technology networks and infrastructure, to date none of these threats has had a material impact on our business or operations.

We
may be unable to protect our technology from use by third parties, which may allow them to compete with us and harm our business.

Our
commercial success depends in part on obtaining patent and other intellectual property right protection for the technologies contained
in our products and on successfully defending these rights against third party challenges. The patent positions of medical device companies,
including ours, can be highly uncertain and involve complex and evolving legal and factual questions. We cannot assure you that we will
obtain the patent protection we seek, that any protection we do obtain will be found valid and enforceable if challenged or that it will
confer any significant commercial advantage. U.S. patents and patent applications may also be subject to interference proceedings and
U.S. patents may be subject to re-examination proceedings in the U.S. Patent and Trademark Office, and foreign patents may be subject
to opposition or comparable proceedings in the corresponding foreign patent office, which proceedings could result in either loss of
the patent, or denial of the patent application, or loss or reduction in the scope of one or more of the claims of the patent or patent
application. In addition, such interference, re-examination, and opposition proceedings may be costly. Thus, any patents that we own
or license from others may not provide any protection against competitors. Our pending patent applications, those we may file in the
future, or those we may license from third parties may not result in patents being issued and certain foreign patent applications for
medical related devices and methods may be found unpatentable. If issued, they may not provide us with proprietary protection or competitive
advantages against competitors with similar technology.

Some
of our technology was developed in conjunction with third parties, and thus there is a risk that a third party may claim rights in our
intellectual property. Outside the U.S., we rely on third-party payment services for the payment of foreign patent annuities and other
fees. Non-payment or delay in payment of such fees, whether intentional or unintentional, may result in loss of patents or patent rights
important to our business. Many countries, including certain countries in Europe, have compulsory licensing laws under which a patent
owner may be compelled to grant licenses to third parties (for example, the patent owner has failed to “work” the invention
in that country, or the third party has patented improvements). In addition, many countries limit the enforceability of patents against
government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially
diminish the value of the patent. We also cannot assure you that we will be able to develop additional patentable technologies. If we
fail to obtain adequate patent protection for our technology, or if any protection we obtain becomes limited or invalidated, others may
be able to make and sell competing products, impairing our competitive position.

Our
trade secrets, nondisclosure agreements and other contractual provisions to protect unpatented technology provide only limited and possibly
inadequate protection of our rights. As a result, third parties may be able to use our unpatented technology, and our ability to compete
in the market would be reduced. In addition, employees, consultants and others who participate in developing our products or in commercial
relationships with us may breach their agreements with us regarding our intellectual property, and we may not have adequate remedies
for the breach.

Our
competitors may independently develop similar or alternative technologies or products that are equal or superior to our technology and
products without infringing any of our patent or other intellectual property rights or may design around our proprietary technologies.
Our competitors may acquire similar or even the same technology components that are utilized in our current offering eroding some differentiation
in the marketplace. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent, as
do the laws of the U.S., particularly in the field of medical products and procedures.

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Third
parties may assert that we are infringing their intellectual property rights, and any defense of such assertions may be unsuccessful
and expensive, even if we are successful.

Successfully
commercializing our products depends in part on not infringing patents held by third parties. It is possible that one or more of our
products, including those that we have developed in conjunction with third parties, infringes existing patents. We may also be liable
for patent infringement by third parties whose products we use or combine with our own and for which we have no right to indemnification.
In addition, because patent applications are maintained under conditions of confidentiality and can take many years to issue, there may
be applications now pending of which we are unaware and which may later result in issued patents that our products infringe. Determining
whether a product infringes a patent involves complex legal and factual issues and may not become clear until finally determined by a
court in litigation. Our competitors may assert that our products infringe patents held by them. Moreover, as the number of competitors
in our market grows the possibility of a patent infringement claim against us increases. If we were unsuccessful in obtaining a license
or redesigning our products, we could be subject to litigation. If we lose in this kind of litigation, a court could require us to pay
substantial damages or prohibit us from using technologies essential to our products covered by third-party patents. An inability to
use technologies essential to our products would have a material adverse effect on our financial condition, results of operations and
cash flow and could undermine our ability to continue our current business operations.

Expensive
intellectual property litigation is frequent in the medical device industry and may cause us to incur substantial expenses to defend.

Infringement
actions, validity challenges and other intellectual property claims and proceedings, whether with or without merit, can be expensive
and time-consuming and would divert management’s attention from our business. We have incurred, and expect to continue to incur
substantial costs in obtaining patents and may have to incur substantial costs defending our proprietary rights. 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.

As
we develop additional products and improve or maintain existing products, we may find it advisable or necessary to seek licenses or otherwise
make payments in exchange for rights from third parties who hold patents covering certain technology. If we cannot obtain or maintain
the desired licenses or rights for any of our products, we could be forced to try to design around those patents at additional cost or
abandon the product altogether, which could adversely affect revenue and results of operations. If we must 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.

The
robotic magnetic navigation system is designed to have the potential for expanded applications beyond electrophysiology and interventional
cardiology, including congestive heart failure, structural heart repair, interventional neurosurgery, interventional neuroradiology,
peripheral vascular, pulmonology, urology, gynecology and gastrointestinal medicine. However, we have limited financial and managerial
resources and, therefore, may be required to focus on products in selected industries and sites and to forego efforts regarding to other
products and industries. Our decisions may not produce viable commercial products and may divert our resources from more profitable market
opportunities. Moreover, we may devote resources to developing products in these additional areas but may be unable to justify the value
proposition or otherwise develop a commercial market for products we develop in these areas, if any. In that case, the return on investment
in these additional areas may be limited, which could negatively affect our results of operations.

We
may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their
former employers.

Many
of our employees were previously employed at hospitals, universities or other medical device companies, including our competitors or
potential competitors. We could, in the future, be subject to claims that these employees or we have used or disclosed trade secrets
or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in
defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if
we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
Incurring such costs could have a material adverse effect on our financial condition, results of operations and cash flow.

Software
errors or other defects may be discovered in our products and the resulting performance issues may damage our business and our reputation
in the industry in which we operate.

Our
products incorporate many components, including sophisticated computer software. Complex software frequently contains errors, especially
when first introduced. Because our products are designed to be used to perform complex interventional procedures, we expect that physicians
and hospitals will have an increased sensitivity to the potential for software defects. We cannot assure you that our software or other
components will not experience errors or performance problems in the future. If we experience software errors or performance problems,
we would likely also experience:

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Risks
Related to Regulatory and Legal Matters

If
we or the parties in our strategic collaborations fail to obtain or maintain necessary FDA clearances or approvals for our medical device
products, or if such clearances or approvals are delayed, we will be unable to continue to commercially distribute and market our products.

Our
products are medical devices that are subject to extensive regulation in the U.S. and in foreign countries where we do business. Each
medical device that we wish to market in the U.S. must be designated as exempt from premarket approval or notification, or first receive
either a 510(k) clearance, de novo approval, or a pre-market approval, or PMA, from the U.S. FDA pursuant to the Federal Food, Drug,
and Cosmetic Act, or FD&C Act. The FDA’s 510(k) clearance process usually takes from four to 12 months, but it can take longer.
The process of obtaining PMA approval is much more costly, lengthy, and uncertain, generally taking from one to three years or even longer.
Although we have 510(k) clearance for many of our products, including disposable interventional devices, and we are able to market these
products commercially in the U.S., our business model relies significantly on revenue from new disposable interventional devices, some
of which may not achieve FDA clearance or approval. We cannot assure you that any of our devices will not be required to undergo the
lengthier and more burdensome PMA process. We cannot commercially market any disposable interventional devices in the U.S. until the
necessary clearances or approvals from the FDA have been received. In addition, we are working with third parties to co-develop disposable
products. 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. 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.

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 FDA could ask us to revise or supplement our submissions, collect
non-clinical data, conduct clinical trials or engage in other time-consuming actions, or it could simply deny our applications. In addition,
even if we obtain a 510(k) clearance, de novo approvals, or PMA or PMA supplement approval, the clearance or approval could be revoked
or other restrictions imposed if post-market data demonstrates safety issues or lack of effectiveness. We cannot predict with certainty
how, or when, the FDA will act on our marketing applications. If we are unable to obtain the necessary regulatory approvals, our financial
condition and cash flow may be adversely affected. Also, a failure to obtain approvals may limit our ability to grow domestically and
internationally.

If
our strategic collaborations elect not to or we fail to obtain regulatory approvals in other countries for products under development,
we will not be able to commercialize these products in those countries.

To
market our products outside of the U.S., we and our strategic collaborations or distributors must establish and comply with numerous
and varying regulatory requirements of other countries regarding safety and efficacy. Approval procedures vary among countries and can
involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries
might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks
detailed above regarding FDA approval in the U.S. Regulatory approval in one country does not ensure regulatory approval in another,
but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. Failure
to obtain regulatory approval in other countries or any delay or setback in obtaining such approval could have the same adverse effects
described above regarding FDA approval in the U.S. 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
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.

Even
after product clearance or approval, we must comply with continuing regulation by the FDA and other authorities, including the FDA’s
Quality System Regulation, or QSR, requirements, labeling and promotional requirements and medical device adverse event and other reporting
requirements. Any failure to comply with continuing regulation by the FDA or other authorities could result in enforcement action that
may include suspension or withdrawal of regulatory approvals, recalling products, ceasing product manufacture and/or marketing, seizure
and detention of products, paying significant fines and penalties, criminal prosecution and similar actions that could limit product
sales, delay product shipment and harm our profitability. Congress could amend the FD&C Act, and the FDA could modify its regulations
promulgated under this law or its policies in a way to make ongoing regulatory compliance more burdensome and difficult.

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Additionally,
any modification to an FDA 510(k) cleared or de novo-approved device that could significantly affect its safety or effectiveness, or
that would constitute a major change in its intended use, requires a new 510(k) clearance. Modifications to a PMA approved device or
its labeling may require either a new PMA or PMA supplement approval, which could be a costly and lengthy process. In addition, if we
are unable to obtain approval for key applications, we may face product market adoption barriers that we cannot overcome. In the future,
we may modify our products after they have received clearance or approval, and we may determine that new clearance or approval is unnecessary.
We cannot assure you that the FDA would agree with any of our decisions not to seek new clearance or approval. If the FDA requires us
to seek clearance or approval for any modification that we determined to not require clearance or approval in the first instance, we
could be subject to enforcement sanctions and we also may be required to cease marketing or recall the modified product until we obtain
FDA clearance or approval which could also limit product sales, delay product shipment and harm our profitability.

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, in many countries the national health or social security organizations
require our products to be qualified before procedures performed using our products become eligible for reimbursement. Failure to receive,
or delays in the receipt of, relevant foreign qualifications could have a material adverse effect on our business, financial condition
and results of operations. Due to the movement toward harmonization of standards in Europe, we expect a changing regulatory environment
characterized by a shift from a country-by-country regulatory system to a Europe-wide single regulatory system. We cannot predict the
timing of this harmonization and its effect on us. Adapting our business to changing regulatory systems could have a material adverse
effect on our business, financial condition, and results of operations. If we fail to comply with applicable foreign regulatory requirements,
we may be subject to fines, suspension, or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions
and criminal prosecution.

In
addition, we are subject to the U.S. Foreign Corrupt Practices Act, anti-bribery, antitrust and anti-competition laws, and similar laws
in foreign countries. Any violation of these laws by our distributors or agents or by us could create a substantial liability for us
and also cause a loss of reputation in the market. From time to time, we may face audits or investigations by one or more government
agencies, compliance with which could be costly and time-consuming, and could divert our management and key personnel from our business
operations. An adverse outcome under any such investigation or audit could subject us to fines or other penalties, which could adversely
affect our business and financial results.

Our
suppliers, subcontractors, or we may fail to comply with the FDA, EU and other state and foreign government authorities quality system
regulation or other quality standards.

Our
manufacturing processes must comply with the FDA’s QSR, which covers the methods and documentation of the design, testing, production,
control, quality assurance, labeling, packaging and shipping of our products. The FDA enforces the QSR through inspections. We cannot
assure you that we or our suppliers or subcontractors would pass such an inspection. The European Union recently adopted new EN ISO 13485:2016
standards, and we have been certified to these standards. If we or our suppliers or subcontractors fail to comply with the FDA regulation
or EN ISO 13485:2016 standards, we or they may be required to cease all or part of our operations for some period of time until we or
they can demonstrate that appropriate steps have been taken to comply with such standards or face other enforcement action, such as a
public warning letter, untitled letter, fines, injunctions, civil penalties, seizures, operating restrictions, partial suspension or
total shutdown of production, refusing requests for 510(k) clearance, de novo petitions, or PMA approval of new products, withdrawing
510(k) clearance, de novo approvals, or PMA approvals already granted, and/or criminal prosecution. We cannot be certain that our facilities
or those of our suppliers or subcontractors will comply with the FDA or EN ISO 13485:2016 standards in future audits by regulatory authorities.
Failure to pass such an inspection could force a shutdown of manufacturing operations, a recall of our products or the imposition of
other enforcement sanctions, which would significantly harm our revenue and profitability. Further, we cannot assure you that our key
component suppliers are or will continue to be in compliance with applicable regulatory requirements and quality standards and will not
encounter any manufacturing difficulties. Any failure to comply with the FDA’s QSR or EN ISO 13485:2016, by us or our suppliers,
could significantly harm our available inventory and product sales. Further, any failure to comply with FDA’s QSR, by us or our
suppliers, could result in the FDA refusing requests for and/or delays in 510(k) clearance, de novo approval, or PMA approval of new
products.

If
we fail to comply with health care regulations, we could face substantial penalties and our business, operations and financial condition
could be adversely affected.

While
we do not control referrals of health care services or bill directly to Medicare, Medicaid or other third-party payors, many health care
laws and regulations apply to our business. We are subject to health care fraud and patient privacy regulation by the federal government,
the states in which we conduct our business and internationally. The regulations that may affect our ability to operate include:

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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.
Any penalties, damages, fines, curtailment, or restructuring of our operations could adversely affect our ability to operate our business
and our financial results. The risk of our being found in violation of these laws is increased by the fact that many of them have not
been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any
action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses
and divert our management’s attention from the operation of our business. Moreover, to achieve compliance with applicable federal
and state privacy, security, and electronic transaction laws, we may be required to modify our operations with respect to the handling
of patient information. Implementing these modifications may prove costly. 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. Such
changes could, among other things, reduce reimbursement for procedures using our products, change coverage policies, increase compliance
costs, and delay or reduce hospital capital spending.

In
response to perceived increases in health care costs in recent years, there have been and continues to be proposals by the federal administration,
members of Congress, state governments, regulators and third-party payors to control these costs and, more generally, to reform the U.S.
healthcare system.

Decisions
by both the federal and state governments on funding priorities for various healthcare programs impact the finances of our customers
on an ongoing and recurring basis. Such decisions may impact purchasing decisions of a customer.

Changes
to, or repeal of, the 2010 Patient Protection and Affordable Care Act (PPACA), which different administrations and certain members of
Congress have affirmatively indicated that they will pursue, could materially and adversely affect our business and financial position,
and results of operations. Even if the PPACA is not amended or repealed, the administration could propose changes impacting implementation
of the PPACA, which could materially and adversely affect our financial position or operations. However, we cannot currently predict
the content, timing or impact that any such future legislation will have on our business.

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The
application of state certificate of need regulations and compliance by our customers with federal and state licensing or other international
requirements could substantially limit our ability to sell our products and grow our business.

Some
states require health care providers to obtain a certificate of need or similar regulatory approval prior to the acquisition of high-cost
capital items such as our products. In many cases, a limited number of these certificates are available. As a result of this limited
availability, hospitals and other health care providers may be unable to obtain a certificate of need for the purchase of our systems.
Further, the sales and installation cycle of our robotic magnetic navigation systems may be longer in certificate of need states due
to the time it takes our customers to obtain the required approvals. In addition, our customers must meet various federal and state regulatory
and/or accreditation requirements in order to receive payments from government-sponsored health care programs such as Medicare and Medicaid,
receive full reimbursement from third party payors, and maintain their customers. Our international customers may be required to meet
similar or other requirements. Any lapse by our customers in maintaining appropriate licensure, certification or accreditation, or the
failure of our customers to satisfy the other necessary requirements under government-sponsored health care programs or other requirements
could cause our sales to decline.

Hospitals
or physicians may be unable to obtain reimbursement from third-party payors for procedures using our products, or reimbursement for procedures
may be insufficient to recoup the costs of purchasing our products.

We
expect that U.S. hospitals will continue to bill various third-party payors, such as Medicare, Medicaid and other government programs
and private insurance plans, for procedures performed with our products, including the costs of the disposable interventional devices
used in these procedures. If, in the future, our disposable interventional devices do not fall within U.S. reimbursement categories and
our procedures are not reimbursed, or if the reimbursement is insufficient to cover the costs of purchasing our system and related disposable
interventional devices, the adoption of our systems and products would be significantly slowed or halted, and we may be unable to generate
sufficient sales to support our business. Our success in international markets also depends upon the eligibility of our products for
reimbursement through government-sponsored health care payment systems and third-party payors. In both the U.S. and foreign markets,
health care cost-containment efforts are prevalent and are expected to continue. These efforts could reduce levels of reimbursement available
for procedures involving our products and, therefore, reduce overall demand for our products as well. A failure to generate sufficient
sales could have a material adverse impact on our financial condition, results of operations and cash flow.

Our
costs could substantially increase if we receive a significant number of warranty claims or have other significant, uninsured liabilities.

We
generally warrant each of our products against defects in materials and workmanship for a period of 12 months following the installation
of our system. 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, as has occurred in the past, 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.
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. In addition, in the future, we may not
continue to maintain certain existing insurance coverage or adequate levels of coverage. Premiums for many types of insurance have increased
significantly in recent years and, depending on market conditions and our circumstances, in the future, certain types of insurance, such
as directors’ and officers’ insurance, may not be available on acceptable terms or at all. 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.

Risks
Related to Our Common Stock

Our
principal stockholders continue to own a large percentage of our voting stock, and they could substantially influence matters requiring
stockholder approval.

Certain
of our directors and individuals or entities affiliated with them as well as other principal stockholders beneficially own or control
a substantial percentage of the outstanding shares of our common stock. Accordingly, these stockholders will have substantial influence
over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation
or sale of all or substantially all of our assets or any other significant corporate transaction. These stockholders may also delay or
prevent a change of control, even if such a change of control would benefit our other stockholders. This significant concentration of
stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest
may exist or arise.

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Future
issuances of our securities could dilute current stockholders’ ownership.

As
of December 31, 2025, we had 50.3 million shares of our common stock issuable upon conversion of our Series A Convertible Preferred Stock.
Our Series A Convertible Preferred Stock bears dividends at a rate of six percent (6.0%) per annum, which are cumulative and accrue daily
from the date of issuance on the $1,000 stated value. Such dividends will not be paid in cash, except in connection with any liquidation,
dissolution or winding up of the Company or any redemption of the Series A Convertible Preferred Stock. Instead, the value of the accrued
dividends is added to the liquidation preference of the Series A Convertible Preferred Stock and will increase the number of shares of
common stock issuable upon conversion, which will dilute the ownership of our common stockholders. In addition, we may be obligated to
issue additional shares of our common stock in connection with our 2024 acquisition of APT, which could further dilute our current stockholders’
ownership. See “—Risks Related to our 2024 Acquisition of APT—Issuance of the Earnout Consideration will result
in dilution to our stockholders and may adversely affect us, including the market price of our securities.”

In
addition, a significant number of shares of our common stock are subject to issuance under our existing stock incentive plans and we
may request the ability to issue additional such securities. We may also decide to raise additional funds through public or private debt
or equity financing to fund our operations. We filed a universal shelf registration statement on Form S-3 with the SEC in May 2023, which
was declared effective by the SEC on June 6, 2023, registering the sale up to $100.0 million of any combination of our common stock,
preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine. 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.

We
have never paid dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

We
have paid no cash dividends on any of our classes of common stock to date and we currently intend to retain our future earnings to fund
the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be an investor’s
sole source of gain for the foreseeable future.

Further,
the Series A Convertible Preferred Stock rank senior to our common stock as to distributions and payments upon the liquidation, dissolution
and winding up of the Company. No such distributions or payments upon the liquidation, dissolution and winding up of the Company may
be made to holders of common stock unless and until the holders of the Series A Convertible Preferred Stock have received the stated
value of $1,000 per share plus any accrued and unpaid dividends. Until all Series A Convertible Preferred Stock have been converted or
redeemed, no dividends may be paid on the common stock without the express written consent of the holders of a majority of the outstanding
Series A Convertible Preferred Stock. If dividends or other distributions of assets are made or paid by the Company to the holders of
the common stock, the holders of Series A Convertible Preferred Stock are entitled to participate in such dividend or distribution on
an as-converted basis. Any such distributions or payments upon the liquidation, dissolution or winding up of the Company may dilute the
ownership interests of our existing stockholders.

Our
certificate of incorporation and bylaws, the Company’s Performance Share Unit Agreement with Our CEO, and Delaware law, contain
provisions that could discourage a takeover.

Our
certificate of incorporation and bylaws, the Performance Share Unit Agreement with our CEO, and Delaware law contain provisions that
might enable our management to resist a takeover. These provisions may:

Evolving
regulation of corporate governance and public disclosure may result in additional expenses and continuing uncertainty.

Changing
laws, regulations and standards relating to corporate governance and public disclosure, including SEC regulations such as the Dodd-Frank
Wall Street Reform and Consumer Protection Act, have in the past created uncertainty for public companies. We continue to evaluate and
monitor developments with respect to new and proposed rules, including potential recission of certain rules or proposed rules under the
current administration, and cannot predict or estimate the amount of the additional compliance costs we may incur or the timing of such
costs. These new or changed laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of
specificity, and as a result, their application in practice may evolve over time as new guidance is provided by courts and regulatory
and governing bodies. 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. In addition, if we fail to comply with new or changed laws, regulations and standards, regulatory authorities
may initiate legal proceedings against us and our business and reputation may be harmed.

34

Our
future operating results may be below securities analysts’ or investors’ expectations, which could cause our stock price
to decline.

We
may be unable to generate significant revenue or grow at the rate expected by securities analysts or investors. In addition, our costs
may be higher than we, securities analysts, or investors expect. If we fail to generate sufficient revenue or our costs are higher than
we expect, our results of operations will suffer, which in turn could cause our stock price to decline. Our results of operations will
depend upon numerous factors, including:

Our
operating results in any particular period may not be a reliable indication of our future performance. In some future quarters, our operating
results may be below the expectations of securities analysts or investors. If this occurs the price of our common stock will likely decline.

We
expect that the price of our common stock could fluctuate substantially, possibly resulting in class action securities litigation.

While
our common stock is traded on the NYSE American Market, trading volume may be limited or sporadic. The market price of our common stock
has experienced, and may continue to experience, substantial volatility. During 2025, our common stock traded between $1.54 and $3.59
per share, on trading volume ranging from approximately 75,600 to 6.0 million shares per day. The market price of our common stock will
be affected by a number of factors, including:

These
factors, as well as general economic, credit, political and market conditions, may materially adversely affect the market price of our
common stock. As with the stock of many other public companies, the market price of our common stock has been particularly volatile during
periods of upheaval in the capital markets and world economy. Furthermore, the stock prices of many companies in the medical device industry
have experienced wide fluctuations that have often been unrelated to the operating performance of these companies. Volatility in the
price of our common stock on the NYSE American Market may depress the trading price of our common stock, which could, among other things,
allow a potential acquirer of the Company to purchase a significant amount of our common stock at low prices. In addition, the volatility
of our stock price could lead to class action securities litigation being filed against us, which could result in substantial costs and
a diversion of our management resources, which could significantly harm our business.

If
we fail to continue to meet all applicable NYSE American Market requirements and the NYSE American determines to delist our common stock,
the delisting could adversely affect the market liquidity of our common stock, which would impair the value of your investment and ultimately
harm our business by limiting our access to equity markets for capital raising.

Our
common stock is currently listed on the NYSE American Market. We currently meet the continued listing standards of NYSE American. However,
we cannot guarantee that we will be able to continue to comply with the required standards in order to maintain a listing of our common
stock on the NYSE American. If we fail to continue to meet all applicable NYSE American requirements in the future and the NYSE American
determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, which would adversely
affect our ability to obtain financing for the continuation of our operations, as a result, harming our business. This delisting could
also impair the value of your investment.

35

Risks
Related to the February 2021 CEO Performance Stock Unit Grant

We
will incur significant additional stock-based compensation expense over the term of the CEO Performance Award regardless of whether any
of the milestones are achieved.

As
described in Note 11 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. Fischel, the Company’s Chief Executive Officer. Under the terms of the PSU Agreement, the Company will incur significant
additional stock-based compensation expense over the term of the award regardless of whether or not any of the milestones are achieved
as the probability of meeting the ten market capitalization milestones is not considered in determining the timing of expense recognition.
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 and $7.2 million for the years ended December 31, 2025 and 2024, respectively. As of December
31, 2025, the Company had approximately $22.7 million of total unrecognized stock-based compensation expense remaining under the CEO
Performance Award if Mr. Fischel continues to serve as CEO, or in a similar capacity, through 2030. This additional stock-based compensation
expense, incurred regardless of whether any milestones are achieved, increases the difficulty for the Company to achieve a profitable
position as measured by generally accepted accounting principles.

Our
stockholders may experience substantial dilution upon payout of shares under the CEO Performance Award.

If
Mr. Fischel achieves all the milestones specified in the CEO Performance Award, by increasing the Company’s market capitalization
to $5.5 billion for the specified period, he will receive 13,000,000 shares of common stock subject to the vesting requirements in the
agreement. If (i) all 13,000,000 shares of common stock subject to the PSU Agreement were to become fully vested, outstanding and held
by Mr. Fischel; (ii) all other shares of common stock and stock units held by Mr. Fischel were fully vested and were outstanding; (iii)
estimated dilution as a result of potential exercises or conversions from existing grants to employees and non-employee directors and
the outstanding convertible preferred stock were to be considered; and (iv) there were no other dilutive events of any kind, Mr. Fischel
would beneficially own approximately 10% of the outstanding shares of Stereotaxis common stock after the dilutive events described above
and without considering the impact of any other potential future dilutive events or the potential sale of stock required to pay taxes
upon the vesting of the restricted stock units.

Certain
provisions in the PSU Agreement may discourage a change in control of the Company even if such a transaction would otherwise be beneficial
to our stockholders.

Under
the terms of the CEO Performance Award, in the event of a change in control of the Company, the market capitalization formula will be
modified to equal the total amount of consideration paid to all equity holders of the Company, with the number of shares to be issued
pursuant to the CEO Performance Grant giving effect to such valuation. For all valuations above $1.0 billion in connection with a change
in control, partial credit for the next following tranche shall be allocated pro rata based on the market capitalization in such change
in control. Any vested shares upon such a change in control will vest and be paid at the time of the consummation of the change in control,
and the service component of the CEO Performance Award will otherwise be disregarded. These terms may discourage potential business partners
from pursuing a merger or acquisition, even if the merger or acquisition would be viewed favorably by, or be beneficial to, our other
stockholders.

We
are highly dependent on the services of Mr. Fischel, and our compensation package, including the CEO Performance Award, may fail to retain
him.

Since
assuming the role of CEO in February 2017, Mr. Fischel has revitalized the Company’s commercial capabilities, strengthened its
financial position, and led the development of a robust innovation strategy. However, between February 2017 and December 2020, Mr. Fischel
served as CEO without drawing a salary or any other form of cash or equity compensation for his work as CEO, and currently his only compensation
is an annual salary of $60,000, which is substantially below market. While the Board believes that the CEO Performance Award provides
substantial future benefit to all its stockholders and incentivizes Mr. Fischel to serve as CEO for the long term, there is no assurance
that Mr. Fischel will continue as CEO.

General
Risk Factors

General
economic conditions could materially adversely impact us.

Our
operating performance is dependent upon economic conditions in the United States and in other countries in which we operate. Uncertainty
about current global economic conditions and future global economic conditions may cause customers to delay purchasing or installation
decisions or cancel existing orders. 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. 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 the United States and global economy becomes sluggish or deteriorates
for a longer period than we anticipate, we may experience a material negative decrease on the demand for our products which may, in turn,
have a material adverse effect on our revenue, profitability, financial condition, ability to raise additional capital and the market
price of our stock.

36

We
maintain our cash at financial institutions, often in balances that exceed federally insured limits.

Adverse
developments that affect financial institutions, transactional counterparties, or other third parties, or concerns or rumors about these
events, have in the past and may in the future lead to market-wide liquidity problems. Most of our cash is held in accounts at U.S. banking
institutions that we believe are of high quality. Cash held in depository accounts may exceed the $250,000 Federal Deposit Insurance
Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we could lose all or a portion of those
amounts held in excess of such insurance limitations. On March 10, 2023, Silicon Valley Bank (“SVB”), where the Company maintained
accounts with a cash balance of less than 6% of the Company’s total cash, cash equivalents and marketable securities, was closed
by the California Department of Financial Protection and Innovation and the FDIC was appointed as receiver. On March 12, 2023, the U.S.
Department of the Treasury, Federal Reserve Board, and FDIC released a joint statement announcing that the FDIC would complete its resolution
of SVB in a manner that fully protected all depositors at SVB and that depositors would have access to all of their money starting March
13, 2023. On March 26, 2023, it was announced that First-Citizens Bank & Trust Company would assume all of SVB’s deposits and
loans as of March 27, 2023. During the periods presented, the Company has not experienced any losses on its deposits of cash, cash equivalents
or marketable securities. However, in the future, our access to our cash in amounts adequate to finance our operations could be significantly
impaired by the financial institutions with which we have arrangements directly facing liquidity constraints or failures. Any material
loss that we may experience in the future could have a material adverse effect on our business and our financial condition.

We
may lose key personnel or fail to attract and retain replacement or additional personnel.

We
are highly dependent on the principal members of our management, as well as our scientific and sales staff. Attracting and retaining
qualified personnel will be critical to our success, and competition for qualified personnel is intense. We may not be able to attract
and retain personnel on acceptable terms given the competition for qualified personnel among technology and healthcare companies and
universities. The loss of personnel or our inability to attract and retain other qualified personnel could harm our business and our
ability to compete. In addition, the loss of members of our scientific staff may significantly delay or prevent product development and
other business objectives. A loss of key sales personnel could result in a reduction of revenue. In addition, if we outsource certain
employee functions that were formerly handled in-house, our personnel costs could increase.

We
face currency and other risks associated with international operations.

We
intend to continue to devote significant efforts to marketing our systems and products outside of the U.S. This strategy will expose
us to numerous risks associated with international operations, which could adversely affect our results of operations and financial condition,
including the following:

In
addition, contracts may be difficult to enforce and receivables may be difficult to collect through a foreign country’s legal system.