SEC Form 10-Q filed by Monogram Technologies Inc.

11/14/24 4:33:28 PM ET

$MGRM

Medical/Dental Instruments

Health Care

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from ______________ to _____________

Commission file number: 001-41707

Monogram Technologies Inc.

(Exact name of registrant as specified in its charter)

3913 Todd Lane,

Austin, TX

78744

(Address of principal executive offices)

(Zip Code)

(512) 399-2656

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value per share		MGRM		The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 12, 2024, there were 34,312,261 shares of Common Stock, par value $0.001 per share, of the registrant issued and outstanding.

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MONOGRAM TECHNOLOGIES INC.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION	2

Item 1.	Financial Statements	2
	Condensed Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	2
	Condensed Statements of Operations for the three and nine months ended September 30, 2024 and September 30, 2023 (Unaudited)	3
	Condensed Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and September 30, 2023 (Unaudited)	4
	Condensed Statements of Cash Flows for the nine months ended September 30, 2024 and September 30, 2023 (Unaudited)	5
	Notes to Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20

PART II.	OTHER INFORMATION	21

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
	Signatures	24

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MONOGRAM TECHNOLOGIES INC.

CONDENSED BALANCE SHEETS


	September 30,		December 31,
	2024		2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	16,565,142	$	13,589,028
Account receivable		—		364,999
Prepaid expenses and other current assets		2,065,863		664,262
Total current assets		18,631,005		14,618,289
Equipment, net of accumulated depreciation		829,216		945,020
Intangible assets, net		391,250		548,750
Operating lease right-of-use assets		370,795		466,949
Total assets	$	20,222,266	$	16,579,008
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,536,663	$	2,462,268
Accrued liabilities		874,797		227,684
Operating lease liabilities, current		135,757		128,266
Total current liabilities		2,547,217		2,818,218
Operating lease liabilities, non-current		260,904		363,724
Total liabilities		2,808,121		3,181,942
Commitments and contingencies		—		—
Stockholders’ equity:
Series D Preferred Stock, par value $0.0001 per share; 6,000,000 shares authorized; 4,614,453 shares issued and outstanding		4,614		—
Common stock, $.001 par value; 90,000,000 shares authorized; 34,312,261 and 31,338,391shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		34,312		31,338
Additional paid-in capital		81,083,405		64,874,392
Accumulated deficit		(63,708,186)		(51,508,664)
Total stockholders’ equity		17,414,145		13,397,066
Total liabilities and stockholders’ equity	$	20,222,266	$	16,579,008

The accompanying notes are an integral part of these financial statements.

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MONOGRAM TECHNOLOGIES INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three months ended				Nine months ended
	September 30,				September 30,
	2024		2023		2024		2023
Product revenue	$	—	$	—		—		—
Cost of goods sold		—		—	$	—	$	—
Gross profit		—		—		—		—
Operating expenses:
Research and development		2,214,729		2,664,542		7,047,112		7,577,907
Marketing and advertising		1,838,937		32,220		2,050,347		2,844,748
General and administrative		1,093,456		1,060,270		3,293,344		2,968,644
Total operating expenses		5,147,122		3,757,032		12,390,803		13,391,299
Loss from operations		(5,147,122)		(3,757,032)		(12,390,803)		(13,391,299)
Other income:
Change in fair value of warrant liability		—		2,646,399		—		3,088,533
Interest income and other, net		112,621		114,973		312,142		211,843
Total other income		112,621		2,761,372		312,142		3,300,376
Net loss before taxes		(5,034,501)		(995,660)		(12,078,661)		(10,090,923)
Income taxes		—		—		—		—
Net loss	$	(5,034,501)	$	(995,660)	$	(12,078,661)	$	(10,090,923)
Basic and diluted loss per common share	$	(0.16)	$	(0.03)	$	(0.38)	$	(0.52)
Weighted-average number of basic and diluted shares outstanding		32,223,656		29,284,949		31,806,252		19,482,606

The accompanying notes are an integral part of these financial statements.

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MONOGRAM TECHNOLOGIES INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)


											Total
	Series D Preferred Stock			Common Stock			Additional		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity
Balance as of December 31, 2023	—		—	31,338,391	$	31,338	$	64,874,392	$	(51,508,664)	$	13,397,066
Vesting of Common Stock from services performed	—		—	—		—		37,500		—		37,500
Issuance of Common Stock for cash, net of issuance costs	—		—	49,146		49		4,696		—		4,746
Issuance of Common Stock upon cashless warrant exercise	—		—	246,458		246		(246)		—		—
Stock-based compensation	—		—	—		—		294,899		—		294,899
Net loss	—		—	—		—		—		(3,506,704)		(3,506,704)
Balance as of March 31, 2024	—		—	31,633,995		31,633		65,211,241		(55,015,368)		10,227,507
Vesting of Common Stock from services performed	—		—	—		—		12,500		—		12,500
Issuance of Common Stock for cash, net of issuance costs	—		—	36,380		36		55,603		—		55,639
Stock-based compensation	—		—	—		—		283,594		—		283,594
Net loss	—		—	—		—		—		(3,537,457)		(3,537,457)
Balance as of June 30, 2024	—		—	31,670,375	$	31,670	$	65,562,938	$	(58,552,825)	$	7,041,783
Issuance of Series D preferred stock, net of costs	5,664,316		5,664	—		—		11,040,954		—		11,046,618
Series D preferred stock converted to Common stock	(1,049,863)		(1,050)	1,049,863		1,050		—		—		—
Issuance of common stock, net of costs	—		—	1,592,023		1,592		4,115,478		—		4,117,070
Stock-based compensation	—		—	—		—		364,035		—		364,035
Dividends on Series D preferred stock	—		—	—		—		—		(120,860)		(120,860)
Net loss	—		—	—		—		—		(5,034,501)		(5,034,501)
Balance as of September 30, 2024	4,614,453	$	4,614	34,312,261	$	34,312	$	81,083,405	$	(63,708,186)	$	17,414,145


	Series A			Series B			Series C										Total
	Preferred Stock			Preferred Stock			Preferred Stock			Common Stock			Additional		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity
Balance as of December 31, 2022	4,897,553	$	4,898	3,195,599	$	3,196	438,367	$	438	9,673,870	$	9,674	$	41,894,417	$	(37,763,447)	$	4,149,176
Issuances of Class C Preferred Stock, net of issuance costs	—		—	—		—	21,088		21	—		—		147,021		—		147,042
Stock-based compensation	—		—	—		—	—		—	—		—		368,140		—		368,140
Net loss	—		—	—		—	—		—	—		—		—		(3,858,722)		(3,858,722)
Balance as of March 31, 2023	4,897,553		4,898	3,195,599		3,196	459,455		459	9,673,870		9,674		42,409,578		(41,622,169)		805,636
Conversions of Preferred Stock into Common Stock	(4,897,553)		(4,898)	(3,195,599)		(3,196)	(459,455)		(459)	17,105,214		17,105		(8,522)		—		—
Issuance of Common Stock for cash, net of issuance costs	—		—	—		—	—		—	2,374,641		2,375		15,285,486		—		15,287,860
Exercise of warrants	—		—	—		—	—		—	78,837		79		926,256		—		926,335
Issuance of restricted Common Stock for services	—		—	—		—	—		—	20,689		21		24,979		—		25,000
Stock-based compensation	—		—	—		—	—		—	—		—		390,120		—		390,120
Net loss	—		—	—		—	—		—	—		—		—		(5,236,541)		(5,236,541)
Balance as of June 30, 2023	—	$	—	—	$	—	—	$	—	29,253,251	$	29,253	$	59,027,867	$	(46,858,710)	$	12,198,410
Issuances of common stock for services	—		—	—		—	—		—	49,389		49		277,931		—		277,980
Vesting of common stock from services performed	—		—	—		—	—		—	—		—		25,000		—		25,000
Stock issuance costs	—		—	—		—	—		—	—		—		(33,561)		—		(33,561)
Stock-based compensation			—	—		—	—		—	—		—		400,239		—		400,239
Net loss	—		—	—		—	—		—	—		—		—		(995,660)		(995,660)
Balance as of September 30, 2023	—	$	—	—	$	—	—	$	—	29,302,640	$	29,303	$	59,697,475	$	(47,854,370)	$	11,872,408

The accompanying notes are an integral part of these financial statements.

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MONOGRAM TECHNOLOGIES INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine months ended
	September 30,
	2024		2023
Operating activities:
Net loss	$	(12,078,661)	$	(10,090,923)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		942,528		1,158,499
Other expenses settled with stock issuances		50,000		80,000
Loss from change in fair value of common stock make-whole obligation		35,749		—
Depreciation and amortization		321,114		307,293
Change in fair value of warrant liability		—		(3,088,533)
Changes in non-cash working capital balances:
Account receivable		364,999		—
Other current assets		(168,691)		273,079
Accounts payable		(925,605)		1,121,822
Accrued liabilities		490,504		(197,243)
Operating lease assets and liabilities, net		825		5,622
Cash used in operating activities		(10,967,238)		(10,430,384)
Investing activities:
Purchases of equipment		(47,809)		(40,765)
Cash used in investing activities		(47,809)		(40,765)
Financing activities:
Proceeds from issuances of Common Stock, net of cash costs		4,177,931		15,254,300
ELOC issuance cost		—		(523,362)
Proceeds from issuances of Series C Preferred Stock, net		—		147,042
Proceeds from issuances of Series D Preferred Stock, net		9,813,230		—
Cash provided by financing activities		13,991,161		14,877,980
Increase (decrease) in cash and cash equivalents during the period		2,976,114		4,406,831
Cash and cash equivalents, beginning of the period		13,589,028		10,468,645
Cash and cash equivalents, end of the period	$	16,565,142	$	14,875,476

Noncash investing and financing activities:
Receivable from stock offerings’ selling agent	$	1,378,867	$	—
Amortization of deferred issuance costs of Common Stock Purchase Agreement	$	145,956	$	—
Series D Preferred Stock dividends payable	$	120,860	$	—
Cashless exercise of warrant	$	246	$	926,335
Common Stock issued for services related to Common Stock Purchase Agreement	$	—	$	247,980

The accompanying notes are an integral part of these financial statements.

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MONOGRAM TECHNOLOGIES INC.

UNAUDITED NOTES TO FINANCIAL STATEMENTS

1.	Description of Business and Summary of Accounting Principles

Monogram Technologies Inc. (“Monogram” or the “Company”), was incorporated in the state of Delaware on April 21, 2016. On May 15, 2024, the Company changed its name from “Monogram Orthopaedics Inc.” to “Monogram Technologies Inc.”. Monogram is an AI-driven robotics company focused on improving human health, with an initial focus on orthopedic surgery. The Company is developing a product solution architecture to enable patient-optimized orthopedic implants at scale by combining 3D printing, advanced machine vision, AI and next-generation robotics.

Monogram’s mBôs precision robotic surgical system is designed to autonomously execute optimized paths for high-precision insertion of its FDA-cleared mPress press-fit implants. The goal is well balanced better-fitting bone sparing knee replacements. The Company initially intends to produce and market robotic surgical equipment and related software, orthopedic implants, tissue ablation tools, navigation consumables, and other miscellaneous instrumentation necessary for reconstructive joint replacement procedures. Other clinical and commercial applications for the mBôs with mVision navigation are also being explored.

Monogram has obtained FDA clearance for mPress implants. Monogram submitted the application for 510(k) clearance for its robotic products in July 2024. The Company is required to obtain FDA clearance before it can market its products. Monogram cannot estimate the timing or assure the ability to obtain such clearances.

The Company believes that its mBôs precision robotic surgical assistants, which combine AI and novel navigation methods (mVision), will enable more personalized knee implants for patients, resulting in well balanced better-fitting knee replacements with bone sparing implants. Monogram anticipates that there may be other clinical and commercial applications for its navigated mBôs precision robot and mVision navigation.

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America and are consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, 2023. Certain amounts from previous reporting periods have been reclassified to conform with the current period presentation.

As permitted by SEC requirements for interim reporting, certain footnotes or other financial information have been condensed or omitted. In the opinion of management, all normal and recurring adjustments considered necessary for the fair presentation of the financial statements have been included. Revenues, expenses, assets, and liabilities can vary during each quarter of the year, therefore, the results and trends in these interim financial statements may not be representative of those for the full year.

The information included in this Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Going Concern

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits, incurred a net loss during the nine months ended September 30, 2024 of $12,078,661 and has an accumulated deficit of $63,708,186 as of September 30, 2024.

The Company’s ability to continue as a going concern in the next twelve months following the date the unaudited financial statements were available to be issued is dependent upon its ability to produce revenues, raise capital, and/or obtain other financing sufficient to meet current and future obligations. Management has evaluated these conditions and believes its current cash balances, plus the additional capital available under the Common Stock Purchase Agreement and At the Market Common Stock Offering described in Note 4, will be sufficient for the Company to satisfy its near-term capital needs and to continue as a going concern for a reasonable period.

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Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company’s most significant estimates relate to the fair value of the warrant liability, valuations of stock-based compensation, and the income tax valuation allowance. On a continual basis, management reviews its estimates, utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Earnings (Loss) Per Share

Earnings (loss) per share is computed by dividing net income or loss by the weighted-average number of common stock shares outstanding. To the extent that stock options, warrants, and convertible preferred stock are anti-dilutive, they are excluded from the calculation of diluted earnings (loss) per share. For the three and nine months ended September 30, 2024 and 2023, the Company excluded the following shares from the calculation of diluted loss per share because such amounts were antidilutive:


	Nine months ended
	September 30,
	2024	2023
Shares issuable upon exercise of warrants	5,962,438	2,376,495
Shares issuable upon conversion of Series D Preferred Stock	4,614,453	—
Shares issuable upon exercise of stock options	4,994,266	4,891,891
Total	15,571,157	7,268,386

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

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2.	Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following as of September 30, 2024 and December 31, 2023:


	September 30,		December 31,
	2024		2023
Inventory	$	290,333	$	4,550
Receivable from stock offerings selling agent		1,378,867		—
Deferred issuance costs of active stock offerings		—		145,956
Other prepaid expenses		381,930		349,323
Others		14,733		164,433
Prepaid expenses and other current assets	$	2,065,863	$	664,262

The receivable from the Company’s stock offerings selling agent is the result of a timing difference between when investors in the Company’s active stock offerings purchase shares and remit their payment to the selling agent and when the selling agent remits these funds to the Company.

3.	Accrued Liabilities

Other current liabilities consist of the following as of September 30, 2024 and December 31, 2023:


	September 30,		December 31,
	2024		2023
Payroll liabilities	$	589,082	$	141,131
Series D Preferred Stock dividends payable		120,860		—
Common stock purchase liability		80,082		44,333
Other liabilities		84,773		42,220
Other current liabilities	$	874,797	$	227,684

4.Preferred and Common Stock

Common Stock Purchase Agreement

On July 19, 2023, the Company entered into a Common Stock Purchase Agreement (the “Common Stock Purchase Agreement”) and a Registration Rights Agreement with B. Riley Principal Capital, II LLC (the “BRPC II”), pursuant to which the Company has the right to sell to BRPC II up to $20.0 million in shares of Common Stock (the “Committed Equity Shares”), subject to certain limitations and the satisfaction of specified conditions in the Common Stock Purchase Agreement, from time to time over the 24-month period commencing upon the initial satisfaction of the conditions to the BRPC II’s purchase obligations set forth in the Common Stock Purchase Agreement. Sales of Common Stock pursuant to the Common Stock Purchase Agreement, and the timing of any sales, are solely at the Company’s option, and it is under no obligation to sell any securities to BRPC II. As of September 30, 2024, the Company had raised gross proceeds of $961,245 from the sale of 292,726 shares under the Common Stock Purchase Agreement.

As consideration for BRPC II’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the Purchase Agreement, upon execution of the Purchase Agreement, the Company issued 45,252 shares of Common Stock to BRPC II (the “Commitment Shares”). Under the terms of the Common Stock Purchase Agreement, if the aggregate proceeds received by BPRC II from its resale of the Commitment Shares is less than $200,000 then, upon notice by BRPC II, the Company must pay the difference between $200,000 and the aggregate proceeds received by BPRC II from its resale of the Commitment Shares. At September 30, 2024, the market value of the Commitment Shares was $119,918. Therefore, the Company’s make-whole obligation was $80,082 and this amount was recorded as a component of accrued expenses in the accompanying balance sheet. During the nine months ended September 30, 2024, the $35,749 decrease in the fair value of the Company’s make-whole obligation was recorded as a component of interest income and other, net, in the accompanying statement of operations.

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Series A, Series B, Series C and Series D Preferred Stock

On May 17, 2023, the Company filed a Form 8-A in connection with the listing of its Common Stock on Nasdaq, which was declared effective on the same date. At that time, each outstanding share of Series A, Series B, and Series C Preferred Stock was converted into two shares of Common Stock of the Company. At September 30, 2024, the Company had no shares of Series A, Series B, or Series C Preferred Stock outstanding.

Series D Preferred Stock Offering

On July 9, 2024, the Company commenced a best efforts offering of up to 5,790,479 units at a price per unit of $2.25. Each unit consists of one share of Series D Preferred Stock and a warrant to purchase one share of Common Stock at an exercise price of $3.375 per share. The warrants are exercisable at any time during the period beginning 180 days after July 9, 2024 through and including July 8, 2025, unless redeemed earlier by the Company. At September 30, 2024, warrants exercisable into 5,664,316 shares of Common Stock issued in connection with this offering remained outstanding.

Holders of Series D Preferred Stock are entitled to receive cumulative quarterly dividends, when and as declared by the Company’s Board of Directors, at a rate of 8.0% of the $2.25 liquidation preference per share. Dividends, at the Company’s discretion, may be paid in cash or in kind in the form of Common Stock. Upon a liquidation, dissolution, or winding up of the Company, holders of Series D Preferred Stock will be entitled to receive a per share liquidation preference of $2.25 plus an amount equal to any accrued but unpaid dividends (whether or not declared).

Each share of Series D Preferred Stock is optionally convertible, at any time, into one share of Common Stock. Each share of Series D Preferred Stock will be mandatorily convertible into one share of Common Stock upon the occurrence of a change in control of the Company, 10 consecutive trading days of the Company’s Common Stock closing pricing being at or above $2.8125 per share, or the Company’s consummation of a firm commitment public offering of Common Stock for gross proceeds of at least $15 million at an offering price per share equal to or greater than $3.375.

The Company has the option (but is not required) to redeem the Series D Preferred Stock, in whole or in part, by paying a specified redemption price plus any accrued and unpaid dividends through the date of redemption. The redemption price is $4.50 per share up to and including the 180th day from the original issuance date, $3.9375 per share beginning on the 181st day after the original issuance date and until the third anniversary of the original issuance date, and $3.375 per share from and after the third anniversary of the original issuance date.

Holders of the Series D Preferred Stock generally will have no voting rights. However, if the Company does not pay dividends on any outstanding shares of Series D Preferred Stock for six or more quarterly dividend periods (whether or not declared or consecutive), holders of the Series D Preferred Stock (voting separately as a class with all other outstanding series of preferred stock upon which like voting rights have been conferred and are exercisable) will be entitled to elect two additional directors to the Board of Directors to serve until all unpaid dividends have been fully paid or declared and set apart for payment. In addition, certain material and adverse changes to the terms of the Series D Preferred Stock cannot be made without the affirmative vote of holders of at least a majority of the outstanding shares of Series D Preferred Stock, voting as a separate class.

At the Market Common Stock Offering

On July 22, 2024, the Company entered into an agreement with B. Riley Securities, Inc. (the “Agent”) under which the Company may, from time to time, offer and sell shares of Common Stock through or to the Agent having an aggregate gross proceeds of up to $25,000,000. Each time the Company wishes to issue and sell common stock under the agreement, the Company will notify the Agent of the number or dollar value of shares to be issued, the time period during which such sales are requested to be made, any limitation on the number of shares that may be sold in one day, any minimum price below which sales may not be made and other sales parameters deemed appropriate. Once the Company has so instructed the Agent, unless the Agent declines to accept the terms of the notice, the Agent has agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such shares up to the amount specified on such terms. The Agent will be entitled to compensation at a fixed commission rate of up to 3.0% of the gross sales price per share sold. As of September 30, 2024, the Company had sold 1,592,023 shares of Common Stock for total gross proceeds of $4.27 million in connection with this offering.

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Anti-Dilution Right of CEO

Benjamin Sexson, the Company’s Chief Executive Officer (“CEO”), is entitled to pre-emptive rights that permit him to preserve his vested equity position in the Company in the event of any additional issuances of Common Stock (or securities convertible into Common Stock), at a per-share price equal to the then current fair value, as reasonably determined by the Board.

5.Stock Warrants

In February 2019, the Company entered into a warrant agreement that provided the holder with the right to acquire $1,000,000 worth of shares of the Company’s capital stock upon the occurrence of the Company raising $5,000,000 in an equity financing. At December 31, 2023, this warrant was exercisable into 547,944 shares of Common Stock at a price of $1.83 per share. In two transactions during January and February 2024, this warrant was exercised by the holder in a cashless exercise under which the Company issued the holder a total of 246,458 shares of Common Stock and retained the remaining shares as settlement of the $1.83 per share exercise price of the warrant.

In October 2023, as consideration for Pro-Dex, Inc. (“Pro-Dex”) agreeing to exercise a non-dilutive warrant originally issued in December 2018, the Company agreed to issue Pro-Dex additional “Coverage Warrants”. Under the terms of the Coverage Warrants, if, (a) between October 2, 2023 and March 31, 2024 or (b) during the six month period between (i) April 1 and September 30 and (ii) October 1 and March 31 of each year thereafter, Monogram engages in or otherwise consummates an issuance of securities that results in Monogram receiving, or having the right to receive, gross proceeds of $5.0 million or more during such period, then Monogram will issue Pro-Dex a warrant to be exercised in cash to purchase 5% (calculated after giving effect to such issuance to Pro-Dex) of the types, series and classes of securities issued during such period at a price equal to the total gross proceeds received over such period divided by the number of securities issued during that same period (each, a “Coverage Warrant”). Each Coverage Warrant will have a term of six months from the date of issuance.

The gross proceeds received by the Company’s in its Series D Preferred Stock and Common Stock offerings during the period from April 1, 2024 to September 30, 2024 exceeded $5.0 million. Therefore, at September 30, 2024, the Company was obligated to issue Pro-Dex a warrant exercisable into 298,122 shares of Series D Preferred Stock at an exercise price of $2.25 per share and a warrant exercisable into 85,705 shares of Common Stock at an exercise price of $2.67.

6.	Stock Options

The Company has adopted a stock option plan covering the issuance of up to 5,200,000 shares of Common Stock to qualified individuals. Options granted under this plan vest over four years and expire ten years from the date of the grant. The following table summarizes stock option activity for the nine months ended September 30, 2024:


	Option	Weighted-Average		Weighted-Average
	Number of	Exercise		Remaining
	Shares	Price Per Share		Contractual Term
Options outstanding as of January 1, 2024	4,904,266	$	1.93	7.50
Granted	973,000		2.09	—
Exercised	—		—	—
Canceled	(883,000)		3.36	—
Options outstanding as of September 30, 2024	4,994,266	$	1.71	7.22
Options exercisable as of September 30, 2024	2,889,074	$	1.58	6.01

Stock-based compensation expense resulting from granted stock options was $942,528 and $1,158,499 for the nine months ended September 30, 2024 and 2023, respectively. Unrecognized stock-based compensation expense related to stock options of $4,854,408 at September 30, 2024 will be recognized in future periods as the related stock options continue to vest over a weighted-average period of 2.93 years.

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On July 1, 2024, the Company offered each holder of previously issued stock options a one-time, 45-day choice to void the holder’s previously issued stock option grant or grants and receive a replacement stock option grant exercisable into an equivalent number of shares of Common Stock at a reduced exercise price of $2.02 per share. In total, the Company issued replacement stock option grants exercisable into 797,500 shares of Common Stock. The Company accounted for the issuance of the replacement stock option grants as a repricing and accordingly, the difference between the fair value of the replacement stock option on July 1, 2024 and the fair value of the previously issued stock options on July 1, 2024 will be recognized over the vesting term of the replacement stock option.

Provided the holder continues to have a service relationship with the Company at each vesting date, the replacement stock options grants have a vesting schedule as follows: 25% vest and become exercisable after one year and the remaining 75% vest and become exercisable in twelve equal 6-month installments over the six-year period thereafter.

7.	Commitments and Contingencies

Under the Company’s Exclusive License Agreement with the Icahn School of Medicine at Mount Sinai (“Mt. Sinai”), the Company has an obligation to make certain payments to Mt. Sinai as a result of reaching certain milestones in the development and sales of the product, and for significant events related to the Company. The Company is currently in discussions with Mt. 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. If the Company is required to pay this amount, it could have a material adverse effect on the Company’s operations.

8.	Subsequent Events

October 2, 2024, the Company announced the closing of its Series D Preferred Stock offering. In total, the Company received gross proceeds of approximately $13 million from the sale of units consisting of 5,789,479 shares of the Company’s Series D Preferred Stock and warrants to purchase an aggregate of 5,789,479 shares of the Company’s Common Stock in connection with this offering.

The Company evaluated subsequent events through the date these unaudited financial statements were issued for events that should be recorded or disclosed in the financial statements as of September 30, 2024. Other than those noted above, the Company concluded that no other events have occurred that would require recognition or disclosure in the unaudited financial statements.

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Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and the accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as previously filed with the Commission. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs, involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Monogram Technologies Inc. (the “Company”, “Monogram”, “we,” “us,” “our”) was incorporated under the laws of the State of Delaware on April 21, 2016, as “Monogram Arthroplasty Inc.” On March 27, 2017, the Company changed its name to “Monogram Orthopedics Inc.” On May 15, 2024, the Company changed its name from Monogram Orthopedics Inc. to “Monogram Technologies Inc.” Monogram Technologies is an AI-driven robotics company focused on improving human health, with an initial focus on orthopedic surgery. The Company is developing a product solution architecture to enable patient optimized orthopedic implants at scale by combining 3D printing, advanced machine vision, AI and next generation robotics. The Company has a robot prototype that can autonomously execute optimized paths for high precision insertion of implants in simulated cadaveric surgeries. Monogram intends to produce and market robotic surgical equipment and related software, orthopaedic implants, tissue ablation tools, navigation consumables, and other miscellaneous instrumentation necessary for reconstructive joint replacement procedures. The Company has obtained 510(k) clearances for certain implants but has not yet made 510(k) premarket notification submissions or obtained 510(k) premarket clearances for any of robotic products. U.S. Food and Drug Administration (FDA) 510(k) premarket clearance is required to market our robotic products, and the Company cannot estimate the timing, or assure our ability, to obtain such clearances.

Recent Developments

FDA Update

The Company announced on August 8, 2024, that on July 19, 2024, it had submitted a 510(k) premarket filing to the FDA for the Company’s semi-active version of the mBôs TKA System. The FDA has completed its Administrative and Substantive reviews of this 510(k) filing. On September 30, 2024, the Company received an Additional Information Request (AIR) from the FDA. According to the 2nd Quarter FY2023 MDUFA V Performance Report, approximately 68% of 510(k)s submitted in FY2022 received AIR requests from the FDA during their first review cycle. Monogram’s 510(K) submission was over 28,000 pages, so receipt of the AIR from the FDA aligned with management’s expectations.

On October 16, 2024, the Company held a teleconference with the FDA to address the clarification questions in the AIR, which management found constructive. The FDA has recommended an issue-specific submission (q submission) to discuss the Company’s planned approach for responding to the AIR. The Company anticipates holding the issue-specific meeting with the FDA by December 2024 pending FDA availability which could delay timing.

The Company has 180 days from receiving the AIR to respond with the requested information. If the FDA accepts the current planned approach, the Company believes it could address the AIR within the allotted period; however, this timeline could change based on the outcome of the December issue-specific meeting wherein the FDA may request clinical data or comment on the planned approach.

Closing of Series D Preferred Stock Offering

As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024 filed with the Commission on August 8, 2024, on July 9, 2024, the Company commenced a best efforts offering of up to 5,790,479 units, with each unit consisting of (a) one share of our 8.00% Series D Convertible Cumulative Preferred Stock (the “Series D Preferred Stock”) and (b) one Common Stock Purchase Warrant to purchase one share of our common stock, $0.001 par value per share (the “Common Stock”) at an exercise price of $3.375 per share, for a total of 5,790,479 shares of our Series D Preferred Stock and warrants to purchase up to an aggregate of 5,790,479 shares of our Common Stock (and shares of Common Stock underlying shares of Series D Preferred Stock, PIK dividends on Series D Preferred Stock, and all such warrants), which we refer to as the “Series D Preferred Stock Offering”.

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On October 2, 2024, the Company announced the closing of its Series D Preferred Stock Offering. In total, the Company received gross proceeds of approximately $13 million from the sale of units consisting of 5,789,479 shares of the Company’s Series D Preferred Stock and warrants to purchase an aggregate of 5,789,479 shares of the Company’s Common Stock in connection with the Series D Preferred Stock Offering.

At the Market Common Stock Offering

On July 22, 2024, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. to sell shares of our Common Stock from time to time through an “at-the-market” equity offering program under which B. Riley Securities, Inc. will act as our sales agent (the “Sales Agent”).

Under the Sales Agreement, we may issue and sell from time-to-time shares of our Common Stock for aggregate proceeds of up to $25,000,000. Each time the Company wishes to issue and sell Common Stock under the Sales Agreement, the Company will notify the Sales Agent of the number or dollar value of shares to be issued, the time period during which such sales are requested to be made, any limitation on the number of shares that may be sold in one day, any minimum price below which sales may not be made and other sales parameters deemed appropriate. Once the Company has so instructed the Sales Agent, unless the Sales Agent declines to accept the terms of the notice, the Sales Agent has agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such shares up to the amount specified on such terms. We have no obligation to sell any shares of our Common Stock under the Sales Agreement, and we may suspend solicitation and offers under the Sales Agreement for any reason in our sole discretion. We agreed to pay the Sales Agent a commission equal to up to 3.0% of the gross proceeds from the sales of shares of our Common Stock pursuant to the Sales Agreement or such lower amount as we and the Sales Agent may agree.

Any shares of our Common Stock sold under the Sales Agreement will be issued pursuant to our shelf registration statement on Form S-3 (File No. 333-279927) and the base prospectus included therein, originally filed with the Commission on June 4, 2024 and declared effective by the SEC on June 14, 2024. A prospectus supplement relating to the offering of shares of our Common Stock under the Sales Agreement was filed with the SEC on July 22, 2024.

We refer to this offering herein as the “At The Market Common Stock Offering”.

As of November 12, 2024, the Company had sold 1,592,023 shares of Common Stock under the Sales Agreement, for gross proceeds of $4,274,008.

General Market Update

The Company continues to see a significant and growing market opportunity for an active cutting robotic system that does not utilize haptic controls. Haptic controls may describe haptic control schemes such as admittance control, impedance control, or hybrid control, i.e., configurations where the device is not intended to move autonomously on its own. The Company believes the patent landscape for haptic control and the widespread adoption of products like Mako could be favorable for next-generation active cutting robots like Monogram’s mBôs™ TKA System, which is being designed to efficiently resect bone without utilizing haptic controls. Monogram has filed several patents around its active control scheme. Monogram is not aware of any widely accepted products where the robot efficiently resects bone with a saw on the market today other than Mako.

Results of Operations for the Three & Nine Months ended September 30, 2024 and 2023

Revenues

The Company is currently focused on commercialization of its robotic products, including seeking 510(k) clearances from the FDA for those products. The Company did not make any sales during the nine months ended September 30, 2024 or 2023. The Company does not anticipate additional sales before initiating a clinical study and obtaining the appropriate regulatory approvals.

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Operating Expenses

The following table sets forth our operating expenses for the period indicated:


	Three Months Ended September 30
	2024		2023		$ Change		% Change
Research and development	$	2,214,729	$	2,664,542	$	(449,813)	(17)	%
Marketing and advertising		1,838,937		32,220		1,806,716	5,607	%
General and administrative		1,093,456		1,060,270		33,186	3	%
Total operating expenses	$	5,147,122	$	3,757,032	$	1,390,090	37	%


	Nine Months Ended September 30
	2024		2023		$ Change		% Change
Research and development	$	7,047,112	$	7,577,907	$	(530,795)	(7)	%
Marketing and advertising		2,050,347		2,844,748		(794,401)	(28)	%
General and administrative		3,293,344		2,968,644		324,700	11	%
Total operating expenses	$	12,390,803	$	13,391,299	$	(1,000,496)	(7)	%

Research and development (“R&D”) expenses decreased 17% during the three months ended September 30, 2024 and 7% during the nine months ended September 30, 2024 compared to the respective periods in 2023, primarily as a result of the Company finalizing the validation phase of the verification and validation phase of its robot prototype with the submission of the aforementioned application for 510 (k) FDA clearance. R&D expenses during the three and nine months ended September 30, 2024 and 2023 were primarily comprised of payroll and related costs, contractor and prototype material expenses for the development of the Company’s novel robotic system and associated implants. The reduction in R&D expenses for the nine months ended September 30, 2024 was offset in part by an increase of $554,133 related to regulatory expenses as the Company prepared for its planned 510(k) submission.

Marketing and advertising expenses increased by $1,806,716 during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 driven by the marketing campaign to support the Series D preferred Stock Offering which commenced in July 2024 and closed on October 2, 2024. Marketing and advertising expenses incurred for the nine-month period ending September 30, 2024 decreased by 28% compared to the same period in 2023. The expenses incurred during the nine months ended September 30, 2023 were primarily related Company’s marketing campaign for its Regulation A – Tier 2 offering of its Common Stock (the “Reg A Common Stock Offering”) that began during the three months ended March 31, 2023 and successfully culminated with a round closing in May of 2023.

General and administrative expenses increased 3% during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 and 11% during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. In both periods, the increases were primarily due to increases in insurance and regulatory compliance and consulting and professional fees, as described more fully below:

●

Insurance and regulatory compliance expenses were higher during the three and nine months ended September 30, 2024 compared to the same periods in 2023 due to additional insurance and regulatory compliance activities required to list as a publicly traded company on NASDAQ, which occurred May 2023. Consulting and professional services expenses were higher during the three months and nine months ended September 30, 2024 compared to the respective periods ended September 30, 2023 as a result of the Company’s use of such services related to its offering of the Series D Preferred Stock Offering, increased legal and accounting expenses due to our increased regulatory reporting requirements as an Exchange Act reporting company (which we became in May 2023), and continued protection for the Company’s intellectual property.

As a result of the foregoing, the Company’s total operating expenses increased 37% during the three months ended September 30, 2024, and decreased 7% during the nine months ended September 30, 2024, compared to the same periods ending September 30, 2023.

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Other Income

The following table sets forth our other income for the periods indicated :


	Three Months Ended September 30
	2024		2023		$ Change
Change in fair value of warrant liability	$	—	$	2,646,399	$	(2,646,399)
Interest income and other, net		112,621		114,973		(2,352)
Total other income	$	112,621	$	2,761,372	$	(2,648,751)


	Nine Months Ended September 30
	2024		2023		$ Change
Change in fair value of warrant liability	$	—	$	3,088,533	$	(3,088,533)
Interest income and other, net		312,142		211,503		100,639
Total other income	$	312,142	$	3,300,037	$	(2,987,894)

During the three and nine months ended September 30, 2023, the Company had a change in the fair value of warrant liability that resulted in a gain caused primarily by a decrease in the value of the Company’s Common Stock used to estimate the fair value of certain warrants that included anti-dilution protections. Because of these protections, when the Company issued additional shares of its capital stock in connection with its ongoing capital raising efforts, the number of shares issuable upon the exercise of these warrants increased proportionally. During May and October 2023, these warrants were exercised by the holders, and as a result, no warrants with anti-dilution protections remain outstanding.

The increase in interest income during the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 is primarily the result of proceeds from the Company’s Regulation A Common Stock Offering which were invested in a JP Morgan US Government Money Market Fund beginning in Q2 2023.

Net Loss

As a result of the foregoing factors, the Company had a net loss of $5,034,501 for the three months ended September 30, 2024 – an 80% increase compared to a net loss of $995,660 for the three months ended September 30, 2023 (which was driven primarily by the loss of the value of the warrant liability due to those warrants no longer being outstanding, which significantly offset operational losses during the three and nine months ended September 30, 2023, followed by increased marketing and advertising expenses related to the exercise Series D Preferred Stock Offering). Additionally, the Company had a net loss of $12,078,661 for nine months ended September 30, 2024 – a 16% increase compared to $10,090,923 net loss for nine months ended September 30, 2023.

Liquidity and Capital Resources

As of September 30, 2024 the Company had approximately $16.6 million in cash on hand, largely resulting from proceeds received from the Company’s various Common Stock and Preferred Stock offerings. The Company has recorded losses since inception and, as of September 30, 2024, had working capital of approximately $16.1 million and total stockholders’ equity of approximately $17.4 million. Since inception, the Company has been primarily capitalized through securities offerings. The Company plans to continue to try to raise additional capital through available financing options to the Company, including, but not limited to, registered or exempt equity and/or debt offerings, as well as straight or convertible debt financings, although there can be no assurance that we will be successful in these fundraising efforts. Absent additional capital, the Company may be forced to reduce expenses significantly and could become insolvent.

To provide additional flexibility to the Company ahead of generating sufficient revenues to support operations:

●

On July 19, 2023, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement with B. Riley Principal Capital, II LLC (the “BRPC II”). Under the Purchase Agreement and Registration Rights Agreement, the Company has the right to sell to BRPC II up to $20.0 million in shares of Common Stock (the “Committed Equity Shares”), subject to certain limitations and the satisfaction of specified conditions in the Purchase Agreement, from time to time over the 24-month period commencing upon the initial satisfaction of the conditions to the BRPC II’s purchase obligations set forth in the Purchase Agreement, including that the registration statement declared effective by the SEC on September 7, 2023. Sales of Common Stock pursuant to the Purchase Agreement, and the timing of any sales, are solely at the Company’s option, and it is under no obligation to sell any securities to BRPC II under the Purchase Agreement.

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As of September 30, 2024, we have sold 292,726 shares of Common Stock to BRPC II for gross proceeds of $961,245 pursuant to this purchase obligation – and therefore have approximately $19 million worth of our Common Stock that we may sell to BRPC II.

●

Pursuant to our shelf registration statement on Form S-3 (File No. 333-279927) and the base prospectus included therein, originally filed with the Commission on June 4, 2024 and declared effective by the SEC on June 14, 2024, we may also sell from time to time, in one or more offerings under this prospectus, debt securities, which may be senior or subordinated. We will issue any such senior debt securities under a senior indenture that we will enter into with a trustee to be named in the senior indenture. We will issue any such subordinated debt securities under a subordinated indenture, which we will enter into with a trustee to be named in the subordinated indenture. We have not issued any debt securities pursuant to this registration statement as of the date of this Quarterly Report on Form 10-Q. For a description of the material provisions of the senior debt securities, the subordinated debt securities and the senior and subordinated indentures, please refer to the registration statement on Form S-3 (File No. 333-279927) and the base prospectus included therein, originally filed with the Commission on June 4, 2024 and declared effective by the SEC on June 14, 2024. Forms of the Senior Indenture and Subordinated Indenture are included as Exhibits 4.7 and 4.8, respectively, to this Quarterly Report on Form 10-Q.

●

On July 22, 2024, the Company commenced the At The Market Common Stock Offering (described more fully under “Recent Developments” in Item 2 of this report). As of November 12, 2024, the Company had sold 1,592,023 shares of Common Stock for total gross proceeds of $4,274,008 in this offering. As of the date of this Quarterly Report on Form 10-Q, sales in this offering are still ongoing.

The Company’s unaudited condensed financial statements included in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits, incurred a net loss during the nine months ended September 30, 2024 of $12,078,661 and has an accumulated deficit of $63,708,186 as of September 30, 2024.The Company’s ability to continue as a going concern in the next twelve months following the date the unaudited condensed financial statements were available to be issued is dependent upon its ability to produce revenues, raise capital, and/or obtain other financing sufficient to meet current and future obligations. Management has evaluated these conditions and believes its current cash balances, plus the additional capital available under the Purchase Agreement and At The Market Common Stock Offerings will be sufficient for the Company to satisfy its near-term capital needs and to continue as a going concern for a reasonable period.

Issuances of Equity

In two transactions during January and February 2024, ZB Capital Partners LLC, holder of a warrant exercisable for 547,944 shares of Common Stock, executed a cashless exercise of its warrant under which the Company issued the holder a total of 246,458 shares of Common Stock and retained the remaining shares as settlement of the $1.83 per share exercise price of the warrant.

During the nine months ended September 30, 2024, the Company sold 85,526 shares of its Common Stock to BRPC II for total proceeds, net of issuance costs, of $206,341.

Pro-Dex Coverage Warrants

On October 2, 2023, as consideration for Pro-Dex, Inc., a Colorado corporation (“Pro-Dex”) agreeing to exercise certain warrants exercisable for shares of the Company’s Common Stock held by Pro-Dex in full, Monogram agreed to the following:

If, (a) between October 2, 2023 and March 31, 2024; or (b) during the six month period between (i) April 1 and September 30 or (ii) October 1 and March 31 of each year thereafter, Monogram engages in or otherwise consummates an issuance of securities that results in Monogram receiving, or having the right to receive, gross proceeds of $5,000,000 or more during such period, then Monogram will issue Pro-Dex a warrant to be exercised in cash to purchase 5% (calculated after giving effect to such issuance to Pro-Dex) of the types, series and classes of securities issued during such period at a price equal to the total gross proceeds received over the such period divided by the number of securities issued during that same period on terms at least as favorable to Pro-Dex as the most favorable terms pursuant to which any such securities are acquired by any investor during such period (each, a “Coverage Warrant”). Each Coverage Warrant will be issued to Pro-Dex within ten (10) business day after the last day of the applicable period, will have a term of six (6) months from the date of issuance and, unless otherwise agreed to in writing by Pro-Dex in its sole and absolute discretion, will have other provisions consistent with the provisions of the Pro-Dex Warrants. Pro-Dex’s rights in this regard will expire on December 31, 2025 and will apply to all warrant coverage issuances conducted from time to time, and at any time, by Monogram prior to that date.

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Indebtedness

As of September 30, 2024, the Company had $2.8 million in total liabilities, primarily comprised of vendor accounts payable of $1.5 million, accrued liabilities of $0.9 million and lease liabilities of $0.4 million.

Commitments and Contingencies

Under the Company’s Exclusive License Agreement with the Icahn School of Medicine at Mount Sinai (“Mount Sinai”), the Company has an obligation to make certain payments to Mount Sinai as a result of reaching certain milestones in the development and sales of the product, and for significant events related to the Company. The Company is currently in discussions with Mount Sinai in regard to the payment obligation associated with a “Significant Transaction” following the Company becoming publicly traded on Nasdaq without undertaking a traditional initial public offering contemplated by that term. 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. If the Company is required to pay this amount, it could have a material adverse effect on the Company’s operations.

Cash Flows


	For the nine months ended
	September 30,
	2024		2023
Cash used in operating activities	$	(10,967,238)	$	(10,430,384)
Cash used in investing activities	$	(47,809)	$	(40,765)
Cash provided by financing activities	$	13,991,161	$	14,877,980

Cash Used In Operating Activities

For the nine months ended September 30, 2024, cash used in operating activities resulted primarily from our $12,078,661 net loss, offset by various non-cash expenses including $942,528 related to stock-based compensation, $321,114 related to depreciation and amortization, and $85,749 related to other non-cash expenses. Additionally, the overall increase in our non-cash net working capital balance during this period increased the amount of cash used in operations of $237,968.

For the nine months ended September 30, 2023, cash used in operations resulted primarily from our $10,090,923 net loss, offset by various non-cash expenses including $1,158,499 related to stock-based compensation, $307,293 related to depreciation and amortization, and $80,000 related to other non-cash expenses. Additionally, the overall decrease in our non-cash net working capital balance during this period decreased the amount of cash used in operations by $1,203,280 and was primarily due to increases in accounts payable resulting from the timing of payment of invoices.

Cash Used in Investing Activities

For the nine months ended September 30, 2024 and 2023, cash used in investing activities were comprised entirely of equipment purchases and remained relatively stable between the two periods.

Cash Provided by Financing Activities

Cash provided by financing activities during the nine months ended September 30, 2024 consisted primarily of $4,177,931 of net proceeds received from the sale of Common Stock under the Purchase Agreement and in the At the Market Common Stock Offering and $9,813,230 of net proceeds received from the Company’s Series D Preferred Stock Offering.

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Cash provided by financing activities during the nine months ended September 30, 2023 consisted primarily of $15.2 million received under the Reg A Common Stock Offering that concluded in May 2023, offset by $0.5 million of costs incurred in connection with the Common Stock Purchase Agreement.

Impact of inflation

While inflation may impact our capital and operating expenditures, we believe the effects of inflation, if any, on our results of operations and financial condition have not been significant. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future, including by heightened levels of inflation experienced globally as a consequence of the COVID-19 pandemic and recent geopolitical conflict.

Funding Requirements

We believe our existing cash and cash equivalents, including potential cash available to us under the Purchase Agreement, will be sufficient to meet anticipated cash requirements for at least 12 months from the date of this Quarterly Report on Form 10-Q. However, our forecast of the period of time through which our financial resources will be adequate to support operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could expend capital resources sooner than we expect.

Future capital requirements will depend on many factors, including:

●

Establishing and maintaining supply relationships with third parties that can provide adequate, in both amount and quality, products and services to support our development;

●

Technological or manufacturing difficulties, design issues or other unforeseen matters;

●

Addressing any competing technological and market developments;

●

Seeking and obtaining regulatory approvals; and

●

Attracting, hiring, and retaining qualified personnel.

Until such time, if ever, as we can generate substantial revenues to support our cost structure, we expect to finance cash needs through a combination of equity offerings, debt financings, commercial and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of stockholders will be, or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and 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. If we raise funds through commercial agreements, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies and/or future revenue streams, or grant licenses on terms that may not be favorable to us and/or may reduce the value of our Common Stock. Also, our ability to raise necessary financing could be impacted by the COVID-19 pandemic, recent geopolitical events, and inflationary economic conditions and their effects on the market conditions. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our commercialization efforts or grant rights to develop and market other products even if we would otherwise prefer to develop and market these products ourselves or potentially discontinue operations.

Summary of Accounting Principles

Basis of Presentation

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Going Concern

The Company’s ability to continue as a going concern in the next twelve months following the date the unaudited financial statements were available to be issued is dependent upon its ability to produce revenues, raise capital, and/or obtain other financing sufficient to meet current and future obligations. Management has evaluated these conditions and believes its current cash balances, plus the additional capital available under the Common Stock Purchase Agreement and the At The Market Agreement described in Note 4 to the financial statements included in this Quarterly Report on Form 10-Q, will be sufficient for the Company to satisfy its near-term capital needs and to continue as a going concern for a reasonable period.

Use of Estimates

Emerging Growth Company

As a Nasdaq listed public reporting company, we are required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company”, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies”, including but not limited to:

●

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

●

taking advantage of extensions of time to comply with certain new or revised financial accounting standards;

●

being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

●

being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We may remain an “emerging growth company” for up to five years, beginning January 26, 2022, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of September 30th, before that time, we would cease to be an “emerging growth company” as of the following December 31st.

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In summary, we are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies” and therefore, our shareholders could receive less information than they might expect to receive from more mature public companies.

Item 3. Quantitative And Qualitative Disclosures About Market Risk

We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.

Item 4. Controls And Procedures

As required by Rule 13a-15 under the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

Based upon their evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.

Change in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the nine months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may be involved in a variety of legal matters that arise in the normal course of business. The Company is not currently involved in any litigation, and its management is not aware of any pending or threatened legal actions relating to its intellectual property, conduct of its business activities, or otherwise.

Item 1A. Risk Factors.

As a smaller reporting company, the Company is not required to provide the information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On March 1, 2023, the Company commenced an offering of Tier 2 of Regulation A under the Securities Act (the “Reg A Common Stock Offering). This offering closed on May 16, 2023, and a total of 2,374,641 shares of Common Stock were sold in this offering for gross proceeds of $17,216,147. The Company engaged Digital Offering, LLC (“Digital Offering”) to act as lead selling agent for this offering to offer prospective investors in this offering shares of the Company’s Common stock on a “best efforts” basis.

Except as set forth above, no underwriters were involved in the foregoing sales, conversions, and/or exchanges of securities.

All purchasers of the securities described above issued in reliance upon the exemption from the registration requirements of the Securities Act the as set forth under Regulation A and/or in Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) as transactions by an issuer not involving any public offering represented to the registrant in connection with their respective purchases and/or exchanges that they were accredited investors and were acquiring the shares for their own account for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that they could bear the risks of the investment and could hold the securities for an indefinite period of time. Such purchasers and/or recipients received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration statement or an available exemption from such registration.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits

Exhibit No.		Description
2.1		Agreement and Plan of Merger dated May 14, 2024 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 15, 2024)
3.1		Sixth Amended and Restated Certificate of Incorporation of the Company (incorporated by reference Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 15, 2024)
3.2		Amended and Restated Bylaws, effective as of March 12, 2024 (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 15, 2024)
3.3		Certificate of Designations of Preferences, Rights and Limitations of 8.00% Series D Convertible Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 12, 2024)
3.4		Certificate of Ownership and Merger, as filed with the Secretary of State of the State of Delaware on May 14, 2024 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 15, 2024).
4.1		Warrant Agreement dated December 20, 2018 between Monogram Technologies Inc. and Pro-Dex, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
4.2		Warrant to Purchase Capital Stock dated February 7, 2019 between Monogram Technologies Inc. and ZB Capital Partners, LLC as Holder (incorporated by reference to Exhibit 4.2 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
4.3		Form of Warrant to be issued to StartEngine Primary, LLC (incorporated by reference to Exhibit 4.3 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
4.4		Description of Securities (incorporated by reference to exhibit 4.4 to the Company’s Annual Report on Form 10 - K for the fiscal year ended December 31, 2023 filed with the SEC on March 14, 2024)
4.5		Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 12, 2024)
4.6		Form of Warrant Agency Agreement (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on July 12, 2024))
4.7		Form of Senior Indenture (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-3 filed with the SEC on June 4, 2024)
4.8		Form of Subordinated Indenture (incorporated by reference to Exhibit 4.7 to the Company’s Registration Statement on Form S-3 filed with the SEC on June 4, 2024)
10.1		Consulting agreement dated April 5, 2021 between Monogram Technologies Inc. and Doug Unis (incorporated by reference to Exhibit 10.1 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.2		Amended Employment Agreement dated April 29, 2018 between Monogram Technologies Inc. and Benjamin Sexson (incorporated by reference to Exhibit 10.2 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.3		April 30, 2019 Amendment to Employment Agreement dated April 29, 2018 between Monogram Technologies Inc. and Benjamin Sexson (incorporated by reference to Exhibit 10.3 to the Company’s Form S-1 filed with the SEC on July 27, 2023).
10.4		May 31, 2020 Amendment to Employment Agreement dated April 29, 2018 between Monogram Technologies Inc. and Benjamin Sexson (incorporated by reference to Exhibit 10.4 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.5		Exclusive Licensing Agreement dated October 3, 2017 between Monogram Technologies Inc. as Licensee and Icahn School of Medicine at Mount Sinai as Licensor (incorporated by reference to Exhibit 10.5 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.6		Option Agreement dated March 18, 2019 between Monogram Technologies Inc. and Icahn School of Medicine at Mount Sinai (incorporated by reference to Exhibit 10.6 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.7		Amendment No. 2 to the Exclusive Licensing Agreement dated June 28, 2019 between Monogram Technologies Inc. as Licensee and Icahn School of Medicine at Mount Sinai (incorporated by reference to Exhibit 10.7 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.8		Amendment No. 3 to the Exclusive Licensing Agreement dated September 17, 2020 between Monogram Technologies Inc. as Licensee and Icahn School of Medicine at Mount Sinai (incorporated by reference to Exhibit 10.8 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.9		Amendment No. 4 to the Exclusive Licensing Agreement dated May 17, 2023 between Monogram Technologies Inc. as Licensee and Icahn School of Medicine at Mount Sinai (incorporated by reference to Exhibit 10.9 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.10		Stock Issuance Agreement between Monogram Technologies Inc. and Icahn School of Medicine at Mount Sinai (incorporated by reference to Exhibit 10.10 to the Company’s Form S-1 filed with the SEC on July 27, 2023)

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10.11		Development and Supply Agreement dated December 20, 2018 between Monogram Technologies Inc. and Pro-Dex, Inc. (incorporated by reference to Exhibit 10.11 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.12		Amended and Restated 2019 Stock Option and Grant Plan (incorporated by reference to Exhibit 10.12 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.13		Noel Knape Offer Letter (incorporated by reference to Exhibit 10.13 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.14		Form of Indemnification Agreement with Executive Officers and Directors of the Company (incorporated by reference to Exhibit 10.14 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.15		Common Stock Purchase Agreement, dated July 19, 2023 by and between Monogram Technologies Inc. and B. Riley Principal Capital II, LLC (incorporated by reference to Exhibit 10.15 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.16		Registration Rights Agreement, dated July 19, 2023 by and between Monogram Technologies Inc. and B. Riley Principal Capital II, LLC (incorporated by reference to Exhibit 10.16 to the Company’s Form S-1 filed with the SEC on July 27, 2023)
10.17 †		Supply Agreement dated October 3, 2023 between Monogram Technologies Inc. and Pro-Dex, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2023)
10.18		Warrant Exercise Side Letter dated October 2, 2023 between Monogram Technologies Inc. and Pro-Dex, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 6, 2023)
10.19		November 3, 2023 Amendment to Warrant Exercise Side Letter dated October 2, 2023 between Monogram Technologies Inc. and Pro-Dex, Inc. (incorporated by reference to exhibit 10.19 to the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023 filed with the SEC on November 8, 2023)
10.20		Kamran Shamaei Offer Letter dated February 11, 2021 (incorporated by reference to exhibit 10.20 to the Company’s Annual Report on Form 10 - K for the fiscal year ended December 31, 2023 filed with the SEC on March 14, 2024)
10.21		Consulting agreement dated July 28, 2023 between Monogram Technologies Inc. and Colleen Gray (incorporated by reference to Exhibit 10.21 to the Company’s Form POS - AM filed with the SEC on April 18, 2024)
10.22		Consulting agreement dated September 19, 2022 between Monogram Technologies Inc. and Paul Riss (incorporated by reference to Exhibit 10.22 to the Company’s Form POS - AM filed with the SEC on April 18, 2024)
10.23†		Clinical Research Services Master Agreement between the Company and the CRO dated May 8, 2024. (incorporated by reference to Exhibit 10.23 to the Company’s Form 10-Q filed with the SEC on May 14, 2024)
10.24		Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 12, 2024).
31.1*		Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase
104		Cover Page Interactive Data File—the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*	Filed herewith.

†	Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized in the City of Austin, State of Texas, on November 14, 2024.

MONOGRAM TECHNOLOGIES INC.

By	/s/ Benjamin Sexson
Benjamin Sexson, Chief Executive Officer
Monogram Technologies Inc.

The following persons in the capacities and on the dates indicated have signed this offering statement.

/s/ Benjamin Sexson
Benjamin Sexson, Chief Executive Officer, Director
Date: November 14, 2024

/s/ Noel Knape
Noel Knape, Chief Financial Officer, Principal Financial Officer,
Principal Accounting Officer
Date: November 14, 2024

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