DEF 14A of Stereotaxis, Inc., Apr 4, 2025

DEF 14A of Stereotaxis, Inc.

Filed Apr 4, 2025 · FY20240001641172-25-002746

Open on EDGAR

  1. Class III Directors

    Class III Directors

  2. (Nominees for election to the Board at the 2025 Annual Meeting to serve a three-year term until the 2028 Annual Meeting)

    (Nominees for election to the Board at the 2025 Annual Meeting to serve a three-year term until the 2028 Annual Meeting) Nathan Fischel, M.D. Director since February 2017 Dr. Fischel, 69, is the Founder and CEO of DAFNA Capital Management, LLC. DAFNA Capital is an SEC registered investment advisor with a highly successful investment record of over 25 years focused on innovations in biotechnology and medical devices. Dr. Fischel was Professor of Pediatrics at UCLA School of Medicine and attending physician in Pediatric Hematology and Oncology at Cedars-Sinai Medical Center in Los Angeles. He has published over 120 peer-reviewed scientific and medical manuscripts and book chapters, has been the principal investigator of multiple National Institutes of Health (“NIH”) funded research grants, has served repeatedly on internal and external review panels at the NIH, and was appointed by the U.S. Secretary of Health and Human Services to serve for four years on the Advisory Council of one of the NIH’s institutes. Dr. Fischel received his M.D. from the Technion Israel Institute of Technology and served his internship year at Hadassah Hospital in Jerusalem. He completed his residency and fellowship in Pediatrics and Pediatric Hematology and Oncology at the Children’s Hospital and the Dana-Farber Cancer Institute, Harvard Medical School in Boston, and his postgraduate research training in Molecular Genetics at Oxford University in England. Dr. Fischel’s experience as a physician enables him to provide critical perspectives regarding our technologies and the commercial adoption of our products, and his extensive knowledge of medical device companies allows him to provide insight to the Board on strategic decisions.

  3. Ross B. Levin

    Ross B. Levin Mr. Levin, 41, is the Director of Research for Arbiter Partners Capital Management LLC and a principal in the firm. Mr. Levin is a former board member of Capital Senior Living Corporation, Mood Media Corporation, American Community Properties Trust, and Presidential Life Corporation. Mr. Levin is also chairman of the board of directors of Constructive Partnerships Unlimited, a non-profit organization providing services and programs for people with developmental disabilities, and former vice chairman of the board of the Cerebral Palsy Associations of New York State. Mr. Levin is a member of the New York Society of Securities Analysts and a CFA charter holder. Mr. Levin holds a Bachelor of Science degree in Management with a concentration in Finance from the A.B. Freeman School of Business at Tulane University and has completed the Investment Decisions and Behavioral Finance program at the John F. Kennedy School of Government at Harvard University. Mr. Levin’s extensive professional experience in evaluating and analyzing financial information provides the Board with expertise in financing, accounting, and governance matters. Class I Directors (terms expiring at the 2026 Annual Meeting) David W. Benfer Director since February 2005 Mr. Benfer, 78, has served as the chairman of The Benfer Group LLC, which provides advisory services to healthcare providers and suppliers, since 2010. From 1999 to 2009, Mr. Benfer served as president and chief executive officer of Saint Raphael Healthcare System and the Hospital of Saint Raphael, New Haven, Connecticut. Prior to that, he was the president and chief executive officer of the Provena-Saint Joseph/Morris Health Network in Joliet, Illinois from 1992 to 1999. Mr. Benfer served as senior vice president for Hospital and Urban Affairs for the Henry Ford Health System in Detroit and chief executive officer of the Henry Ford Hospital from 1985 to 1992. He served as the chairman of the American College of Healthcare Executives (ACHE) from 1998 to 1999 and on its board of governors from 1992 to 2000. Mr. Benfer was named a Fellow of ACHE in 1981 and served on the board of the Catholic Health Association from 2003 until 2008. He earned his M.B.A. from Xavier University and his B.S.B.A. from Wittenburg University. Mr. Benfer’s extensive experience in the healthcare industry and in hospital management provides the Company with useful industry information related to technology acquisition, governance, and risk and liability issues. Mr. Benfer serves on the Board of The John and Mable Ringling Museum of Art Foundation, Inc., the state museum of Florida. Arun S. Menawat, Ph.D. Director since September 2016 Dr. Menawat, 70, is Chairman and CEO of Profound Medical Corp. (NASDAQ: PROF), a medical device company that is driving commercialization of real-time MRI-guided ablation for prostate diseases including cancer. Dr. Menawat has an accomplished history of executive leadership success in the healthcare industry. He was previously the Chairman, President, and CEO of Novadaq Technologies Inc. Under his 13-year tenure at Novadaq, he transformed the company from a small private pre-commercial company into the leader in intraoperative imaging and was instrumental in signing strategic partnerships with companies including Intuitive Surgical, LifeCell, and KCI. He obtained a Ph.D. in Chemical (Bio) Engineering from the University of Maryland, while concurrently completing a fellowship in biomedical engineering at the U.S. National Institute of Health and holds an Executive MBA from the J.L. Kellogg School of Management, Northwestern University. In 2014, Dr. Menawat was named the EY Ontario Entrepreneur of the Year in the health sciences category. Dr. Menawat’s strong executive experience with medical device companies provides the Board with valuable guidance for product innovation, customer initiatives and operational matters. Myriam Curet, M.D. Dr. Curet, 68, currently serves as Executive Vice President and Chief Medical Officer for Intuitive Surgical, the global leader and pioneer of robotic surgery. Dr. Curet joined Intuitive Surgical in 2005 and has since led the development of clinical evidence, physician education, and reimbursement activities that have been instrumental to Intuitive Surgical’s growth across multiple clinical specialties. For more than 20 years, Dr. Curet has also served as a Clinical Professor of Surgery at Stanford University School of Medicine, with a part-time clinical appointment at the Palo Alto Veteran’s Administration Medical Center. Dr. Curet received her M.D. from Harvard Medical School and completed her general surgery residency at the University of Chicago. Dr. Curet’s extensive medical credentials and her executive experience in a medical device company provide the Board with significant insights into the commercial adoption of our products, as well as product innovation and operational matters.

  4. Policies and Practices on the Timing of Awards of Equity Awards in Relation to the Disclosure of Material Nonpublic Information

    | | Fees Earned | Stock | | | | | | or Paid in | Awards | Option | All Other | | | Director | Cash ($) | ($)(1) | Awards ($) | Compensation | Total ($) | | David W. Benfer(2) | - | 200,000 | - | - | 200,000 | | Myriam Curet(3) | - | 200,000 | - | - | 200,000 | | David L. Fischel(4) | - | - | - | - | - | | Nathan Fischel, M.D.(5) | - | 200,000 | - | - | 200,000 | | Ross Levin(5) | - | 200,000 | - | - | 200,000 | | Dr. Arun S. Menawat(5) | - | 200,000 | - | - | 200,000 | | Robert J. Messey(6) | - | 74,725 | - | - | 74,725 | | Nachum Shamir (7) | - | 90,761 | - | - | 90,761 |

  5. EXECUTIVE COMPENSATION

    | | | Salary | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Totals | | Name and Principal Position | Year | ($) | ($) | ($)(1) | ($)(2) | ($)(3) | ($) | | David L. Fischel | 2024 | 60,000 | - | - | - | 2,195 | 62,195 | | Chief Executive Officer | 2023 | 60,000 | - | - | - | 2,195 | 62,195 | | Kimberly R. Peery | 2024 | 226,750 | - | 84,520 | 20,000 | 8,895 | 340,165 | | Chief Financial Officer | 2023 | 223,000 | - | 72,040 | 20,000 | 8,758 | 323,798 |

  6. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End

  7. Outstanding Equity Awards at Fiscal Year-End

    | | Option Awards | | | | | Stock Awards | | | Named | | Number of Securities Underlying Unexercised | Number of Securities Underlying Unexercised | Option Exercise | Option | Number of Shares or Units of Stock That | Market Value of Shares or Units of Stock That Have Not | | Executive | Date of | Options (#) | Options (#) | Price | Expiration | Have Not | Vested | | Officer | Award | Exercisable | Unexercisable(1) | ($) | Date | Vested (#) | ($)(2) | | David L. | 1/2/2020 | | | | | 30,000 | 68,400 | | Fischel(3) | 7/1/2020 | | | | | 30,000 | 68,400 | | | 1/4/2021 | | | | | 25,000 | 57,000 | | | 2/27/2021(4) | | | | | 13,000,000 | 29,640,000 | | Kimberly R. | 2/26/2018 | 15,750 | | 0.74 | 2/26/2028 | | | | Peery | 3/3/2019 | 35,000 | | 2.03 | 3/3/2029 | | | | | 3/9/2020 | 40,000 | | 4.52 | 3/9/2030 | | | | | 3/8/2021 | 37,522 | 2,478 | 6.96 | 3/8/2031 | | | | | 2/25/2022 | 28,348 | 11,652 | 4.80 | 2/25/2032 | | | | | 3/1/2023 | 18,340 | 21,660 | 2.57 | 3/1/2033 | | | | | 4/2/2024 | - | 40,000 | 3.01 | 4/2/2034 | | |

  8. Outstanding Equity Awards at Fiscal Year-End

    | (1) The amounts appearing in this column represent the total number of options that have not vested as of December 31, 2024. Options granted to the Named Executive Officers, vest at the rate of 25% one year from the date of grant, and thereafter in 36 equal monthly installments. | | (2) Based on the closing price of $2.28 for the shares of our common stock on December 31, 2024. | | (3) Prior to December 1, 2020, Mr. Fischel received compensation as a “non-employee director” under our compensation program for non-employee directors described under “Director Compensation” above. | | (4) As of December 31, 2024, Mr. Fischel has not achieved any of the performance milestones established by the 2021 CEO Incentive Program and has not received any awards under that program. |

  9. Outstanding Equity Awards at Fiscal Year-End

    PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of our company. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the fiscal years shown.

  10. Outstanding Equity Awards at Fiscal Year-End

    | Year | Summary Compensation Table Total for Principal Executive Officer (“PEO”) | Compensation Actually Paid to PEO(1) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (“NEOs”) | Average Compensation Actually Paid to Non-PEO NEOs(1) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return (“TSR”)(2) | Net Income (Loss)(3) (millions) | | 2024 | $62,195 | $3,723,190 | $340,165 | $337,755 | $37.42 | $(24.05) | | 2023 | $62,195 | $(4,286,114) | $323,798 | $270,703 | $28.23 | $(20.71) | | 2022 | $62,195 | $(49,087,719) | $386,760 | $94,383 | $33.39 | $(18.30) |

  11. Outstanding Equity Awards at Fiscal Year-End

    | (1) Amounts represent compensation actually paid to our CEO, Mr. David Fischel, who was our Principal Executive Officer or “PEO” for each of the years shown, and the average compensation actually paid to our CFO, Ms. Peery, as our remaining NEO or “Non-PEO NEO” for the relevant fiscal year. Amounts were computed in accordance with Item 402(v) of Regulation S-K and do not reflect the actual amount of compensation earned by or paid to Mr. Fischel or Ms. Peery during the applicable year. |

  12. Outstanding Equity Awards at Fiscal Year-End

    Amounts represent the Summary Compensation Table Total Compensation for the applicable fiscal year adjusted as follows:

  13. Outstanding Equity Awards at Fiscal Year-End

    | | 2022 | | 2023 | | 2024 | | | | PEO | Average non- PEO NEOs | PEO | Average non- PEO NEOs | PEO | Average non- PEO NEOs | | Deduction for ASC 718 Fair Value as of Grant Date Reported under the Stock Awards and Option Awards Columns in the Summary Compensation Table | - | (134,920) | - | $(72,040) | - | $(84,520) | | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year | - | 46,680 | - | $42,880 | - | $59,000 | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | - | - | - | - | - | - | | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | (49,149,914) | (109,265) | $(4,348,309) | $(12,967) | $3,660,995 | $13,483 | | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | - | (94,872) | - | $(10,968) | - | $9,627 | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | - | - | - | - | - | - | | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | - | - | - | - | - | - | | Total Adjustments | (49,149,914) | (292,377) | $(4,348,309) | $(53,095) | $3,660,995 | $(2,410) |

  14. Outstanding Equity Awards at Fiscal Year-End

    The equity awards granted to our PEO include performance-based stock units (PSU). The change in fair values of those PSUs included in the compensation actually paid to our PEO are calculated at the required measurement dates using a Black-Scholes model to approximate the change in fair value. Changes to the PSU fair value from the grant date are based on our updated stock price at the respective measurement dates, in addition to the remaining life of the grant, implied volatility of our stock over the remaining grant life, and risk-free rate assumptions. For all years presented, the meaningful increases or decreases in the year-end stock option fair value from the fair value on the grant date were primarily driven by changes in the stock price. The equity awards to our Non-PEO NEOs include incentive stock options. The change in fair values of those options include in the compensation actually paid to our Non-PEO NEOs are calculated at the required measurement dates, consistent with the approach used to value the awards at the grant date as described in our Annual Report on Form 10-K for the year ended December 31, 2024. Changes to the stock option fair values are based on the updated stock price at the respective measurement dates, in addition to updated expected option term, implied volatility of our stock over the updated expected option term, and risk-free rate assumptions. For all years presented, the meaningful increases or decreases in the year-end stock option fair value from the fair value on the grant date were primarily driven by changes in the stock price.

  15. Outstanding Equity Awards at Fiscal Year-End

    | (2) Cumulative total shareholder return (TSR) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our company’s share price at the end and the beginning of the measurement period by our company’s share price at the beginning of the measurement period. No dividends were paid on stock or option awards in any applicable period. | | (3) The dollar amounts reported represent the amount of net income (loss) reflected in our consolidated audited financial statements for the applicable year. |

  16. Analysis of the Information Presented in the Pay Versus Performance Table

    Analysis of the Information Presented in the Pay Versus Performance Table We seek to incentivize long-term performance and therefore do not specifically align our performance measures with “compensation actually paid” (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table. Compensation Actually Paid and Net Income (Loss) Between 2022 and 2024, our net loss increased; although the compensation paid for both our PEO and non-PEO NEOs increased to reflect contributions to, and performance on, Company initiatives. Compensation Actually Paid and Cumulative TSR As shown in the following graph, the compensation actually paid to Mr. Fischel and the average amount of compensation actually paid to our named executive officers as a group (excluding Mr. Fischel) during the periods presented are positively correlated to total shareholder return (TSR). We have not historically aligned executive compensation with TSR. Our stock incentive programs, which are an integral part of our executive compensation program, are tied to Company performance because they provide value only if the market price of our common stock increases and if the executive officer continues in our employment over the vesting period. These stock awards strongly align our executive officers’ interests with those of our stockholders by providing a continuing financial incentive to maximize long-term value for our stockholders and by encouraging our executive officers to continue in our employment for the long-term. Additionally, part of the compensation of our named executive officers other than our PEO consists of annual performance-based cash bonuses which are designed to provide appropriate incentives for our executives to achieve defined annual corporate goals and to reward our executives for individual achievement towards these goals. See the Executive Compensation section for a discussion of our compensation programs. Securities Authorized for Issuance under Equity Compensation Plans The following table discloses information as of December 31, 2024, regarding securities to be issued upon the exercise of outstanding options, warrants, and rights under equity compensation plans.

  17. Analysis of the Information Presented in the Pay Versus Performance Table

    | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (3) | | | (a) | (b) | (c) | | Equity compensation plans approved by shareholders | 5,404,892 | 3.79 | 18,317,547 | | Equity compensation plans not approved by shareholders | - | - | - | | Total | 5,404,892 | $3.79 | 18,317,547 |

  18. Analysis of the Information Presented in the Pay Versus Performance Table

    | (1) Includes 1,546,532 shares issuable pursuant to RSUs under our compensation program for non-employee directors, for which the service period has been completed but which will vest and become issuable in the future on the earliest to occur of (i) the fifth anniversary of the date of the award, (ii) the date on which the Board service of the director terminates, or (iii) a “change of control” of the Company, as defined in the award agreement. See “Director Compensation—Director Compensation Policy” above. | | (2) Shares issuable upon vesting of restricted share units are not included in the weighted average computation. | | (3) Includes 13,000,000 shares issuable pursuant to performance based RSUs under the 2021 CEO Performance Share Unit Award Plan which was approved by our shareholders at our May 20, 2021, annual meeting. As of December 31, 2024, no milestones have been achieved under the 2021 CEO Performance Share Unit Award Plan and accordingly no shares have been issued. |

  19. Analysis of the Information Presented in the Pay Versus Performance Table

    Potential Payments Upon Termination or Change of Control The award agreements under our 2012 Stock Incentive Plan, 2022 Stock Incentive Plan, and the 2021 CEO Performance Share Unit Award Plan (collectively, the “Plans”) provide for the acceleration of certain equity awards in the event of termination of the employee’s employment due to a change of control of the Company. The provisions under the award agreements are applicable to awards granted to all participants in the Plan, including the Named Executive Officers. We have described those provisions below. Additionally, under certain stock incentive plans, in the event of a change of control of the Company, the Compensation Committee has the discretion to provide for termination of awards in exchange for cash payments or the issuance of substitute awards. Benefits or payments under other plans and arrangements that are available to the Company’s employees on similar terms are not described. Provisions of awards under the Stock Incentive Plans The awards do not typically accelerate in connection with the retirement, resignation, or other termination of employment (i.e., voluntary termination, termination for cause or involuntary termination) of any of the participants. In addition, none of the equity awards under 2012 Stock Incentive Plan, or 2022 Stock Incentive Plan accelerate in the event of termination by death or disability. SARs and options could be exercised for specified periods following retirement, death, or disability. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of March 17, 2025, by:

  20. Analysis of the Information Presented in the Pay Versus Performance Table

    | ● | each person known by us to beneficially own more than 5% of our outstanding common stock; | | ● | each of our directors; | | ● | each of our Named Executive Officers; and | | ● | all our directors and executive officers as a group. |

  21. Analysis of the Information Presented in the Pay Versus Performance Table

    There were 85,979,662 shares of common stock and 21,233 shares of Series A Convertible Preferred Stock outstanding as of March 17, 2025. Each share of our Series A Convertible Preferred Stock is convertible into 2,320 shares of our common stock (or an aggregate 21,633,743 of shares), subject to specified beneficial ownership limitations. Unless otherwise indicated, the table below includes the number of shares underlying options that are currently exercisable or exercisable within 60 days after March 17, 2025, the number of shares that may be issuable upon vesting of restricted share units within 60 days after March 17, 2025, and the number of shares of common stock into which the shares of Series A Convertible Preferred Stock are convertible within 60 days after March 17, 2025, in each case subject to the beneficial ownership limitations described in the footnotes below. Such shares are considered outstanding and beneficially owned by the person holding the options, restricted share units, or shares of Series A Convertible Preferred Stock for the purposes of computing beneficial ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, where applicable, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name. Except as otherwise indicated, the address of each of the persons in this table is as follows: c/o Stereotaxis, Inc., 710 North Tucker Boulevard, Suite 110, St. Louis, Missouri 63101.

  22. Analysis of the Information Presented in the Pay Versus Performance Table

    | Name and Address of Beneficial Owner of Common Stock | Number of shares of Common Stock beneficially owned | Percentage of shares of Common Stock beneficially owned | | Five percent shareholders | | | | 2012 Revocable Trust of Andrew Redleaf (1) 3033 Excelsior Boulevard Minneapolis, MN 55416 | 7,747,608 | 8.55% | | Joseph Kiani Dynasty Trust (2) 52 Discovery Irvine, CA 92618 | 8,859,681 | 9.99% | | DAFNA Capital Management, LLC (3) 10990 Wilshire Boulevard, Suite 1400 Los Angeles, CA 90024 | 13,680,554 | 15.91% | | Directors and Named Executive Officer | | | | David W. Benfer (4) | 463,304 | * | | David L. Fischel | 200,000 | * | | Nathan Fischel, M.D. (5) | 13,875,054 | 16.14% | | Myriam Curet, M.D. | - | * | | Arun S. Menawat | 479,285 | * | | Ross Levin | 94,973 | * | | Nachum Shamir | - | * | | Kimberly R. Peery (6) | 198,234 | * | | All directors and executive officers as a group (8 persons) | 15,310,850 | 17.77% |

  23. Analysis of the Information Presented in the Pay Versus Performance Table

    * Indicates ownership of less than 1%

  24. Analysis of the Information Presented in the Pay Versus Performance Table

    | (1) Based on the Company’s records. Includes 4,670,685 shares of common stock issuable upon conversion of Series A Convertible Preferred Stock. The conversion of the Series A Convertible Preferred Stock is restricted to the extent that, upon such conversion, the number of shares of common stock then beneficially owned by the holder of such securities and its affiliates would exceed 9.99% of our common stock then outstanding. | | (2) Based on a Schedule 13G filed by Joe Kiani on June 9, 2021, and the Company’s records. Excludes 6,635,535 shares of common stock issuable upon conversion of Series A Convertible Preferred Stock held by the Joseph Kiani Dynasty Trust. The conversion of the Series A Convertible Preferred Stock is restricted to the extent that, upon such conversion, the number of shares of common stock then beneficially owned by the holder of such securities and its affiliates would exceed 9.99% of our common stock then outstanding. | | (3) Based on the Company’s records and a Schedule 13D filed on March 8, 2018, by DAFNA Capital Management, LLC, in its capacity as investment adviser to DAFNA LifeScience Ltd., DAFNA LifeScience Market Neutral Ltd., and DAFNA LifeScience Select Ltd. (collectively, the “Funds”), each of which entities is a Cayman Islands exempted company. In such capacity, DAFNA Capital Management, LLC may be deemed to be the beneficial owner of the shares of our common stock owned by the Funds, as in its capacity as investment adviser it has the power to dispose, direct the disposition of, and vote our shares owned by the Funds. Nathan Fischel and Fariba Ghodsian are part-owners of DAFNA Capital Management and managing members. As controlling persons of DAFNA Capital Management, they may be deemed to beneficially own the shares of our common stock owned by the Funds. Pursuant to Rule 13d-4, Drs. Fischel and Ghodsian disclaim beneficial ownership of the securities owned by the Funds. This amount excludes an aggregate of 18,682,739 shares of common stock issuable upon conversion of Series A Convertible Preferred Stock. The conversion of the Series A Convertible Preferred Stock is restricted to the extent that, upon such conversion, the number of shares of common stock then beneficially owned by the holder of such securities and its affiliates would exceed 4.99% of our common stock then outstanding. | | (4) Includes, 2,700 shares of common stock held by Mr. Benfer’s spouse, and 210,255 shares of common stock held by the Benfer Family Trust TTEE. | | (5) Includes 13,680,554 shares of common stock held by DAFNA Capital Management, LLC, in its capacity as investment advisor to DAFNA LifeScience Ltd., DAFNA LifeScience Market Neutral Ltd., and DAFNA LifeScience Select Ltd. (collectively, the “Funds”). This number of shares excludes an aggregate of 18,682,739 shares of common stock issuable upon conversion of Series A Convertible Preferred Stock held by the Funds. Dr. Fischel disclaims beneficial ownership of the shares and warrants owned by the Funds. The conversion of the Series A Convertible Preferred Stock is restricted to the extent that, upon such conversion, the number of shares of common stock then beneficially owned by the holder of such securities and its affiliates would exceed 4.99% of our common stock then outstanding. | | (6) Includes options to purchase 194,917 shares of common stock. |