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Monogram Orthopaedics Inc (MGRM)
:MGRM
US Market

Monogram Orthopaedics Inc (MGRM) Risk Analysis

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Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Monogram Orthopaedics Inc disclosed 52 risk factors in its most recent earnings report. Monogram Orthopaedics Inc reported the most risks in the “Production” category.

Risk Overview Q4, 2024

Risk Distribution
52Risks
27% Production
23% Legal & Regulatory
21% Finance & Corporate
15% Tech & Innovation
13% Ability to Sell
0% Macro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Monogram Orthopaedics Inc Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q4, 2024

Main Risk Category
Production
With 14 Risks
Production
With 14 Risks
Number of Disclosed Risks
52
+4
From last report
S&P 500 Average: 31
52
+4
From last report
S&P 500 Average: 31
Recent Changes
7Risks added
3Risks removed
1Risks changed
Since Dec 2024
7Risks added
3Risks removed
1Risks changed
Since Dec 2024
Number of Risk Changed
1
+1
From last report
S&P 500 Average: 3
1
+1
From last report
S&P 500 Average: 3
See the risk highlights of Monogram Orthopaedics Inc in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 52

Production
Total Risks: 14/52 (27%)Above Sector Average
Manufacturing4 | 7.7%
Manufacturing - Risk 1
Our products require a level of accuracy that we may never be able to achieve
To obtain FDA clearance on our system we will need to demonstrate that we can accurately position implants in robotically prepared bone specimens. The KUKA LBR Med robotic arm that we are using has never before been used or validated for this application, and it may not be able to perform to the accuracy required. Preparing bone to the accuracies required is a highly challenging task with numerous sources of error that we may never be able to overcome. We have not yet achieved high-accuracy cuts in a cadaveric bone specimen. If we cannot execute a robotic surgical plan with sufficient accuracy, it will materially adversely impact our business and market reputation.
Manufacturing - Risk 2
Our products may require more technical complexity than anticipated and our engineers may not be able to overcome these technical challenges
While management makes every effort to anticipate the technical challenges of product development, we may encounter unforeseen complexity that we cannot overcome, or that may be difficult to overcome without incurring significant time or cost that was not anticipated or budgeted. For example, we have found it challenging to revise our first-generation tibial design. To facilitate more efficient removal, we may need to make design changes to features like the locking mechanism that were not anticipated and introduce additional cost, time and complexity. Additional unforeseen challenges as this could hinder our plan of operations, slowing our progress and increasing our costs, which may harm your investment in our Company.
Manufacturing - Risk 3
Our products may be more expensive to produce than we estimate.
We estimate, although we cannot guarantee, that the cost to produce our robotic system will be below that of our primary competitors in this market. Investors should note, however, that this estimation is based on assumptions about the production costs of our competitors that may be inaccurate or outdated. Furthermore, it is possible that that competitors of our Company with larger and more established operations could discount their prices compared to what they are now if we attempted to undercut them in the market, which could negatively affect our ability to compete in our market against these competitors.
Manufacturing - Risk 4
Assuming our surgical robot or other product candidates receive 510(k) premarket clearance, our products will still be subject to recalls, which could harm our reputation, business operations and financial results.
Even assuming we obtain 510(k) premarket clearance with regard to product candidates, the FDA has the authority to require the recall of our products if we commence manufacturing of our products and we or any contract manufacturers we retain fail to comply with relevant regulations pertaining to manufacturing practices, labeling, advertising or promotional activities, or if new information is obtained concerning the safety or efficacy of the devices. A government-mandated recall could occur if the FDA finds that there is a reasonable probability that our devices would cause serious, adverse health consequences or death. A voluntary recall by us could occur as a result of manufacturing defects, labeling deficiencies, packaging defects or other failures to comply with applicable regulations. Any recall would divert our attention and financial resources, could harm our reputation with customers, and could harm our business and financial condition.
Employment / Personnel6 | 11.5%
Employment / Personnel - Risk 1
Our future success is dependent on the continued service of our small management team
Monogram is managed by four directors and one executive officer. Our success is dependent on their ability to manage all aspects of our business effectively. Because we are relying on our small management team, we lack certain business resources that may hurt our ability to efficiently operate or grow our business. Any loss of key members of our executive team could have a negative impact on our ability to manage and grow our business effectively. We do not maintain a key person life insurance policy on any of the members of our senior management team. As a result, we would have no way to cover the financial loss if we were to lose the services of our directors or officers.
Employment / Personnel - Risk 2
Added
Recent Downsizing of FDA Personnel Reviewing Medical Device Applications May Adversely Affect Our Regulatory Approval Timeline and Create Uncertainty in the Approval Process.
Obtaining 510(k) premarket clearance by the FDA of our surgical robot – and, to a lesser degree, our orthopaedic implant(s) - is critical to our business. Recent downsizing of FDA personnel, particularly those responsible for reviewing medical device applications, has created uncertainty regarding the timing and efficiency of the regulatory approval process. In early 2025, the FDA implemented workforce reductions affecting personnel across various regulatory divisions, including those overseeing medical device approvals. While the full impact of these reductions is still unfolding, delays in the review of our submissions, extended response times for regulatory inquiries, and potential bottlenecks in the approval process may adversely affect the FDA's review of our submission. Any delays or disruptions in the FDA's review process could materially affect our business operations, financial condition, and growth strategy. Extended approval timelines may increase our costs, defer expected revenue, or allow competitors to gain market advantages while we await regulatory clearance. Furthermore, should the FDA continue to operate with reduced staffing levels, we may face ongoing uncertainty regarding future submissions, supplemental approvals, and post-market regulatory oversight.
Employment / Personnel - Risk 3
We do not currently have the sales and marketing personnel necessary to sell products, and the failure to hire and retain such staff, or retain a third-party with sales and marketing personnel to fulfill that function, could have a materially adverse effect on our business.
We are a development-stage company with limited resources. Even if we had products available for sale, which we currently do not, we have not secured sales and marketing staff at this early stage of operations to sell products. We cannot generate sales without sales or marketing staff and must rely on others to provide any sales or marketing services until such personnel are secured, if ever. If we fail to hire and retain the requisite expertise in order to market and sell our products or fail to raise sufficient capital in order to afford to pay such sales or marketing staff, then we could be forced to cease operations and you could lose all of your investment.
Employment / Personnel - Risk 4
Certain of our non-executive employees rely on work visas in order to work at our Company, and as a result, we may experience disruptions resulting from visa issues encountered by members of our staff.
A number of our non-executive employees are not United States citizens, and require visas in order to legally work in the United States. As a result, we are potentially susceptible to work disruptions and/or staff shortages resulting from visa issues (such as denials, non-renewals, etc.) affecting members of our staff. If one or more of our employees were unable to work for us as a result of a visa issue, either temporarily or permanently, it could have a material negative impact on our Company, leading to delays to our current plan of operations, additional expenses, as well as time and effort on the part of management in finding replacements that would otherwise be spent on the Company's primary goals.
Employment / Personnel - Risk 5
Our failure to attract and retain highly qualified personnel in the future could harm our business.
As the Company grows, it will be required to hire and attract additional qualified professionals such as software engineers, robotics engineers, machine vision and machine learning experts, biomechanical engineers, project managers, regulatory professionals, sales and marketing professionals, accounting, legal, and finance experts. We expect to face intense competition for such personnel, and the Company may not be able to locate or attract qualified individuals for such positions, which will affect the Company's ability to grow and expand its business.
Employment / Personnel - Risk 6
The Company's success depends on the experience and skill of the board of directors, its executive officers and key employees.
In particular, the Company is dependent on Benjamin Sexson who joined on April 2018 and is currently serving as the Chief Executive Officer of the Company. The Company has entered into an employment agreement with Benjamin Sexson although there can be no assurance that he will continue to be employed by the Company for a particular period of time. The loss of Benjamin Sexson or any member of the board of directors or other executive officers could harm the Company's business, financial condition, cash flow and results of operations.
Supply Chain3 | 5.8%
Supply Chain - Risk 1
Changed
We face risks related to our license agreement with the Icahn School of Medicine at Mount Sinai.
We are party to a license agreement (and related option agreement) with Mount Sinai (and the amendments thereto, each of which are included as Exhibits to this Form 10-K) pursuant to which Mount Sinai has granted Monogram an exclusive license to patents related to customizable bone implants, surgical planning software, and surgical robots. The Company does not believe the licensed patents are critical to the development of its robotic system or commercial strategy, and as such, as of the date of this report, the Company has elected to abandon its rights to the patents licensed under the agreement. The Company also intends to try to negotiate a termination of the agreement. Until the agreement is terminated, it is still in effect, with the resulting payment schedules and obligations. The Company does not have the unilateral right to terminate the license agreement and will seek to work with Mount Sinai to terminate the agreement. Should the Company come to an agreement with Mount Sinai to terminate the license agreement, it may be required to issue new consideration in exchange for the termination. Such new consideration may include ongoing royalties or payments associated with Mount Sinai's intellectual property claimed to be part of the development of the Company's robotic systems. As a result, the Company may not be able to terminate the Mount Sinai agreement on terms that are beneficial to the Company, or may be required to encumber the Company with payments that would reduce net revenues, should the Company ever achieve consistent revenues. If we are not able to terminate the agreement amicably, Mount Sinai would retain the right to determine the Company is in default on provisions of the agreement. For instance, pursuant to the terms of the license agreement with Mount Sinai, we must have a first commercial sale our products within eight (8) years of the Effective Date of the agreement, or by October 10, 2025. Failure to meet this deadline would constitute a breach of our agreement, which would afford to Mount Sinai the right to give us a notice of default, and could ultimately terminate the license agreement if we are unable to cure this default within sixty (60) days. A termination of this license agreement would also terminate our related option agreement with Mount Sinai, as the option agreement is governed by the terms of the license agreement. While we expect to achieve a commercial sale within this timeframe if we are unsuccessful in doing so, we would be in default, and would be exposed to the risk of Mount Sinai terminating the agreement without the benefit of the Company being able to negotiate a suitable termination of the license agreement. Such a result may result in ongoing disputes about the use of know-how claimed to be associated with the licensed Mount Sinai intellectual property, or continued obligations to make royalty payments to Mount Sinai that survive termination of the agreement. The Company is not currently licensing any intellectual property used in its robotic system and believes there is no know-how that would be subject to the license agreement with Mount Sinai. However, Mount Sinai may still contend that know-how is being utilized entitling it to ongoing payments under the agreement. This poses a risk to the Company that it will be required to litigate such claims with Mount Sinai, which would result in increased expenses to the Company and disruption of its business activities. We further note that, as of the date of this report, we are in discussions with Mount Sinai as to whether the Company becoming publicly traded on Nasdaq without undertaking a traditional initial public offering constitutes a "Significant Transaction" under the licensing agreement. Under the licensing agreement, if at the time of completion of a "Significant Transaction" the Company has a valuation greater than $150,000,000, Mount Sinai will receive 1% of the fair market value of Company at the time of completion of the Significant Transaction. It is the Company's position that no Significant Transaction has occurred – but there is no guarantee the Company and Mount Sinai will come to a consensus on this point. If we cannot come to an agreement with Mount Sinai on this point, we may be forced into litigation – and even if we pursue litigation, it is possible that a court would not rule in our favor. At December 31, 2024 and through the date of this Annual Report, the Company believes it is probable it will be obligated to transfer consideration to Mount Sinai to settle this matter and terminate the Licensing Agreement. Though discussions are still in their very early stages, the Company estimates $1.5 million to be a reasonable estimate of its contingent obligation in this matter and has recorded a liability for this amount, with a corresponding charge to other expenses, in its financial statements as of and for the year ended December 31, 2024. If the Company is required to pay this amount, it could have a material adverse effect on the Company's operations.
Supply Chain - Risk 2
We have no manufacturing experience, and we rely entirely on third-party manufacturers and service providers to produce our medical device product candidates
Our third-party partners provide a variety of essential business functions, including distribution, manufacturing, and many others. It is possible that some of these third parties will fail to perform their services or will perform them in an unacceptable manner. If we encounter problems with one or more of these parties, and they fail to perform to expectations, it would be materially disruptive to our business, and we may incur high costs and time to secure alternative supply or be unable to secure an alternative supply altogether. Such an occurrence could have a material adverse impact on the Company. Additionally, the Company does not currently have any manufacturing capabilities itself for what is required by the FDA. As such, any failures or delays on the part of the contract manufacturers we rely on to produce our products could lead to longer production lead times. Similarly, supplier disruptions could materially impact our development timelines, potentially delaying our clinical trial launch for the second-generation Monogram TKA System or potentially delaying our commercial launch if we obtain clearance. If we are unable to submit our FDA submissions in a timely manner, it could adversely affect our financial position and ability to generate sales. If our existing third-party manufacturers, or the third parties that we engage in the future to manufacture a product for commercial sale or for clinical studies, should cease to continue to do so for any reason, we likely would experience significant delays in obtaining sufficient quantities of product for us to meet commercial demand or to advance our clinical studies while we identify and qualify replacement suppliers. If for any reason we are unable to obtain adequate supplies of any product candidate that we develop, it will be more difficult for us to compete effectively, generate revenue, and further develop our products.
Supply Chain - Risk 3
We will need to outsource and rely on third parties for various aspects relating to the development, manufacture, distribution, and sale and marketing of our products as well as in connection with assisting us in the preparation and filing of our FDA 510(k) premarket clearance submissions(s).
For example, the robot arm that we use for our surgical robots is the LBR Med, which KUKA Robotics Corporation manufactures. If KUKA Robotics Corporation decided to terminate its business relationship with us, or discontinued production of this robot arm, it could result in significant time, effort, and expense to find a suitable alternative for our surgical robots, and could negatively impact our current timelines with respect to developing and commercializing our product candidates. If problems develop in our relationships with this or other third parties, or if such parties fail to perform as expected, it could lead to delays or lack of progress in obtaining FDA 510(k) premarket clearance, significant cost increases, and even failure of our product initiatives.
Costs1 | 1.9%
Costs - Risk 1
We may experience property theft and inventory control issues.
Once (and assuming) we are successful in bringing our products to market, we may be reliant on third-party distributors to market and sell our inventory on consignment. If such a distributor loses, steals, or otherwise damages our inventory, it could result in material losses to our business that we may not recover. Furthermore, our business could suffer significant reputational damage because of the actions of distributors.
Legal & Regulatory
Total Risks: 12/52 (23%)Below Sector Average
Regulation10 | 19.2%
Regulation - Risk 1
Added
If the FDA requires us to provide clinical data to obtain clearance for our product candidates, it could pose a significant obstacle to business and plan of operations.
The FDA has not confirmed that no clinical data will be required with our 510(k) submissions. Obtaining clinical data could significantly increase the time needed to prepare our premarket application and receive 510(k) premarket clearance and could materially delay our timeline to revenues and add considerable development costs. We do not currently have the funding to conduct clinical trials. The Company may pursue a clinical trial outside the United States and incorporate this data into a 510(k) submission – however, there is no guarantee the FDA would approve us utilizing the results of a foreign study for purposes of our submissions. If the FDA requires us to provide clinical data, we may be required to raise additional capital from outside sources to secure the capital for a clinical trial, and there is no guarantee we would be successful in doing so. The FDA has indicated an increased focus on robotic technologies that perform automated operations and may request clinical data for our robot and/or implants. If the FDA requires such information, it will materially and adversely impact our development timeline and increase the cost to obtain market clearance. If the Company is unsuccessful in securing enough capital to fund clinical trials and continue its operations while it is under review with the FDA, the Company may be unable to operate as a going concern.
Regulation - Risk 2
Added
Our use of artificial intelligence (AI) and machine learning (ML) technologies is subject to significant regulatory oversight, and changes in regulations or guidance could impact our ability to develop and commercialize AI-driven solutions.
The integration of AI and ML into medical technologies is subject to increasing regulatory scrutiny. Our Case Management Application incorporates ML-driven bone segmentation and case file generation functionalities, and we plan to expand AI applications into surgical planning and real-time object tracking through our mVision technology. However, regulatory agencies such as the U.S. Food and Drug Administration (FDA) continue to evolve their policies regarding AI-enabled medical devices, and future changes to regulatory frameworks could: - Require additional testing, validation, or clinical studies beyond what we currently anticipate. - Mandate modifications to our AI models, potentially delaying commercialization. - Introduce new compliance requirements that increase costs and development timelines. Any regulatory changes impacting AI-driven medical devices could materially and adversely affect our business strategy, product development, and commercial operations.
Regulation - Risk 3
We may fail to meet the Sarbanes-Oxley regulations and may lack the financial controls and safeguards required of public companies.
We are a newly Exchange Act reporting company, and we may fail to implement the internal infrastructure necessary and required under Section 404 of the Sarbanes- Oxley Act of 2002. There can be no assurance that there are no significant deficiencies or material weaknesses in the quality of our financial controls. We expect to incur additional expenses and diversion of management's time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.
Regulation - Risk 4
There may be delays of our clinical trial by international regulatory agencies.
The Company intends to conduct a clinical trial outside the United States. International regulatory agencies may delay the approval of the clinical trial. International governments may restrict importation of our products for the purpose of conducting a clinical trial.
Regulation - Risk 5
We can provide no assurance that our medical device product candidates will obtain regulatory clearance or that the results of clinical studies, if required, will be favorable.
Due to our financial constraints, we do not have the resources necessary to generate clinical data in the United States, if required by FDA. Subject to FDA guidance, we plan to make a 510(k) submission clinical data obtained outside the United States for our second generation Monogram TKA System. There is no guarantee the FDA will agree that clinical data obtained outside the United States is sufficient, and even if it does, there is no guarantee of regulatory clearance by FDA. Furthermore, even if we are granted 510(k) premarket clearances, such clearances may be subject to significant limitations on the indicated uses for the devices, which may limit the market for our product candidates.
Regulation - Risk 6
We have not yet obtained clearance of our products by the U. S. Food and Drug Administration, or FDA, which is critical to our business plan.
Before a new medical device, or a new intended use of a legally marketed device, can be marketed in the United States, it must be cleared or approved by FDA through the applicable premarket review process (510(k), Premarket Approval (PMA), or de novo classification), unless an exemption applies. Our business strategy is focused on obtaining premarket clearance for our product candidates from the FDA under Section 510(k) of the Federal Food, Drug, and Cosmetic Act, or the FDCA (see "Business – Regulation"). In the 510(k) clearance process, the FDA must determine that a proposed device, known as the "subject" device, is "substantially equivalent" to a device legally on the market, known as a "predicate" device, with respect to intended use, technology, and safety and effectiveness, in order to clear the subject device for marketing. Clinical data is sometimes required to support substantial equivalence. Our initial focus is seeking Section 510(k) clearance for our surgical robot, to be followed by seeking clearance for orthopaedic implants developed by the Company with assistance from a contracted third party. If Monogram is unable to, at a minimum, obtain Section 510(k) clearance for its surgical robot, which clearance we cannot guarantee, we will not be able to commercialize our robot, and it is unlikely that we will be able to continue to operate as a going concern.
Regulation - Risk 7
Changes in laws, regulations, and policies and the related interpretations and enforcement practices may significantly affect our cost of doing business as we endeavor to maintain compliance with such new policies and laws.
Changes in laws, regulations, and policies and the related interpretations and enforcement practices generally cannot be predicted may require extensive system and operational changes. Noncompliance with applicable laws and regulations could result in civil and criminal penalties that could adversely affect our business, including suspension of payments from government programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government programs, including the Medicare and Medicaid programs; loss of licenses; and significant fines or monetary penalties. Any failure to comply with applicable regulatory requirements could result in significant legal and financial exposure, damage our reputation, and have a material adverse effect on our business operations, financial condition, and results of operations.
Regulation - Risk 8
Government regulations and other legal requirements affecting our Company are subject to change. Such change could have a material adverse effect on our business.
We operate in a complex, highly regulated environment. The numerous federal, state and local regulations that our business is subject to include, but are not limited to: federal and state registration and regulation of medical devices; applicable governmental payor regulations including Medicare and Medicaid; data privacy and security laws and regulations including those under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"); the Affordable Care Act ("ACA") or any successor to that act; laws and regulations relating to the protection of the environment and health and safety matters, including those governing exposure to, and the management and disposal of, hazardous substances; regulations regarding medical device safety and efficacy including those of the FDA, federal laws regarding advertising and promotion of our products, and consumer protection and safety regulations including those of the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability, sale, advertisement and promotion of products we sell; federal and state laws governing health care fraud and abuse; anti-kickback laws; false claims laws; and laws against the corporate practice of medicine. The FDA and state regulatory authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal, civil and administrative sanctions for violations of these laws and regulations.
Regulation - Risk 9
We are subject to federal and state healthcare regulations and laws relating to anti-bribery and anti-corruption, and non-compliance with such laws could lead to significant penalties.
State and federal anti-bribery laws, and healthcare fraud and abuse laws dictate how we conduct the relationships that we and our distributors and others that market our products have with healthcare professionals, such as physicians and hospitals. We also must comply with a variety of other laws that protect the privacy of individually identifiable healthcare information. These laws and regulations are broad in scope and are subject to evolving interpretation, and we could be required to incur substantial costs to monitor compliance or to alter our practices if we are found not to be in compliance. In addition, violations of these laws may be punishable by criminal or civil sanctions, including substantial fines, imprisonment of current or former employees, and exclusion from participation in governmental healthcare programs.
Regulation - Risk 10
We are subject to substantial governmental regulation relating to the manufacturing, labeling, and marketing of our developmental products, and will continue to be for the lifetime of our Company.
The FDA and other governmental authorities in the United States and internationally regulate the manufacturing, labeling, marketing, distribution, and various other aspects of our products. The process of obtaining regulatory clearance to market a medical device can be expensive and lengthy, and products may take a long time to be reviewed and cleared, if they are cleared at all. Even if we are able to obtain 510(k) premarket clearance and have completed all other steps needed to commercialize our product candidates, if we or any contracted third party that we select fails to comply with the FDA's regulations, the manufacturing and distribution of a product candidate(s) could be interrupted and adversely affect our ability to operate. Our compliance with the quality system, medical device reporting regulations, and other laws and regulations applicable to the manufacturing of products within our facilities and those contracted by third parties is subject to periodic inspections by the FDA and other governmental authorities. Complying with regulations, and, if necessary, remedial actions can be significantly expensive. Failure to comply with applicable regulatory requirements may subject us to a range of sanctions, including substantial fines, warning letters that require corrective action, product seizures, recalls, halting product manufacturing, revocation of clearances, exclusion from future participation in government healthcare programs, substantial fines, and criminal prosecution. In certain cases, federal and state authorities may pursue actions for unlawful pre-market commercialization of unapproved or non-cleared products. Pursuant to FDA regulations, we can only market our cleared or approved products and only for cleared or approved uses. If it is determined that our conduct or activities to develop and eventually commercialize our product candidates constitutes unlawful pre-market promotion or commercialization of our product candidates, we could be subject to significant fines in addition to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure, criminal penalty, and/or damage to our reputation.
Litigation & Legal Liabilities2 | 3.8%
Litigation & Legal Liabilities - Risk 1
We could be adversely affected by product liability, personal injury or other health and safety issues.
We could be adversely impacted by the supply of defective products. We are also exposed to risks relating to the surgical robotic technology services and products we provide. Defective products or errors in our technology could lead to serious injury or death. If our robotic system does not perform its intended clinical use, or if it is not safe, we could materially harm patients and incur material liabilities that could materially adversely impact our business and market reputation. Product liability or personal injury claims may be asserted against us with respect to any of the products we supply or the services we provide. Monogram is also liable for harms caused by any faults in raw materials or products supplied by third-party manufacturers and suppliers that our Company utilizes. It is our responsibility to have a quality management system in place and to audit our suppliers to ensure that products supplied to our Company meet proper standards. Should a product or other liability issues arise, the coverage limits under insurance programs and the indemnification amounts available to us may not be adequate to protect us against claims and judgments. We also may not be able to maintain such insurance on acceptable terms in the future. We could suffer significant reputational damage and financial liability if we experience any of the foregoing health and safety issues or incidents, which could have a material adverse effect on our business operations, financial condition and results of operations.
Litigation & Legal Liabilities - Risk 2
We may have to reduce our headcount if we are unable to raise sufficient funds.
The Company anticipates that it could substantially reduce expenses to extend its operating runway if needed. This could require a reduction in the number of full-time employees. However, reducing the number of employees could slow our products' development and commercialization and adversely impact our business and market reputation.
Finance & Corporate
Total Risks: 11/52 (21%)Below Sector Average
Share Price & Shareholder Rights6 | 11.5%
Share Price & Shareholder Rights - Risk 1
The market price of our Common Stock has been and will likely continue to be volatile, and you could lose all or part of your investment.
The market price of our Common Stock has been and may continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control and may not be related to our operating performance. In addition to the factors discussed in this Risk Factors section and elsewhere in this Annual Report on Form 10-K, factors that could cause fluctuations in the market price of our Common Stock include the following: - general economic, regulatory, and market conditions - public health crises and related measures to protect the public health;- sales of shares of our Common Stock by us or our stockholders;- issuance of shares of our Common Stock, whether in connection with an acquisition - short selling of our Common Stock or related derivative securities;- reports by securities or industry analysts that are interpreted either negatively or positively by investors, failure of securities analysts to maintain coverage and/or to provide accurate consensus results of us, changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors;- rumors and market speculation involving us or other companies in our industry;- actual or anticipated developments in our business, our competitors' businesses, or the competitive landscape generally. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been instituted against these companies. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources.
Share Price & Shareholder Rights - Risk 2
Raising additional capital may cause significant dilution to our stockholders and adversely affect the market price for our Common Stock.
Until such time, if ever, as we can generate substantial revenue, we may finance our cash needs through a combination of equity offerings, debt financings, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or other sources. We do not currently have any committed external source of funds. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Such restrictions could adversely impact our ability to conduct our operations and execute our business plan. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, intellectual property, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us and/or that may reduce the value of our common stock.
Share Price & Shareholder Rights - Risk 3
If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the market price and trading volume of our Common Stock could decline.
The market price and trading volume of our Common Stock will be heavily influenced by the way analysts interpret our financial information and other disclosures. We do not have control over these analysts. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, our stock price could be negatively affected. If securities or industry analysts do not publish research or reports about our business, downgrade our Common Stock, or publish negative reports about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Common Stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our Common Stock.
Share Price & Shareholder Rights - Risk 4
Provisions in our Sixth Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Delaware law might discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, depress the market prices of our Common Stock.
Our Sixth Amended and Restated Certificate of Incorporation and amended and restated bylaws contain provisions that could depress the market prices of our Common Stock by acting to discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions, among other things: - establish a classified board of directors so that not all members of our board are elected at one time;- permit only the board of directors to establish the number of directors and fill vacancies on the board;- authorize the issuance of "blank check" preferred stock that our board could use to implement a stockholder rights plan (also known as a "poison pill");- authorize our board of directors to amend the bylaws; and - establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. Any provision of our amended and restated certificate of incorporation, amended and restated bylaws, or the Delaware General Corporation Law that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of Common Stock and could also affect the price that some investors are willing to pay for our stock
Share Price & Shareholder Rights - Risk 5
Our Sixth Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our Sixth Amended and Restated Certificate of Incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the exclusive forum for (i) any derivative action or proceeding brought on our behalf, other than an action or suit to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, (ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our Sixth Amended and Restated Certificate of Incorporation or amended and restated bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our Sixth Amended and Restated Certificate of Incorporation or amended and restated bylaws or (v) any action asserting a claim governed by the internal affairs doctrine. Our Sixth Amended and Restated Certificate of Incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. These exclusive forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Some companies that adopted a similar federal district court forum selection provision are currently subject to a suit in the Chancery Court of Delaware by stockholders who assert that the provision is not enforceable. If a court were to find either choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business.
Share Price & Shareholder Rights - Risk 6
Anti-Takeover Effects of Our Sixth Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws could impair a takeover attempt.
Our Sixth Amended and Restated Certificate of Incorporation and Bylaws contain certain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions could discourage takeovers, coercive or otherwise. Any provision of our certificate of incorporation, Amended and Restated Bylaws, or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our capital stock and could also affect the price that some investors are willing to pay for our Common Stock.
Accounting & Financial Operations2 | 3.8%
Accounting & Financial Operations - Risk 1
We anticipate initially sustaining operating losses.
It is expected that we will initially sustain operating losses in seeking 510(k) premarket clearance. Our ability to become profitable depends primarily on obtaining 510(k) premarket clearance of our surgical robot – and, to a lesser degree, our orthopaedic implant(s) - and subsequent success in licensing and selling of those products. There can be no assurance that this will occur. Unanticipated problems and expenses are often encountered in offering new products, which may impact whether the Company is successful. Furthermore, we may encounter substantial delays and unexpected costs related to development, technological changes, marketing, regulatory requirements, and changes to such requirements or other unforeseen difficulties. There can be no assurance that we will ever become profitable. If the Company sustains losses over an extended period of time, it may be unable to continue in business.
Accounting & Financial Operations - Risk 2
We have a limited operating history upon which you can evaluate our performance. Accordingly, our prospects must be considered in light of the risks that any new company encounters.
Our Company was incorporated under the laws of the State of Delaware on April 21, 2016. Accordingly, we have limited history upon which an evaluation of our prospects and future performance can be made. The likelihood of our creation of a viable business must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the time required to obtain 510(k) premarket clearance for and commercialize FDA regulated products, operation in a competitive industry, and the continued development of advertising, promotions, and a corresponding client base. We anticipate that our operating expenses will increase in the near future, and there is no assurance that we will be profitable in the near future. You should consider our business, operations, and prospects in light of the risks, expenses, and challenges faced as an emerging growth company. Because we are subject to these risks, you may have a difficult time evaluating our business and your investment in our Company. Our ability to become profitable depends primarily on our ability to develop medical devices, to obtain regulatory clearance for such medical devices, and if cleared, to successfully commercialize our devices, our research and development ("R&D") efforts, including the timing and cost of clinical trials if needed; and our ability to enter into favorable alliances with third-parties who can provide substantial capabilities in clinical development, regulatory affairs, sales, marketing and distribution. Even if we successfully develop and market our medical devices, we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations and cause you to lose all of your investment.
Debt & Financing2 | 3.8%
Debt & Financing - Risk 1
We may need to raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms, which could have a materially adverse effect on our business.
Developing medical device products, including conducting clinical studies, if required, and establishing manufacturing capabilities, requires substantial funding. Additional financing may be required to fund the research and development of our medical device product candidates. We have not generated any product revenues, and do not expect to generate any revenues until, and only if, we develop such products, and receive clearance from FDA to sell our product candidates in the U.S. and receive product clearance from other regulatory authorities to sell our product candidates internationally. We may not have the resources to complete the development and commercialization of any of our proposed product candidates. We may require additional financing to further the clinical development of our product candidates. In the event that we cannot obtain such financing, we will be unable to complete the development necessary to make submissions to FDA for 510(k) premarket clearance. This will delay or require termination of research and development programs, clinical studies, material characterization studies, and regulatory processes, which could have a materially adverse effect on our business. The amount of capital we may need will depend on many factors, including the progress, timing and scope of our research and development programs; the progress, timing and scope of our clinical studies, if required; the time and cost necessary to obtain regulatory clearance; the time and cost necessary to establish our own marketing capabilities or to seek marketing partners; the time and cost necessary to respond to technological and market developments; changes made or new developments in our existing collaborative, licensing and other commercial relationships; and new collaborative, licensing and other commercial relationships that we may establish. Until we can generate a sufficient amount of revenue, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings, or corporate collaboration and licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research or development programs or our commercialization efforts. In addition, we could be forced to discontinue product development and reduce or forego attractive business opportunities. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our product candidates, or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. Our fixed expenses, such as rent and other contractual commitments, will likely increase in the future, as we may enter into leases for new facilities and capital equipment and/or enter into additional licenses and collaborative agreements. Therefore, if we fail to raise substantial additional capital to fund these expenses, we could be forced to cease operations, which could cause you to lose all of your investment.
Debt & Financing - Risk 2
Our assets may become pledged as collateral to a lender.
We may enter into financing arrangements with lenders that contain covenants that limit our ability to engage in specified types of transactions. These covenants may limit our ability to, among other things: - petition for bankruptcy;- assignment of the notes to other creditors;- appointment of a receiver of any property of the Company; and - consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets. A breach of any of these covenants could result in a default under the terms of such a financing in which the lender could elect to declare all amounts outstanding thereunder to be immediately due and payable. We may need to pledge all of our assets as collateral to secure additional financing.
Corporate Activity and Growth1 | 1.9%
Corporate Activity and Growth - Risk 1
Acquisition opportunities may present themselves do not achieve the positive results anticipated by our management.
From time to time, acquisition opportunities may become available to the Company. Those opportunities may involve the acquisition of specific assets, like intellectual property or inventory, or may involve the assumption of the business operations of another entity. Our goal with any future acquisition is that any acquisition should be able to contribute neutral to positive EBITDA to the Company after integration. To effect these acquisitions, we will likely be required to obtain lender financing or issue additional shares of stock in exchange for the shares of the target entity. If the performance of the acquired assets or entity does not produce positive results for the Company, the terms of the acquisition, whether it is interest rate on debt, or additional dilution of stockholders, may prove detrimental to the financial results of the Company, or the performance of your particular shares.
Tech & Innovation
Total Risks: 8/52 (15%)Below Sector Average
Innovation / R&D2 | 3.8%
Innovation / R&D - Risk 1
Our products may not provide a clinical benefit
The Company has not conducted clinical studies on live patients with its products. Our products may not provide a benefit to patient outcomes, or may not prove to be useful to patients or desirable for hospitals. If our products fail to provide a clinical benefit to our patients, it will materially adversely impact our business and market reputation.
Innovation / R&D - Risk 2
Our technology is not yet fully developed, and there is no guarantee that we will successfully develop our technology.
Monogram is developing sophisticated technology that will require significant technical and regulatory expertise to develop and commercialize. If we are unable to develop and commercialize our technology and products successfully, it will significantly affect our viability as a Company.
Trade Secrets1 | 1.9%
Trade Secrets - Risk 1
Successful infringement claims against us could result in significant monetary liability or prevent us from selling some of our products.
If successfully developed, our products and technology may be highly disruptive to a very large and growing market. Our competitors are well-capitalized with significant intellectual property protection and resources and may initiate infringement lawsuits against our Company. Such litigation could be expensive and could also prevent us from selling our products, which would significantly harm our ability to grow our business as planned.
Technology5 | 9.6%
Technology - Risk 1
Added
The effectiveness and reliability of our AI-driven technologies depend on data quality, and limitations in data diversity or accuracy could impact performance.
AI and ML algorithms rely on high-quality, diverse, and representative training datasets to perform accurately across different patient populations. If our training data does not sufficiently represent diverse demographic or anatomical variations, our AI models may not perform as expected across all patient groups. Errors in input imaging data could lead to incorrect bone segmentation outputs, impacting surgical planning. The success of future AI models correlating patient outcomes with surgical variables depends on access to comprehensive, high-quality clinical data, which may be subject to privacy regulations, consent restrictions, or data-sharing limitations. If we are unable to continuously refine and validate our AI models with high-quality and representative datasets, the accuracy, reliability, and regulatory approval prospects of our AI-driven applications may be compromised, potentially leading to adverse patient outcomes and legal liability.
Technology - Risk 2
Added
If our AI and ML models do not perform as intended, we could be exposed to increased liability risks, including product liability claims and regulatory enforcement actions.
AI-powered medical devices introduce novel risks associated with algorithmic decision-making. While our AI tools operate under human supervision, any failure of our models to produce accurate, consistent, or clinically valid outputs could result in: - Patient harm, leading to potential medical malpractice or product liability claims - Regulatory penalties, including FDA warning letters, product recalls, or marketing restrictions - Reputational damage, which could negatively impact customer adoption and sales We maintain strict verification and validation (V&V) protocols, but unanticipated errors in AI-generated outputs could increase litigation exposure, require costly product modifications, and delay commercialization.
Technology - Risk 3
Added
Our AI-driven applications depend on evolving computing infrastructure and may require additional resources as we scale.
Our current AI models do not require significant computing power for training. However, as we expand our AI capabilities into real-time surgical planning and object tracking, we may need to invest in advanced computational infrastructure, which could lead to increased capital expenditures for high-performance computing resources, scalability challenges in deploying AI-driven systems in real-time surgical environments, and/or dependence on third-party cloud providers or specialized AI hardware, creating potential supply chain vulnerabilities. If our AI development efforts require unexpected infrastructure upgrades or computing power investments, this could have material adverse effect on our business.
Technology - Risk 4
Added
If we fail to clearly communicate the actual capabilities and limitations of our AI technologies, we may face regulatory scrutiny, reputational harm, and potential liability.
Regulatory agencies, including the SEC, have emphasized concerns around the overstatement or misrepresentation of AI capabilities in corporate disclosures. As AI is an emerging field, misalignment between our AI claims and actual capabilities could expose us to SEC enforcement actions if AI-related disclosures are found to be misleading or incomplete, Loss of customer trust if our AI technologies fail to meet expectations, and/or potential legal challenges if investors, customers, or regulators allege that our AI-related statements were deceptive or exaggerated.
Technology - Risk 5
Our technologies are highly complex, and development budget estimates may not be accurately or sufficiently forecasted.
While management makes every effort to predict anticipated development costs accurately, the project and technology complexity of the products makes it difficult to forecast these required development costs accurately. It is not uncommon to encounter unforeseen technical challenges that introduce unanticipated development costs. The actual development costs may not be the same as the anticipated development costs. If the actual development costs are materially above those anticipated by management, it could materially adversely impact our business.
Ability to Sell
Total Risks: 7/52 (13%)Above Sector Average
Competition1 | 1.9%
Competition - Risk 1
We operate in a highly competitive industry that is dominated by several very large, well-capitalized market leaders and is continuously evolving. New entrants to the market, existing competitor actions, or other changes in market dynamics could adversely impact us.
The level of competition in the orthopaedic market is high, with several very large, well-capitalized competitors holding a majority share of the market. Changes in market dynamics or actions of competitors or manufacturers, including industry consolidation and the emergence of new competitors and strategic alliances, could materially and adversely impact our business. Disruptive innovation by existing or new competitors could alter the competitive landscape in the future and require us to accurately identify and assess such changes and make timely and effective changes to our strategies and business model to compete effectively. Currently, we are not aware of any well-known orthopaedic companies that broadly offer robotic technology that enables saw-based autonomous cutting. Nonetheless, many of our competitors in this market have significant financial resources. They may seek to extend their robotic technology to accommodate the robotic insertion implants. Further, several companies offer surgical navigation systems for use in arthroplasty procedures that provide a minimally invasive means of viewing the anatomical site. As such, other companies may create similar technology and/or products to that which we are trying to develop, which would increase competition in our industry. As competition increases, a significant increase in general pricing pressures could occur, which could require us to reevaluate our pricing structures to remain competitive. For example, if we are not able to anticipate and successfully respond to changes in market conditions, it could result in a loss of customers or renewal of contracts or arrangements on less favorable terms.
Sales & Marketing6 | 11.5%
Sales & Marketing - Risk 1
If third-party payors fail to provide appropriate levels of reimbursement for the use of our products, our revenues could be adversely affected.
Sales of our products that receive 510(k) premarket clearance will depend on the availability of adequate reimbursement from third-party payors. In each market in which we intend to do business, our inability to obtain reimbursement approval or the failure of third-party payors to reimburse health care providers at a level that justifies the use of our products instead of cheaper alternatives will hurt our business. Moreover, we are unable to predict what changes will be made to the reimbursement methodologies used by third-party payors in the future. Changes in political, economic, and regulatory influences may significantly affect healthcare financing and reimbursement practices. For example, there have been multiple attempts through legislative action and legal challenges to repeal or amend the ACA. We cannot predict whether current or future efforts to repeal or amend these laws will be successful, nor can we predict the impact that such a repeal or amendment and any subsequent legislation would have on our business and reimbursement levels. There have also been a number of other proposals and enactments by the federal government and various states to reduce Medicaid reimbursement levels in response to budget deficits, and we expect additional proposals in the future. We cannot assure you that recent or future changes to reimbursement policies and practices will not materially and adversely affect our results of operations. Efforts to control healthcare costs, including costs of reconstructive joint replacement, are continuous, and reductions in third party reimbursement levels could materially and adversely affect our results of operations.
Sales & Marketing - Risk 2
Our products may not gain market acceptance among hospitals, surgeons, physicians, patients, healthcare payors, and the medical community.
Even if our product candidates receive 510(k) premarket clearance, a critical element in our commercialization strategy is to persuade the medical community on the efficacy of our products and to educate then on their safe and effective use. Surgeons, physicians, and hospitals may not perceive the benefits of our products and could be unwilling to change, or advocate for change, from the devices they are currently using. A number of factors may limit the market acceptance of our products, including the following: - rate of adoption by healthcare practitioners;- rate of a product's acceptance by the target population;- timing of market entry relative to competitive products;- availability of third-party reimbursement;- government review and approval requirements;- the extent of marketing efforts by us and third-party distributors or agents retained by us; and - side effects, product defects / weaknesses, or unfavorable publicity concerning our products or similar products.
Sales & Marketing - Risk 3
We have no products approved for commercial sale, have generated minimal revenues related to OUS opportunities and may never achieve significant revenues or profitability, which could cause us to cease operations.
We have no products approved or cleared for commercial sale in the United States. To date, we have generated minimal revenue from our products, and no revenue in fiscal year 2024. Our ability to generate material revenues depends heavily on (a) successful completion of one or more development programs leading to submission of an acceptable 510(k) medical device clearance application to FDA; (b) our ability to seek and obtain 510(k) premarket clearances, including, without limitation, with respect to the indications we are seeking; (c) successful commercialization of our product candidates; and (d) market acceptance of our products. There are no assurances that we will achieve any of the forgoing objectives. Furthermore, our product candidates are in the verification stage, and have not been evaluated in human clinical trials. If we do not successfully develop and commercialize our product candidates, we will not achieve revenues or profitability in the foreseeable future, if at all. If we are unable to generate revenues or achieve profitability, we may be unable to continue our operations.
Sales & Marketing - Risk 4
We may not gain acceptance by group purchasing organizations or other purchasing entities
Many hospital systems and ambulatory surgery centers use group purchasing organizations to negotiate pricing and supply from vendors. Many of these organizations are large and risk-averse, and gaining adoption at reasonable terms can be challenging. If we are unable to secure contracts with widely used group purchasing organizations, we may struggle to gain market adoption, which would materially adversely affect our business.
Sales & Marketing - Risk 5
We may spend material amounts on marketing that may not be effective.
The Company has paid and anticipates it will continue to spend material amounts on marketing the Company and its products. The returns from marketing are highly speculative and often challenging to measure. If the marketing spending is ineffective, it could materially harm our business.
Sales & Marketing - Risk 6
We may use independent distributors to represent our products.
Monogram may use contracted employees and independent distributors to represent our products to surgeons, hospitals, and ambulatory surgery centers. Such independent distributors and contractors are not employees of the Company and may conduct business in a manner that is unethical or even illegal. Monogram could incur liability for unlawful business practices conducted by such independent distributors or contractors. If a distributor acts unlawfully, it could materially adversely affect our business.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
    The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
      They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
        It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
          How do companies disclose their risk factors?
          Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
            Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
              Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
                According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
                  How can I use TipRanks risk factors in my stock research?
                  Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
                    You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
                      Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
                        A simplified analysis of risk factors is unique to TipRanks.
                          What are all the risk factor categories?
                          TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
                          1. Financial & Corporate
                          • Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
                          • Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
                          • Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
                          • Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
                          2. Legal & Regulatory
                          • Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
                          • Regulation – risks related to compliance, GDPR, and new legislation.
                          • Environmental / Social – risks related to environmental regulation and to data privacy.
                          • Taxation & Government Incentives – risks related to taxation and changes in government incentives.
                          3. Production
                          • Costs – risks related to costs of production including commodity prices, future contracts, inventory.
                          • Supply Chain – risks related to the company’s suppliers.
                          • Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
                          • Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
                          4. Technology & Innovation
                          • Innovation / R&D – risks related to innovation and new product development.
                          • Technology – risks related to the company’s reliance on technology.
                          • Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
                          • Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
                          5. Ability to Sell
                          • Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
                          • Competition – risks related to the company’s competition including substitutes.
                          • Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
                          • Brand & Reputation – risks related to the company’s brand and reputation.
                          6. Macro & Political
                          • Economy & Political Environment – risks related to changes in economic and political conditions.
                          • Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
                          • International Operations – risks related to the global nature of the company.
                          • Capital Markets – risks related to exchange rates and trade, cryptocurrency.
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