Stereotaxis, Inc. (STXS)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included
in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025. Operating results are
not necessarily indicative of results that may occur in future periods.

This
report includes various forward-looking statements that are subject to risks and uncertainties, many of which are beyond our control.
Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors,
including those set forth in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q and in Part I, Item
1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, as well as risks
and uncertainties related to our acquisition of Access Point Technologies EP, Inc. (“APT”) and our recently completed acquisition
of Robocath. Forward-looking statements discuss matters that are not historical facts. Forward-looking statements include, but are not
limited to, discussions regarding our operating strategy, sales and marketing strategy, regulatory strategy, industry, economic conditions,
financial condition, liquidity, capital resources and results of operations; the ongoing impact of the coronavirus (“COVID-19”)
pandemic and our response to it or the impact of any similar pandemic; and statements relating to our acquisitions of APT and Robocath,
including the anticipated benefits and strategic implications of the acquisitions; our ability to integrate acquired operations; manufacture,
develop, commercialize and sell acquired products; retain key personnel; fund Robocath’s operations; and achieve regulatory and
commercial milestones that could trigger contingent payments. Such statements include, but are not limited to, statements preceded by,
followed by, or that otherwise include the words “believe,” “expects,” “anticipates,” “intends,”
“estimates,” “projects,” “can,” “could,” “may,” “would” or similar
expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. You should not unduly rely on these forward-looking statements, which speak only as of the
date on which they are made. They give our expectations regarding the future but are not guarantees. We undertake no obligation to update
publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required
by law.

Overview

Stereotaxis
designs, manufactures and markets robotic systems, instruments and information systems for the interventional laboratory. Our proprietary
robotic technology, Robotic Magnetic Navigation, fundamentally transforms endovascular interventions using precise computer-controlled
magnetic fields to directly control the tip of flexible interventional catheters or devices. Direct control of the tip of an interventional
device, in contrast to all manual hand-held devices that are controlled from their handle, can improve the precision, stability, reach
and safety of these devices during procedures.

Our
primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias. Cardiac
ablation has become a well-accepted therapy for arrhythmias and a multi-billion-dollar medical device market with expectations for substantial
long-term growth. We have shared our aspiration and a product strategy to expand the clinical focus of our technology to several additional
endovascular indications including coronary, neuro, and peripheral interventions.

There
is substantial real-world evidence and clinical literature for Robotic Magnetic Navigation in electrophysiology. Hundreds of electrophysiologists
at over one hundred hospitals globally have treated over 150,000 arrhythmia patients with our robotic technology. Clinical use of our
technology has been documented in over 500 clinical publications. Robotic Magnetic Navigation is designed to enable physicians to complete
more complex interventional procedures with greater success and safety by providing image-guided delivery of catheters through the blood
vessels and chambers of the heart to treatment sites. This is achieved using externally applied computer-controlled magnetic fields that
govern the motion of the working tip of the catheter, resulting in improved navigation. The more flexible atraumatic design of catheters
driven using magnetic fields may reduce the risk of patient harm and other adverse events. Performing the procedure from a control cockpit
enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency.
We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging
or unsuccessful and generates significant x-ray exposure, and we are investing in research and development in these areas.

22

Our
primary products include the Genesis RMN and the GenesisX RMN Systems, the Synchrony & SynX Solutions, various
interventional devices under the Map-iT, MAGiC and EMAGIN brands, and other related devices. Through our strategic
relationships with fluoroscopy system manufacturers, providers of catheters and electrophysiology mapping systems, and other parties,
we offer our customers x-ray systems and other accessory diagnostic and therapeutic devices.

The
Genesis RMN and the GenesisX RMN Systems are designed to enable physicians to complete complex interventional procedures
by providing image-guided delivery of catheters through the blood vessels and chambers of the heart to treatment sites. This is achieved
using externally applied magnetic fields that govern the motion of the working tip of the catheter, resulting in improved navigation,
efficient procedures, and reduced x-ray exposure. The GenesisX RMN System, the latest generation of the Genesis RMN System,
is designed to enhance the accessibility of Robotic Magnetic Navigation by reducing the lengthy construction cycle necessary to install
prior generation RMN systems.

The
Synchrony system is designed to digitize and modernize the interventional catheter lab. Synchrony’s ultra-high-definition
display consolidates the viewing and control of all disparate systems in the lab, offering an enhanced procedure experience with custom
layouts, streamlined workflows, an intuitive user interface, and a decluttered environment. Synchrony digitizes the video streams with
full fidelity and ultra-low latency, offering crystal-clear visualization. Its architecture allows obsolescence protection for labs as
new technologies are introduced in the future. Synchrony is made available with SynX, a cloud-based HIPAA and GDPR-compliant app
that allows for secure remote connectivity, collaboration, recording, and monitoring of the cath lab. These technologies are sold alongside
RMN systems and as stand-alone solutions.

We
pursue arrangements with fluoroscopy system manufacturers to provide RMN Systems in a bundled purchase for hospitals establishing
robotic interventional operating rooms. An integrated x-ray system is critical for customer adoption of RMN Systems and, when
offered in a bundled purchase with the RMN System, may reduce the cost of acquisition, the ongoing cost of ownership, and the
complexity of installation of a robotic electrophysiology practice.

We
promote our full suite of products necessary for a typical hospital implementation, subject to regulatory approvals or clearances. This
implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically
includes equipment and installation charges. The recurring payments typically include disposable costs for each procedure, equipment
service costs beyond the warranty period, and ongoing software updates. In hospitals where our full suite of products has not been implemented,
equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.

Not
all products have and/or require regulatory clearance in all the markets we serve. Please refer to “Regulatory Approval”
in Item 1 for a description of the regulatory clearance, licensing, and/or approvals we currently have or are pursuing. 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
have strategic relationships with technology leaders and innovators in the global interventional market. Through these strategic relationships
we provide compatibility with our robotic magnetic navigation systems, integrated x-ray systems, digital imaging and 3D catheter location
sensing technology, and compatible disposable interventional devices. The maintenance of these strategic relationships, or the establishment
of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships
will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. We
cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent
alternatives on competitive terms or at all.

Corporate
Developments

On
July 7, 2026, the Company completed its previously announced acquisition of shares and other securities collectively representing 100%
of the share capital and voting power of Robocath, a French société par actions simplifiée (“Robocath”),
pursuant to the Share Sale Agreement dated April 14, 2026, for approximately $20.0 million in cash and common stock.

Robocath,
headquartered in Rouen, France, is an innovator of advanced mechanical robotic technology for interventional cardiology and neurointerventions.

At
closing, the Company made certain cash payments for the benefit of Robocath’s securityholders and issued (i) 1,469,485 shares of
common stock and (ii) pre-funded warrants to purchase 4,575,143 shares of common stock to the securityholders. The Company also issued
225,000 shares of common stock to Robocath’s financial advisor as partial payment of a success fee for acquisition advisory services.
The Share Sale Agreement provides for up to $25.0 million of additional earnout consideration, payable in cash, shares of common stock
(including shares issuable upon exercise of Purchaser Warrants) or a combination thereof at the Company’s election, upon achievement
of one regulatory milestone and two commercial milestones during periods ending December 31, 2033, December 31, 2035 and December 31,
2037, respectively.

23

Stereotaxis
has continued to advance development and regulatory approval of its Robotic Magnetic Navigation systems and proprietary interventional
devices.

In
the fourth quarter of 2025, we received FDA 510(k) clearance in the United States for the GenesisX RMN System. This latest generation
of the RMN System is designed to significantly enhance the accessibility of Robotic Magnetic Navigation by eliminating the lengthy construction
cycle necessary to install prior-generation RMN systems. In October 2025, we obtained CE Mark for the Synchrony Solution, and
in April 2026, we received FDA 510(k) clearance in the United States.

The
Stereotaxis MAGiC catheter, a robotically navigated magnetic ablation catheter designed to perform minimally invasive cardiac
ablation procedures, obtained CE marking in Europe during the first quarter of 2025 and FDA 510(k) clearance in January 2026. MAGiC
Sweep™, the first robotically navigated high-density EP mapping catheter, received FDA 5

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included
in this report on Form 10-K. Operating results are not necessarily indicative of results that may occur in future periods.

This
report includes various forward-looking statements that are subject to risks and uncertainties, many of which are beyond our control.
Our actual results could differ materially from those anticipated in these forward- looking statements as a result of various factors,
including those set forth in Item 1A. “Risk Factors,” as well as various impacts related to our previously announced acquisition
of Access Point Technologies EP, Inc. (“APT”). Forward-looking statements discuss matters that are not historical facts.
Forward-looking statements include, but are not limited to, discussions regarding our operating strategy, sales and marketing strategy,
regulatory strategy, industry, economic conditions, financial condition, liquidity, capital resources, results of operations, the impact
of, and our response to the coronavirus (“COVID-19”) pandemic, pandemics similar to the coronavirus (“COVID-19”)
pandemic, and statements relating to our recent acquisition of APT including any benefits expected from the acquisition, potential strategic
implications as a result of the acquisition, and the potential for achievement of the regulatory and commercial milestones that would
trigger contingent payments in the transaction. Such statements include, but are not limited to, statements preceded by, followed by
or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,”
“estimates,” “projects,” “can,” “could,” “may,” “will,” “would,”
or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995. You should not unduly rely on these forward-looking statements, which speak only
as of the date on which they were made. They give our expectations regarding the future but are not guarantees. We undertake no obligation
to update publicly or revise forward-looking statements, whether because of new information, future events or otherwise, unless required
by law.

Overview

Stereotaxis
designs, manufactures and markets robotic systems, instruments and information systems for the interventional laboratory. Our proprietary
robotic technology, Robotic Magnetic Navigation, fundamentally transforms endovascular interventions using precise computer-controlled
magnetic fields to directly control the tip of flexible interventional catheters or devices. Direct control of the tip of an interventional
device, in contrast to all manual hand-held devices that are controlled from their handle, can improve the precision, stability, reach
and safety of these devices during procedures.

Our
primary clinical focus has been electrophysiology, specifically cardiac ablation procedures for the treatment of arrhythmias. Cardiac
ablation has become a well-accepted therapy for arrhythmias and a multi-billion-dollar medical device market with expectations for substantial
long-term growth. We have shared our aspiration and a product strategy to expand the clinical focus of our technology to several additional
endovascular indications including coronary, neuro, and peripheral interventions.

39

There
is substantial real-world evidence and clinical literature for Robotic Magnetic Navigation in electrophysiology. Hundreds of electrophysiologists
at over one hundred hospitals globally have treated over 150,000 arrhythmia patients with our robotic technology. Clinical use of our
technology has been documented in over 500 clinical publications. Robotic Magnetic Navigation is designed to enable physicians to complete
more complex interventional procedures with greater success and safety by providing image-guided delivery of catheters through the blood
vessels and chambers of the heart to treatment sites. This is achieved using externally applied computer-controlled magnetic fields that
govern the motion of the working tip of the catheter, resulting in improved navigation. The more flexible atraumatic design of catheters
driven using magnetic fields may reduce the risk of patient harm and other adverse events. Performing the procedure from a control cockpit
enables physicians to complete procedures in a safe location protected from x-ray exposure, with greater ergonomics, and improved efficiency.
We believe these benefits can be applicable in other endovascular indications where navigation through complex vasculature is often challenging
or unsuccessful and generates significant x-ray exposure, and we are investing in research and development in these areas.

Our
primary products include the Genesis RMN and the GenesisX RMN Systems, the Odyssey and Synchrony & SynX Solutions,
various interventional devices under the Map-iT, MAGiC and EMAGIN brands, and other related devices. Through our
strategic relationships with fluoroscopy system manufacturers, providers of catheters and electrophysiology mapping systems, and other
parties, we offer our customers x-ray systems and other accessory diagnostic and therapeutic devices.

The
Genesis RMN and the GenesisX RMN Systems are designed to enable physicians to complete complex interventional procedures
by providing image-guided delivery of catheters through the blood vessels and chambers of the heart to treatment sites. This is achieved
using externally applied magnetic fields that govern the motion of the working tip of the catheter, resulting in improved navigation,
efficient procedures, and reduced x-ray exposure. The GenesisX RMN System, the latest generation of the Genesis RMN System,
is designed to enhance the accessibility of Robotic Magnetic Navigation by reducing the lengthy construction cycle necessary to install
prior generation RMN systems.

The
Odyssey Solution consolidates lab information onto one large integrated display, enabling physicians to view and control all the
key information in the operating room. This is designed to improve lab layout and procedure efficiency. The system also features a remote
viewing and recording capability called Odyssey Cinema. The Odyssey Solution and Odyssey Cinema are being replaced
by next generation innovative solutions branded Synchrony and SynX. Synchrony digitizes and modernizes the interventional
cath lab with a 4K high-definition display that consolidates the viewing and control of disparate systems in the lab, offering enhanced
procedure experience with custom layouts, streamlined workflows, an intuitive user interface, and a decluttered environment. Synchrony
is made available with SynX a cloud-based HIPAA and GDPR-compliant browser and mobile-based app that allows for secure remote
connectivity, collaboration, recording, and monitoring of the cath lab. As these technologies gain regulatory approvals they are being
commercialized alongside RMN systems and as stand-alone solutions.

We
pursue arrangements with fluoroscopy system manufacturers to provide RMN Systems in a bundled purchase offer for hospitals establishing
robotic interventional operating rooms. An integrated x-ray system is critical for customer adoption of RMN Systems, and when
offered as a bundled purchase offer with the RMN System, may reduce the cost of acquisition, the ongoing cost of ownership, and
the complexity of installation of a robotic electrophysiology practice.

We
promote our full suite of products necessary for a typical hospital implementation, subject to regulatory approvals or clearances. This
implementation requires a hospital to agree to an upfront capital payment and recurring payments. The upfront capital payment typically
includes equipment and installation charges. The recurring payments typically include disposable costs for each procedure, equipment
service costs beyond the warranty period, and ongoing software updates. In hospitals where our full suite of products has not been implemented,
equipment upgrade or expansion can be implemented upon purchasing of the necessary upgrade or expansion.

Not
all products have and/or require regulatory clearance in all the markets we serve. Please refer to “Regulatory Approval”
in Item 1 for a description of the regulatory clearance, licensing, and/or approvals we currently have or are pursuing. Approval processes
can be lengthy and uncertain, submissions may require revised or additional non-clinical and clinical data, and regulatory applications
could be denied.

As
of December 31, 2025, we had approximately $9.1 million of system backlog, consisting of outstanding purchase orders and other commitments
for these systems. Of the December 31, 2025 system backlog, we expect approximately 78% to be recognized as revenue over the course of
2026. We had system backlog of approximately $14.4 million as of December 31, 2024. There can be no assurance that we will recognize
such 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. These orders and commitments may be revised, modified or canceled, either by their express terms, because of negotiations
or by project changes or delays. In addition, the sales cycle for the robotic magnetic navigation system is lengthy and generally involves
construction or renovation activities at customer sites. Consequently, revenues and/or orders resulting from sales of our robotic magnetic
navigation systems can vary significantly from one reporting period to the next.

40

We
have strategic relationships with technology leaders and innovators in the global interventional market. Through these strategic relationships
we provide compatibility with our robotic magnetic navigation systems, integrated x-ray systems, digital imaging and 3D catheter location
sensing technology, and compatible disposable interventional devices. The maintenance of these strategic relationships, or the establishment
of equivalent alternatives, is critical to our commercialization efforts. There are no guarantees that any existing strategic relationships
will continue, and efforts are ongoing to ensure the availability of compatible systems and devices and/or equivalent alternatives. We
cannot provide assurance as to the timeline of the ongoing availability of such compatible systems or our ability to obtain equivalent
alternatives on competitive terms or at all.

Corporate
Developments

On
July 31, 2024, the Company completed its acquisition of all the shares of capital stock of Access Point Technologies EP, Inc., a Minnesota
corporation (“APT”), from APT Holding Company, Inc., a Minnesota corporation. APT, based in Rogers, Minnesota, designs, manufactures,
and commercializes a portfolio of differentiated high-quality diagnostic catheters, branded as Map-iT catheters, used during cardiac
ablation procedures that are commercially available across key global geographies.

The
transaction was concluded pursuant to that certain Share Purchase Agreement, dated May 11, 2024. The transaction consideration included
an upfront payment of 1,486,620 shares of Company common stock issued at closing, as well as additional contingent payments of Company
common stock based upon the achievement of specified product revenue and regulatory approval milestones through September 30, 2029. All
consideration is payable in Stereotaxis common stock.

The
integration with APT provides in-house catheter development, manufacturing expertise and specialized knowledge that will further Stereotaxis’
innovation efforts in developing a broad family of interventional devices navigated by our robots within electrophysiology and across
a range of endovascular procedures.

Stereotaxis
has continued to advance development and regulatory approval

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]