InMode Ltd 20-F for FY2025
InMode Ltd. (INMD)
20-F
2026-02-10
For: 2025-12-31
View Original
Added on
April 04, 2026
About this 20-F
InMode Ltd filed this 20-F on February 10, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $370.5M
- down 6.2% from $394.82M a year earlier
- Net income
- $93.83M
- down 48.2% from net income of $181.28M a year earlier
- Diluted EPS
- $1.43
- down 36.4% from $2.25 a year earlier
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM
20-F
(Mark One)
OR
For
the fiscal year ended December
31 , 2025
OR
OR
Date
of event requiring this shell company report
For
the transition period from __________ to __________
Commission
file number 001-39016
(Exact
name of Registrant as specified in its charter)
N/A
(Translation
of Registrant’s name into English)
(Jurisdiction
of incorporation or organization)
(Address
of principal executive offices)
+972 -4-9096313
(Name,
Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities
registered or to be registered pursuant to Section 12(b) of the Act:
|
Title
of each class |
Trading
Symbol(s) |
Name
of each exchange on which registered | ||
|
|
|
|
Securities
registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title
of Class)
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title
of Class)
Indicate
the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report: 63,358,750
Ordinary Shares, par value NIS 0.01 per share.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934.
Yes
☐ No
☒
Note — Checking
the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 from their obligations under those Sections.
Indicate
by check mark whether the registrant (1) has filed all 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.
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).
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
|
|
Accelerated filer
☐ |
Non-accelerated
filer ☐ |
|
Emerging growth
company
|
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. ☐
The
above number of Ordinary Shares outstanding does not include a total of 24,975,003 Ordinary Shares held at December 31, 2025, as treasury
shares, all of which were repurchased by InMode Ltd.
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
|
|
International Financial
Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other
☐ |
If
“Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant
has elected to follow. N/A
☐
Item 17 ☐ Item 18
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☒
(APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐
No ☐
TABLE OF CONTENTS
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i
Certain Definitions
In this Annual Report on Form 20-F, unless the context otherwise requires:
| • |
references to “InMode,” the “Company,” “us,” “we” and “our” refer to
InMode Ltd., an Israeli company, and its consolidated subsidiaries; |
| • |
references to “ordinary shares,” “our shares” and similar expressions refer to the Company’s ordinary
shares; |
| • |
references to “dollars,” “U.S. dollars” and “$” are to U.S. Dollars; |
| • |
references to “NIS” are to New Israeli Shekels, the Israeli currency; |
| • |
references to the “Companies Law” are to Israel’s Companies Law, 5759-1999, as amended; |
| • |
references to the “SEC” are to the U.S. Securities and Exchange Commission; and |
| • |
references to “U.S. GAAP” are to U.S. generally accepted accounting principles. |
Forward-Looking Statements
The sections entitled “Item 3. Key Information – D. Risk Factors”
“Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects” and elsewhere
in this Annual Report on Form 20-F contain forward-looking statements that are subject to substantial risks and uncertainties. All statements,
other than statements of historical facts, included in this Annual Report on Form 20-F regarding our strategy, future operations, future
financial position, future revenues, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking
statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“may,” “plan,” “predict,” “project,” “will,” “would” and similar
expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying
words. Unless otherwise indicated in this Annual Report on Form 20-F, the basis for any statements regarding our competitive position
is based on our own assessment and knowledge of the market in which we operate.
These forward-looking statements include, among other things, statements about:
| • |
our ability to identify and penetrate new markets for our products and technology; |
| • |
our ability to innovate, develop and commercialize our existing and new products and to expand beyond our historic customer base;
|
| • |
our ability to obtain and maintain regulatory clearances; |
| • |
the impact of the political, economic and military instability in Israel and the ongoing Israel-Hamas war on our ability to operate
and develop, manufacture and deliver products and components; |
| • |
our expectation regarding the safety and efficacy of our products; |
| • |
the commercial experience of our management team; |
| • |
our commercialization, marketing and manufacturing capabilities and strategy; |
| • |
our estimates regarding the potential market opportunity for our products; |
| • |
developments and projections relating to our competitors or our industry; |
| • |
our ability to differentiate and distinguish our products from those of our competitors; |
| • |
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| • |
our sales and marketing capabilities and strategy in the United States and internationally; |
| • |
the implementation of our business model, strategic plans for our business, products and technology; |
| • |
our ability to attract or retain key personnel; |
| • |
the impact of climate-related events and increasing regulatory requirements and security on our operating costs and business operations;
|
| • |
our intellectual property portfolio and position and our ability to protect our intellectual property rights; and |
| • |
our assessment of the impact to us of any third-party litigation claiming patent infringement. |
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our forward-looking statements. Forward-looking statements are based on our management’s
current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s
beliefs and assumptions, are not guarantees of future performance or development, and involve known and unknown risks, uncertainties and
other factors that are in some cases beyond our control. Actual results or events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included
in this Annual Report on Form 20-F, particularly in the section entitled “Item 3. Key Information – D. Risk Factors,”
which could cause actual results or events to differ materially from the forward-looking statements that we make. You should not put undue
reliance on any forward-looking statements. Unless we are required to do so under U.S. federal securities laws or other applicable laws,
we do not intend to update or revise any forward-looking statements. Readers are encouraged to consult the Company’s reports made
on Form 6-K, which are periodically filed with or furnished to the SEC.
ii
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Our business faces significant risks. You should carefully consider
all of the information set forth in this Annual Report on Form 20-F and in our other filings with the SEC, including the following risk
factors that we face and that are faced by our industry. Our business, financial condition or results of operations could be materially
and adversely affected by any of these risks. Additional risks and uncertainties not presently known to us or that we currently deem immaterial
also may have similar adverse effects on us. This report also contains forward-looking statements that involve risks and uncertainties.
Our results could materially differ from those anticipated in these forward-looking statements, as a result of certain factors, including
the risks described below and elsewhere in this Annual Report on Form 20-F and our other SEC filings. See “Forward-Looking Statements”
above.
Summary Risk Factors
Our business is subject to a number of risks of which you should be aware of before
making an investment decision. These risks are discussed more fully in the “Risk Factors” section of this annual report. These
risks include, but are not limited to, the following:
| • |
our success depends upon market acceptance of our products; |
| • |
if there is not sufficient demand for the procedures performed with our products, practitioner demand for our products could decline,
resulting in unfavorable operating results; |
| • |
the success and continued development of our products depends, in part, upon maintaining strong relationships with physicians and
other healthcare professionals; |
| • |
we rely heavily on our sales professionals to market and sell our products worldwide. If we are unable to hire, effectively train,
manage, improve the productivity of and retain our sales professionals, our business will be harmed, which would impair our future revenue
and profitability; |
| • |
the failure to attract and retain key personnel could adversely affect our business; |
| • |
the impact of the political, economic and military instability in Israel and the ongoing Israel-Hamas war and other conflicts in
the region could impede our ability to operate and develop, manufacture and deliver products and components and harm our financial results;
|
| • |
the impact of actual or threatened tariffs imposed on our products or their respective components; |
| • |
if we do not continue to develop and commercialize new products and identify new markets for our products and technologies, we may
not remain competitive or expand beyond our historic customer base, and our revenues and operating results could suffer; |
1
| • |
product liability suits could be brought against us due to defective material or design or misuse of our products and could result
in expensive and time-consuming litigation, payment of substantial damages and an increase in our insurance rates; |
| • |
our products and operations are subject to extensive and continuing regulatory compliance obligations in the United States and other
countries, and failure to meet those obligations could adversely harm our business; |
| • |
we outsource almost all of the manufacturing of our products to a small number of manufacturing subcontractors. If our subcontractors’
operations are interrupted or if our orders exceed our subcontractors’ manufacturing capacity, we may not be able to deliver our
products on time; |
| • |
our operating costs and business operations could be adversely affected by climate-related events and increasing regulatory requirements
and security; |
| • |
if we are unable to protect our intellectual property rights, our competitive position could be harmed. Our success and ability to
compete depends in large part upon our ability to protect our proprietary technology; |
| • |
third parties have commenced and may in the future commence litigation against us claiming that our products infringe upon their
patents or other intellectual property rights; |
| • |
if we fail to obtain and maintain necessary FDA clearances for our products, if clearances for future products and proposed indications
are delayed or not issued, if we or any of our third-party suppliers or manufacturers fail to comply with applicable regulatory requirements,
or if there are regulatory changes, our commercial operations could be harmed; and |
| • |
as a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and Nasdaq corporate governance
rules and are permitted to file less information with the SEC than U.S. domestic public companies, which may limit the information available
to holders of our ordinary shares. |
Risks Related to Our Business and Industry
Our success depends upon market acceptance of our products.
We design, develop, manufacture and commercialize innovative, minimally invasive and
non-invasive surgical/medical products. We have developed products that apply our minimally invasive technology in plastic surgery, dermatology,
gynecology and ophthalmology. We were established in 2008 and have expanded our product offerings to include fourteen product platforms:
BodyTite, Optimas, Votiva, Contoura, Triton, EmbraceRF, EvolveX, Evoke, Morpheus8,
EmpowerRF, Define, Envision, IgniteRF and OptimasMAX. In 2025 we introduced
two new, Luxora and ApexRF. If we fail to significantly penetrate current or new markets with
our products or fail to properly manage the manufacturing and distribution of multiple products, our business, financial condition and
results of operations could be negatively impacted. The success of our products depends on adoption and acceptance of our technology by
user doctors. The rate of adoption and acceptance may be affected adversely by perceived issues relating to quality and safety, doctors’
reluctance to invest in new technologies, the cost of competitive treatments and widespread acceptance of other technologies. Our business
strategy is based, in part, on our expectation that we will continue to make novel product introductions and upgrades that we can sell
to new and existing users of our products and that we will be able to identify new markets for our existing technologies.
To increase our revenues, we must:
| • |
continue to further penetrate our existing historic customer base, including plastic and facial surgeons, aesthetic surgeons, dermatologists
and obstetricians/gynecologists, or OB/GYNs, and drive recurring revenues by demonstrating to our customers that our products or product
upgrades would be an attractive revenue-generating addition to their practices; |
| • |
expand our customer base to include new customers, such as ear, nose and throat physicians, or ENTs, ophthalmologists, general
practitioners and aesthetic clinicians; |
| • |
leverage our existing technology to expand into new minimally invasive and non-invasive applications that either add to or significantly
improve our current products; |
| • |
increase our sales presence to target and expand our market globally; |
| • |
actively pursue business development opportunities, including potential acquisitions and strategic partnerships to augment our product
and technology portfolio; and |
| • |
expand and maintain our intellectual property and patent portfolio. |
2
In addition, the surgical aesthetic solutions market is highly competitive and dynamic
and marked by rapid and substantial technological development and product innovations. Demand for our products could be diminished by
equivalent or superior products and technologies offered by competitors.
If there is not sufficient demand for the procedures performed with
our products, practitioner demand for our products could decline, resulting in unfavorable operating results.
Continued expansion of the global market for energy-based aesthetic procedures is a
material assumption of our business strategy. Most procedures performed using our products are not reimbursable through government or
private health insurance and are therefore elective procedures, the cost of which must be borne by the patient. The decision to utilize
our products may therefore be influenced by a number of factors, including:
| • |
consumer disposable income and access to consumer credit; |
| • |
the cost of procedures performed using our products; |
| • |
the cost, safety and effectiveness of alternative treatments, including treatments which are not based upon laser or other energy-based
technologies and treatments which use pharmaceutical products; |
| • |
the success of our sales and marketing efforts; |
| • |
the education of our customers and patients on the benefits and uses of our products compared to competitors’ products and
technologies; and |
| • |
consumer confidence, which may be impacted by economic and political conditions. |
If, as a result of these factors, there is not sufficient demand for the procedures
performed with our products, practitioner demand for our products could decline, which could have a material adverse effect on our results
of operations.
The success and continued development of our products depends, in
part, upon maintaining strong relationships with physicians and other healthcare professionals.
If we fail to maintain our working relationships with physicians and other ancillary
healthcare professionals, our products may not be developed and marketed in line with the needs and expectations of the professionals
who use and support our products. If we are unable to maintain these strong relationships or form new relationships with physicians and
other healthcare professionals beyond our historic customer base, the development and marketing of our products could suffer, which could
have a material adverse effect on our business, financial condition and results of operations.
We rely heavily on our sales professionals to market and sell our
products worldwide. If we are unable to hire, effectively train, manage, improve the productivity of and retain our sales professionals,
our business will be harmed, which would impair our future revenue and profitability.
Our success largely depends on our ability to hire, train, manage and improve the productivity
levels of our sales professionals worldwide. We train our existing and recently recruited sales professionals to better understand our
existing and new product technologies and how they can be positioned against our competitors’ products and increase the revenue
of our customers. It may take time for the sales professionals to become productive, and there can be no assurance that recently recruited
sales professionals will be adequately trained in a timely manner, that our direct sales productivity will improve or that we will not
experience significant levels of attrition in the future.
Product liability suits could be brought against us due to defective
material or design or misuse of our products and could result in expensive and time-consuming litigation, payment of substantial damages
and an increase in our insurance rates.
Our systems are inherently complex in design and require ongoing scheduled maintenance.
Our products may malfunction when used by our customers. Additionally, if our products are alleged to be defectively designed, manufactured
or labeled, contain defective components or are misused, we may become subject to substantial and costly litigation by our customers or
their patients. Misusing our products or failing to adhere to operating guidelines could cause burns, scarring and tissue irregularities.
In addition, if our operating guidelines are found to be inadequate, we may be subject to liability. Furthermore, our products are sold
in jurisdictions that vary as to the specific qualifications or training required for purchasers or operators of the products. There is
a risk that our products may be purchased or operated by physicians with varying levels of training and, in some cases, by practitioners,
such as nurses, chiropractors and technicians, who may not be adequately trained. The purchase and use of our products by non-physicians
or persons who lack adequate training may result in the misuse of our products, which could give rise to adverse treatment outcomes. If
we are unable to prevent product malfunctions or misuse, or if we fail to do so in a timely manner, we could also experience, among other
things, delays in the recognition of revenues or loss of revenues, particularly in the case of new products; legal actions by customers,
patients and other third parties, which could result in substantial judgments against us or settlement costs; action by regulatory bodies;
and diversion of development, engineering and management resources.
3
Product liability claims could divert management’s attention from our core business,
be expensive to defend and result in sizable damage awards against us. In addition, such potential adverse effects may cause a significant
increase in the premiums under our insurance policies. Further, the coverage limits of our product liability insurance policies may not
be adequate to cover future claims. A successful claim brought against us in excess of, or outside of, our insurance coverage could have
a material adverse effect on our business, financial condition and results of operations. Even if unsuccessful, such a claim could nevertheless
have an adverse impact on us, due to damage to our reputation and diversion of management resources.
We may have difficulty managing our growth, which could limit our
ability to increase sales and cash flow.
Since inception, we have experienced significant growth in our operations, and the number
of our employees has significantly increased since inception. This growth has placed significant demands on our management, as well as
our financial and operational resources. In order to achieve our business objectives, we will need to continue to grow our business. Continued
growth would increase the challenges involved in:
| • |
implementing appropriate operational and financial systems; |
| • |
expanding our sales and marketing infrastructure and capabilities; |
| • |
ensuring compliance with applicable Food and Drug Administration, or FDA, and other regulatory requirements; |
| • |
providing adequate training and supervision to maintain high quality standards; and |
| • |
preserving our culture and values. |
If our growth continues, it will require that we continue to develop and improve our
operational, financial and other internal controls. If we cannot scale and manage our business appropriately, we will not realize our
projected growth and our financial results will suffer.
The failure to attract and retain key personnel could adversely
affect our business.
Our success also will depend in large part on our ability to continue to attract, retain
and motivate qualified and highly skilled personnel. Competition for highly skilled employees is intense. We may be unable to continue
to attract and retain sufficient numbers of highly skilled employees. Our inability to attract and retain additional key employees or
the loss of one or more of our current key employees could adversely affect our business, financial condition and results of operations.
Our financial results may fluctuate from quarter to quarter.
We base our production, inventory and operating expenditure levels on anticipated orders.
If orders are not received when expected in any given quarter, expenditure levels could be disproportionately high in relation to sales
for that quarter. A number of additional factors, over which we have limited control, may contribute to fluctuations in our financial
results, including:
| • |
customer adoption of our products; |
| • |
the willingness of individuals to pay directly for aesthetic medical procedures in light of the lack of reimbursement by third-party
payors; |
4
| • |
continued availability of attractive equipment leasing terms for our customers, which may be negatively influenced by interest rate
increases; |
| • |
the impact of the political, economic and military instability in Israel and the ongoing Israel-Hamas war; |
| • |
changes in our ability to obtain and maintain regulatory approvals and maintain compliance with applicable regulatory requirements;
|
| • |
actual or perceived breaches of, or failures relating to, privacy, data protection or data security; |
| • |
positive or negative coverage in the media or clinical publications of our products or products of our competitors or industry;
|
| • |
increases in the length of our sales cycle; |
| • |
performance of our independent distributors; |
| • |
delays in, or failure of, product and component deliveries by our subcontractors and suppliers; |
| • |
the impact on our operating costs and business operations by climate-related events and increasing regulatory requirements and security;
and |
| • |
the impact of global health crises on our business and general economic conditions. |
We rely on a limited number of suppliers, contract manufacturers
and logistics partners for our products. A loss of any of these partners or delays at transition points such as harbors, straights and
ports could negatively affect our business.
We rely on a limited number of contract manufacturers, suppliers and logistics providers
to manufacture and transport our products. Our reliance on a limited number of contract manufacturers for our products increases our risks,
since we do not currently have alternative or replacement contract manufacturers beyond these key parties. In the event of interruption
from any of our contract manufacturers or suppliers, we may not be able to increase capacity from other sources or develop alternate or
secondary sources without incurring material additional costs and substantial delays. Furthermore, our primary facilities are located
in Israel. Thus, our business could be affected if one or more of our suppliers, manufacturers or logistics partners are impacted by a
natural disaster, an epidemic, the ongoing Israel-Hamas war and other conflicts in the region, or other interruption at a particular location.
Interruptions in the development, manufacturing, and shipment of our products, could adversely impact our revenue, gross margins and operating
results. Such interruptions may be due to, among other things, temporary closures of the facilities our contract manufacturers, and other
vendors in our supply chain; restrictions or delays on transport or the import/export of goods and services from certain ports
and harbors that we and our logistics partners use; and local quarantines or work stoppages.
Competition among providers of energy-based devices for the medical
aesthetics market is characterized by rapid innovation. If we do not continue to develop and commercialize new products and identify new
markets for our products and technologies and expand beyond our historic customer base, we may not remain competitive, and our revenues
and operating results could suffer.
The industry in which we operate is subject to continuous technological development
and product innovation. If we do not continue to be innovative in the development of new products and applications, our competitive position
will likely deteriorate as other companies successfully design and commercialize new products and applications. While we attempt to protect
our products through patents and other intellectual property, there are few barriers to entry that would prevent new entrants or existing
competitors from developing products that compete directly with ours. We expect that any competitive advantage we may enjoy from our current
and future innovations may diminish over time, as companies successfully respond to our, or create their own, innovations. Accordingly,
our success depends in part on developing new and innovative applications of laser and other energy-based technology and identifying new
markets for and applications of existing products to new customers and technology. Our future growth also depends, in part, on our ability
to expand beyond our historic customer base to ENTs, ophthalmologists, general practitioners and aesthetic clinicians. If we are unable
to develop and commercialize new products and identify and penetrate new markets for our products and technology, our products and technology
could become obsolete and our revenues and operating results could be adversely affected.
5
Our long-term growth depends on our ability to enhance our products,
expand our indications, and develop and commercialize additional products.
It is important to our business that we continue to enhance our products and develop
and introduce new products. Developing products is expensive and time-consuming. The success of any new product offering or product enhancement
to our current products will depend on several factors, including our ability to:
| • |
properly identify and anticipate physician and patient needs; |
| • |
develop and introduce new products and product enhancements in a timely manner; |
| • |
avoid infringing upon the intellectual property rights of third parties; |
| • |
demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials; |
| • |
obtain the necessary regulatory clearances or approvals for expanded indications, new products or product modifications; and
|
| • |
be fully FDA-compliant with marketing of new devices or modified products. |
If we are not successful in expanding our indications and developing and commercializing
new products and product enhancements, our ability to increase our revenue may be impaired, which could have a material adverse effect
on our business, financial condition and results of operations.
Our inability to compete effectively with our competitors may prevent
us from achieving significant market penetration or improving our operating results.
Our products compete against products offered by public companies, including AbbVie
Inc., Apyx Medical Corporation, Venus Concept Inc., BTL Aesthetics, Inc. and Sisram Medical Ltd, as well as by private companies, such
as Cutera, Inc., Cynosure LLC, Lumenis Ltd., and Candela Medical Inc. Competition with these companies could result in reduced prices
and profit margins and loss of market share, any of which could harm our business, financial condition and results of operations. We also
face competition from medical aesthetic products, including Botox®, hyaluronic acid injections and collagen injections, and aesthetic
procedures, such as face lifts, liposuction, sclerotherapy, electrolysis, chemical peels and laser procedures, which may offer a broader
range of medical and non-medical products and technologies that are more readily available to customers at a lower cost. Our ability to
compete effectively depends upon our ability to distinguish the Company and our products from our competitors and their products and includes
the following factors:
| • |
product performance; |
| • |
product pricing; |
| • |
product safety; |
| • |
intellectual property protection; |
| • |
quality of customer support; |
| • |
success and timing of new product development and introductions; and |
| • |
development of successful distribution channels. |
Furthermore, potential customers also may need to recoup the cost of expensive products
that they already have purchased from our competitors and may decide not to purchase our products or to delay such purchases. If we are
unable to achieve continued market penetration, we will be unable to compete effectively, and our business will be harmed.
6
The introduction of disruptive technological breakthroughs, whether
pharmaceutical or other newer therapeutic solutions, may present an additional threat to our success in our target markets.
The medical technology industry is intensely competitive. Pharmaceutical alternative
treatments compete vigorously with traditional laser and other energy-based procedures, such as those carried out with our products. Some
pharmaceutical companies, academic and research institutions or others have or may in the future develop new, non-invasive or minimally
invasive therapies that could be considered more effective or more convenient, or less expensive than our current or future products.
The introduction of new technologies, along with these potential new therapies, could result in increased competition or make our products
obsolete. Moreover, we could expand our business to include new, non-invasive or minimally invasive therapies which may compete with our
current product offerings. We may not be able to respond effectively to technological changes and emerging industry standards or to successfully
identify, develop or support new technologies or enhancements to existing products in a timely and cost-effective manner. Any such developments
could have a material adverse effect on our business, financial condition and results of operations.
Our markets are characterized by evolving technological standards
and changes in customer requirements, and we may not be able to react to such changes and introduce new products in a timely manner.
The aesthetics market is characterized by extensive research and development, technological
change, frequent modifications and enhancements, innovations, new applications, evolving industry standards, and changes in customer requirements.
Our future growth depends, in part, on our ability to introduce new products on a timely basis, as well as to introduce other product
enhancements that address the evolving customer needs. This requires us to design, develop, manufacture, assemble, test, market and support
these new products or product enhancements on a timely and cost-effective basis. It also requires continued substantial investment in
research and development.
During each stage of the research and development process, we have in the past and may
again in the future encounter obstacles that could delay development and consequently increase our expenses. This may ultimately
force us to abandon a potential product in which we have already invested substantial time and resources. Technologies in development
could prove to be more complex than initially understood or not scientifically or commercially viable. Even if we develop new products
and technologies ahead of our competitors, we will still need to obtain the requisite regulatory approvals for such products, including
from public agencies, such as the FDA, before we can commercially distribute them. We cannot assure you that we will successfully identify
new technological opportunities, develop and bring new or enhanced products to market, obtain sufficient patent or other intellectual
property protection for such new or enhanced products, or obtain the necessary regulatory approvals in a timely and cost-effective manner,
or, if such products are introduced, that those products will achieve market acceptance. Our failure to do so, or to address the technological
changes and challenges in our markets, could have a material adverse effect on our business, financial condition and results of operations.
We rely on our own direct sales force to sell our products in certain
territories, which may result in higher fixed costs than our competitors and may slow our ability to reduce costs in the face of a sudden
decline in demand for our products.
We rely on our own direct sales force to market and sell our products in certain territories.
Some of our competitors rely predominantly on independent sales agents and third-party distributors. A direct sales force may subject
us to higher fixed costs than those of companies that market competing products through independent third parties, due to the costs that
we will bear associated with employee benefits, and training and managing sales personnel. As a result, we could be at a competitive disadvantage.
Additionally, these fixed costs may slow our ability to reduce costs in the face of a sudden decline in demand for our products, which
could have a material adverse effect on our business, financial condition and results of operations.
To successfully market and sell our products internationally, we
must address many issues with which we have little or no experience.
International (non-U.S.) sales accounted for approximately 46% of our total revenue
for the year ended December 31, 2025. We believe that an increasing percentage of our future revenue will come from international sales
as we continue to expand our operations and develop opportunities in additional international territories. We currently depend on third-party
distributors and a direct sales team in certain regions to sell our products internationally. If these distributors or direct sales personnel
underperform, we may be unable to increase or maintain our level of international revenue. We will need to attract additional distributors
to grow our business and expand the territories in which we sell our products. Distributors may not commit the necessary resources to
market and sell our products to the level of our expectations. If current or future distributors do not perform adequately, or we are
unable to locate distributors in particular geographic areas, we may not realize expected international revenue growth. Additionally,
we expect to expand our direct sales force in the United States, Canada, Europe and Asia. If we are unable to do so successfully, our
revenue and revenue growth from international operations will be adversely affected.
International sales are subject to a number of risks, including:
| • |
difficulties in staffing and managing our foreign operations; |
7
| • |
difficulties in penetrating markets in which our competitors’ products are more established; |
| • |
reduced protection for intellectual property rights in some countries; |
| • |
export restrictions, trade regulations and foreign tax laws; |
| • |
fluctuating foreign currency exchange rates; |
| • |
obtaining and maintaining foreign certification and compliance with other regulatory requirements; |
| • |
customs clearance and shipping delays; and |
| • |
political and economic instability. |
If one or more of these risks were realized, it could require us to dedicate significant
resources to remedy the situation, and if we are unsuccessful at finding a solution, our revenue may decline.
Political, economic and military conditions in Israel could impede
our ability to operate and develop, manufacture and deliver products and components and harm our business and financial results.
Our principal executive offices and research and development facilities as well as our
third-party manufacturers are located in Israel. In addition, all of our subcontractors are located in Israel. Accordingly, political,
economic and military conditions in Israel and the surrounding region could directly affect our business.
In October of 2023, Hamas terrorists infiltrated Israel’s southern border from
the Gaza Strip and conducted a series of attacks on civilian and military targets. Following the attacks, Israel’s security cabinet
declared war against Hamas and commenced a military campaign. Since the commencement of these events, there have been additional active
hostilities, including with Hezbollah in Lebanon, the Houthi movement which controls parts of Yemen, and with Iran. During November 2024,
a ceasefire in Lebanon was declared. During January 2025, Israel and Hamas entered into a ceasefire agreement, which remained in effect
until March 18, 2025, when hostilities resumed. As of October 9, 2025, Israel and Hamas entered into a renewed ceasefire agreement calling
for a permanent end of the war. However, there are no assurances that such agreement will hold. In addition, in June 2025, a significant
escalation occurred in the direct confrontation with Iran and the Houthis Movement. Following an extensive Israeli preemptive strike
against nuclear sites and high-ranking officials in Tehran, Iran and the Houthis launched massive swarms of hundreds of ballistic missiles
and UAVs. These attacks resulted in casualties and widespread damage to residential buildings and civilian infrastructure across several
areas in Israel. The physical impact on Israel's infrastructure was substantial, with authorities recording damage to strategic assets,
including energy-related facilities, medical infrastructure and Israel’s national airport.
The ongoing and revived hostilities in the region, could prevent or delay shipments
of our products, harm our operations and product development and cause our sales to decrease. In the event that the hostilities disrupt
the ongoing operation of our facilities or the airports and seaports on which we depend to import and export our supplies and products,
our operations may be materially adversely affected. Armed conflict in the region has caused some Israeli companies to experience delays
to clinical trials and other operational milestones. Similar disruptions could impact us and delay our timelines.
The conflict could cause situations where applicable foreign regulatory bodies, such
as the FDA, could not be able to visit our third-party manufacturing facilities in Israel in order to review, causing delays. The hostilities
could also result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform
their commitments under those agreements pursuant to force majeure provisions in such agreements.
Several of our employees are subject to military reserve service in the IDF and have
been and may be called to serve. Since October 7, 2023 and as of the date of this Annual Report, 6 of our employees served in active duty.
Military reserve service call ups that result in absences of personnel for an extended period of time may materially and adversely affect
our business, prospects, financial condition and results of operations.
8
Moreover, political uprisings and conflicts in various countries in the Middle East
are affecting the political stability of those countries. This instability has raised concerns regarding security in the region and the
potential for armed conflict. Such instability may lead to deterioration in the political and trade relationships that exist between the
State of Israel and certain other countries. Any armed conflicts, terrorist activities or political instability in the region could adversely
affect business conditions, could harm our results of operations and could make it more difficult for us to raise capital. Parties with
whom we do business may be disinclined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative
arrangements when necessary, in order to meet our business partners face to face. In addition, the political and security situation in
Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform
their commitments under those agreements pursuant to force majeure provisions in such agreements. Actions by international judicial bodies
or other international forums could also influence the global perception of Israel and Israeli companies and may lead to sanctions or
other restrictive measures against Israeli companies and academic institutions, which could negatively affect our operations and collaborations.
Further, there have been travel advisories imposed as related to travel to Israel, and
restriction on travel, or delays and disruptions as related to imports and exports may be imposed in the future. An inability to receive
supplies and materials, shortages of materials or difficulties in procuring our materials, among others, may adversely impact our ability
to commercialize and manufacture our product candidates and products in a timely manner. This could cause a number of delays and/or issues
for our operations, including delay of the review of our product candidates by regulatory agencies, which in turn would have a material
adverse impact on our ability to commercialize our product candidates. Although the resulting sanctions and any related market disruptions
are impossible to predict, they could be substantial, particularly if current or new sanctions continue for an extended period of time
or if geopolitical tensions result in expanded military operations on a global scale. See “Item 3. Key Information – D. Risk
Factors – Risks Related to our Operations in Israel.”
We have limited business in Russia which pose some degree of sanctions
risk that cannot be entirely eliminated.
We have a long-standing distribution contract with a Russian distributer which distributes
our products in the country and other neighboring countries. Sanctions against Russia across various key jurisdictions, including
the United States, are extremely dynamic and complex and usually apply on a strict liability basis, and sometimes may expose non-U.S.
parties to liability or imposition of market restrictions even in the absence of jurisdictional grounds or touchpoints with the country
of the governmental authority imposing the sanctions. Accordingly, in the current environment, Russia-related dealings may entail some
degree of exposure to sanctions risks that cannot be entirely eliminated.
We outsource almost all of the manufacturing of our
products to a small number of manufacturing subcontractors. If our subcontractors’
operations are interrupted or if our orders exceed our subcontractors’
manufacturing capacity, we may not be able to deliver our products on time.
We outsource almost all of the manufacturing of our products to three subcontractors
located in Israel, two of which we are substantially dependent on, while we manufacture our laser and intense pulsed light, or IPL, handpieces
in-house in Israel. These subcontractors have limited manufacturing capacity that may be inadequate if our customers place orders for
unexpectedly large quantities of our products. In addition, because our subcontractors are located in Israel, they on occasion may feel
the impact of potential economic or political instability in the region, including the ongoing Israeli-Hamas war. If the operations of
one or more of our subcontractors were halted or limited, even temporarily, or if they were unable or unwilling to fulfill large orders,
we could experience business interruption, increased costs, damage to our reputation and loss of our customers. In addition, finding new
subcontractors that meet our manufacturing requirements, comply with regulatory requirements, and are ISO certified could take several
months.
Future changes to U.S. income tax or trade policies impacting multi-national
companies could materially affect our financial condition and results of operations.
In recent years, the U.S. government has instituted or proposed changes to international
trade policy through the renegotiation, and potential termination, of certain existing bilateral or multilateral trade agreements and
treaties with, and the imposition of tariffs on, a wide range of products and other goods from China and other countries. Given our contract
manufacturing and logistic providers in those countries, policy or regulations changes in the United States or other countries present
particular risks for us.
9
New or increased tariffs could adversely affect many of our products. There also are
risks associated with retaliatory tariffs and resulting trade wars. We cannot predict future trade policy and regulations in the United
States and other countries, the terms of any new or renegotiated trade agreements or treaties, or tariffs and their impact on our business.
An escalated trade war could have a significant adverse effect on world trade and the world economy. To the extent that trade tariffs
and other restrictions imposed by the United States or other countries increase the price of, or limit the amount of, our products or
components or materials used in our products imported into the United States or other countries, or create adverse tax consequences, the
sales, cost, or gross margin of our products may be adversely affected and the demand from our customers for products and services may
be diminished. Uncertainty surrounding international trade policy and regulations as well as disputes and protectionist measures could
also have an adverse effect on consumer confidence and spending. If we deem it necessary to alter all or a portion of our activities or
operations in response to such policies, agreements, or tariffs, our capital and operating costs may increase.
Components used in our products are complex in design, and defects
may not be discovered prior to shipment to customers, which could result in warranty obligations, reducing our revenue and increasing
our costs.
In manufacturing our products, we and our subcontractors depend upon third-party suppliers
for various components. Many of these components require a significant degree of technical expertise to produce. If our suppliers fail
to produce components to specification, or if the suppliers, our subcontractors, or we, use defective materials or workmanship in the
manufacturing process, the reliability and performance of our products will be compromised.
If our products contain defects that cannot be repaired easily and inexpensively, we
may experience:
| • |
loss of customer orders and delay in order fulfillment; |
| • |
damage to our brand reputation; |
| • |
increased cost of our warranty program due to product repair or replacement; |
| • |
inability to attract new customers; |
| • |
diversion of resources from our manufacturing and research and development departments into our service department;
|
| • |
product recalls; and |
| • |
legal action. |
The occurrence of any one or more of the foregoing could materially harm our business,
financial condition and results of operations.
We and our manufacturing subcontractors depend upon third-party
suppliers, making us vulnerable to supply shortages, price fluctuations or other degradations in performance of these suppliers, which
could harm our business and financial condition.
Many of the components that comprise our products are currently manufactured by a limited
number of suppliers. Although each of our components can be obtained from more than one supplier, we do not have the ability to manufacture
the components we outsource. Additionally, our subcontractors rely on a limited number of suppliers, or in some cases, one supplier, for
some of the materials and components used in our products. If our subcontractors were to lose such suppliers, there can be no assurance
that they will be able to identify or enter into agreements with alternative suppliers on a timely basis on acceptable terms, if at all,
which could cause interruptions in their operations. If any of these third-party suppliers fails to adequately perform, our revenue and
profitability could be adversely affected. A supply interruption or an increase in demand beyond current suppliers’ capabilities
could harm our ability to manufacture our products until we identify and qualify a new source of supply, which may be a lengthy process.
There is a risk that our suppliers will not always act consistently with our best interests,
and may not always supply goods that meet our requirements. Any interruption in the supply of components or materials, or our inability
to obtain substitute components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability
to meet the demand of our customers, which would have an adverse effect on our business, financial condition and results of operations.
Transitioning to a new supplier could be time-consuming and expensive, may result in
interruptions in our operations and product delivery, could affect the performance specifications of our products or could require that
we modify the design of certain product systems. If a change in manufacturer results in a significant change to any product, a new 510(k)
clearance from the FDA or similar international regulatory authorization may be necessary before we implement the change, which could
cause substantial delays.
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Disruptions or interruptions to our suppliers could occur for many reasons, including
fire, floods, hurricanes, typhoons, droughts, tsunamis, volcanoes, earthquakes, disease or other similar natural disasters, unplanned
maintenance or other manufacturing problems, labor shortages, power outages or shortages, telecommunications failures, strikes, transportation
interruption, government regulation, economic or political instability, terrorism or other extraordinary events, including epidemics and
related travel restrictions. Such disruptions may continue over a sustained period and could cause direct injury or damage to our supplier’s
employees and property with significant indirect consequences to us. Alternative facilities with sufficient capacity or capabilities may
not be available, may cost substantially more or may take a significant time to start manufacturing, each of which could negatively affect
our ability to fill customer orders and our business and financial performance.
There exists potential for misuse of our products, over which we
have very little to no control, which could harm our reputation and our business.
In the United States, federal regulations allow us to sell our products to or on the
order of “licensed practitioners.” The definition of “licensed practitioners” varies from state to state. As a
result, depending on state law, our products may be purchased or operated by physicians or other licensed practitioners, including nurse
practitioners, chiropractors and technicians. Outside the United States, many jurisdictions do not require specific qualifications or
training for purchasers or operators of our products. Although we offer training on the use of our products, we do not supervise the treatments
performed. Purchase and use of our products by non-physicians may result in product misuse. The potential misuse of our products may result
in adverse treatment outcomes, which could harm our reputation and expose us to costly product liability litigation.
Our products include a limited time warranty which could result
in substantial additional costs to us should we fail to monitor product quality effectively.
We generally provide a 12-month warranty on our products. After the warranty period,
maintenance and support is provided on a service contract basis. If our products malfunction, warranty claims may become significant,
which could cause a significant drain on our resources and materially adversely affect our results of operations.
We forecast sales to determine requirements for our products and
if our forecasts are incorrect, we may experience either shipment delays or increased costs.
Our subcontractors keep limited materials and components on hand. To help them manage
their manufacturing operations and minimize inventory costs, we forecast anticipated product orders to predict our inventory needs up
to six months in advance and enter into purchase orders on the basis of these forecasts. If our business expands, our demand will increase
and our suppliers may be unable to meet our demand. If we overestimate our requirements, our subcontractors will have excess inventory,
and may transfer to us any increase in costs. If we underestimate our requirements, our subcontractors may have inadequate components
and materials inventory, which could interrupt, delay or prevent delivery of our products to our customers. Any of these occurrences would
negatively affect our financial performance and the level of satisfaction our customers have with our business.
Under applicable employment laws, we may not be able to enforce
covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former
employees.
We generally enter into non-competition agreements with our professional employees,
in most cases within the framework of their employment agreements. These agreements prohibit our employees, if they cease working for
us, from competing directly with us or working for our competitors for a limited period. Under applicable employment laws, we may be unable
to enforce these agreements, in whole or in part, and it may be difficult for us to restrict our competitors from gaining the expertise
our former employees gained while working for us. For example, Israeli courts have required employers seeking to enforce non-compete undertakings
of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material
interests of the employer which have been recognized by the courts, such as the secrecy of a company’s confidential commercial information
or its intellectual property. If we cannot demonstrate that we would be harmed, we may be unable to prevent our competitors from benefiting
from the expertise of our former employees, which could materially adversely affect our business, results of operations and ability to
capitalize on our proprietary information.
The expense and potential unavailability of insurance coverage for
our customers and the Company could adversely affect our ability to sell our products and our financial condition.
Some of our customers and prospective customers are required to maintain liability insurance
to cover their operation and use of our products. Medical malpractice carriers are withdrawing coverage in certain states or substantially
increasing premiums. If this trend continues or worsens, our customers may discontinue using our products and, industry-wide, potential
customers may opt against purchasing light, laser or radio frequency-based products due to the cost or inability to procure insurance
coverage.
11
Outbreaks of contagious disease or similar public health threats
could materially and adversely affect our business, financial condition and results of operations.
Outbreaks of contagious disease or other adverse public health developments worldwide
could have a material adverse effect on our business, financial condition and results of operations. Outbreaks of contagious disease or
other adverse public health developments could affect our business in a number of ways, including but not limited to:
| • |
Disruptions or restrictions on our employees’ ability to work effectively due to illness. |
| • |
Temporary closures or disruptions at our facilities or the facilities of our customers or suppliers could reduce demand for our products
or affect our ability to timely meet our customer’s orders and negatively impact our supply chain. |
| • |
Outbreaks of contagious disease could cause delays or disruptions in our supply chain. |
| • |
The failure of third parties on which we rely to meet their respective obligations to us, or significant disruptions in their ability
to do so, which may be caused by their own financial or operational difficulties, could have an adverse impact on our business, financial
condition or results of operations. |
| • |
The impact of contagious disease or other adverse public health developments could also exacerbate other risks discussed elsewhere
in this section of this report, any of which could have a material adverse effect on us. |
Global economic and social conditions may adversely affect our business,
financial condition and results of operations.
Any negative conditions in the national and global economic environments may adversely
affect our business, financial condition and results of operations. During uncertain economic times and in tight credit markets, many
of our customers may experience financial difficulties or be unable or unwilling to borrow money to fund their operations, including obtaining
credit lines for purchasing our products, and may delay or reduce purchases or reduce the extent of their operations. The market for aesthetic
procedures and the market for our premium products can be particularly vulnerable to economic uncertainty, since the end-users of our
products may decrease the demand for our products when they have less discretionary income or determine not to spend their discretionary
income on aesthetic procedures. In addition, in many instances, the ability of our customers to purchase our products depends in part
upon the availability of obtaining financing at acceptable interest rates.
These factors could result in reductions in revenues from sales of our products, longer
sales cycles, difficulties in collection of accounts receivable, slower adoption of new technologies and increased price competition.
Payment by our customers of our receivables is dependent upon the financial stability of the economies of certain countries. In light
of the current economic state of many countries outside of the United States, we continue to monitor the creditworthiness of our customers
because weakness in the end-user market could negatively affect the cash flows of our customers who could, in turn, delay paying their
obligations to us. This would increase our credit risk exposure and cause delays in our recognition of revenues on current and future
sales to these customers.
Exchange rate fluctuations may decrease our earnings if we are not
able to hedge our currency exchange risks successfully.
A majority of our revenues and a substantial portion of our expenses are denominated
in U.S. dollars. However, a portion of our revenues and a portion of our costs, including personnel and some marketing and facilities
expenses, are incurred in NIS, Canadian dollars and Euros. Inflation in Israel or Europe may have the effect of increasing the U.S. dollar
cost of our operations in that country. If the U.S. dollar declines in value in relation to one or more of these currencies, it will become
more expensive for us to fund our operations in the countries that use those other currencies. To date, we have not found it necessary
to hedge the risks associated with fluctuations in currency exchange rates. In the future, if we do not successfully engage in hedging
transactions, our results of operations may be subject to losses from fluctuations in foreign currency exchange rates.
12
Cyber-attacks as well as improper disclosure or control of personal
information could result in liability and harm our reputation, which could adversely affect our business and results of operations. We
may face liability if we breach our obligations related to the protection, security, nondisclosure of confidential customer information
or disclosure of sensitive data or fail or are perceived to fail to comply with applicable data protection laws and regulations, or consumer
protection laws, regulations and standards.
Our business is heavily dependent on the security of our IT networks. Internal or external
attacks on any of those could disrupt the normal operations of our engagements, impede our ability to provide services to our customers,
and subject us to substantial liabilities or penalties in connection with any violation of applicable contracts, privacy laws or regulations.
Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and
are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. Emerging technologies
such as generative artificial intelligence (AI) may be used by malicious actors to create more targeted cyber-attacks that may target
us or spread disinformation about us or our products. Furthermore, because the techniques used to obtain unauthorized access to, or to
sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these
techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended
period. While we take measures to protect the security of, and unauthorized access to, our systems, as well as the privacy of personal
and proprietary information, it is possible that our security controls of our systems, as well as other security practices we follow or
those systems of our customers which we rely upon, may not prevent the improper access to or disclosure of personally identifiable or
proprietary information.
The global data protection landscape is rapidly evolving, and we are or may become subject
to numerous state, federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention, and security
of personal data, such as information that we may collect about individuals in the U.S. and abroad. . This evolution may create uncertainty
in our business, affect our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal information,
necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us. The cost
of compliance with these laws, regulations and standards is high and is likely to increase in the future. Any failure or perceived failure
by us to comply with federal, state or foreign laws or regulation, our internal policies and procedures or our contracts governing our
processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third
parties and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
As our operations and business grow, we may become subject to or affected by new or
additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. We are subject to
U.S. federal and state laws regarding data privacy and security, including Section 5 of the Federal Trade Commission Act, or FTC Act,
the California Consumer Privacy Act, or the CCPA and the California Privacy Rights Act, or the CPRA. Further, the Health Insurance Portability
and Accountability Act of 1996, as amended, and regulations implemented thereunder, or HIPAA, imposes, among other things, certain standards
relating to the privacy, security, transmission and breach reporting of individually identifiable health information. Although we are
not currently subject to the rules and regulations promulgated under the Health Insurance Portability and Accountability Act of 1996,
as amended (“HIPAA”), even when HIPAA does not apply, according to the FTC, failing to take appropriate steps to keep consumers’
personal information secure may constitute unfair acts or practices in or affecting commerce in violation of the Federal Trade Commission
Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume
of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce
vulnerabilities. Federal and state consumer protection laws are increasingly being applied by the FTC, and states’ attorneys general
to regulate the collection, use, storage and disclosure of personal or personally identifiable information, through websites or otherwise,
and to regulate the presentation of website content.
Certain states have also adopted comparable privacy and security laws and regulations,
some of which may be more stringent than HIPAA. For example, the CCPA provides for civil penalties for violations, as well as a private
right of action for data breaches that is expected to increase data breach litigation. The CPRA imposes additional data protection obligations
on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk
data, and opt outs for certain uses of sensitive data. Both the CCPA and CRPA are generally more stringent than similar U.S. federal regulations.
Any liability from failure to comply with the CCPA and CPRA, as well as HIPPA, to the extent we may become subject to this act in the
future, if at all, could adversely affect our financial condition.
13
We are also subject to foreign data privacy and security laws, including the Israeli
Protection of Privacy Law of 1981 and the Privacy Protection Regulations (Data Security) 5777-2017, the European Union General Data Protection
Regulation, or GDPR, and the United Kingdom GDPR, or UK GDPR. The GDPR went into effect in May 2018 and imposes strict requirements for
processing the personal data of individuals within the European Economic Area, or the EEA. Companies that must comply with the GDPR face
increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and significant
penalties for non-compliance, including potential fines for noncompliance of up to €20 million or 4% of the annual global revenues
of the noncompliant company, whichever is greater. The UK GDPR mirrors the fines under the GDPR, e.g., fines up to the greater of €20
million (£17.5 million) or 4% of global turnover.
As supervisory authorities issue further guidance on personal data export mechanisms,
including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, we could suffer
additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between
and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location
or segregation of our relevant systems and operations, and could adversely affect our financial results.
Although we work to comply with applicable laws, regulations and standards, our contractual
obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent
manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply. Any failure
or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply
with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability
to us, damage our reputation, and adversely affect our business and results of operations.
We may become subject to numerous foreign, federal, and state healthcare
statutes and regulations and our failure to comply could result in a material adverse effect to our business and operations.
Although none of our products or procedures using our products are currently covered
by any state or federal government healthcare programs, or any private commercial payor, we may become subject to foreign, federal, and
state laws intended to prevent healthcare fraud and abuse, including those that apply to all payors. These laws could include state anti-kickback
and false claims laws, which may extend to services reimbursable by any payor, as well as state consumer protection laws. Although we
currently are not subject to transparency laws, we may become subject to such laws in the future. Such laws could include requirements
to disclose payments to certain healthcare professionals and healthcare entities or disclosures related to sales and marketing, or that
could require healthcare professionals to provide notice to their patients of ownership or financial arrangements with manufacturers.
Efforts to ensure that our internal operations and business arrangements with third
parties comply with future applicable healthcare laws and regulations may involve substantial costs. These laws and regulations, among
other things, could constrain our business, marketing and other promotional activities by limiting the kinds of financial arrangements,
including financing programs, we may have with physicians or other potential purchasers of our products. It is possible that governmental
authorities may conclude that our business practices, including our arrangements with physicians, some of whom received stock options
as compensation for services provided, as well as fees for marketing to other physicians, are subject to and do not comply with current
or future statutes, regulations, agency guidance or case law involving applicable healthcare laws. If our current or future operations
are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant
civil, criminal and administrative penalties which could adversely affect our ability to operate our business and pursue our strategy.
We are subject to anti-bribery, and corruption and anti-money laundering
laws, including the U.S. Foreign Corrupt Practices Act, as well as export control laws, customs laws, sanctions laws and other laws governing
our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and
legal expenses, which could adversely affect our business, results of operations and financial condition.
As we continue to grow our international presence and global operations, we will be
increasingly exposed to trade and economic sanctions and other restrictions imposed by the United States, the European Union, the State
of Israel and other governments and organizations. The U.S. Departments of Justice, Commerce, State and Treasury and other federal agencies
and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations
of economic sanctions laws, export control laws, the U.S. Foreign Corrupt Practices Act, or the FCPA, and other federal statutes and regulations,
including those established by the Office of Foreign Assets Control, or OFAC. In addition, the U.K. Bribery Act of 2010, or the Bribery
Act, prohibits both domestic and international bribery, as well as bribery across both private and public sectors. An organization that
“fails to prevent bribery” by anyone associated with the organization can be charged under the Bribery Act unless the organization
can establish the defense of having implemented “adequate procedures” to prevent bribery. Under these laws and regulations,
as well as other anti-corruption laws, anti-money laundering laws, export control laws, customs laws, sanctions laws and other laws governing
our operations, various government agencies may require export licenses, may seek to impose modifications to business practices, including
cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs,
which may increase compliance costs, and may subject us to fines, penalties and other sanctions. A violation of these laws or regulations
would negatively affect our business, financial condition and results of operations.
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We have implemented policies and procedures designed to ensure compliance by us and
our directors, officers, employees, representatives, consultants and agents with the FCPA, OFAC restrictions, the Bribery Act and other
export control, anti-corruption, anti-money-laundering and anti-terrorism laws and regulations. We cannot assure you, however, that our
policies and procedures are or will be sufficient or that directors, officers, employees, representatives, consultants and agents have
not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have
not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or
even result in our being held liable for such conduct. Violations of the FCPA, OFAC restrictions, the Bribery Act or other export control,
anti-corruption, anti-money laundering and anti-terrorism laws or regulations may result in severe criminal or civil sanctions, and we
may be subject to other liabilities, which could have a material adverse effect on our business, financial condition and results of operations.
Our operating costs and business operations could be adversely affected
by climate-related events and increasing regulatory requirements and security.
The effects of climate change (such as drought, flooding, heat waves, wildfires, increased
storm severity, and sea level rise, etc.) could affect our ability to continue our operations and cause delays in our product development,
manufacturing and shipment, all of which could cause reputational harm or otherwise have an adverse effect on our business and operating
results. In addition, the impacts of climate change on the global economy and our industry are rapidly evolving. Changing market dynamics,
global policy developments and the increasing frequency and impact of extreme weather events on critical infrastructure across different
countries could have the potential to disrupt our business, the business of our third-party suppliers and the business of our customers,
and may cause us to experience higher attrition, losses and additional costs to maintain or resume operations. We also expect to face
increasing regulatory requirements and regulatory scrutiny related to climate matters, resulting in higher associated compliance costs.
Failure to uphold, meet or make timely forward progress against our public commitments and goals related to climate action could adversely
affect our reputation with suppliers and customers, financial performance or the ability to recruit and retain talent.
Risks Related to Our Intellectual Property
If we are unable to protect our intellectual property rights, our
competitive position could be harmed. Our success and ability to compete depends in large part upon our ability to protect our proprietary
technology.
Our success and ability to compete depends in large part upon our ability to protect
our proprietary technology. We rely primarily upon a combination of patents and trademarks, as well as nondisclosure, confidentiality
and other contractual agreements to protect the intellectual property related to our brands, products and other proprietary technologies.
We generally apply for patents only in those countries where we intend to make, have
made, use, offer for sale, or sell products. To date, we have issued patents in the United States, which we consider to be our main target
market, and one issued patent in South Korea. Most of our revenues for the years ended December 31, 2025, 2024 and 2023 were derived from
the United States, where we have patent protection. We do not seek protection in all countries where we sell products and we may not accurately
predict all the countries where patent protection would ultimately be desirable. At this time, the countries in which we have not sought
patent protection, but intend to offer our products for sale, are not our main target markets. We acknowledge that competitors may use
our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export
otherwise infringing products to territories in which we do not have patent protection. Such activity may prevent us from protecting our
proprietary technology, and thus, may harm our competitive position.
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Our patent portfolio consists of fifteen issued U.S. patents, one issued Korean patent
and eleven pending patent applications in the United States relating to our technology and products. Our pending and future patent applications
may not issue as patents or, even if issued, may not issue in a form that will be advantageous to us. Any issued patents may be challenged,
invalidated or legally circumvented by third parties. We cannot be certain that our patents will be upheld as valid, proven enforceable
or prevent the development of competitive products. Other companies may also design around technologies we have patented. Third parties
may have blocking patents that could prevent us from marketing our products or practicing our own patented technology. In addition, competitors
could purchase one of our products and attempt to replicate some or all of the competitive advantages we derive from our development efforts,
design around our protected technology, or develop their own competitive technologies that fall outside of our intellectual property rights.
If our intellectual property is not adequately protected, our competitive position could be adversely affected, as could our business
and financial results.
The U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit have made,
and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, foreign courts have
made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted. We cannot predict
future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S. and foreign legislative
bodies.
We rely on a combination of patent and other intellectual property laws and confidentiality,
non-disclosure and assignment of inventions agreements, as appropriate, with our employees and consultants, to protect and otherwise seek
to control access to, and distribution of, our proprietary information. These measures may not be adequate to protect our technology from
unauthorized disclosure, third-party infringement or misappropriation. Parties may breach these agreements, and we may not have adequate
remedies for any breach. Also, the laws of certain countries in which we develop, manufacture or sell our products may not protect our
intellectual property rights to the same extent as the laws of the United States or Israel.
The aesthetics industry is highly competitive and marked by frequent litigation. New
patent applications may be pending or may be filed in the future by third parties covering technology that we currently use or may ultimately
use. Third parties have claimed, and may in the future claim, that our current or future products infringe their patent or other intellectual
property rights and may seek to prevent, limit or interfere with our ability to make, use, sell or import our products. Moreover, if such
a claim were to be decided adversely to us or if we settled such a claim on adverse terms, we could be forced to pay substantial damages,
to license the technology in question at high rates or to redesign or modify our products so as to avoid any infringement. Any of those
results could adversely affect our sales, margins and results of operations.
If it appears necessary or desirable, we may try to obtain licenses for those patents
or intellectual property rights that we are allegedly infringing, may infringe, or desire to use. Although holders of these types of intellectual
property rights commonly offer these licenses, we cannot assure you that licenses will be offered or that the terms of any offered licenses
will be acceptable to us. Our failure to obtain a license for key intellectual property rights from a third party for technology used
by us could cause us to incur substantial liabilities and to suspend the manufacturing and selling of products utilizing the technology.
Alternatively, we could be required to expend significant resources to develop non-infringing
technology. We cannot assure you that we would be successful in developing non-infringing technology.
Third parties have and may in the future commence litigation against
us claiming that our products infringe upon their patents or other intellectual property rights
From time to time, we may be party to, or threatened with, litigation or other proceedings
with third parties, including non-practicing entities, who allege that our products, components of our products, services, and/or proprietary
technologies infringe, misappropriate or otherwise violate their intellectual property rights. The types of situations in which we may
become a party to such litigation or proceedings include:
| • |
we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held
by those third parties or to obtain a judgment that our products or processes do not infringe those third parties’ patents;
|
| • |
we or our collaborators may participate at substantial cost in International Trade Commission proceedings to abate importation of
products that would compete unfairly with our products; |
| • |
if our competitors file patent applications that claim technology also claimed by us, we may be required to participate in interference,
derivation or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially
provide a third party with a dominant patent position; |
| • |
if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property
rights, we and our collaborators will need to defend against such proceedings; |
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| • |
if third parties initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a
declaratory judgment that their product, service, or technology does not infringe our patents or patents licensed to us, we will need
to defend against such proceedings; |
| • |
we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations
of consultants or others who are involved in developing our products; and |
| • |
if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products
infringe or misappropriate its patent or other intellectual property rights and/or that we breached our obligations under the license
agreement, and we and our collaborators would need to defend against such proceedings. |
These lawsuits and proceedings, regardless of merit, are time-consuming and expensive
to initiate, maintain, defend or settle, and could divert the time and attention of managerial and technical personnel, which could materially
adversely affect our business. Any such claim could also force us to do one or more of the following:
| • |
incur substantial monetary liability for infringement or other violations of intellectual property rights, which we may have to pay
if a court decides that the product, service, or technology at issue infringes or violates the third party’s rights, and if the
court finds that the infringement was willful, we could be ordered to pay treble damages and the third party’s attorneys’
fees; |
| • |
pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology;
|
| • |
stop manufacturing, offering for sale, selling, using, importing, exporting or licensing the product or technology incorporating
the allegedly infringing technology or stop incorporating the allegedly infringing technology into such product, service, or technology;
|
| • |
obtain from the owner of the infringed intellectual property right a license, which may require us to pay substantial upfront fees
or royalties to sell or use the relevant technology and which may not be available on commercially reasonable terms, or at all;
|
| • |
redesign our products, services, and technology so they do not infringe or violate the third party’s intellectual property
rights, which may not be possible or may require substantial monetary expenditures and time; |
| • |
enter into cross-licenses with our competitors, which could weaken our overall intellectual property position; |
| • |
lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion
of our intellectual property against others; |
| • |
find alternative suppliers for non-infringing products and technologies, which could be costly and create significant delay; or
|
| • |
relinquish rights associated with one or more of our patent claims, if our claims are held invalid or otherwise unenforceable.
|
Some of our competitors may be able to sustain the costs of complex intellectual property
litigation more effectively than we can because they have substantially greater resources. In addition, intellectual property litigation,
regardless of its outcome, may cause negative publicity, adversely impact prospective customers, cause product shipment delays, or prohibit
us from manufacturing, marketing or otherwise commercializing our products, services and technology. Any uncertainties resulting from
the initiation and continuation of any litigation could have a material adverse effect on our ability to raise additional funds or otherwise
have a material adverse effect on our business, results of operation, financial condition or cash flows.
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In addition, we may indemnify our customers and distributors against claims relating
to the infringement of intellectual property rights of third parties related to our products. Third parties may assert infringement claims
against our customers or distributors. These claims may require us to initiate or defend protracted and costly litigation on behalf of
our customers or distributors, regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages
on behalf of our customers, suppliers or distributors, or may be required to obtain licenses for the products or services they use. If
we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products or services.
Furthermore, because of the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during
this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or
developments, which could have a material adverse effect on the price of our ordinary shares. If securities analysts or investors perceive
these results to be negative, it could have a material adverse effect on the price of our ordinary shares.
If our trademarks and trade names are not adequately protected,
then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our registered or unregistered trademarks or trade names may be challenged, infringed,
circumvented, declared generic or determined to be infringing on other marks. We may not be able to protect our rights in these trademarks
and trade names, which we need in order to build name recognition with potential partners or customers in our markets of interest. If
we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and
our business may be adversely affected.
We may be subject to claims that our employees, consultants or independent
contractors have wrongfully used or disclosed confidential information of their former employers or other third parties.
We do and may in the future employ individuals who were previously employed at universities
or other pharmaceutical or medical device companies, including our competitors or potential competitors. Although we try to ensure that
our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for
us, and we are not currently subject to any significant claims that our employees, consultants or independent contractors have wrongfully
used or disclosed confidential information of third parties, we may in the future be subject to such claims. Litigation may be necessary
to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable
intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial
costs and be a distraction to management and other employees.
Intellectual property rights do not necessarily address all potential
threats to our business.
The degree of future protection afforded by our intellectual property rights is uncertain
because even granted intellectual property rights have limitations, and may not adequately protect our business, provide a barrier to
entry against our competitors or potential competitors, or permit us to maintain our competitive advantage. Moreover, if a third party
has intellectual property rights that cover the practice of our technology, we may not be able to fully exercise or extract value from
our intellectual property rights. The following examples are illustrative:
| • |
others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology, but that
are not covered by the claims of the patents that we own or control, assuming such patents have issued or do issue; |
| • |
we or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the
issued patent or pending patent application that we own or have exclusively licensed; |
| • |
we or any future strategic partners might not have been the first to file patent applications covering certain of our inventions;
|
| • |
others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our
intellectual property rights; |
| • |
it is possible that our pending patent applications will not lead to issued patents; |
| • |
issued patents that we own may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result
of legal challenges by our competitors; |
| • |
our competitors might conduct research and development activities in countries where we do not have patent rights and then use the
information learned from such activities to develop competitive products for sale in our major commercial markets; |
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| • |
third parties performing manufacturing or testing for us using our products or technologies could use the intellectual property of
others without obtaining a proper license; |
| • |
parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising
exclusive rights over that intellectual property; |
| • |
we may not develop or in-license additional proprietary technologies that are patentable; |
| • |
we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and |
| • |
the patents of others may have an adverse effect on our business. |
Should any of these events occur, they could significantly harm our business and results
of operations.
Risks Related to Government Regulation
Our business is subject to extensive and continuing regulatory compliance
obligations. If we fail to obtain and maintain necessary FDA clearances for our products, if clearances for future products and proposed
indications are delayed or not issued, if we or any of our third-party suppliers or manufacturers fail to comply with applicable regulatory
requirements, or if there are regulatory changes, our commercial operations could be harmed.
Our products are medical devices subject to extensive regulation by the applicable regulatory
authorities where our products are or will be sold prior to their marketing for commercial use. In the United States, our products are
subject to extensive regulation by the FDA for developing, testing, manufacturing, labeling, sale, marketing, advertising, promotion,
distribution, import, export, shipping, establishment registration and device listing, inspections and audits, record keeping, recalls
and field safety corrective actions and post-market surveillance, including reporting of certain events.
Before a new medical device, or a new use of, or claim for, an existing product can
be marketed in the United States, it must first receive marketing authorization from the FDA unless it is exempt. The FDA marketing authorizations
include a 510(k) clearance or premarket approval. A relatively small number of devices may be exempt from 510(k) clearance or may receive
marketing authorization through the de novo classification pathway. These processes can be expensive and lengthy. The FDA’s 510(k)
clearance process usually takes from 3 to 12 months, but it can last longer. The process of obtaining premarket approval is much more
costly and uncertain than the 510(k)-clearance process and it generally takes from one to three years, or even longer, from the time the
application is filed with the FDA. Our future products and enhancements or changes to products may require new 510(k) clearance or premarket
approval from the FDA. All products that we currently market in the United States that require an FDA marketing authorization have received
510(k) clearance for the uses for which they are marketed.
Medical devices may be marketed only for the indications for which they are approved
or cleared. We have obtained 510(k) clearance for the current treatments for which we offer our products. However, our clearances can
be revoked under certain circumstances. If the FDA disagrees with us concerning the scope or applicability of a clearance or exemption
with respect to a device, we may be required to change our promotional and/or labeling materials and/or stop marketing that device. Changes
or modifications to an FDA-cleared device that could significantly affect its safety or effectiveness or that constitute a major change
or modification in its intended use would require a new 510(k) clearance or possibly premarket approval. We may not be able to obtain
additional 510(k) clearances or premarket approvals for new products or for modifications to, or additional indications for, our existing
products in a timely fashion, or at all. Delays in obtaining future clearances or approvals would adversely affect our ability to introduce
new or enhanced products in a timely manner, which in turn would harm our revenue and future profitability.
We have made modifications to our devices in the past and may make additional modifications
in the future that we believe do not or will not require additional clearances or approvals. If the FDA disagrees, and requires new clearances
or approvals for the modifications, we may be required to recall and to stop marketing the modified devices. We also are subject to the
FDA’s Medical Device Reporting regulations, which require us to report to the FDA if our products cause or contribute to a death
or serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury.
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The FDA or the applicable foreign regulatory bodies can delay, limit or deny clearance
or approval of a device for many reasons, including:
| • |
our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory bodies that our products are safe
or effective for their intended uses; |
| • |
the disagreement of the FDA or the applicable foreign regulatory bodies with the design or implementation of our clinical trials
or the interpretation of data from pre-clinical studies or clinical trials; |
| • |
serious and unexpected adverse device effects experienced by participants in our clinical trials; |
| • |
the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required;
|
| • |
our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; |
| • |
the manufacturing process or facilities we use may not meet applicable requirements; and |
| • |
the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in
a manner rendering our clinical data or regulatory filings insufficient for clearance or approval. |
In addition, the FDA or applicable foreign regulatory bodies may change their clearance
and approval policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay
approval or clearance of our future products under development or impact our ability to modify our currently cleared products on a timely
basis. Such policy or regulatory changes could impose additional requirements upon us that could delay our ability to obtain new clearances,
increase the costs of compliance or restrict our ability to maintain our current clearances. For example, in November 2018, FDA officials
announced forthcoming steps that the FDA intends to take to modernize the premarket notification pathway under Section 510(k) of the Food,
Drug and Cosmetic Act of 1938, as amended (the “FDCA”). Among other things, the FDA announced that it plans to develop proposals
to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates. These proposals include possible plans to sunset
certain older devices that were used as predicates under the 510(k)-clearance pathway, and to publish a list of devices that have been
cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than 10 years old. The FDA also announced
that it intends to finalize guidance to establish a premarket review pathway for “manufacturers of certain well-understood device
types” as an alternative to the 510(k) clearance pathway and that such premarket review pathway would allow manufacturers to rely
on objective safety and performance criteria recognized by the FDA to demonstrate substantial equivalence, obviating the need for manufacturers
to compare the safety and performance of their medical devices to specific predicate devices in the clearance process. These proposals
have not yet been finalized or adopted, and the FDA announced that it would seek public feedback prior to publication of any such proposals,
and may work with Congress to implement such proposals through legislation. Accordingly, it is unclear the extent to which any proposals,
if adopted, could impose additional regulatory requirements on us that could delay our ability to obtain new 510(k) clearances, increase
the costs of compliance, or restrict our ability to maintain our current clearances, or otherwise create competition that may negatively
affect our business.
Additionally regulatory clearances or approvals to market a product can contain limitations
on the indicated uses for such product. Product clearances and approvals can be withdrawn due to failure to comply with regulatory standards
or the occurrence of unforeseen problems following initial clearance or approval. FDA regulations depend heavily on administrative interpretation,
and there can be no assurance that future interpretations made by the FDA or other regulatory bodies will not adversely affect our operations.
We and our manufacturers may be inspected by the FDA from time to time to determine whether we or our manufacturers are in compliance
with applicable laws, including the cGMP regulations set forth in the FDA’s Quality System Regulation/Medical Device Current Good
Manufacturing Practices, or QSR, including those relating to specifications, development, documentation, validation, testing, quality
control and product labeling. A determination that we are in violation of FDA or other applicable foreign regulations or any of our product
clearances or approvals could lead to imposition of civil penalties, including fines, product recalls or product seizures and, in certain
cases, criminal sanctions.
The use, misuse or off-label use of our products may harm our reputation
in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by
regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.
The use, misuse or off-label use of our products may harm our reputation or the image
of our products in the marketplace, result in injuries that lead to product liability suits, which could be costly to our business, or
result in legal sanctions if we are deemed or alleged to have engaged in off-label promotion.
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A medical device may be authorized by the FDA for marketing through several regulatory
mechanisms. The FDA classifies medical devices as Class I, Class II, or Class III, in increasing order of risk. Most of our products are
Class I or Class II medical devices. As such, they are either exempt from premarketing authorization requirements or are subject to the
510(k)-clearance process, and all are listed with the FDA pursuant to FDA’s medical device listing requirements.
Under FDA regulations, for each of our products we must only use labeling, including
advertising and promotional materials, that is consistent with the specific indication(s) for use included in the FDA exemption regulation,
clearance, or approval that is applicable to the specific product. If the FDA or other authorities determine that our promotional or training
materials constitute the unlawful promotion of an off-label use, they could request that we modify our training or promotional materials
and/or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, civil money penalties,
seizure, injunction or criminal fines and penalties. Other federal, state or foreign governmental authorities might also take action if
they consider our promotion or training materials to constitute promotion of an uncleared or unapproved use, which could result in significant
fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement, or exclusion from participation
in federal health programs. In each event, our reputation could be damaged and the use of our products in the marketplace could be impaired,
or our business could face significant hardship.
In addition, there may be increased risk of injury if physicians or others attempt to
use our products off-label. The FDA does not restrict or regulate a physician’s use of a medical product within the practice of
medicine, and we cannot prevent a physician from using our products for an off-label use. The use of our products for indications other
than those for which our products have been approved or cleared by the FDA may not effectively treat the conditions not referenced in
product indications, which could harm our reputation in the marketplace among physicians and patients. Physicians may also misuse our
products or use improper techniques if they are not adequately trained in the particular use, potentially leading to injury and an increased
risk of product liability. Product liability claims are expensive to defend and could divert management’s attention from our primary
business and result in substantial damage awards against us. Any of these events could harm our business, results of operations and financial
condition.
We are subject to ongoing regulatory obligations and a failure to
comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might
require us to recall or withdraw a product from the market.
Even after we have obtained the proper regulatory clearance or approval to market a
product, we have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations. The regulations to which
we are subject are complex and have become more stringent over time. Regulatory changes could result in restrictions on our ability to
continue or expand our operations, higher than anticipated costs, or lower than anticipated sales.
Our products and/or their use are also subject to state regulations and additional regulations
in other foreign jurisdictions outside of the United States, which may change at any time. We cannot predict the impact or effect of future
legislation or regulations and any changes in regulations may impede sales.
Furthermore, the FDA and state authorities have broad enforcement powers. Our failure
to comply with applicable regulatory requirements could result in enforcement action by the FDA or state agencies, which may include any
of the following sanctions:
| • |
warning letters or untitled letters, fines, injunctions, consent decrees and civil penalties; |
| • |
repair, replacement, refunds, recalls, termination of distribution, administrative detention or seizure of our products; |
| • |
operating restrictions or partial suspension or total shutdown of production; |
| • |
refusing our requests for 510(k) clearance or premarket approval of new products, new intended uses, or modifications to existing
products; |
| • |
withdrawing 510(k) clearances or premarket approvals or foreign regulatory approvals that have already been granted, resulting in
prohibitions on sales of our products; and |
| • |
criminal prosecution. |
The occurrence of any of these events could harm our business, financial condition and
results of operations.
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If we or our subcontractors fail to comply with federal
and state regulation, including the FDA’s Quality System Regulation/Medical
Device Good Manufacturing Practices and performance standards, our or our subcontractors’
manufacturing operations could be halted, and our business would suffer.
We and our subcontractors currently are required to demonstrate and maintain compliance
with the QSR. The QSR is a complex regulatory scheme that covers the methods and documentation of the design, testing, control, manufacturing,
labeling, quality assurance, packaging, storage and shipping of our products. Because our products use optical energy, including lasers,
our products also are covered by a performance standard for lasers set forth in FDA regulations. The laser performance standard imposes
specific record-keeping, reporting, product testing and product labeling requirements. These requirements include affixing warning labels
to laser products, as well as incorporating certain safety features in the design of laser products. The FDA enforces the QSR and laser
performance standards through periodic announced or unannounced inspections. We and our subcontractors are subject to such inspections.
Although we place our own quality control employee at each of our subcontractor’s facilities, we do not have complete control over
our subcontractor’s compliance with these standards.
Any failure by us or our subcontractors to take satisfactory corrective action in response
to an adverse QSR inspection or to comply with applicable laser performance standards could result in enforcement actions against us or
our subcontractors, including warning letters or untitled letters; fines, injunctions or civil penalties; suspension or withdrawal of
approvals or clearances; seizures or recalls of our products; total or partial suspension of production or distribution; administrative
or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for our products; clinical
holds; refusal to permit the import or export of our products; and criminal prosecution of us or our employees. Any of these actions could
significantly and negatively impact the supply of our products, and could cause our sales and business to suffer. In addition, we are
subject to standards imposed on our activities outside of the United States, such as obtaining CE mark certification in Europe (by our
notified body DEKRA) and the Standards Institution of Israel (imposed on our activities in Israel), and failure to comply with such standards
could adversely impact our business.
Our products may cause or contribute to adverse medical events or
other undesirable side effects that we are required to report to the FDA, and if we fail to do so, we would be subject to sanctions that
could harm our reputation, business, financial condition and results of operations. The discovery of serious safety issues with our products,
or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative
impact on us.
We are subject to the FDA’s medical device reporting regulations and similar foreign
regulations, which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or
more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were
to recur, it could cause or contribute to a death or serious injury. The timing of our obligation to report is triggered by the date we
become aware of the adverse event as well as the nature of the event. We may fail to report adverse events of which we become aware within
the prescribed timeframe. We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not
reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the product. If
we fail to comply with our reporting obligations, the FDA could take action, including warning letters, untitled letters, administrative
actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearance, seizure of our products or
delay in clearance of future products.
The FDA and foreign regulatory bodies have the authority to require the recall of commercialized
products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an
unacceptable risk to health. We may also choose to voluntarily recall a product if any material deficiency is found. A government-mandated
or voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing defects,
labeling or design deficiencies, packaging defects or other deficiencies or failures to comply with applicable regulations. Product defects
or other errors may occur in the future. Depending on the corrective action we take to redress a product’s deficiencies or defects,
the FDA may require, or we may decide, that we will need to obtain new approvals or clearances for the product before we may market or
distribute the corrected product. Seeking such approvals or clearances may delay our ability to replace the recalled products in a timely
manner. Moreover, if we do not adequately address problems associated with our products, we may face additional regulatory enforcement
action, including FDA warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.
22
Companies are required to maintain certain records of recalls and corrections, even
if they are not reportable to the FDA. We may initiate voluntary withdrawals or corrections for our products in the future that we determine
do not require notification of the FDA. If the FDA disagrees with our determinations, it could require us to report those actions as recalls
and we may be subject to enforcement action. A future recall announcement could harm our reputation with customers, potentially lead to
product liability claims against us and negatively affect our sales.
We may be unable to obtain or maintain international regulatory
qualifications or approvals for our current or future products and indications, which could harm our business. Additionally, obtaining
and maintaining regulatory approval in one jurisdiction does not mean we will be successful in obtaining regulatory approvals for our
products in other jurisdictions.
Sales of our products outside the United States are subject to foreign regulatory requirements
that vary widely from country to country, including some regulatory requirements that we may not be fully aware of, or that may change
in ways that affect our ability to sell our products in those jurisdictions. Complying with international regulatory requirements can
be an expensive and time-consuming process and approval is not certain. The regulatory process in foreign jurisdictions includes all the
risks associated with obtaining FDA clearance, as well as additional risks not present in the FDA process. For example, the time required
to obtain foreign clearance or approvals may be longer than that required for FDA clearance or approvals, and requirements for such clearances
or approvals may significantly differ from FDA requirements, adding costs and variability. Foreign regulatory authorities may not approve
our product for the same uses cleared by the FDA. Although we have obtained regulatory clearances to sell our products in the European
Union and other countries outside the United States, we may be unable to maintain regulatory qualifications, clearances or approvals in
these countries or to obtain approvals in other countries. We also may incur significant costs in attempting to obtain and in maintaining
foreign regulatory approvals, clearances or qualifications.
If we experience delays in receiving necessary qualifications, clearances or approvals
to market our products outside the United States, or if we fail to receive those qualifications, clearances or approvals, we may be unable
to market some of our products or enhancements in certain international markets effectively, or at all. Since the enactment of the Israeli
Medical Equipment Law, 2012, or the Medical Equipment Law, the manufacturing and marketing of medical and certain aesthetic devices, including
our products, in Israel requires registration with the Israeli Ministry of Health. The Medical Equipment Law offers a fast-track registration
process for devices that received approval from certain non-Israeli regulatory agencies, including FDA clearance or CE marks. We have
taken advantage of such fast-track registration process in the past. If we are unable to obtain and maintain the necessary registration
for any of our products in Israel, we may have to move the manufacturing of such unregistered products to a location outside of Israel
and stop selling these products in Israel until the products are registered. We may also suffer harm to our reputation as a result.
Disruptions at the FDA and other government agencies caused by funding
shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent
new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety
of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees,
and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition,
government funding of other government agencies that fund research and development activities is subject to the political process, which
is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new devices
to be reviewed and/or cleared by necessary government agencies, which would adversely affect our business. For example, over the last
several years, including for 43 days beginning on October 1, 2025, the U.S. government has shut down several times and certain regulatory
agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.
New regulations may limit our ability to sell to non-physicians
in the future.
Currently, we sell our products solely to physicians. However, where permitted under
applicable laws, we intend to introduce certain of our products in the developing medical spa market, where aesthetic procedures are being
performed at dedicated facilities by non-physicians under physician supervision. U.S., state and international regulations could change
at any time, disallowing sales of our products to aestheticians, and/or limiting the ability of aestheticians and non-physicians to operate
our products.
23
Risks Related to Our Ordinary Shares
The price of our ordinary shares may be volatile, and you may lose
all or part of your investment.
The price of our ordinary shares has historically fluctuated and has experienced volatility
in the past. The market price for our ordinary shares may fluctuate as a result of a number of factors, many of which are beyond our control,
including:
| • |
fluctuations in our operating results or the operating results of our competitors; |
| • |
changes in the estimates of the future size and growth rate of our market opportunities; |
| • |
changes in the general economic, industry and market conditions; |
| • |
success of competitive technologies and procedures; |
| • |
recruitment or departure of key personnel; |
| • |
the announcement of new products or enhancements by us or our competitors; |
| • |
the commencement or outcome of litigation against us, or involving our general industry or both; |
| • |
new laws or regulations or new interpretations of existing laws or regulations applicable to our business; |
| • |
changes in earnings estimates, investors’ perceptions, recommendations by securities analysts or our failure to achieve analysts’
earnings estimates; |
| • |
developments in our industry, including the announcement of significant new technologies, procedures or acquisitions by us or our
competitors; |
| • |
actual or expected sales of our ordinary shares by the holders of our ordinary shares; and |
| • |
the trading volume of our ordinary shares. |
In addition, the stock prices of companies in the medical device industry have experienced
wide fluctuations that often have been unrelated to the operating performance of those companies. These fluctuations may be attributed,
among other reasons, to the general global economic environment and the instability in markets. These factors and price fluctuations may
materially and adversely affect the market price of our ordinary shares.
Future sales of our ordinary shares could reduce the price of our
ordinary shares.
Sales by shareholders of substantial amounts of our ordinary shares, or the perception
that these sales may occur in the future, could materially and adversely affect the market price of our ordinary shares and could impair
our ability to raise capital through the sale of additional equity securities and our ability to acquire other companies by using our
ordinary shares as consideration.
As of December 31, 2025, there were 63,358,750 ordinary shares outstanding (not including
a total of 24,975,003 ordinary shares held at that date as treasury shares). Sales of these shares, or the perception that these sales
may occur in the future, into the market could cause the market price of our ordinary shares to drop significantly. In addition, we have
registered all ordinary shares that we have issued and may issue in the future under our equity compensation plans, and, as such, these
shares can be freely sold in the public market upon issuance.
We have not paid dividends in the past and may not pay dividends
in the future, and any return on investment may be limited to the value of our ordinary shares.
We have never declared or paid cash dividends on our ordinary shares and may not distribute
cash or other dividends on our ordinary shares in the foreseeable future. The distribution of dividends on our ordinary shares will depend
on our earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider
relevant. We may only distribute dividends out of “profits,” as defined by the Companies Law, and provided that the
distribution is not reasonably expected to impair our ability to fulfill our outstanding and anticipated obligations as they become due.
If we do not distribute dividends, our ordinary shares may be less valuable because a return on your investment will only occur if the
price of our ordinary shares appreciates.
24
We incur significant costs operating as a public company in the
United States, and our management is required to devote substantial time to compliance matters.
As a public company whose ordinary shares are listed in the United States, we are subject
to an extensive regulatory regime, requiring us, among other things, to maintain various internal controls and facilities and to prepare
and file periodic and current reports and statements. Complying with these requirements is costly and time consuming. In the event that
we are unable to demonstrate ongoing compliance with our obligations as a public company, or are unable to produce timely or accurate
financial statements, we may be subject to sanctions or investigations by regulatory authorities and investors may lose confidence in
our operating results, and the price of our ordinary shares could decline. We became a “large accelerated filer” beginning
from December 31, 2020. We have incurred significant management time and cost complying with the more stringent reporting requirements
applicable to “accelerated filers,” including complying with auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley
Act of 2002.
We may be subject to shareholder activism, including proposals or
demands by our shareholders to effect changes in our governance, corporate structure or business strategy.
Activist shareholders may seek to influence or control decisions regarding matters such
as our operations, distributions, management, compensation or other key aspects of our business or operations. Such activism could result
in significant costs and management distraction, diverting resources away from our strategic priorities. Shareholder activism could give
rise to perceived uncertainties as to our future prospects and adversely affect our business, operations, financial condition and stock
price. Additionally, increased activist activity may lead to volatility in our stock price and potentially adversely impact our relationship
with investors, customers, employees, and other stakeholders.
U.S. investors in the Company could suffer adverse tax consequences
if we are characterized as a passive foreign investment company.
We believe that we were not a passive foreign investment company, or PFIC, for U.S.
federal income tax purposes for our taxable year ended December 31, 2025, and we do not expect to be classified as a PFIC for the current
year ending December 31, 2026 or the foreseeable future. However, the determination of whether we are a PFIC is a factual determination
made annually based on all the facts and circumstances and thus is subject to change. The relevant rules for determining whether or not
we are a PFIC as applied to our business are not entirely clear and certain aspects of the relevant tests will be outside our control.
Therefore, no assurance can be given that we will not be a PFIC for any taxable year.
If we are determined to be a PFIC at any time during which a U.S. Holder (as defined
in “Item 10E. Additional Information–Taxation–Material U.S. Federal Income Tax Considerations to U.S. Holders”)
holds our shares, such U.S. Holder may be subject to materially adverse tax consequences, including additional U.S. federal income tax
liability and tax filing obligations. See “Item 10E. Additional Information–Taxation–Material U.S. Federal Income Tax
Considerations to U.S. Holders–Passive Foreign Investment Company Considerations.” U.S. Holders are strongly urged to consult
their tax advisors as to whether or not we will be a PFIC.
If we fail to maintain an effective system of internal control over
financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose
confidence in our financial and other public reporting, which would harm our business and the trading price of our ordinary shares.
Effective internal control over financial reporting is necessary for us to provide reliable
financial reports. As a “large accelerated filer” we are responsible for establishing and maintaining internal controls and
procedures that will allow our management to report on, and our independent registered public accounting firm to attest to, our internal
controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404. Although our independent registered
public accounting firm is required to attest to the effectiveness of our internal control over financial reporting pursuant to Section
404(b) of the Sarbanes-Oxley Act of 2002 and our management is required to report on our internal controls over financial reporting under
Section 404, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause
us to fail to meet our reporting obligations. In addition, any testing by us, as and when required, conducted in connection with Section
404 or any subsequent testing by our independent registered public accounting firm, as and when required, may reveal deficiencies in our
internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes
to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause
investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ordinary
shares.
25
We are a “foreign
private issuer” and have disclosure obligations that are different from
those of U.S. domestic reporting companies.
We are a foreign private issuer and are not subject to the same requirements that are
imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we are subject to reporting obligations that, in certain respects,
are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we are not required to issue quarterly
reports or proxy statements that comply with the requirements applicable to U.S. domestic reporting companies. Furthermore, although under
regulations promulgated under the Companies Law, as an Israeli public company listed on the Nasdaq, we are required to disclose the compensation
of our five most highly compensated officers on an individual basis, this disclosure will not be as extensive as that required of U.S.
domestic reporting companies. We also have four months after the end of each fiscal year to file our annual report with the SEC and are
not required to file current reports as frequently or promptly as U.S. domestic reporting companies. Our officers, directors and principal
shareholders have historically been exempt from the requirements to report transactions and short-swing profit recovery required by Section
16 of the Exchange Act, but effective March 18, 2026, our officers and directors will be subject to such reporting requirements.
Furthermore, as a “foreign private issuer,” we are not subject to the requirements of Regulation FD (Fair Disclosure) promulgated
under the Exchange Act. Even though we may voluntarily elect to comply with Regulation FD and have done so in the past, these exemptions
and leniencies reduce the frequency and scope of information and protections available to you in comparison to those applicable to a U.S.
domestic reporting company.
We would lose our foreign private issuer status if, as of June 30 in any calendar year,
a majority of our outstanding shares are held of record by U.S. residents and a majority of our directors or executive officers are U.S.
citizens or residents or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. The regulatory
and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we lose our foreign private
issuer status, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which
are more detailed and extensive than the forms available to a foreign private issuer. We may also be required to modify certain of our
policies to comply with accepted governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve
additional costs. In addition, we would lose our ability to rely upon exemptions from certain corporate governance requirements on U.S.
stock exchanges that are available to foreign private issuers.
As a “foreign
private issuer,” we are permitted to follow certain home country corporate
governance practices instead of otherwise applicable SEC and Nasdaq requirements, which may result in less protection than is accorded
to investors under rules applicable to domestic U.S. issuers.
As a “foreign private issuer,” we are permitted to follow certain home country
corporate governance practices instead of those otherwise required under the listing rules of Nasdaq for domestic U.S. issuers. For instance,
we follow our home country law instead of the listing rules of Nasdaq that require that we obtain shareholder approval for certain dilutive
events, such as the establishment or amendment of certain equity-based compensation plans, an issuance that will result in a change of
control of us, certain transactions other than a public offering involving issuances of a 20% or greater interest in the Company, and
certain acquisitions of the stock or assets of another company. Under the Companies Law as currently applicable to us, there is no requirement
to receive shareholder approval for the issuance of securities for such dilutive events, and under our amended and restated articles of
association our board of directors is authorized to issue securities, including ordinary shares, warrants and convertible notes. Additionally,
under the Companies Law, unless the articles of association otherwise provide, the quorum required for an ordinary meeting of shareholders
must consist of at least two shareholders who hold at least 25% of the voting rights (instead of the 33 and 1/3% required under Nasdaq
rules), and we are not required to have a nominating committee consisting solely of independent directors for the nomination of directors.
See “Item 16G. Corporate Governance” for details on the differences between Israeli corporate governance practices and comparable
U.S. requirements and other home country practices we follow instead of the listing rules of Nasdaq. We may in the future elect to follow
home country corporate governance practices in Israel with regard to other matters. Following our home country corporate governance practices
as opposed to the requirements that would otherwise apply to a U.S. company listed on Nasdaq may provide less protection to you than what
is accorded to investors under the listing rules of Nasdaq applicable to domestic U.S. issuers.
Risks Related to Our Operations in Israel
Our commercial insurance may leave us subject to a risk of a loss
if a terrorist attack or act of war occurs.
Our insurance does not cover losses that may occur as a result of an event associated
with the security situation in the Middle East or for any resulting disruption in our operations. Although the Israeli government has
in the past covered the reinstatement value of direct damages that were caused by terrorist attacks or acts of war, we cannot be assured
that this government coverage will be maintained or, if maintained, will be sufficient to compensate us fully for damages incurred, and
the government may cease providing such coverage or the coverage might not suffice to cover potential damages. Any losses or damages incurred
by us could have a material adverse effect on our business.
26
Boycotts and various Middle Eastern business restrictions in the
region may adversely impact our ability to operate and sell our products.
Several countries, principally in the Middle East, restrict doing business with Israel
and Israeli companies, and additional countries may in the future impose restrictions on doing business with Israel and Israeli companies,
whether as a result of the ongoing and revived hostilities in the region, the ongoing Israel-Hamas war or otherwise. In addition, there
have been increased efforts by activists to cause companies and consumers to boycott Israeli goods based on Israeli government policies.
Although Israel had signed bilateral peace agreements with several Middle Eastern countries for forging new economic ties with them, the
goals of such bilateral peace agreements may not be achieved in full or at all. The restrictive laws and policies and the actions by boycott
activists, if they become more widespread and successful, and fast-moving changes to Israel’s geopolitical relations, may limit
our ability to sell our products and may have an adverse impact on our operating results, financial conditions or the expansion of our
business.
We may become subject to claims for remuneration or royalties for
assigned service invention rights by our employees, which could result in litigation and adversely affect our business.
We have entered into assignment of invention agreements with our employees pursuant
to which such individuals agree to assign to us all rights to any inventions created during their employment or engagement with us. A
significant portion of our intellectual property has been developed by our employees in the course of their employment with us. Under
the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the scope of his or her employment with
a company and as a result thereof are regarded as “service inventions,” which belong to the employer, absent a specific agreement
between the employee and employer giving the employee service invention rights. The Patent Law also provides that if there is no agreement
between an employer and an employee with respect to the employee’s right to receive compensation for such “service inventions,”
and to what extent and under which conditions, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted
under the Patent Law, shall determine whether the employee is entitled to remuneration for his or her service inventions and the scope
and conditions for such remuneration. The Patent Law further provides criteria for assisting the Committee in making its decisions. Case
law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that in certain
circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general
contractual framework between the parties, applying interpretation rules of the general Israeli contract laws. Further, the Committee
has not yet determined one specific formula for calculating this remuneration, nor the criteria or circumstances under which an employee’s
waiver of his right to remuneration will be disregarded. Similarly, it remains unclear whether waivers by employees in their employment
agreements of the alleged right to receive consideration for service inventions should be declared as void being a depriving provision
in a standard contract. Although our employees have agreed to assign to us service invention rights and have specifically waived their
right to receive any special remuneration for such service inventions beyond their regular salary and benefits, as a result of uncertainty
under Israeli law with respect to the efficacy of waivers of service invention rights, we may face claims demanding remuneration in consideration
for assigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current
and/or former employees, or be forced to litigate such claims, which could negatively affect our business.
Our operations may be affected by negative economic conditions or
labor unrest in Israel.
General strikes or work stoppages, including at Israeli ports, have occurred periodically
or have been threatened in the past by Israeli trade unions due to labor disputes. These general strikes or work stoppages may have an
adverse effect on the Israeli economy and on our business, including our ability to deliver products to our customers and to receive raw
materials from our suppliers in a timely manner and could have a material adverse effect on our results of operations.
You may have difficulties enforcing a U.S. judgment against us,
our executive officers and directors and Israeli experts named in this Annual Report on Form 20-F in Israel or the United States, asserting
U.S. securities laws claims in Israel or serving process on our officers and directors and these experts in Israel.
We are incorporated in Israel and our corporate headquarters is located in Israel. Many
of our executive officers and directors reside outside of the United States, and a significant portion of our assets and the assets of
certain of our directors and executive officers are located outside the United States. Therefore, a judgment obtained against us or any
of them in the United States, including one based on the civil liability provisions of the U.S. federal securities laws, may not be collectible
in the United States and may not be enforced by an Israeli court. Further, if a foreign judgment is enforced by an Israeli court, it will
be payable in Israeli currency. It also may be difficult for you to effect service of process on these persons in the United States or
to assert U.S. securities law claims in original actions instituted in Israel. Additionally, it may be difficult for an investor, or any
other person or entity, to initiate an action with respect to U.S. securities laws in Israel. Israeli courts may refuse to hear a claim
based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring such a
claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable
to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses,
which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding
case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment in Israel,
you may not be able to collect any damages awarded by either a U.S. or foreign court.
27
Moreover, among other reasons, including but not limited to, fraud or absence of due
process, or the existence of a judgment which is at variance with another judgment that was given in the same matter if a suit in the
same matter between the same parties was pending before a court or tribunal in Israel, an Israeli court will not enforce a foreign judgment
if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases),
or if its enforcement is likely to prejudice the sovereignty or security of the State of Israel.
Provisions of our amended and restated articles of association and
Israeli law may delay, prevent or make difficult a merger with, or an acquisition of, the Company, which could prevent a change of control
even when the terms of such transaction are favorable to us and our shareholders and, therefore, could depress the price of our ordinary
shares.
As a company incorporated under the laws of the State of Israel, we are subject to Israeli
corporate law. Israeli corporate law regulates mergers, requires tender offers for acquisitions of ordinary shares above specified thresholds,
requires special approvals for transactions involving directors, officers or certain significant shareholders and regulates other matters
that may be relevant to these types of transactions. In addition, our amended and restated articles of association contain provisions
that may make it more difficult to acquire us, such as classified board provisions. In addition, Israeli corporate law generally does
not provide for shareholder action by written consent in public companies, thereby requiring all shareholder actions to be taken at a
general meeting, which could delay the ability of shareholders to effect certain corporate actions. Furthermore, Israeli tax considerations
may make potential transactions unappealing to us or to some of our shareholders whose country of residence does not have a tax treaty
with Israel granting tax relief to such shareholders from Israeli tax obligations. With respect to mergers, Israeli tax law allows for
tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including, in some
cases, a holding period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating
companies are subject to certain restrictions. See “Item 10E. Additional Information–Taxation–Israeli Material Tax Considerations”
for additional information. These provisions of our amended and restated articles of association and Israeli law may delay, prevent or
make difficult an acquisition of us, which could prevent a change of control and therefore depress the price of our ordinary shares.
In addition, as a corporation incorporated under the laws of the State of Israel, we
are subject to the Israeli Economic Competition Law, 1988, and the regulations promulgated thereunder (formerly known as the Israeli Antitrust
Law, 1988), under which we may be required in certain circumstances to obtain the approval of the Israel Competition Authority (formerly
known as the Israel Antitrust Authority) in order to consummate a merger or a sale of all or substantially all of our assets.
Your rights and responsibilities as a holder of our ordinary shares
will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S.
companies.
Since we are incorporated under Israeli law, the rights and responsibilities of the
holders of our ordinary shares are governed by our articles of association and by Israeli law, including the Companies Law. These rights
and responsibilities differ in some material respects from the rights and responsibilities of shareholders in typical U.S. corporations.
In particular, pursuant to the Companies Law, a shareholder of an Israeli company has certain duties, including to act in good faith and
fairness and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders
and to refrain from abusing its power in the company including, among other things, in voting at the general meeting of shareholders on
certain matters, such as an amendment to the company’s articles of association, an increase of the company’s authorized share
capital, a merger of the company, and approval of certain related party transactions that require shareholder approval under Israeli law.
A shareholder also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder
or a shareholder who knows that it possesses the power to determine the outcome of a shareholders’ vote or to appoint or prevent
the appointment of an officer of the company has a duty to act in fairness towards the company with regard to such vote or appointment.
See “Item 6C. Directors, Senior Management and Employees–Board Practices–Approval of Related Party Transactions under
Israeli Law” for additional information. There is limited case law available to assist in understanding the nature of these duties
or the implications of these provisions. These provisions may be interpreted to impose additional obligations on holders of our ordinary
shares that are not typically imposed on shareholders of U.S. corporations.
28
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
We were incorporated as a limited liability company in the State of Israel on January
2, 2008, and operate under its laws. In November 2017, our corporate name was changed from Invasix Ltd. to InMode Ltd. Our registered
office is located at Tavor Building, Sha’ar Yokneam, P.O. Box 533, Yokneam 2069206, Israel. The phone number of our registered office
is +972-4-9096313. Our wholly‑owned subsidiary, Invasix Inc., a Delaware corporation, acts as our agent for service of process in
the United States and is located at 17 Hughes Irvine, California 92618. The phone number for Invasix Inc. is 949-387-5711.
In August 2019, we completed our initial public offering of 10,000,000 of our ordinary
shares at an initial public offering price of $7.00 per ordinary share. The effective date of the registration statement on Form F-1 (File
No. 333-232615) was August 7, 2019. Also, during August 2019, the underwriters partially exercised their over-allotment option and purchased
an additional 1,000,000 ordinary shares at the same price per share. Our ordinary shares commenced trading on Nasdaq on August 8, 2019,
under the symbol “INMD.”
Our capital expenditures for the years ended December 31, 2025, 2024 and 2023 amounted
to approximately $1.0 million, $0.7 million and $0.8 million respectively. Our capital expenditures consist principally of the purchase
of molds for manufacturing. We anticipate our capital expenditures in 2026 to be up to $1 million and to be financed from our existing
cash and cash equivalents.
The SEC maintains an Internet site that contains reports, proxy and information statements,
and other information regarding issuers, including InMode, that file electronically with the SEC. The address of that site is www.sec.gov.
We maintain a corporate website at www.inmodemd.com. Our periodic filings are available,
free of charge (other than an investor’s own Internet access charges), on our website soon as reasonably practicable after we electronically
file or furnish such material with the SEC. The information contained on our website or available through our website is not incorporated
by reference into and should not be considered a part of this Annual Report on Form 20-F, and the reference to our website in this Annual
Report on Form 20-F is an inactive textual reference only.
B. Business Overview
Overview
We are a leading global provider of innovative, energy-based, minimally invasive surgical
medical treatment solutions. Within the global aesthetics market, our products and solutions are primarily designed to address three energy-based
treatment categories comprised of: (i) face and body contouring; (ii) medical aesthetics; and (iii) women’s wellness. We have developed
and commercialized products utilizing medically accepted RF energy technology, which can penetrate deep into the subdermal fat, allowing
adipose tissue remodeling. We believe our radio frequency, or RF, energy-based proprietary technologies—(i) Radio Frequency
Assisted Lipolysis, or RFAL; (ii) Deep Subdermal Fractional RF; (iii) Simultaneous Fat Destruction and Skin Tightening; and (iv) Deep
Heating Collagen Remodeling for skin and human natural openings – represent a paradigm shift in the minimally invasive aesthetic
solutions market. These technologies are used by physicians to remodel subdermal adipose, or fatty tissue in a variety of procedures including
liposuction with simultaneous skin tightening, face and body contouring, ablative skin rejuvenation treatments and treatment of Genitourinary
Syndrome of Menopause, or GSM. We believe that our products, developed with our proprietary RF energy-based technologies, overcome many
of the shortcomings of other surgical options by delivering surgical-grade results under local anesthetics while significantly minimizing
risks of scarring, downtime, pain and other complications typically accompanying surgical procedures. In addition to our minimally invasive
solutions, we design, develop, manufacture and market differentiated, non-invasive medical aesthetic products that target a wide array
of procedures. These include simultaneous fat destruction and skin tightening, permanent hair reduction through the use of our innovative
dual wavelength technology and other treatments targeting skin appearance and texture through the use of our high-power IPL technology.
Our products, which we have historically marketed and sold to plastic and facial surgeons, aesthetic surgeons, dermatologists and OB/GYNs,
may be used on a variety of body parts including the face, neck, abdomen, upper arms, thighs and intimate feminine regions.
29
In addition to the existing group of patients who currently undergo full surgical aesthetic
procedures, we believe our minimally invasive solutions satisfy a previously unmet market demand in two incremental groups of patients:
(i) those whose skin laxity or other physical attributes have previously precluded them from undergoing surgical aesthetic procedures
and (ii) those who would entertain the idea of surgical or minimally invasive aesthetic procedures, but are averse to the associated costs,
downtime and potential safety risks. We believe these patient populations will continue to represent a significant opportunity for our
differentiated minimally invasive aesthetic solutions.
We believe our products have consistently been at the forefront of technological development
in the aesthetic solutions market. Since 2010, we have launched sixteen product platforms: BodyTite,
Optimas, Votiva, Contoura, Triton, EmbraceRF, EvolveX, Evoke, Morpheus8, EmpowerRF, Define, Envision, IgniteRF, OptimasMAX, Luxora, ApexRF
and Solaria. Each product consists of the following components: a platform that incorporates
multiple energy sources, one or more handpieces or hands-free applicators, our proprietary software and a simple user interface with touch
screen. Our platforms have a small footprint and are lightweight compared to our competitors’ systems, which are typically larger
and heavier. Our products can be upgraded easily by the user in order to perform additional treatments by adding handpieces, hands-free
applicators and/or installing software in the existing platform. The ease of upgrades enables our customers to meet demand for aesthetic
solutions through additional service offerings.
Our focus on innovation has resulted in a strong track record of sustained new and next-generation
product development. We believe our ability to bring new products to market and continuously innovate is a distinct competitive advantage.
We expect that the new product platforms will complement our existing portfolio of products,
allowing us to increase our offerings to existing customers and attract new customers. We believe that introducing new product platforms
is important in order to satisfy consumer demand and respond to evolving technological developments and consumer needs.
In response to customers’ desires to enhance and expand their offering of our
aesthetic and wellness office-based procedures, we are developing additional RF energy-based platforms, handpieces and applicators targeted
towards several medical specialties.
| • |
For ear nose and throat specialists we are in the initial stage of developing a new platform and handpieces that we believe will
provide patients with a medical treatment solution for snoring and rhinitis. The handpiece for treatment of turbinates is based on our
Deep Subdermal Fractional RF technology and is expected to contract the turbinate to enable free breathing. This platform and handpiece
is in the concept design phase. |
| • |
For urologists, we brought to the market a device using RF energy to for temporary relief of muscle spasms, and temporary improvement
of local blood circulation. called ApexRF. We registered a patent application to protect our technological
concept, and we believe that our technological concept work well for this indication but much more research and development is needed.
|
We are focused on establishing and using clinical evidence to support and broaden our
marketing claims and drive customer awareness and acceptance of our products. Historically, the aesthetic solutions market has relied
heavily on marketing efforts and “before-and-after” pictures in an attempt to distinguish products. We believe our focus on
establishing clinical evidence for the efficacy of our products has been important for adoption by our surgically trained customers, who
are accustomed to seeing extensive clinical data in their non-aesthetic practices. To date, 105 third-party clinical studies have been
completed and 11 third-party clinical studies are in the process of being conducted using our products. We also have a portfolio of over
110 peer-reviewed publications. While we did not have any involvement in the clinical studies mentioned above, such studies provide qualitative
results that we believe are meaningful in demonstrating the efficacy of our technology. However, because these were third-party
studies, we do not have access to any raw data to conduct any quantitative analyses.
To complement our surgical aesthetic and medical treatment solutions, we offer post-sales
training and support services. We provide physicians with training focused on the most beneficial ways to utilize our products, including
safety and instructional videos to expand procedural offerings and hands-on, personalized marketing support. We believe that we provide
one of the most extensive training and ongoing support programs available to physicians throughout the aesthetic solutions market.
30
Our revenue decreased to approximately $370.5 million for the year ended December 31,
2025, from approximately $394.8 million for the year ended December 31, 2024 and from approximately $492.0 million for the year ended
December 31, 2023. For the years ended December 31, 2025, 2024 and 2023, we recorded a gross margin of approximately 79%, 80% and 84%,
respectively, and net income of approximately $93.9 million, $181.3 million and $197.9 million, respectively. Our principal market is
in the U.S., where our revenue decreased to approximately $198.7 million for the year ended December 31, 2025, from approximately $244.8
million for the year ended December 31, 2024 and from approximately $307.8 million for the year ended December 31, 2023. Outside of the
U.S., our revenue increased to approximately $171.8 million for the year ended December 31, 2025, from approximately $150.0 million for
the year ended December 31, 2024 and decreased from approximately $184.2 million for the year ended December 31, 2023.
Regarding U.S. revenues for the years ended December 31, 2025, 2024 and 2023, we derived
approximately $155.4 million, or 78%, $223.7 million, or 92%, and $264.7 million, or 86%, of our total U.S. revenues from the sale of
minimally invasive platforms. We derived approximately $5.2 million, or 3%, $15.2 million, or 6%, and $33.9 million, or 11%, respectively,
of our total U.S. revenues from the sale of hands-free platforms, and approximately $38.1 million, or 19%, $5.9 million, or 2% and $9.2
million, or 3%, respectively, of our total U.S. revenues from the sale of non-invasive platforms.
We have 37 FDA clearances and, in addition to the United States, where we have sold
over 13,120 product platforms, we are permitted to sell our products in most countries. As of December 31, 2025, we sell and market our
products in the United States, Canada, the United Kingdom, Ireland, Spain, Portugal, France, Belgium, Luxembourg, Italy, Germany, Austria,
Japan, Australia, India, Thailand and Argentina through a direct sales force (including distributor sales managers) of approximately 285
representatives. We also sell and market our products through over 73 distributors in over 101 countries. As of December 31, 2025, we
had a global installed base of approximately 30,900 product platforms capable of running various multi-use applicators and utilizing minimally
invasive consumables.
Our Solution
We believes that key benefits of our minimally invasive surgical aesthetic and medical
treatment solutions include:
| • |
Small to no incisions, which reduces the drawbacks and risks typically associated with surgical procedures such as significant pain,
local or widespread scarring, infection, perforation and hemorrhage. |
| • |
Outpatient procedures that typically do not require general anesthesia, which can decrease patient downtime, discomfort and other
potential complications, and typically reduces cost. |
| • |
Minimally invasive procedures with similar efficacy to surgical procedures that have the ability to expand the addressable patient
population for aesthetics procedures. |
| • |
Effective and long-lasting aesthetic solutions, many of which are supported by compelling clinical data, including over 110 peer-reviewed
publications. |
| • |
Differentiated, RF energy-based technology simultaneously destroys fat and tightens skin, overcoming the many shortcomings of traditional
surgical, minimally and non-invasive aesthetic procedures. |
| • |
Innovative dual wavelength laser technology that allows for permanent hair reduction on a wider range of skin types and hair textures
than other aesthetic solutions currently on the market, reducing the number of treatments required. |
| • |
Typically less expensive than other aesthetic solutions on the market that provide comparable results because less physician time
and training is required. |
Leader in RF Energy
We believe we are the leader in using RF energy for both minimally invasive and subdermal
ablative aesthetic purposes. RF energy is different from optical energy because it is absorbed by the epidermis and is able to be targeted
to penetrate deep into the tissue. The application of RF energy in medicine is a well-established practice. For example, RF energy is
the basis of magnetic resonance imaging, or MRI, and surgical diathermy, used to cauterize blood vessels to prevent excessive bleeding,
both commonplace applications administered regularly in medical practice. RF energy is also used in cardiology for ablative interventions
and in oncology surgery for tumor/metastasis ablation.
31
RF energy can be delivered to the skin in a variety of ways, the most common being monopolar
delivery, whereby RF energy is delivered through a single probe placed on the skin with a grounding pad distant to the probe site. Alternatively,
in bipolar delivery, RF energy is delivered from a probe with two electrodes placed over the treatment area. Bipolar delivery has an important
advantage over monopolar delivery: depth of penetration of the RF energy is not dependent on the tissue impedance, or electrical resistance,
which varies from person to person, or the cross-sectional area of the probe. Instead, in bipolar delivery, depth of penetration of the
RF energy depends on the distance between the two electrodes on the probe, with increasing distance resulting in increased depth of penetration.
We believe we are the leader in the development, design and commercialization of bipolar RF energy devices for minimally invasive and
subdermal ablative aesthetic purposes.
Radio-Frequency Assisted Lipolysis
Using our expertise in bipolar RF energy delivery, we developed what we believe is the
next generation of lipolysis and adipose tissue remodeling technology, a new category of devices that deliver a thermal response to the
adipose tissue, skin and subdermal matrix. Our RFAL products deliver directional RF energy into the subcutaneous fat to coagulate, liquefy
and remodel adipose tissue and heat the subcutaneous fibrous septa, or partitions, resulting in substantial collagen contraction of subdermal
space. We believe we are the first company to utilize bipolar radio frequency in a minimally invasive manner. Our RFAL products generate
a higher power and more efficient energy transfer than laser energy systems and allow the treatment of larger volumes of the subcutaneous
tissue with optimal thermal profiles, facilitating the significant tightening of the tissue. The shrinkage of tissue is significant and
can reach double-digit percentages of the heated tissue volume. The thermal energy is delivered by an innovative handpiece comprised of
two electrodes: the internal electrode is inserted into the fat layer while the other larger electrode is applied externally to the skin
surface above the cannula tip. The internal cannula is passed through the subcutaneous fat while the external electrode is moved above
and over the skin’s surface. The small, conductive tip of the cannula delivers RF energy into the subcutaneous fat, liquefying it
and simultaneously contracting fibrous septa. The liquefied fat can then be removed from the body through a suction cannula. Our RFAL
products also apply gentle uniform heating of the dermis, thereby promoting skin tightening. Figure 1 below shows how the RF energy is
delivered through the handpiece to simultaneously liquefy fat and tighten the skin.
Our BodyTite, EmbraceRF
and IgniteRF platforms, and the BodyTite, FaceTite
and QuantumRF handpieces rely on our proprietary RFAL technology. To date, there have been more
than 340,000 successful RFAL procedures conducted with positive clinical results using our BodyTite,
EmbraceRF and IgniteRF platforms, and the BodyTite,
FaceTite and QuantumRF handpieces. We
have demonstrated that RFAL has the potential to elicit three-dimensional soft tissue contraction reliably and predictably to both serve
otherwise non-traditional liposuction candidates, as well as to improve outcomes in patients for whom liposuction is an option.
Figure 1: RFAL mechanism of action.
Deep Subdermal Fractional RF
Our Deep Subdermal Fractional RF delivers RF energy into the subdermal fat tissue to
depths of up to four millimeters, or mm. Deep Subdermal Fractional RF provides skin tightening and adipose tissue remodeling directly
under the dermal layer. Our Deep Subdermal Fractional RF products deliver RF energy under the dermis through an array of pins producing
localized heat and small micro-lesion dots in the treatment area. The heat generated by the pins in the subdermal tissue promotes collagen
restructuring and tissue reshaping. Physicians can offer a versatile fractional treatment creating a three-dimensional matrix of coagulation
volumes inside the tissue. Deep Subdermal Fractional RF is used for wrinkle reduction, skin tightening and treatment of cellulite appearance.
Our deep subdermal fractional RF can be applied to both face and body. Our Morpheus8, Morpheus8 Body,
Morpheus Burst and Morpheus8 V handpieces rely on our proprietary Deep Subdermal Fractional
RF technology and are used in conjunction with our BodyTite, Embrace RF, Optimas, IgniteRF, OptimasMAX,
EmpowerRF, Envision and Define platforms. Figure 2 below
shows how the RF energy is delivered through the coated pins on the handpiece to reshape tissue under the dermal layer.
32
Figure 2: Deep Subdermal Fractional RF mechanism of action.
Simultaneous Fat Destruction and Skin Tightening
Our Simultaneous Fat Destruction and Skin Tightening proprietary technology combines
vacuum and bipolar RF energy with high and low amplitudes to both permanently destroy adipose tissue and contract the skin. We believe
our Simultaneous Fat Destruction and Skin Tightening technology is the first and only RF-based, non-invasive body contouring technology
that permanently destroys adipose tissue. Our BodyFX handpiece and MiniFX
handpiece utilize our Simultaneous Fat Destruction and Skin Tightening technology to address problematic fatty tissue in larger body areas
such as the abdomen, back and thighs.
Deep Heating Collagen Remodeling for Skin and Human Natural Openings
Our Deep Heating Collagen Remodeling propriety technology delivers heat in a uniform
and volumetric form targeting deep into tissue while providing collagen remodeling with real-time control of the device’s temperature.
The versatility of this technology allows the operator to provide a customized solution to address a variety of women’s wellness
concerns that occur due to aging, hormonal stress or physical damage. Our Forma, FormaV,
and Morpheus8V handpieces utilize Deep Heating Collagen Remodeling technology while harnessing
continuous bipolar RF energy with real-time temperature measurement. RF energy generated heat is delivered uniformly to vaginal tissue
through a consumable applicator to provide vaginal and labia contraction with patients often seeing effects of the procedure immediately.
Pulse/Continuous Bipolar RF
Continuous bipolar RF is electrical energy in the RF spectrum (1 MHz) that results from
the flow of an electric charge between two electrodes. This conducted energy increases ion movement in the tissue and generates kinetic
energy that is transformed to thermal energy (heating). In turn, this thermal energy causes controlled damage to the tissue and triggers
a natural healing mechanism and tissue-renewal resulting in tissue tightening and remodeling. The distance between the electrodes allows
for control of the depth of penetration of the bipolar RF energy into the tissue. The distance between the electrodes is chosen based
on the particular treatment and according to the tissue to be treated (generally varies between a few millimeters to 3-4 centimeters).
Bipolar RF can be delivered to the tissue in one of two modes: either pulse or continuous. In pulse mode, pulse duration is pre-determined
and RF energy automatically stops. In continuous mode, the RF energy is delivered uninterrupted into the tissue for as long as the operator
deems appropriate. As part of the design, continuous bipolar RF energy allows real-time measurement of the patient’s skin temperature.
This allows our products to provide real-time feedback to the operator throughout the treatment process and enhances overall safety and
efficiency. All of our RF platforms (both existing and expected) and RF handpieces (both minimally and non-invasive) have both pulse bipolar
RF and continuous bipolar RF capabilities. Our proprietary RFAL-based products (such as our BodyTite
and IngiteRF platforms with BodyTite, FaceTite
and QuantumRF handpiece) and Deep Heating Collagen Remodeling based products (such as our
Forma and Plus handpieces) primarily utilize the continuous
bipolar RF feature. Our proprietary Deep Subdermal Fractional RF based products (such as our Morpheus8
and Moprheus8 Burst handpieces) and Simultaneous Fat Destruction and Skin Tightening products
(such as our BodyFX and Mini FX handpieces) primarily
utilize the pulse feature, depending on the procedure and target result. Figure 3 below shows how RF energy is delivered through the handpiece
by an electric charge between two electrodes continuously into the tissue.
33
Figure 3: Pulse/Continuous Bi-polar RF mechanism of action.
Non-invasive Medical Aesthetic Technologies
In addition to our proprietary minimally invasive solutions, we continue to develop
innovative non-invasive medical aesthetic solutions, including:
| • |
Simultaneous non-invasive fat destruction and skin tightening. We believe our technology
is the first RF-based, noninvasive body contouring technology that permanently destroys adipose tissue while simultaneously contracting
the skin. This technology addresses problematic fatty tissue in large body areas such as the abdomen, back and thighs. Customers use this
technology with the Contoura platform and the BodyFX and
MiniFX handpieces. |
| • |
Dual wavelength for permanent hair reduction. Our single-pulse, dual wavelength product for
permanent hair reduction, Triton, combines two wavelengths in one platform, overcoming certain
limitations of standard lasers. This optimal mix of wavelengths allows the highest efficiency and safety. This optimal mix of wavelengths
allows the highest efficiency and safety. We believe Triton is the only FDA-cleared, single-pulse,
dual wavelength product for permanent hair reduction. Customers use this technology with the Triton Duo Light
and Triton Duo Dark handpieces. |
| • |
High-power Intense Pulsed Light. Our high-power IPL is a breakthrough technology that delivers
up to three times more energy than typical IPL devices within the 500 to 600 nanometers, or nm, range to improve efficacy for vascular
and pigmented lesions. It is optimized to treat a variety of skin types and conditions in a single session. Customers use this technology
with the Optimas and the OptimasMAX platforms and the
Lumecca handpiece. |
| • |
Controlled continuous RF heating. We believe our controlled continuous RF technology is the
first auto-adjusting non-invasive thermal skin treating technology for deep and uniform tissue stimulation. This technology uses bipolar
RF energy delivery that allows uniformity between the electrodes to provide a comfortable thermal effect with immediate and subsequent
contraction. Customers use this technology with the Optimas, OptimasMAX, Votiva, Define, Contoura, Evoke
and EvolveX hands-free platforms and EmpowerRF,
as well as the Envision. |
| • |
Energy Muscle Stimulation (EMS). This
technology is used on several platforms that we sell, such as the EvolveX and EmpowerRF.
The technology can be combined with RF or can be stand-alone. |
Differentiated and Comprehensive Post-Sales Support
To complement our innovative aesthetic solutions, we offer post-sales training and support
services. We provide physicians training focused on the most beneficial ways to utilize our products, including a disciplined focus on
safety. Our clinical training and support program consists of three key components:
| i. |
A visit by a new physician customers to one of our many plastic surgery facilities for instruction followed by a live patient demonstration;
|
| ii. |
A visit to the new physician customer’s office by a trained registered nurse or physician’s assistant to attend the first
day of treatments; and |
| iii. |
Open house workshops organized by us, wherein a new physician customer invites his or her patient base and we assist them in “kick
starting” marketing efforts. These events typically secure significant procedural revenues for the physician. |
34
In addition, we offer ongoing livestream classes for physician customers where they
can observe and interact in real-time with both our training staff and highly qualified physician instructors on a regular basis. Advanced
training is also available for physicians who choose to expand their education on highly skilled procedures, including non-excisional
breast lifting or brachioplasty. We are continuing to build a library of on-line instructional videos as both a reference tool and to
expand physicians’ procedural offerings. We also provide support to help customers educate and engage patients about the new minimally
invasive procedures available to them through our In-Practice program. This program provides hands-on, personalized marketing support
for customers’ practices including marketing materials such as signage, educational collateral, digital marketing and advertising
assets. We believe that we provide one of the most extensive training and ongoing support programs available to physicians throughout
the aesthetics industry.
Our Competitive Strengths
We attribute the growing commercial success of our platforms and products to the following:
| • |
Pioneer of the minimally invasive aesthetic solutions market. We believe our proprietary
technologies represent a paradigm shift in the minimally invasive and surgical aesthetic solutions market. We believe our technologies
and products demonstrate numerous performance advantages over other aesthetic options and enable physicians and patients to obtain results
that previously could only be generally achieved with more expensive and invasive surgical procedures. Our RF proprietary energy-based
technology simultaneously destroys fat and tightens skin, overcoming many of the limitations of other surgical, minimally and non-invasive
procedures, positioning us to address unmet patient needs and expand the addressable patient population for aesthetic solutions. Unlike
many of our competitors, our technology is not exclusively laser-based or limited to superficial treatment of the skin. Instead, we have
developed and commercialized products utilizing medically-accepted RF energy technology, which can penetrate deep into the subdermal fat,
allowing adipose tissue remodeling. |
| • |
Strong brand recognition. Our brand is associated with product leadership, significant technological
advances and extensive clinical data, which has led to strong customer loyalty. We believe our brand is synonymous throughout the physician
and patient communities with having the broadest RF energy-based portfolio in the minimally invasive aesthetics market for fat destruction
and remodeling, face and body contouring and skin tightening. |
| • |
Provide comprehensive solutions for physicians and patients. We have an extensive product
portfolio that includes solutions for a wide range of both minimally and non-invasive procedures across the aesthetic solutions market.
Although each of our product platforms has a primary handpiece or applicator that is either minimally or non-invasive, our platforms are
designed to be modular, which enables the user to provide complementary treatments using a single platform by attaching different handpieces
or applicators. For each of our products, we offer post-sales support services including training, installation, practice growth consulting
and repair support that minimizes product downtime and associated lost revenues to physicians. |
| • |
Broad regulatory approvals supported by extensive clinical data. We have 37 FDA clearances
and in addition to the United States, are permitted to sell in approx. 90 countries. To date, we also have a portfolio of over 110 peer-reviewed
publications and 11 ongoing third-party clinical studies on a number of our products (BodyTite, FaceTite,
NeckTite, Optimas, Fractora, Morpheus8, Forma, Lumecca, DiolazeXL, Votiva, Morpheus8V, FormaV, Contoura, BodyFX, MiniFX, Evoke, EvolveX,
Morpheus8, AccuTite, QuantumRF, Luxora ApexRF and
Solaria). While we did not have any involvement in the clinical studies mentioned above,
such studies provide qualitative results that we believe are significant. However, because these were third-party studies, we do not have
access to any raw data to conduct any quantitative analyses. We believe our focus on demonstrated clinical data and effectiveness differentiates
us from our competition and helps to validate our technology with surgically-trained physicians, who we believe are typically the most
difficult segment of the market to penetrate. |
| • |
Strong management team with proven track record. Our management team has significant expertise
in the medical aesthetics industry with a proven track record of successfully developing and commercializing innovative technologies.
Moshe Mizrahy and Dr. Michael Kreindel, our co-founders, previously founded Syneron Medical Ltd. Our senior executive team has an average
of over 16 years of medical aesthetics industry experience and has served in various leadership positions at Syneron Medical Ltd. and
Cynosure, Inc. |
35
Our Growth Strategy
Our objective is to expand our technological leadership in the surgical solutions market
and to leverage our RF proprietary technologies to expand into additional medical solutions markets. We intend to achieve this goal by
implementing the following strategies:
| • |
Increase our sales presence to target and expand our addressable market globally. We plan
to continue to expand our direct sales organization and our distribution network and seek to recruit and train exceptionally talented
sales representatives in existing and new markets to help us broaden the adoption of our products, drive further market penetration and
expand beyond our historic customer base. |
| • |
United States: We have a direct sales presence in United States and plan to keep expanding
our direct sales team. |
| • |
Canada: We have a direct sales presence in Canada and plan to keep expanding our direct sales
team. |
| • |
Europe: We intend to establish sales and marketing organizations and a network of exclusive
European distributors in addition to our subsidiaries network in the United Kingdom, Spain, Italy, France and Germany. |
| • |
Latin America: We plan to strengthen our network of exclusive distributors in all countries
in Latin America. In 2025, we established a direct sales operation in Argentina. |
| • |
Asia-Pacific: In addition to our direct sales presence in India, Australia, Japan and Thailand,
we may also establish direct sales presence in China through our fully-owned subsidiary in China, Guangzhou InMode Medical Technology
Ltd., as well as enhance our network of exclusive distributors in other countries in Asia. |
| • |
Continue to further penetrate our existing customer base and drive recurring revenues. We
believe that there are opportunities for us to generate additional revenue from existing customers who are already familiar with our products.
Since inception, we have sold over 4.4 million consumables. We expect that as our customer base grows, the percentage of our revenues
attributable to consumables will increase. We also expect that certain customers will be candidates for technology upgrades to enhance
the capabilities of their existing InMode products. In addition, as we continue to grow our support services program, we expect to seek
to increase the number of customers that enter into extended warranties, which would provide us with additional recurring revenues.
|
| • |
Leverage our existing technology to expand into new minimally and non-invasive applications.
We have an active research and development pipeline focused on additional solutions targeted to our historic customer base. Our near-term
product development portfolio consists of new and second generation solutions for various conditions, including wearable, noninvasive
face and body reshaping products, cellulite, large area lipolysis, fractional RF treatment of stress urinary incontinence , ), vaginal
laxity pelvic floor muscle restoration, labiaplasty procedures, post-partum treatments and other GSM symptoms, snoring and rhinitis treatments,
dry eye and eyelid treatments, Temporomandibular Joint Disorders and Erectile Dysfunction. |
| • |
Expand our customer base beyond traditional customers. We intend to develop products that
leverage our minimally and non-invasive technologies to address the unmet market needs of a new customer base, which includes OB/GYNs,
ENTs, ophthalmologists, general practitioners and aesthetic clinicians. We intend to adapt our products to the expertise and skill level
of these providers, further expanding our addressable market. |
| • |
Actively pursue business development opportunities. We may seek to engage in targeted business
development activities, including acquisitions of technologies and strategic partnerships, in order to augment our product and technology
portfolio in our existing and potentially adjacent markets. We believe we can leverage our global infrastructure and existing relationships
to implement a disciplined tuck-in acquisition strategy. |
| • |
Expand our intellectual properly and patent portfolio. We intend to expand our existing intellectual
property and patent portfolio as we develop additional applications and continue to aggressively defend our existing patent portfolio
against potential infringement by our competitors. |
36
Our Products
We offer a broad portfolio of aesthetic and medical treatment solutions that consist
of a variety of platforms providing minimally and non-invasive applications. The following tables provide information concerning our product
platforms and their applications.
Minimally Invasive and Ablative Platforms
|
Product
Platform |
Energy
Source(s) |
Year
Introduced |
Handpiece(s) |
Primary (not Exclusive) Applications* |
|
BodyTite |
Bipolar RF |
2010 |
BodyTite |
Body Contouring (MI) |
|
FaceTite |
Face Contouring (MI) | |||
|
NeckTite |
Neck Contouring (MI) | |||
|
AccuTite |
Face/Body Contouring (MI) | |||
|
Optimas
Optimas MAX |
Laser Bipolar RF IPL |
2016
2024 |
Morpheus8
Forma
Lumecca
DiolazeXL
Vasculaze |
Skin Rejuvenation (MI)
Skin Rejuvenation (NI)
Skin Rejuvenation & Pigmentation (NI)
Hair Removal (NI)
Vascular Lesion (NI)
Facial Wrinkles and Texture (MI) |
|
EmbraceRF |
Bipolar RF |
2018 |
FaceTite |
Face Remodeling (MI) |
|
Morpheus8 |
Facial Wrinkles and Texture (MI) | |||
|
AccuTite |
Face/Body Contouring (MI) | |||
|
Votiva |
Bipolar RF |
2017 |
FormaV |
Women’s Wellness (MI) |
|
Women’s Wellness (NI) | ||||
|
Morpheus8 |
Bipolar RF |
2021 |
Morpheus8 |
Face and body fractional RF treatment (MI) |
|
Morpheus8 Body |
||||
|
Envision |
Bipolar RF and IPL |
2023 |
Forma i
Lumecca I
Morpheus8 |
Treatment of dry eyes
Facial Rejuvenation |
|
Morpheus8 Burst |
Bipolar RF |
2024 |
Morpheus8 Burst
Morpheus8 Burst Deep |
Face and body fractional RF treatment (MI) |
|
EmpowerRF |
Bipolar RF and EMS |
2021 |
FormaV, Morpheus8V, VTone, Aviva |
Women’s Wellness (MI) |
|
IgniteRF/ Luxora |
Bipolar RF |
2024 |
QuantumRF |
Body and face contouring (MI) |
37
Non-Invasive Platforms
|
Product Platform |
Energy Source(s) |
Year Introduced |
Handpiece(s) |
Primary (not Exclusive) Applications* |
|
Contoura |
Bipolar RF |
2017 |
BodyFX |
Body Contouring |
|
MiniFX |
Face/Neck Contouring | |||
|
Plus |
Skin Tightening | |||
|
Triton |
Laser |
2018 |
Triton Duo Light |
Hair Removal |
|
Triton Duo Dark |
Hair Removal | |||
|
ApexRF |
BipolarRF |
2025 |
Curved and
Straight
ED handpieces |
Improved Blood Circulation |
|
Solaria |
Laser |
2025 |
CO2,HP
|
Facial Rejuvenation |
Hand-Free Platforms
|
Product Platform |
Energy Source(s) |
Year Introduced |
Handpiece(s) |
Primary (not Exclusive) Applications* |
|
EvolveX |
Bipolar RF EMS |
2021 |
Tite (HF) |
Skin Tightening |
|
Transform (HF) |
Body Contouring | |||
|
Tone (HF) |
EMS | |||
|
Evoke |
Bipolar RF |
2020 |
Cheek (HF) |
Skin Rejuvenation |
|
Chin (HF) |
Skin Rejuvenation | |||
|
Define |
Bipolar RF |
2023 |
Cheek (HF)
Chin (HF) |
Skin Rejuvenation
Skin Rejuvenation |
| * |
“MI” = Minimally Invasive, “NI” = Non-Invasive, “HF” = Hands-free application
|
In addition to the products described above, prior versions of our products continue
to be used by customers. Outside of the United States, we also offer some alternative versions of our aesthetic treatment solutions, in
some cases under different trademarks, which are tailored to the specific preferences and needs of certain countries and regions.
Components of Our Products
Each of our products consists of the following components:
| • |
platform; |
| • |
one or more handpieces or hands-free applicators; |
| • |
one-time disposable handpiece or tip; and |
| • |
our proprietary software. |
Platforms
Our platforms are mostly electronic boxes, comprised of RF energy generators and modules
supporting lasers and IPL, as applicable, a 110/220VAC input power supply, controller and a user interface with touch screen. The user
interface allows the physician to select the handpiece and set treatment parameters to meet the requirements of a particular application
and patient. Using the touch screen, the physician can independently adjust the energy level, pulse width and other parameters depending
on application to optimize the treatment’s safety and effectiveness. The user interface on our multiple energy workstations also
allows the user to change energy sources with the press of a button. The control system communicates the operator’s settings from
the user interface to the system’s modules and manages system operation and performance.
Handpieces and Hands-Free Applicators
Our handpieces and hands-free applicators are used to apply the energy to the patient
treatment area. The handpieces and hands-free applicators are designed for specific targeted body areas, type of energy to maximize treatment
safety and efficacy for specific treatment. Certain of our handpieces and hands-free applicators have a contained thermal field that ensures
a controlled and safe treatment through our Acquire, Control and Extend, or ACE, technology. Our ACE technology ensures that no areas
are under- or over-treated using therapeutic temperatures safely and efficiently. Built-in safeguards, including real time measurements
of skin temperature, impedance monitoring, power cut-off and audible feedback, help ensure patient safety throughout the procedure. A
number of our handpieces and hands-free applicators are, or contain, one-time use applicators, or consumables, which must be replaced
following each treatment.
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Minimally Invasive
BodyTite – The minimally invasive,
consumable Bodyrite handpiece, introduced in 2010, utilizes directional RF energy for
RFAL treatments using needle-size cannula and external electrodes to apply RF energy to the subcutaneous adipose tissue. The tissue is
heated to 50°C to 70°C to destroy fat and contract connective tissue, simultaneously remodeling the dermis at external temperatures
of up to 42°C. This handpiece allows tissue treatment using a 17cm cannula that provides treatment depth up to 50mm.
Facerite/NeckTite – The minimally
invasive, consumable FaceTite and NeckTite handpieces,
introduced in 2012, utilize directional RF energy for RFAL treatments using cannula with diameters of 1.8mm and 2.2mm and external electrodes
to apply RF energy to the subcutaneous adipose tissue. The tissue is heated to 50°C to 70°C to destroy fat and contract connective
tissue, simultaneously remodeling the dermis at external temperatures up to 42°C. This handpiece allows tissue treatment using a
10cm cannula that provides treatment depth up to 25mm.
AccuTite – The minimally invasive AccuTite handpiece,
introduced in 2019, utilizes directional RF energy for RFAL treatments using sub-millimeter cannula with diameters of 0.9mm and external
electrodes to apply RF energy to subcutaneous adipose tissue. The tissue is heated to 50°C to 70°C to destroy fat and contract
connective tissue, simultaneously remodeling the dermis at external temperatures of up to 42°C. This handpiece allows tissue treatment
using a 60mm cannula that provides treatment depth up to 25mm. Additionally, in 2019, we began marketing AccuTite for Aviva, a
minimally invasive procedure that restores the function and appearance of the vulva by offering a non-excisional alternative to a labiaplasty. Aviva is
powered by AccuTite to deliver safe and uniform heat to the entire soft tissue matrix
of the labia minora, labia majora, clitoral hood, vaginal introitus and perineal body.
QuantumRF 10 and QuantumRF25 – The minimally
invasive disposable handpieces for minimally invasive treatment of face and body for simultaneous treatment of destroying fat and skin
tightening. The QuantumRF handpieces are operated on the IgniteRF
platform.
Fractora – The minimally invasive Fractora handpiece,
introduced in 2011, uses customizable fractional energy and superficial fractional resurfacing for subdermal adipose tissue remodeling.
The handpiece offers two treatment depths (skin surface and subdermal) and is safe on all skin types including type IV. The consumable
applicator tip contains 24-coated pins with a length of up to 4mm.
Morpheus8/Morpehus8 Body/Morpheus8 Burst/Moprheus8
Deep/Morpheus8V – The minimally invasive Morpheus8 and Morpheus8 Body handpieces
use RF energy for subdermal adipose tissue remodeling, and are programmable by the user according to treatment area. The handpieces offer
treatment depth up to 7mm. The upper part of the needle and external electrodes are coated with a polymer to prevent skin surface thermal
damage while delivering RF energy into the subdermal space.
Non-Invasive
BodyFX/MiniFX – The non-invasive BodyFX and
MiniFX handpieces, introduced in 2013, combine vacuum and bipolar RF energy with high and low
amplitudes to both permanently destroy adipose tissue and contract the skin. The BodyFX handpiece,
intended for use on various parts of the body, comprises a vacuum cavity with a size of 1.36in x 1.2in. The MiniFX
handpiece, better suited to address problematic fatty tissue in smaller areas, comprises a vacuum cavity with a size of 1.24in x 0.87in.
DiolazeXL (810nm) – The non-invasive DiolazeXL
(810nm) handpiece, introduced in 2017, is a high-speed, gold standard 810nm (diode) laser indicated for permanent hair reduction. DiolazeXL’s differentiated
triple contact cooling technology (pre, parallel and post), or 3PC technology, provides for a safe and comfortable patient experience.
The handpiece covers a spot size of 12mm x 26mm to allow for the removal of a variety of hair colors and thickness. This handpiece offers
short and long pulse durations and repetition rates that enable treatment times up to 6cm2/second.
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Triton Duo Light (755nm & 810nm) –
The non-invasive Triton Duo Light handpiece, introduced in 2017, combines two wavelengths
for optimal treatment of light skin patients. The handpiece utilizes a blend of 755nm (Alexandrite) and 810nm (diode) laser wavelengths
that have been optimized for hair removal on patients with skin types I to IV. The handpiece covers a spot size of 12mm x 26mm and provides
two pulse durations and high repetition rates.
Triton Duo Dark (810nm & 1064nm) –
The non-invasive Triton Duo Dark handpiece, introduced in 2017, combines two wavelengths
for optimal treatment of dark skin patients. The handpiece utilizes a blend of 810nm (diode) and 1064nm (Nd:YAG) laser wavelengths that
have been optimized for hair removal on patients with skin types Ito IV. The handpiece covers a spot size of 12mm x 26mm and provides
two pulse durations and high repetition rates.
Forma – The non-invasive Forma
handpiece, introduced in 2013, uses our ACE technology to deliver auto-adjusting uniform RF energy-generated heat (up to 43°C)
for collagen remodeling and skin contraction of the face and neck. We believe Forma is
the first thermal face and neck skin tightening device to have both temperature monitoring and automatic, user programmable, RF on/off
control. This handpiece has an RF energy output power of up to 65 watts and covers a spot size of 22mm x 20mm.
Forma I – The non-invasive handpiece was
introduced in 2022 for treatment of peri-orbital and meibomian glands, and for dry eye indication by Health Canada. The energy level is
similar to Forma (above), and the handpiece covers a spot size of 10 sq. millimeters.
FormaV – The non-invasive FormaV
handpiece, introduced in 2017, uses our ACE technology to deliver auto-adjusting uniform RF energy generated heat (up to 43°C)
to vaginal tissue through a consumable applicator.
VTone – Intervaginal EMS device to
treat SUI and pelvic floor muscle restorations.
Plus – The non-invasive Plus handpiece,
introduced in 2013, uses our ACE technology to deliver auto-adjusting uniform RF generated heat (up to 43°C) for collagen remodeling
and skin contraction of the body. We believe Plus is the first thermal body skin tightening
device to have both temperature monitoring and automatic, user programmable, RF on/off control. This handpiece has an RF energy output
of up to 65 watts and covers a spot size of 45mm x 45mm.
Lumecca
Peak – The non-invasive Lumecca and Lumecca
Peak handpieces, introduced in 2015 and 2024, are IPL handpieces optimized for both light and dark skin that uses a xenon flash
lamp to deliver filtered optical energy in the 515nm to 1200nm range for light skin treatment and 580nm to 1200nm range for darker skin. Lumecca and
Lumecca Peak are intended for treatment of superficial vascular and pigmented lesions. The handpiece
covers a spot size of 30mm x 10mm with a peak optical power of 10,000 watts.
Vasculaze – The non-invasive Vasculaze handpiece,
introduced in 2018, is a 1064nm wavelength diode laser intended for use in the coagulation and hemostasis of benign vascular legions such
as, but not limited to, reticular leg veins, spider veins, hemangiomas, port wine stains and venous lakes. Vasculaze is
optimized with high peak power, strong contact cooling and an ergonomic head intended to maximize treatment efficiency. The handpiece
covers a spot size of 3mm x 4mm and has pulse duration of 20 to 100 milliseconds, or msec.
Hands-Free
Transform – The non-invasive Transform, introduced
in 2021, is a set of six hands-free applicators for the EvolveX platform. The mechanism
of action is a combination of bipolar RF and EMS. The Transform is mounted on a belt
and works automatically without the assistance of a physician or technician.
Tite – The non-invasive Tite,
introduced in 2019, is a set of eight hands-free applicators for the EvolveX platform.
The mechanism of action is similar to the Plus handpiece. The Tite is
mounted on a belt for treatment of different body parts and areas without the assistance of a physician or technician.
Tone – The non-invasive Tone,
introduced in 2019, is a set of four hands-free electro-muscle stimulation applicators. The Tone is
designed to be used on the EvolveX platform for muscle stimulation and improving skin
tone.
Cheek – The non-invasive Cheek,
introduced in 2020, is a hands-free device containing eight applicators that is mounted on the face and designed to be used with the Evoke platform
or Define platform. The mechanism of action is similar to the Forma handpiece,
but works automatically on both sides of the face without the assistance of a physician or technician.
Chin – The non-invasive Chin,
introduced in 2020, is a hands-free device containing two applicators that is mounted on the chin and designed to be used with the Evoke platform
or Define platform. The mechanism of action is similar to the Forma handpiece,
but works automatically on the chin without the assistance of a physician or technician.
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Proprietary Software
Our software permits the user to define treatment parameters to be communicated to the
electronic modules in the platform and deliver RF or optical energy through the handpiece or hands-free applicator to the patient. In
addition, our software controls and manages proper system performance and automatic temperature control, system self-calibration, system
setup and detection of any malfunction of the system. We believe our software’s automotive capabilities allow physicians to dedicate
their attention and focus to patient treatment rather than system monitoring. Our users upgrade their products through the purchase of
additional treatment applicators and corresponding software plugs. All of our software complies with applicable medical specifications
and regulations.
Applications and Procedures
Our products provide our customers with a broad range of applications among both traditional
procedures and emerging applications.
Face and Body Contouring
Minimally Invasive
Generally performed by a physician, RFAL delivers directional RF energy into a patient’s
subcutaneous fat to coagulate and liquefy adipose tissue and heat the subcutaneous fibrous septa, resulting in substantial collagen contraction
of the subdermal space. RF energy is delivered through an innovative handpiece comprised of two electrodes. The internal electrode is
inserted into the fat layer, while the other larger electrode is applied externally to the skin surface above the cannula tip. The internal
cannula passes through the subcutaneous fat, while the external electrode slides over the skin’s surface. The small conductive tip
of the cannula concentrates RF energy in the subcutaneous fat, liquefying it and simultaneously contracting the fiber septa. This liquefied
fat can then be removed from the body. Our RFAL technology can be administered on all regions of the body and typical treatments are approximately
30 to 90 minutes each under local anesthesia. We received 510(k) FDA clearance for our RFAL technology in 2016. Users conduct minimally
invasive face and body contouring using RFAL technology with the BodyTite and Embrace platforms
and BodyTite, FaceTite and AccuTite handpieces.
In 2024, we introduced the IgniteRF platform with the QuantumRF
handpiece which is also based on RFAL technology. We received 510 K FDA clearance for the QuantumRF
in 2024.
Generally performed by a physician, Deep Subdermal Fractional RF delivers RF energy
into the subcutaneous adipose tissue to depths of up to 4mm through an array of coated needles producing localized heat and matrix of
small lesions in the subcutaneous fat. The heat generated by the pins in the subdermal tissue promotes connective tissue restructuring.
As a result, physicians can offer a versatile fractional treatment creating a three-dimensional collagen contraction and subdermal fat
coagulation. The deep fractional remodeling is used when fat layer is not thick enough to use RFAL technology or when patient wants only
superficial result. Deep Subdermal Fractional RF can be used for wrinkle reduction, skin tightening and treatment of cellulite appearance.
In addition to reshaping, Deep Subdermal Fractional RF provides long-term results for inflammatory acne by coagulating enlarged sebaceous
glands. The most common areas of treatment are the face and neck. Patients generally receive between one to three treatments for approximately
30 minutes each. Treatments are typically spaced two to three weeks apart. We received two 510(k) FDA clearances for Fractora in
2011 and 2016, and 510(k) FDA clearance for the Morpheus8 in 2019. In addition, we received
510K clearance for the Morpheus8soft tissue coagulation/contraction in 2024. Customers use
this technology with the BodyTite, Embrace, IgniteRF, Votiva, Empower, Optimas
and OptimasMAX platforms.
Solaria: Solaria is a fractional CO2
technology used for ablative skin resurfacing. It delivers precise microbeam treatments that leave surrounding tissue untreated, supporting
deep ablation, faster healing, and fewer side effects. The system provides the trusted benefits of traditional resurfacing with the advantages
of fractional procedures, offering controlled optical energy up to 120 microns and 45 mJ per micro spot. With multiple scanning modes,
adjustable ablation areas, and four tips, it is a versatile platform for customizable treatments.
Non-Invasive
Handpieces: Administered by physicians
and other aesthetic practitioners, our differentiated fat reduction solution is based on skin shaping using a vacuum and delivering both
low amplitude bipolar RF energy for gentle deep tissue heating and high amplitude RF energy to simultaneously destroy fat and tighten
skin. The handpiece is placed over the desired area of the body and vacuum energy shapes the skin into the cavity for safe and effective
RF energy delivery allowing greater volumes of fat to be treated (up to 2.5cm in depth). Subsequently, temperature-controlled RF energy
is applied to preheat the tissue and fat uniformly to 42°C to 43°C. High amplitude RF energy delivered in ultra-short pulse
duration is then administered via electrodes causing apoptosis of adipose tissue and resulting in simultaneous skin contraction. Our technology
can be administered on all regions of the body. Patients generally receive six treatments for approximately 10 to 20 minutes each. Treatments
are typically spaced one to two weeks apart. We received 510(k) FDA clearance for this technology in 2013. Users conduct non-invasive
face and body contouring with the Contoura platform using the BodyFX
or MiniFX handpieces.
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Hands-Free
Hands-Free Applicators: Applied by physicians
and other aesthetic practitioners, our differentiated skin tightening, fat reduction and muscle stimulation solution is based on bipolar
RF and EMS technologies, delivered through a set of hands-free applicators mounted or placed over the body or face. The setup of the parameters
is determined by a doctor. Subsequently, temperature-controlled RF energy is applied to preheat the tissue and fat uniformly to 42°C
to 43°C. High amplitude RF energy delivered in ultra-short pulse duration is then administered via electrodes causing apoptosis of
adipose tissue and resulting in simultaneous skin contraction. Our technology can be administered on all regions of the body and face.
Patients generally receive three to six treatments for approximately 30 minutes each. Treatments are typically spaced one to two weeks
apart. We received 510(k) FDA clearance for the Evoke and Evolve in
2019. In 2021, we received 510(k) FDA clearance for the EvolveX which replaced the
Evolve platform. Users conduct hands-free face and body contouring with the Evoke and EvolveX platforms
using the Transform, Tite and Tone hands-free
applicators for the EvolveX, and Cheek and Chin hands-free
applicators for the Evoke and Define.
Medical Aesthetics
Skin Rejuvenation/Vascular & Pigmented Lesion Treatment
Generally performed by a physician or other aesthetic professional, different types
of energy and treatments are provided, depending on the handpiece. The application of JPL energy enables the improvement of photo damage,
as well as other pigmented abnormalities and superficial vascular lesions. A 1064nm laser is used for the treatment of larger and deeper
veins. Patients often see results after a single treatment, but typically two to three treatments of approximately 15 minutes each are
recommended. Treatments are typically spaced two to four weeks apart. We received 510(k) FDA clearance for superficial vascular and pigmented
lesion treatments in 2013 and for hair removal and permanent hair reduction in 2017 and 2018, respectively. Users rejuvenate the skin
with the Optimas and OptimasMAX platforms using
the Vasculaze, Lumecca and
Lumecca Peak handpieces.
Sub-Necrotic Thermal Tissue Remodeling
Administered by physicians and other aesthetic practitioners, the application is based
on uniform and deep heating of the skin and subdermal layer using bipolar RF energy. The handpiece is moved over the desired area of the
treatment area, while maintaining the designated temperature for the predetermined time for safe and effective collagen remodeling. Subsequently,
temperature-controlled RF energy is applied automatically to heat tissue uniformly to 42°C to 43°C. The Forma handpiece
is utilized to target fat and heats the tissue to depths of up to 4.5mm while the Plus handpiece
is used for larger body areas and provides effect up to 6mm in depth. Patients generally receive six treatments for approximately 10 to
20 minutes each. Treatments are typically spaced one to two weeks apart. We received three 510(k) FDA clearances for this technology in
2014, 2016 and 2017. Users conduct facial treatment with the Optimas and
OptimasMAX platforms using the Forma handpiece and body contouring with
the Contoura platform using the Plus handpiece.
Permanent Hair Reduction
Administered by a user, who is not necessarily a physician, our differentiated dual
wavelength technology incorporated in the Triton platform fires two wavelengths in a
single pulse destroying the hair follicles located in the dermis and subdermal layers. This procedure is continued over the target area
and can last from a few minutes to 90 minutes depending on the size of the treatment area. In general, permanent hair reduction requires
four to six treatments spaced four to eight weeks apart. More sessions may be required for stubborn hairs. Due to our unique dual wavelength
technology, our Triton platform allows practitioners to address all skin types and tones.
We received 510(k) FDA clearance for our Optimas and dual wavelength Triton platforms
for permanent hair reduction treatments in 2016 and 2018, respectively. Users perform permanent hair reduction procedures with our Optimas and Triton platforms
using the DiolazeXL and Triton Duo Light and Triton
Duo Dark handpieces, respectively.
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Women’s
Wellness
We have two platforms for women’s wellness: the Votiva
and the EmpowerRF. Procedures with these platforms are performed by a physician. Depending on
the handpiece, the administration of bipolar RF energy or subdermal heating is applied to gently warm and massage the internal vaginal
tissue (FormaV), the external vaginal tissue (Morpheus8V), or
to deliver uniform heat to the entire soft tissue matrix of the labia minora, labia majora, clitoral hood, vaginal introitus and perineal
body (Aviva procedure administered by the AccuTite handpiece),
and pelvic floor muscle restoration (with VTone). Depending on the treatment type, patients typically
receive between two to three treatments of approximately 15 minutes each. Treatments are typically spaced two to three weeks apart. We
received 510(k) FDA clearance for FormaV for certain indications in 2017. In July 2018,
we received a letter from the FDA seeking information as to the regulatory basis for marketing of our FormaV handpiece
based on our promotion and labeling of this device for use in certain women’s wellness conditions and procedures. We timely responded
to the FDA by immediately altering the wording of our promotional and labeling materials, and we submitted a response letter in August
2018 answering the FDA’s questions and advising the agency that we had modified our promotional and labeling materials to remove
certain statements regarding uses of our products for conditions and procedures that were questioned by the FDA in the agency’s
informational request letter. The FDA responded in September 2018 by stating that the agency had reviewed our response letter and verified
the changes in terminology made to our website. Moreover, the FDA further responded in November 2018 and confirmed we addressed all items
raised by the agency in its letter, and that the FDA continues to expect us to conduct a review of our marketing and promotional materials
to make appropriate changes and remove materials containing uncleared claims. We have received no further communications from the agency
regarding this matter.
Men’s Health
In 2025, we launched the ApexRF, which is based
on non-invasive bipolar RF technology intended to treat men who suffer from ED. This treatment is carried our using two different handpieces:
the ED straight handpiece for treatment of the perineum and a curved handpiece for treatment of the penis. We are currently conducting
two clinical studies in the United States, and, during 2026, we currently intend to launch this product in Europe. We do not yet have
RF clearance for Erectile Dysfunction indication and are accordingly are limited in how we may market ApexRF.
Sales and Marketing
Our primary strategy to increase market penetration relies on selling directly to our
historic customer base of plastic and facial surgeons, aesthetic surgeons, dermatologists and OB/GYNs. We believe we are the only company
commercializing minimally invasive aesthetic solutions specifically targeting the surgical community and believe our products represent
a significant opportunity for these practitioners to deliver improved patient treatment results and significantly increase their ability
to generate additional revenue. We are also targeting newer market opportunities consisting of OB/GYNs, ENTs, urologists, ophthalmologists,
general practitioners and aesthetic clinicians as an incremental growth opportunity.
We target potential customers through office visits, trade shows, professional journals
and various forms of paid and unpaid media. We also conduct clinical workshops featuring recognized expert panelists and key opinion leaders
to promote existing and new treatment techniques using our products. We believe that these workshops enhance customer loyalty and provide
us with new sales opportunities. We plan to continue to offer a large number of workshops spanning from single-day workshops to three-day
workshops. We also use direct mail programs to target specific segments of the market that we seek to access, such as members of medical
societies and attendees at meetings sponsored by medical societies or associations. In addition, we maintain an active public relations
program that has resulted in treatments based on our products being featured in various televised and printed media outlets including InStyle,
Shape, The Doctors and Harper’s Bazaar. In September 2022, international
actress and producer, Eva Longoria, agreed to join us as our brand ambassador to share her positive experience with our EvolveX and Morpheus8 technologies,
replacing our previous brand ambassador, international pop icon, Paula Abdul. We do not currently have a brand Ambassador.
We currently sell and market our products in the United States, Canada, the United Kingdom,
Ireland, Spain, Portugal, France, Belgium, Luxembourg, Italy, Germany, Austria, Japan, Australia, India, Thailand and Argentina through
a direct sales force of approximately 285 representatives. We also sell and market our products through over 73 distributors in over 101
countries. Our U.S. sales efforts are headquartered in Irvine, California. To support the continued roll-out of our products and further
penetrate the market, we anticipate that our direct sales force in the United States will continue to increase.
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In international markets, to complement our direct sales force, we sell our products
through a network of distributors. Our Canadian sales efforts are headquartered in Toronto, Canada. As of December 31, 2025, we had an
international sales management team of seven employees supporting over 73 independent distributors. The percentage of our revenues from
customers located outside of the United States for each of the years ended December 31, 2025 and 2024 was 46% and 38%, respectively. We
intend to continue to increase penetration of our customer base in international markets and expand into attractive new international
markets by identifying and training qualified distributors. In addition, we may opportunistically hire a direct sales force and expand
our marketing campaigns in select international markets. We require our distributors to provide customer training, to invest in service
and demonstration equipment and marketing, and to attend certain exhibitions and industry meetings.
Service and Support
We support our customers with a range of services, including business and practice development
consulting and product service and maintenance.
We service our products in three service centers: (1) the U.S. market is serviced through
our facility in Irvine, California, (2) the Canadian market is serviced through our facility in Toronto, Canada, and (3) the rest of the
world is serviced through our distributors and our facility in Yokneam, Israel. In the event of a technical malfunction, our customers
first contact us (if in the United States or Canada) or our distributors (if outside of the United States or Canada) telephonically. If
a product requires service or repair that cannot be addressed telephonically, we or our distributors ship a temporary “loaner”
system to the customer as soon as possible, often overnight. This unique “loaner” system reduces any product downtime and
associated lost revenues for the physician. We then arrange for shipment of the out-of-order product to one of our service centers in
the United States or Canada. Outside the United States or Canada, the product is sent to our distributors or our facility in Israel. Either
we or our distributors quickly repair the product and ship it back to the customer. We have designed our products in a lightweight, modular
fashion to enable quick and efficient service and support. Specifically, we build our platforms to be less than 35 kilograms in weight
to ensure acceptance by traditional, commercial third-party logistics providers for next-day delivery of replacement products without
requiring specialized shipping procedures. We believe our depot service and support model provides for more efficient and less costly
operations.
Our standard warranty term is 12 months, however, certain products are sold with multi-year
warranties. Our standard warranty covers parts, labor, participation in our loaner program and a white glove, door-to-door, shipping service
for expedited repair service, and can be extended for an additional charge. We believe that we have a significant opportunity to increase
our recurring customer revenue by increasing the number of our customers that enter into service contracts and extended warranties for
our systems. All of our distributors have a service department and are required by us to maintain a full inventory of spare parts. All
service staff is trained by our service department in Israel.
Manufacturing and Supply
We rely primarily on outsourced manufacturing to produce our devices while maintaining
control over the production process. Outsourcing allows us to carry lower inventory levels and maintain fixed unit costs without incurring
significant capital expenditures than would be in place if products were self-manufactured. We outsource almost all of the manufacturing
of our products to three subcontractors located in Israel, two of which we are substantially dependent on as part of our business. Through
our strategic arrangement with Flextronics (Israel) Ltd., or Flex, and (BY) Medimor Ltd., or Medimor, we maintain dedicated manufacturing
lines supervised by us in Flex and Medimor’s medical-grade manufacturing facilities in Migdal Haemek and Poriya, Israel. Within
the Flex and Medimor facilities, all proprietary manufacturing, testing and assembly equipment was built and is owned by us. We also use
a separate manufacturer, in addition to Flex and Medimor, to produce our handpieces and disposables.
We believe our outsourced manufacturers’ processes comply with all applicable
U.S. and international quality and safety standards, such as ISO 13485:2016, CE and the FDA quality system regulations. We conduct in-house
prototype development and present detailed manufacturing documents to our subcontractors, who then purchase most of the necessary components
and manufacture the product. These manufacturing subcontractors provide us fully assembled, or “turn-key,” services. We control
and monitor the quality of our products by having one of our quality control employees at each of our subcontractor’s facilities.
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The contracts we have with our
main manufacturing subcontractors (Flex and Medimor) do not have minimum purchase requirements and allow us to purchase end products on
a purchase order basis. Under these contracts, our manufacturing subcontractors provide manufacturing services pursuant to our written
specifications. These manufacturing services include labor, materials, testing, packaging and delivery, as well as allocating production
and storage space within their facilities for our products. Pricing under these contracts is reviewed between us and the manufacturing
subcontractors every three months. These contracts typically have one-year terms that automatically renew for successive one-year terms
unless either we or the manufacturing subcontractor provide three months written notice prior to the expiration of the term. To date,
we have not experienced any significant manufacturing delays. These
contracts can be terminated by either party, without cause, with four to six months prior written notice.
We manufacture all laser and IPL handpieces in our facility in Yokneam, Israel and procure
other major components of our products on behalf of our third-party manufacturers from a limited number of suppliers. We have flexibility
to adjust the number of lasers and other components that we either manufacture or procure as well as the delivery schedules. The forecasts
that we use are based on historical demands and expected future plans. Lead times may vary significantly depending on the size of the
order, time required to fabricate and test the components, specific supplier requirements and current market demand for the components.
We intend to reduce any potential for delays of supply by maintaining relationships with multiple suppliers of major components. To date,
we have not experienced significant delays in obtaining our major components.
In November 2019, we signed a Share Purchase and Shareholders Agreement, or the SPA,
with Medimor, one of our turnkey manufacturing subcontractors. Pursuant to the SPA, we have invested an aggregate of $600,000, in consideration
for 1,369,863 ordinary shares of Medimor (which reflected a 10.34% ownership interest in Medimor at the signing date, on a fully diluted
basis), at a price per share of $0.438, of which 414,384 ordinary shares were issued upon consummation of the initial closing on December
31, 2019, and the remaining 955,479 ordinary shares were issued in July 2020 following Medimor achieving certain pre-defined milestone
events. In November 2023, we signed an additional Share Purchase and Shareholders Agreement (the “Purchase Agreement”) in
which we invested an additional $100,000 in consideration of 117,440 ordinary shares of Medimor.
As of December 31, 2025, we hold a 11.73% ownership interest on an as-issued basis and
an 11.23% ownership interest on a fully diluted basis of Medimor.
Research and Development
Our research and development activities are conducted internally by a team of 42 research
and development staff, based mainly in Israel. Our research and development efforts are focused on the development of new products, as
well as on the extension of our existing products to introduce new applications in the minimally and non-invasive and medical aesthetic
markets. We have a number of new projects and products under development. We expect to concentrate our research and development efforts
in the coming years on developing procedures and platforms based on our proprietary technologies: (i) RFAL, (ii) Deep Subdermal Fractional
RF, (iii) Simultaneous Fat Destruction and Skin Tightening, and (iv) Deep Heating Collagen Remodeling, and developing new technologies.
Our research and development expenditures for the years ended December 31, 2025, 2024
and 2023 were approximately $13.3 million, $13.1 million and $13.4 million, respectively.
Seasonality
Our business is not significantly impacted by seasonality; however, our fourth quarter
has historically generated slightly stronger operating results. We have historically experienced stronger sales in the fourth quarter
in correlation with our customers’ spending patterns and budget cycles. Most physicians operate on an annual budget cycle with a
fiscal year that begins on January 1. It is not uncommon to experience a higher level of purchasing activity from physicians in the final
months and weeks of their fiscal year. Consequently, our fourth quarter revenues may be greater than other quarters. Our business is also
impacted by general economic conditions, which may impact future seasonal variations.
Intellectual Property
We rely on a combination of patent, trademark and copyright laws to protect our intellectual
property rights.
Patents and Patent Applications
As of February 10, 2026, we own 21 issued U.S. patents and one issued Korean patent.
As of February 10, 2026, we have filed 5 patent applications that are pending in the United States Patent and Trademark Office. Our issued
U.S. patents and pending applications are projected to expire between 2027 and 2044 (assuming pending U.S. patent applications are approved).
These patents and patent applications cover the technologies described herein, and contribute to the protection of our rights to our proprietary
technology. Our patents relate to RF based technology that may be used for minimally invasive aesthetic solutions, such as fat destruction,
and fractional skin ablation relating to skin tightening and fat destruction, among others, and cover our existing products. Without these
patents, we cannot guarantee that we can prevent others from manufacturing similar products that are covered by our patent rights. We
also rely on our issued patents to make, use, sell, and distribute our products. The term of the patents depends on the legal term for
patents in the countries in which they are granted. In most countries, including the United States, the patent term is generally 20 years
from the earliest claimed filing date of a non-provisional patent application in the applicable country. We also rely upon trademarks
in various jurisdictions covering the InMode brand and our product lines, as well as upon U.S. copyright law for protection of the software
programs associated with our products.
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Patent Litigation
On October 11, 2023, we filed a complaint of patent infringement against BTL Industries
Ltd. (“BTL”) in the United States District Court, Central District of California, alleging that BTL is infringing our U.S.
Patent No. 8,961,511 (the “’511 patent”). In December 2024, the litigation was transferred to the District of Massachusetts,
and BTL filed an answer to our complaint. On April 10, 2024, BTL filed a petition for inter partes review (IPR) before the Patent
Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office. On October 1, 2025, the PTAB issued a final written decision
finding all claims of the ’511 patent valid. BTL has appealed the decision to the Federal Circuit. The district court had stayed
the litigation during the IPR proceeding but lifted the stay shortly after the PTAB decision. We are pressing forward with the district
court litigation, leading up to a final pre-trial conference on January 28, 2027. Meanwhile, the parties continue to discuss settlement.
Copyrights, Trademarks and Trade Secrets
The software programs associated with our products are protected by U.S. copyright law.
We also filed for protection available under trademark law. As of December 31, 2025,
we own 19 registered trademarks in the United States and at least 46 registered trademarks in various jurisdictions outside the United
States, including for the marks “InMode” and “RFAL” and certain key product names, in particular, BodyTite,
Contoura by InMode, FaceTite, InMode, Optimas by InMode,
Triton by InMode, Votiva by InMode,
Triton by InMode, AccuTite, Morpheus, BodyFX, Diolaze, Fractora and Lumecca. We
also have at least nine pending foreign trademark applications. We also have six trademark applications in the United States pending for
“Define by InMode,” “Fusion Dark,” Fusion
Light,” “QuantumRF” ”IgniteRF,” and “Luxora.”
We also rely upon know-how and continuing technological innovation, and may pursue licensing
opportunities in the future in order to develop and maintain our competitive position. We seek to protect our proprietary rights through
a variety of methods, including confidentiality agreements and proprietary information agreements with suppliers, employees, consultants
and others who may have access to proprietary information, under which they are bound to assign to us inventions made during the term
of their employment or term of service.
All professional employees and technical consultants are required to execute confidentiality
agreements in connection with their employment and consulting relationships with us. We also require them to agree to disclose and assign
to us all inventions conceived in connection with their services to us. However, there can be no assurance that these confidentiality
and invention assignment agreements will be enforceable or that they will provide us with adequate protection.
Competition
Our industry is subject to intense competition, subject to rapid change and highly sensitive
to the introduction of new products or other market activities of industry participants. We compete against products offered by other
public companies, including AbbVie, Cutera, Inc., Apyx Medical Corporation, Venus Concept Inc. Sisram Medical Ltd. and Sofwave Medical
Ltd, as well as by private companies, such as Cynosure LLC, Lumenis Ltd., BTL Aesthetics, Inc. and Candela Medical Inc. In the past few
years, several large pharmaceutical and medical device companies have also entered the aesthetic device market, including Valeant Pharmaceuticals
International Inc. and Merz Pharma Group. Our products compete against conventional medical products, including Botox®, hyaluronic
acid injections and collagen injections, and aesthetic procedures, such as face lifts, liposuction, sclerotherapy, electrolysis, chemical
peels and microdermabrasion, which are unrelated to laser, light and RF-based technologies. Our products also compete against laser and
other light and radio frequency-based products.
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Competition among providers of laser and other light and radio frequency-based products
for the aesthetic medical market is characterized by extensive research efforts and rapid technological progress. While we attempt to
protect our products through patents and other intellectual property rights, there are few barriers to entry that would prevent new entrants
or existing competitors from developing products that would compete directly with ours. There are many companies, both public and private,
that are developing innovative devices that use laser and other energy-based and alternative technologies. Many of these competitors have
significantly greater financial and human resources than we do and have established reputations, greater brand name recognition, broader
product lines, and larger customer bases, as well as worldwide distribution channels that are more effective than ours. Additional competitors
may enter the market, and we are likely to compete with new companies in the future. Any business combinations or mergers among our competitors
that result in larger competitors with greater resources or distribution networks, or the acquisition of a competitor by a major medical
or technology corporation seeking to enter this business, could further result in increased competition.
To compete effectively, we have to demonstrate that our products are attractive alternatives
to other devices and treatments by differentiating our products on the basis of performance, brand name, reputation and price. We have
encountered and expect to continue to encounter potential customers who, due to existing relationships with our competitors, are committed
to, or prefer the products offered by, these competitors. We expect that competitive pressures may over time result in price reductions
and reduced margins for our products.
Other medical companies, academic and research institutions, or others, may develop
new technologies or therapies, including medical devices, surgical procedures or pharmacological treatments and obtain regulatory approval
for products utilizing such techniques that are more effective in treating the conditions that we target or are less expensive than our
current or future products. Our technologies and products could be rendered obsolete by such developments.
Government Regulation
Our products and operations are subject to extensive and rigorous regulation by the
relevant governmental authorities in the countries where we market and sell or products. These governmental authorities include the FDA,
which enforces the FDCA as well as other similar laws, and regulatory bodies worldwide. In addition, the FTC regulates the advertising
of our products in the United States. Further, we are subject to laws directed at preventing fraud and abuse, which subject our sales
and marketing, training and other practices to government scrutiny.
In some jurisdictions, such as the United States, Canada and Israel, we must complete
an application process with the relevant regulator, which includes submitting the results of clinical trials for their review.
In addition, many countries also impose product standards, packaging requirements, environmental
requirements, labeling requirements and import and export restrictions on our devices. Each country also has its own tariff regulations,
duties and tax requirements. Failure to comply with applicable regulatory requirements may result in fines, suspension or withdrawal of
regulatory approvals, product recalls, seizure of products, operating restrictions, criminal prosecution, or other consequences.
In the United States, the FDCA and its regulations govern the following activities
that we perform and will continue to perform to help ensure that medical products distributed within the United States are safe and effective
for their intended uses:
| • |
product design and development; |
| • |
product testing; |
| • |
product manufacturing; |
| • |
product safety; |
| • |
product labeling; |
| • |
product storage; |
| • |
record-keeping; |
| • |
premarket clearance or approval; |
| • |
advertising and promotion; |
| • |
manufacturing and production; |
47
| • |
product sales and distribution; |
| • |
import, export and shipping; |
| • |
establishment registration and device listing; and |
| • |
recalls, field-safety corrective actions and post-market surveillance. |
Each of our currently marketed products has received 510(k) clearance for the uses for
which they are being marketed.
FDA’s
Premarket Clearance and Approval Requirements
Unless an exemption applies, each medical device we wish to commercially distribute
in the United States requires 510(k) clearance or premarket approval. The FDA classifies medical devices into one of three classes –
Class I, Class II or Class III – depending on the degree of risk associated with each medical device and the extent of manufacturer
and regulatory control needed to ensure safety and effectiveness. Class I includes devices with the lowest risk to the patient and are
those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include
compliance with the applicable portions of the QSR, facility registration and product listing, reporting of adverse medical events, and
truthful and non-misleading labeling, advertising, and promotional materials. Class II devices are subject to the FDA’s General
Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls
can include performance standards, post-market surveillance, patient registries and FDA guidance documents. While most Class I devices
are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA
a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device. The FDA’s
permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance. All
of our current products are Class II devices subject to the 510(k) clearance requirements.
Devices deemed by the FDA to pose the greatest risks, such as life-sustaining, life-supporting
or some implantable devices, or devices that have a new intended use, or use advanced technology that is not substantially equivalent
to that of a legally marketed device, are placed in Class III, requiring approval of a premarket approval application, or PMA. Some pre-amendment
devices are unclassified, but are subject to the FDA’s premarket notification and clearance process in order to be commercially
distributed.
510(k) Clearance Pathway
When a 510(k) clearance is required, we must submit a premarket notification demonstrating
that our proposed device is “substantially equivalent,” as defined in the statute, to a previously cleared 510(k) device or
a device that was in commercial distribution in the United States before May 28, 1976, the date upon which the Medical Device Amendments
of 1976 were enacted, for which the FDA has not yet called for the submission of premarket approval applications.
After a 510(k) premarket notification is submitted, the FDA determines whether to accept
it for substantive review. If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) notification.
If it is accepted for filing, the FDA begins a substantive review. By statute, the FDA is required to complete its review of a 510(k)
notification within 90 days of receiving the 510(k) notification. As a practical matter, if the FDA requires additional information, clearance
often takes far longer, and clearance is never assured. Although most 510(k) premarket notifications are cleared without clinical data,
the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may
significantly prolong the review process. If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially
market the device.
If the FDA determines that the device is not “substantially equivalent”
to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the much more
rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the de novo process. A
manufacturer can also submit a petition for direct de novo review if the manufacturer is unable to identify an appropriate predicate device
and the new device or new use of the device presents a moderate or low risk.
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After a device receives 510(k) clearance, any modification that could significantly
affect its safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance
or, depending on the modification, could require a PMA application or de novo classification.
The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k) or a PMA in the first instance,
but the FDA can review any such decision and disagree with a manufacturer’s determination. Many minor modifications are accomplished
by a letter-to-file in which the manufacture documents the change in an internal letter-to-file. The letter-to-file is in lieu of submitting
a new 510(k) to obtain clearance for such change. The FDA can always review these letters to file in an inspection. If the FDA disagrees
with a manufacturer’s determination regarding whether a new premarket submission is required for the modification of an existing
device, the FDA can require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or approval of
a PMA is obtained. In addition, in these circumstances, the FDA can impose significant regulatory fines or penalties for failure to submit
the requisite PMA(s).
Over the last several years, the FDA has proposed reforms to its 510(k)-clearance process,
and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult
for manufacturers to utilize the 510(k)-clearance process for their products. For example, in November 2018, FDA officials announced forthcoming
steps that the FDA intends to take to modernize the premarket notification pathway under Section 510(k) of the FFDCA. Among other things,
the FDA announced that it planned to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates.
These proposals included plans to potentially sunset certain older devices that were used as predicates under the 510(k)-clearance pathway
and to potentially publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate
devices that are more than 10 years old. In May 2019, the FDA solicited public feedback on these proposals. These proposals have not yet
been finalized or adopted, and the FDA may work with Congress to implement such proposals through legislation.
In September 2019, the FDA finalized guidance describing an optional “safety and
performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate
substantial equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria
established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of their medical devices to
specific predicate devices in the clearance process. The FDA maintains a list of device types appropriate for the “safety and performance
based” pathway and will continue to develop product-specific guidance documents that identify the performance criteria for each
such device type, as well as the testing methods recommended in the guidance documents, where feasible.
Laser devices used for aesthetic procedures, such as hair removal, have generally qualified
for clearance under 510(k) procedures.
The table below presents the specific FDA 510(k) clearances, dates and summary of cleared
indications for our BodyTite (Inmode RF/IgniteRF), Optimas, OptimasMAX, Votiva, Contoura, Triton,
EmbraceRF, Morpheus8, EvolveX, Define, and Evoke platforms:
|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
IgniteRF |
Radiofrequency (RF) |
Monopolar:
HP101396A
HP172296A
HP060999A
HP102206A (FaceTite Turbo )
HP253966A(BodyTite Turbo)
Bipolar:
QuantumRF 25 minimally invasive handpiece
QuantumRF 10 minimally invasive handpiece
Fractional RF Applicators:
Morpheus8 Burst
Morpheus8 Burst Deep |
K251254(01/14/2026)
The IgniteRF System with the monopolar RFAL
handpieces is indicated for:
use in dermatological and general surgical procedures where coagulation/contraction
of soft tissue or hemostasis is needed.
The IgniteRF System with the bipolar QuantumRF
handpieces is indicated for:
use in dermatological and general surgical procedures where coagulation/contraction
of soft tissue or hemostasis is needed.
The IgniteRF System with the Morpheus8
Burst and Moprheus8 Burst Deep applicators are indicated for:
use in dermatologic procedures where coagulation/contraction of soft tissue or hemostasis
is needed.
At higher energy levels greater than 62 mJ/pin, the use of the Morpheus8
Burst and Morpheus8 Burst Deep Applicator is limited to Skin Types I-IV.
|
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|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
OptimasMAX |
Radiofrequency (RF), Laser, IPL |
Laser Applicators:
• DiolazeXL
MAX 810nm
• Fusion
Light 755/810nm
• Fusion
Dark 810/1064nm
• VasculazeMAX
IPL Applicators:
• Lumecca
580 PEAK.
• Lumecca
515 PEAK;
Non-Invasive RF Applicators:
• Forma
(Plus)
• Plus
(Plus Plus)
Fractional RF Applicators:
• Morpheus8™
• Morpheus8™
DEPP
|
K251632 (06/26/2025)
The OptimasMAX System with the Diode laser
Applicators is indicated for:
• Diolaze
XL MAX 810nm Applicator is intended for hair removal and permanent hair reduction defined as the stable, long-term reduction in
hair counts at 6, 9, or 12 months following a treatment regime.
• Fusion
Light 755/810nm & Fusion Dark 810/1064nm Applicators are intended for hair removal.
• VasculazeMAX
Applicator is intended for the treatment of vascular lesions, including angiomas, hemangiomas, telangiectasia, port wine stains, leg veins
and other benign vascular lesions.
The OptimasMAX System with the IPL Applicator
is indicated for:
• IPL Applicator with wavelengths
(515-l200nm) is indicated for use for the following treatments: The treatment of benign pigmented epidermal lesions, including dyschromia,
hyperpigmentation, melasma, ephelides (freckles); The treatment of benign cutaneous vascular lesions, including port wine stains, facial,
truncal and leg telangiectasias, rosacea, erythema of rosacea, angiomas and spider angiomas, poikiloderma of Civatte, superficial leg
veins and venous malformations.
The OptimasMAX System with the non-invasive
RF Applicators is indicated for:
• Plus
and Forma Applicators are indicated for the temporary relief of minor muscle aches and pain, temporary relief of muscle spasms,
and temporary improvement of local blood circulation.
The OptimasMAX System with the Morpheus8
RF Applicators indicated for:
Morpheus8 Applicators are intended for use
in dermatologic procedures where coagulation/contraction of soft tissue or hemostasis is needed. At higher energy levels greater than
62 mJ/pin, the use of the Moprheus8 applicator is limited to Skin Types I-IV.
|
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|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
Define |
Radiofrequency (RF) |
Cheek
Chin
Forma
MiniFX
Morpheus8 |
K242598 (11/24/2024)
The Define System with the Cheek and Chin Applicators is indicated
for the temporary relief of minor muscle aches and pain, temporary relief of muscle spasms, and temporary improvement of local blood circulation.
The Define System with the Forma
Applicator is intended for the relief of minor muscle aches and pain, relief of muscle spasms, and for the temporary improvement
of local blood circulation.
The Define System with the MiniFX
Applicator is intended for the relief of minor muscle aches and pain, relief of muscle spasms, for the temporary improvement of local
blood circulation and for the temporary reduction in the appearance of cellulite.
The Define System with the Morpheus8 Applicator is intended for
use in dermatologic procedures where coagulation/contraction of soft tissue or hemostasis is needed. At higher energy levels greater than
62 mJ/pin, the use of the Morpheus8 Applicator is limited to Skin Types I-IV. |
|
InMode RF / IgniteRF |
Radiofrequency (RF) |
QuantumRF 25 minimally invasive handpiece
QuantumRF 10 minimally invasive handpiece
|
K240780 (07/24/2024)
InMode RF/IgniteRF platform with the
FaceTite or BodyTite is indicated for use in dermatologic
procedures where coagulation/contraction of soft tissue or hemostasis is needed. |
|
InMode system with Morpheus8 90 applicators (coagulation/contraction
of software tissue) |
Radiofrequency (RF) |
• The standard
Morpheus 8 90 Applicator is limited to use with the Morpheus8 90 tip head. |
K240017 (06/13/2024)
The InMode System with the Morpheus8 90 Applicator
is intended for use in dermatological procedures where coagulation/contraction of soft tissue or hemostasis is needed. At higher energy
levels greater than 62 mJ/pin, the use of the Morpheus8 Applicator is limited to Skin Types I-IV.
|
|
InMode RF / IgniteRF |
Radiofrequency (RF) |
BodyTite Turbo minimally invasive handpiece
FaceTite Turbo minimally invasive handpiece
|
K233642 (03/20/2024)
InMode RF/IgniteRF platform with the
FaceTite or BodyTite is indicated for use in dermatologic procedures where coagulation/contraction
of soft tissue or hemostasis is needed.
|
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|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
Evolve system with the Transform applicator |
Sequential RF/EMS |
Transform |
K231495 (10/13/2023)
The Evolve System with the Transform Applicator
employs RF technology and EMS-TENS technology for the treatment of selected medical conditions.
The Transform Applicator in RF mode is intended
for the temporary relief of minor muscle aches and pain, temporary relief of muscle spasms, and temporary improvement of local blood circulation.
The Transform Applicator in EMS mode is intended
for:
• Relaxation of muscle spasms
• Prevention or retardation of
disuse atrophy
• Increasing local blood circulation
• Muscle re-education
• Maintaining or increasing range
of motion
• Immediate postsurgical stimulation
of calf muscles to prevent venous thrombosis
The Transform Applicator in TENS mode is intended
for:
• Symptomatic relief and management
of chronic, intractable pain
• Post-surgical acute pain
• Post-trauma acute pain
Additionally, the Transform Applicator in sequential RF/EMS mode is intended for:
• Non-invasive lipolysis (breakdown
of fat) of the abdomen.
• Reduction in circumference of
the abdomen
|
|
InMode system with Morpheus8 applicators (coagulation/contraction
of software tissue) |
Radiofrequency (RF) |
• The standard
Morpheus 8 Applicator is limited to use with the 12, 24 & T tip heads.
• The Morpheus
8 Body Applicator is limited to use with the 40-tip head. |
K231790 (07/20/2023)
The InMode System with the Morpheus8 Applicators
is intended for use in dermatological procedures where coagulation/contraction of soft tissue or hemostasis is needed. At higher energy
levels greater than 62 mJ/pin, the use of the Morpheus8 Applicator is limited to Skin Types I-IV.
|
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|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
InMode Multi System (interface screen was slightly enlarged from
10 inch to 12 inch) |
Radiofrequency (RF), Laser, IPL |
Laser Applicators:
• Diolaze XL 810nm
• Diolaze XL 755/810nm
• Diolaze XL 810/1064nm
• VLaze (Vasculaze)
• IPL Applicator:
• SR IPL (Lumecca
580, Lumecca 515)
Non-Invasive RF Applicators:
• Forma
(Plus)
• Plus
(Plus Plus)
• Plus90
• i-Forma
• BodyFX™
(WMBody)
• MiniFX™
• WMFace
Fractional RF Applicators:
Fractora
• 24
pins tip (FRF)
• 60
pins tip
• Morpheus8™
• 12
pins tip (Prime Tip)
• 24
pins tip (Fractora 3D)
• 40
pins tip (Body Tip)
• T
tip |
K221571 (05/26/2022)
The InMode Multi System with the Diode laser Applicators is indicated for:
• Diolaze
XL 810nm Applicator is intended for hair removal and permanent hair reduction defined as the stable, long-term reduction in hair
counts at 6, 9, or 12 months following a treatment regime.
• Diolaze
XL 755/810nm & 810/1064nm Applicators are intended for hair removal.
• VLaze
Applicator is intended for the treatment of vascular lesions, including angiomas, hemangiomas, telangiectasia, port wine stains, leg veins
and other benign vascular lesions.
The InMode Multi System with the IPL Applicator is indicated for:
• IPL Applicator with wavelengths
(515-l200nm) is indicated for use for the following treatments: The treatment of benign pigmented epidermal lesions, including dyschromia,
hyperpigmentation, melasma, ephelides (freckles); The treatment of benign cutaneous vascular lesions, including port wine stains, facial,
truncal and leg telangiectasias, rosacea, erythema of rosacea, angiomas and spider angiomas, poikiloderma of Civatte, superficial leg
veins and venous malformations.
The InMode Multi System with the non-invasive RF Applicators is indicated for:
• BodyFX
(WMBody) and MiniFX Applicators are intended for the treatment of the following medical conditions:
Relief of minor muscle aches and pains, relief of muscle spasms, temporary improvement of local blood circulation; and temporary reduction
in the appearance of cellulite.
• Plus/
Plus90/Plus-Plus (Forma) and i-Forma Applicators are indicated for the temporary relief
of minor muscle aches and pain, temporary relief of muscle spasms, and temporary improvement of local blood circulation.
• FaceFX
(WMFace) Applicator is intended for use in dermatologic procedures, for noninvasive treatment of mild to moderate facial wrinkles and
rhytids.
The InMode Multi System with the Fractional RF Applicators is indicated for:
• FRACTORA 60 pin Applicator is
intended for use in dermatological procedures requiring ablation and resurfacing of the skin.
• FRF 24 pin Applicator is intended
for use in dermatologic and general surgical procedures for electrocoagulation and hemostasis.
Fractora3D and Morpheus8 Applicators are intended for use in dermatologic and general
surgical procedures for electrocoagulation and hemostasis. At higher energy levels greater than 62 mJ/pin, use is limited to Skin Types
I-IV.
|
|
InMode RF Multi Platform – Contoura |
Radiofrequency (RF) |
Forma(Plus), Plus90,
Plus(Plus-Plus)
BodyFX,
MiniFX, Wmface, Fractora 24 pins tip
Fractora 60 pins tip Morpheus8 24 Pin Applicator Morpheus8 40 Pin treatment tip • Morpheus8
12 Pin treatment tip
• Morpheus8
T Pin treatment tip |
K201150 (07/21/2020)
The InMode RF Multi-System with the Non-invasive RF Applicators employs RF energy
for various applications:
• Forma
(Plus), Plus (Plus
Plus) and Plus90 for relief of minor muscle aches and pain, relief of muscle spasm
• , and temporary improvement
of local blood circulation.
• WMface
is intended for use in dermatologic procedures for non-invasive treatment of mild to moderate facial wrinkles and rhytids.
• BodyFX™
(WMBody)/MiniFX™ for relief of minor muscle aches
and pain, relief of muscle spasms, temporary improvement of local blood circulation and temporary reduction in the appearance of cellulite.
The InMode RF Multi-System with the Fractional Applicators employs RF energy for various
applications:
• Fractora
Applicator with 60 pins tip is designed for use in dermatological procedures requiring ablation and resurfacing of the skin.
• Fractora
Applicator with 24 pins tip is intended for use in dermatological and general surgical procedures for electrocoagulation and hemostasis.
At higher energy levels greater than 62mJ/pin, use of the applicator is limited to skin types I-IV.
• Morpheus8™ for dermatological
and general surgical procedures for electrocoagulation and hemostasis. At higher energy levels greater than 62mJ/pin, use of the applicator
is limited to skin types I-IV.
|
53
|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
Inmode |
Powered muscle stimulator |
Tone |
K192249 (12/17/2019)
The Evolve platform is used in EMS mode for:
• prevention or retardation of
disuse atrophy;
• maintaining or increasing range
of motion;
• muscle re-education;
• relaxation of muscle spasms;
• increasing local blood circulation;
and
• immediate postsurgical stimulation
of calf muscles to prevent venous thrombosis.
And in TENS mode for:
• symptomatic relief and management
of chronic, intractable pain;
• post-surgical acute pain;
and
• post-traumatic acute pain.
|
|
InMode |
Powered muscle stimulator |
vTone |
K200293 (05/05/2020)
The InMode System with the vTone Applicator is intended to provide electrical stimulation
and neuromuscular re-education for the purpose of rehabilitation of weak pelvic floor muscles for the treatment of stress, urge, and mixed
urinary incontinence in women.
|
|
EmFace (Evoke) |
Radiofrequency (RF) |
Cheek
Chin |
K191855 (10/29/2019)
The EmFace (Evoke)
device with the Cheek and Chin applicators
is indicated for the temporary relief of minor muscle aches and pain, temporary relief of muscle spasms, and temporary improvement of
local blood circulation.
|
|
EmBody (Evolve) |
Radiofrequency (RF) |
EMBodyPlus – Tite
EmBodyFX – Trim |
K183450 (06/20/2019)
The EmBody (Evolve) platform with
its designated applicators is intended for the treatment of the following medical conditions:
The EmBodyPlus (Tite) hands-fee
applicator is intended for the temporary relief of minor muscle aches and pain, temporary relief of muscle spasms, and temporary improvement
of local blood circulation.
The EmBodyFX(Tite) hands-free applicator
is intended for the treatment of the following medical conditions using RF combined with massage:
• relief of minor muscle aches
and pain, relief of muscle spasms, and temporary improvement of local blood circulation; and
• temporary reduction in the appearance
of cellulite.
|
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|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
InMode RF / Bodite / EmbraceRF |
Radiofrequency (RF) |
Bodyrite minimally invasive handpiece
for thick body areas (>20mm) |
K171593 (10/10/2017)
The InMode RFIBodyTitel EmbraceRF platform
with the minimally invasive Bodyrite handpiece for thick body areas is indicated for
use in dermatological and general surgical procedures for electrocoagulation and hemostasis.
|
|
InMode RF / Bodyrite / EmbraceRF |
Radiofrequency (RF) |
Bodyrite minimally invasive handpiece
for thin body areas (<20mm) or for large specialty areas |
K163190 (12/12/2016)
The InMode RFIBodyTitel EmbraceRF platform
with the minimally invasive Bodyrite handpiece for thin body and large specialty areas
is indicated for use in dermatological and general surgical procedures for electrocoagulation and hemostasis.
|
|
InMode RF / EmbraceRF |
Radiofrequency (RF) |
FaceTite |
K151793 (02/19/2016)
The InMode RF/EmbraceRF platform
with the FaceTite handpiece is indicated for use in dermatological and general surgical
procedures for electrocoagulation and hemostasis.
|
|
Optimas / InMode RF |
Radiofrequency (RF) |
Fractora (60 pin tip) |
K102461 (06/02/2011)
The Optimas/InMode RF platform with
the Fractora 60 pin tip handpiece is indicated for use in dermatological procedures
requiring ablation and resurfacing of the skin.
|
|
Optimas / InMode RF / EmbraceRF |
Radiofrequency (RF) |
Fractora (24 pin tip) FractoraV
|
K151273 (01/04/2016)
The OptimaslInMode RFI EmbraceRF platform
with the Fractora 24 pin tip handpiece is indicated for use in dermatologic and general
surgical procedures for electrocoagulation and hemostasis.
|
|
Optimas |
Radiofrequency (RF) |
Morpheus8 |
K180189 (06/01/2018)
The Optimas platform with the Morpheus8 handpiece
is indicated for use in dermatological and general surgical procedures for electrocoagulation and homeostasis.
|
|
InMode RF |
Radiofrequency (RF) |
Morpheus8 24 Pin Applicator
Morpheus8 40 Pin treatment tip (New tip)
• Morpheus8 12 Pin treatment
tip (New tip)
• Morpheus8 T Pin treatment
tip (New tip)
(maximal treatment depth 4.00 mm)
|
K192695 (12/27/2019)
The InMode System with the Morpheus8 (Fractora) Applicators
is intended for use in dermatological procedures for electrocoagulation and hemostasis. At higher energy levels greater than 62 mJ/pin,
use of the Morpheus8 (Fractora) Applicator is limited to Skin Types I-IV. |
55
|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
InMode |
Radiofrequency (RF) |
Morpheus8 24 Pin Applicator
Morpheus8 40 Pin treatment tip (New tip)
• Morpheus8
12 Pin treatment tip (New tip)
• Morpheus8
T Pin treatment tip (New tip)
maximal treatment depth 7.00 mm)
|
K200947 (06/12/2020)
The InMode System with the Morpheus8 Applicators is intended for use in dermatological
procedures for electrocoagulation and hemostasis. At higher energy levels greater than 62 mJ/pin, use of the Morpheus8 (Fractora) Applicator
is limited to Skin Types I-IV. |
|
EmBody (Evolve) |
Radiofrequency (RF) |
Tone |
K201285 (03/05/2021)
The EmBody (Evolve) platform with its designated applicators is intended
for the treatment of the following medical conditions:
The EmBody (Evolve) System with Tone Applicator is designed to operate in two modes
– EMS and TENS. In EMS mode it is used for:
• Relaxation of muscle spasms
• Prevention or retardation of
disuse atrophy
• Increasing local blood circulation
• Muscle re-education
• Maintaining or increasing range
of motion
• Immediate postsurgical stimulation
of calf muscles to prevent venous thrombosis
And in TENS mode is intended for:
• Symptomatic relief and management
of chronic, intractable pain
• Post-surgical acute pain
• Post-trauma acute pain
|
|
EmBody (Evolve) |
Radiofrequency (RF) |
EMBodyPlus – Tite
T3-Transform |
K210877 (07/19/2021)
The EvolveX System with the T3 Applicator employs RF technology or EMS-TENS technology
for the treatment of selected medical conditions.
The T3 Applicator in RF mode is intended for the temporary relief of minor muscle
aches and pain, temporary relief of muscle spasms, and temporary improvement of local blood circulation.
The T3 Applicator in EMS mode is intended for:
• Relaxation of muscle spasms
• Prevention or retardation of
disuse atrophy
• Increasing local blood circulation
• Muscle re-education
• Maintaining or increasing range
of motion
• Immediate postsurgical stimulation
of calf muscles to prevent venous thrombosis
The T3 Applicator in TENS mode is intended for: • Symptomatic relief and management
of chronic, intractable pain
• Post-surgical acute pain
• Post-trauma acute pain
The RF treatment mode and EMS/TENS mode should not be used in combination or sequentially.
|
56
|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
InMode RF Pro Platform – Empower |
Radiofrequency (RF) |
i-Forma
Forma(Plus), Plus90,
Plus(Plus-Plus)
BodyFX,
MiniFX,
Wmface,
Fractora 24 pins tip
Fractora 60 pins tip
Morpheus8 24 Pin
Applicator
Morpheus8 40
Pin treatment tip
• Morpheus8
12 Pin treatment tip
• Morpheus8
T Pin treatment tip |
K201150 (07/21/2021)
The InMode RF Pro System with the Non-invasive RF Applicators employs RF energy
for various applications:
• i-Forma,
Forma (Plus), Plus
(Plus Plus) and Plus90 for relief of minor muscle aches
and pain, relief of muscle spasms, and temporary improvement of local blood circulation.
• WMface
is intended for use in dermatologic procedures for non-invasive treatment of mild to moderate facial wrinkles and rhytids.
• BodyFX™
(WMBody)/MiniFX™ for relief of minor muscle aches
and pain, relief of muscle spasms, temporary improvement of local blood circulation and temporary reduction in the appearance of cellulite.
The InMode RF Multi-System with the Fractional Applicators employs RF energy for various applications:
• Fractora Applicator with 60
pins tip is designed for use in dermatological procedures requiring ablation and resurfacing of the skin.
• Fractora Applicator with 24
pins tip is intended for use in dermatological and general surgical procedures for electrocoagulation and hemostasis. At higher energy
levels greater than 62mJ/pin, use of the applicator is limited to skin types I-IV.
• Morpheus8™ for dermatological
and general surgical procedures for electrocoagulation and hemostasis. At higher energy levels greater than 62mJ/pin, use of the applicator
is limited to skin types I-IV.
|
|
InMode RF / EmbraceRF |
Radiofrequency (RF) |
AccuTite |
K182325 (08/27/2018)
The InMode RFI EmbraceRF platform
with the AccuTite handpiece is indicated for use in dermatological and general surgical procedures for electrocoagulation and hemostasis.
|
|
Contoura / Optimas |
Radiofrequency (RF) |
Plus
Plus90
Plus-Plus |
K172302 (12/08/2017)
The Contoura/Optimas platform with
the Forma Plus, Plus90, Plus-Plus handpieces
is indicated for the temporary relief of minor muscle aches and pain, temporary relief of muscle spasms, and temporary improvement of
local blood circulation.
|
|
Optimas |
Intense Pulsed Light (IPL) |
Lumecca 515
Lumecca 580 |
K123860 (04/02/2013)
The Optimas platform with the Lumecca
515 and Lumecca 580 handpieces is indicated for:
• the treatment of benign pigmented
epidermal lesions, including dyschromia, hyperpigmentation, melasma, ephelides (freckles); and
• the treatment of benign cutaneous
vascular lesions, including port wine stains, facial truncal and leg telangiectasias, rosacea, erythema of rosacea, angiomas and spider
angiomas, poikiloderma of civatte, superficial leg veins and venous malformations.
|
|
Triton / Optimas |
Laser |
DiolazeXL |
K170738 (08/07/2017)
The Triton/Optimas platform with
the DiolazeXL handpiece is indicated for hair removal and permanent hair reduction defined
as stable, long-term reduction in hair counts at six, nine or 12 months following a treatment regime.
|
|
Triton / Optimas |
Powered Laser |
Vasculaze |
K173677 (02/23/2018)
The Triton/Optimas platform with
the Vasculaze handpiece is indicated for the treatment of vascular lesions, including
angiomas, hemangiomas, telangiectasia, port wine stains, leg veins and other benign vascular lesions.
|
|
Votiva |
Radiofrequency (RF) |
FormaV |
f (07/12/2016)*
The InMode Plus90 (Votiva) platform
with the Forma V handpiece is indicated for
the temporary relief of minor muscle aches and pain, temporary relief of muscle spasms, and temporary improvement of local blood circulation.
|
57
|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications
|
|
Contoura / Optimas |
Radiofrequency (RF) |
BodyFX |
K131362 (10/08/2013)
The Contoura/Optimas platform with
the BodyFX handpiece is indicated for the treatment of:
• relief of minor muscle aches
and pains, muscle spasms and temporary improvement of blood circulation; and
• temporary reduction in the appearance
of cellulite.
|
|
Contoura / Optimas |
Radiofrequency (RF) |
MiniFX |
K160329 (08/19/2016)
The Contoura/Optimas platform with
the MiniFX handpiece is indicated for the treatment of:
• relief of minor muscle aches
and pain, muscle spasms, and temporary improvement of local blood circulation; and
• temporary reduction in the appearance
of cellulite.
|
|
Triton / Optimas |
Laser |
Triton Duo Light/ Triton Duo
Dark InMode Diolaze XL 755/810nm InMode
Diolaze XL 810/1064nm InMode Diolaze XL 810nm
|
K180719 (06/14/2018)
The Triton/Optimas platform
with the Triton Duo Light and Triton Duo
Dark handpieces is indicated for hair removal and permanent hair reduction. |
|
InMode |
Laser |
Diolaze |
K142952 (11/24/2014)
The InMode Diolaze device is indicated for use for hair removal and for permanent
reduction in hair regrowth, defined as the long-term, stable reduction in the number of hairs regrowing when measured at 6, 9, and 12
months after the completion of a treatment regime
|
|
InMode |
Laser |
Diolaze |
K123682 (02/27/2013)
The InMode Diolaze device is indicated for use for hair removal
|
|
InMode |
Radiofrequency (RF) |
WMface |
k140926 (12/03/2014)
The InMode WMface device is intended for use in dermatologic procedures for noninvasive
treatment of mild to moderate facial wrinkles and rhytids.
|
| * |
In addition to the 510(k) clearance, we also market the FormaV for use with the Votiva
platform pursuant to a classification regulation for “genital vibrators for therapeutic use” under 21 C.F.R. 884.5960, which
permits “electronically operated devices intended and labeled for therapeutic use in the treatment of sexual dysfunction or as an
adjunct to Kegel’s exercise (tightening of the muscles of the pelvic floor to increase muscle tone)” to be marketed without
a 510(k) clearance. |
Premarket Approval Pathway
A PMA must be submitted to the FDA if the device cannot be cleared through the 510(k)
process. A PMA must be supported by extensive data, including, but not limited to, technical, preclinical, clinical trials, manufacturing
and labeling, to demonstrate the safety and effectiveness of the device to the FDA’s satisfaction.
58
No device that we have developed has required premarket approval, nor do we currently
expect that any future device or indication will require premarket approval.
Pervasive and Continuing Regulation
After the FDA permits a device to enter commercial distribution, numerous regulatory
requirements apply. These include:
| • |
QSR, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation
and other quality assurance procedures during all aspects of the manufacturing process; |
| • |
clearance or approval of product modifications to 510(k)-cleared or PMA-approved devices that could affect safety or effectiveness;
|
| • |
labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or “off-label”
uses; |
| • |
advertising and promotion requirements; |
| • |
medical device reporting regulations, which require that manufacturers report to the FDA if their devices may have caused or contributed
to deaths or serious injuries or malfunctioned in ways that would likely cause or contribute to deaths or serious injuries if the malfunctions
were to recur; |
| • |
medical device correction and removal reporting regulations, which require the manufacturers to report to the FDA corrections and
removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to
health; and |
| • |
post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and
effectiveness data for the devices. |
We may be subject to similar foreign laws that may include applicable post-marketing
requirements such as safety surveillance. Our manufacturing processes are required to comply with the applicable portions of the QSR,
which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality
assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use. The QSR also requires,
among other things, maintenance of a device master file, device history file, and complaint files. As a manufacturer, our facilities,
records and manufacturing processes are subject to periodic scheduled or unscheduled inspections by the FDA. Our failure to maintain compliance
with the QSR or other applicable regulatory requirements could result in the shut-down of, or restrictions on, our manufacturing operations
and the recall or seizure of our products. The discovery of previously unknown problems with any of our products, including unanticipated
adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of
its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal
of the product from the market or voluntary or mandatory device recalls.
The FDA has broad post-market and regulatory enforcement powers. We are subject to unannounced
inspections by the FDA to determine our compliance with the QSR and other regulations, and these inspections may include the facilities
of our manufacturing subcontractors.
We also are regulated in the United States under the Radiation Control for Health and
Safety Act, which requires laser products to comply with performance standards, including design and operation requirements, and manufacturers
to certify in product labeling and in reports to the FDA that their products comply with all such standards. The law also requires laser
manufacturers to file new product and annual reports, maintain manufacturing, testing and sales records, and report product defects. Various
warning labels must be affixed and certain protective devices installed, depending on the class of the product.
Failure to comply with applicable regulatory requirements can result in enforcement
action by the FDA, which may include any of the following sanctions:
| • |
warning or untitled letters, fines, injunctions, consent decrees and civil penalties; |
| • |
unanticipated expenditures, repair, replacement, refunds, recalls, administrative detention or seizure of products; |
59
| • |
operating restrictions, partial suspension or total shutdown of production; |
| • |
refusing requests for 510(k) clearance or PMAs of new products or new intended uses; |
| • |
withdrawing 510(k) clearance or PMAs that have already been granted; and |
| • |
criminal prosecution. |
The FDA also has the authority to require us to repair, replace or refund the cost of
any medical device that we have manufactured or distributed. If any of these events were to occur, they could have a material adverse
effect on our business.
We are also subject to a wide range of federal, state and local laws and regulations,
including those related to the environment, health and safety, land use, and quality assurance. We believe that we are in compliance with
these laws and regulations as currently in effect, and our compliance with such laws will not have a material adverse effect on our capital
expenditures, earnings, and competitive and financial position.
Federal Communications Commission and other U.S. governmental agencies
governing the use of radio frequency energy
Our products generate and use radio frequency energy and therefore may be subject to
technical equipment authorization and other regulatory requirements in the countries and regions where they are marketed or distributed.
In the United States, our products are subject to the Federal Communications Commission’s equipment verification procedures, under
which the manufacturer is required to determine or verify that the equipment complies with the applicable technical standards and to keep
a record of test measurements demonstrating compliance before the equipment can be marketed or sold in the United States. Any modifications
to our products may require reverification before we are permitted to market and distribute the modified devices.
We obtain regulatory approvals in countries requiring advance clearance of our products
before they are marketed or distributed in those countries. Our failure to comply with the technical, equipment authorization or other
regulatory requirements of a specific country or region could impair our ability to commercially market and distribute our products in
that country or region.
Other Healthcare Laws
Although none of our products or procedures using our products are currently covered
by any state or federal government healthcare programs, or any private commercial payor, we may be subject to a number of foreign, federal,
and state laws and regulations that may restrict our business practices, including, without limitation, anti-kickback, false claims, physician
payment transparency and data privacy and security laws. The government has interpreted these laws broadly as they apply to the marketing
and sales activities of manufacturers and distributors. Companies targeted in such prosecutions and in civil litigation have paid substantial
fines, penalties, and settlements in the hundreds of millions of dollars or more, have been forced to implement extensive corrective action
plans, can be excluded from federal health care programs, and have often become subject to consent decrees, settlement agreements or corporate
integrity agreements severely restricting the manner in which they conduct their business. Many U.S. states and countries outside the
United States have similar fraud and abuse statutes or regulations that may be broader in scope than the U.S. federal laws, and may apply
regardless of payor, in addition to items and services reimbursed under government programs.
International Regulations
International manufacturing and sales of medical devices are subject to foreign governmental
regulations, which vary substantially from country to country. The time required to obtain clearance or approval by a foreign country
may be longer or shorter than that required for FDA clearance or approval, and the requirements may be different. For example, the European
Union has adopted numerous specific directives regulating the design, manufacture, clinical investigations, conformity assessment, labeling
and adverse event reporting for medical devices that do not necessarily have an exact equivalent under U.S. law.
60
Devices that comply with the essential requirements of the EU Medical Devices Directive
(Directive 93/42/EEC) will be entitled to bear CE conformity marking, indicating that the device conforms with the essential requirements
of the EU Medical Devices Directive and, accordingly, can be commercially distributed throughout the member states of the European Union,
the member states of the European Economic Area, or EEA (which is comprised of the 27 EU countries, plus Norway, Liechtenstein, and Iceland),
and countries that have entered into a Mutual Recognition Agreement. The method of assessing conformity varies depending on the type and
(risk) class of the product but normally involves a combination of self-assessment by the manufacturer and a third-party assessment by
a notified body, an independent organization designed by an EU country to conduct the conformity assessment. This third-party assessment
may consist of an audit of the manufacturer’s quality system and specific testing of the manufacturer’s device. An assessment
by a notified body in one member state of the European Union, the EEA or a country that has entered into a Mutual Recognition Agreement
is required in order for a manufacturer to commercially distribute the product throughout these countries. European Standardization Committees
and the International Organization for Standardization, or ISO, have promulgated voluntary harmonized standards. Compliance with applicable
standards establishes the presumption of conformity with the essential requirements for a CE Marking.
As a general rule, demonstration of conformity of medical devices and their manufacturers
with the essential requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance
of the products during normal conditions of use. Specifically, a manufacturer must demonstrate that the device achieves its intended performance
during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed
against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported
by suitable evidence. All manufacturers placing medical devices into the market in the EEA must comply with the EU Medical Device Vigilance
System. Under this system, incidents must be reported to the relevant authorities of the Member States of the EEA, and manufacturers are
required to take Field Safety Corrective Actions, or FSCAs, to reduce a risk of death or serious deterioration in the state of health
associated with the use of a medical device that is already placed on the market. An incident is defined as any malfunction or deterioration
in the characteristics and/or performance of a device, as well as any inadequacy in the labeling or the instructions for use which, directly
or indirectly, might lead to or might have led to the death of a patient or user or of other persons or to a serious deterioration in
their state of health. An FSCA may include the recall, modification, exchange, destruction or retrofitting of the device. FSCAs must be
communicated by the manufacturer or its legal representative to its customers and/or to the end users of the device through Field Safety
Notices.
On May 25, 2017, the EU passed the Medical Devices Regulation (Regulation 2017/745),
or MDR, entered into force, which repeals and replaces the EU Medical Devices Directive. The MDR allows devices lawfully placed on the
market prior to May 26, 2021 pursuant to the EU Medical Devices Directive (discussed above), to generally continue to be made available
on the market or put into service until December 31, 2028. Once the MDR phase-in period is complete after December 31, 2028, some of our
products that entered the market prior to December 31, 2028 may come out of service.
The Medicines and Healthcare Products Regulatory Agency of the United Kingdom, or MHRA,
is responsible for monitoring the UK medical device market. The MHRA requires that medical devices sold in the U.K. be required with the
MHRA. Manufacturers based outside the UK need to appoint a UK Responsible Person to register devices with the MHRA in line with the grace
periods. From July 1, 2023, all medical devices sold in the UK were required to carry a UKCA (UK Conformity Assessed) mark. However, UKCA
marking alone will not be recognized in the EU. The rules for placing medical devices on the Northern Ireland market differs from those
in the UK. All of our platforms and applicators require UKCA marking.
Several member states of the EEA have voluntarily adopted laws and regulations that
mirror those of the European Union with respect to medical devices. Other countries, such as Switzerland, have entered into Mutual Recognition
Agreements and allow the marketing of medical devices that meet European Union requirements.
In Israel, the Medical Equipment Law generally governs the regulatory process and authorizations
required for the manufacture, marketing and use of medical and certain aesthetic products in Israel. Under the Medical Equipment Law,
we are required to register our products with the Israeli Ministry of Health. The Medical Equipment Law offers a fast-track approval process
for devices that received approval from certain non-Israeli regulatory agencies, including FDA clearance or CE marks. The registration
process under this fast-track process involves submitting an application to the Israeli Ministry of Health which includes, among other
things, documentation confirming receipt of the necessary regulatory approvals, such as 510(k) clearance or CE mark certification. In
addition, we must provide details regarding the approval, including the period for which the applicable device was authorized for marketing
in the applicable country, registration terms, any limitations, and any instructions given with respect to the labeling and packaging
of such device. If approved, the registration of the device in Israel will be valid for the same period that such device was authorized
to be marketed in the applicable non-Israeli country (but in any event not more than five years from the date of registration in Israel),
and the device will be subject to the terms and conditions imposed by the relevant non-Israeli regulatory agency, if any. We have taken
advantage of such fast-track approval in the past. All of our products that we currently sell in Israel are registered with the Israeli
Ministry of Health, with registrations that are set to expire on June 10, 2029 up to May 6, 2030.
61
Data Protection
Our business involves the use, storage and transmission of information about our employees,
our customers and, to a certain extent, clients of our customers. In the course of our operations, we may gain access to confidential
customer information, including nonpublic personal data. We are bound by certain agreements to use and disclose this information in a
manner consistent with the privacy standards under regulations applicable to our customers and are subject to numerous U.S. and foreign
jurisdiction laws and regulations designed to protect this information. With the increase in publicity regarding data breaches resulting
in improper dissemination of consumer information, many states have passed laws regulating the actions that a business must take if it
experiences a data breach, such as prompt disclosure to affected customers, governmental entities, and the media. In addition to data
breach notification laws, some states have enacted statutes and rules requiring businesses to protect certain types of personal information
they hold or to otherwise comply with certain specified data security requirements for personal information. We intend to protect all
personal information and to comply with all applicable laws regarding the protection of such information.
As an Israeli headquartered company, we are subject to the Israeli Protection of Privacy
Law of 1981 and the Privacy Protection Regulations (Data Security) 5777-2017. Further, in the U.S., numerous federal and state laws and
regulations, including data breach notification laws, health information privacy laws and consumer protection and advertising laws (e.g.,
Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure and protection of health-related and other
personal information could apply to our operations or the operations of our collaborators and third-party providers.
In the European Union and the EEA, the GDPR imposes several stringent requirements for
controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to process
their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for
data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health data
and pseudonymized (i.e., key-coded) data and additional obligations when we contract third-party
processors in connection with the processing of the personal data. The GDPR provides that EU and EEA member states may make their own
further laws and regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share
personal data or could cause our costs to increase, and harm our business and financial condition. Failure to comply with the requirements
of GDPR and the applicable national data protection laws of the EU and EEA member states may result in fines of up to €20 million
or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.
To comply with the new data protection rules imposed by GDPR, we may be required to put in place additional mechanisms ensuring compliance.
Further, since January 1, 2021, we are subject to the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act
2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, e.g., fines up to the greater of €20 million
or 4% of global turnover. The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection
law remains unclear, and it is unclear how UK data protection laws and regulations will develop in the medium to longer term, and how
data transfers to and from the United Kingdom will be regulated in the long term. It is not clear whether (and when) an adequate decision
may be granted by the European Commission enabling data transfers from European Union member states to the United Kingdom long-term without
additional measures. These changes will lead to additional costs and increase our overall risk exposure.
Corporate and Social Responsibility
Our management continues to participate in Corporate Social Responsibility, or CSR,
Reporting on our website to respond to increased awareness of the importance of environmental and sustainability topics and non-material
company activities towards the long-term success of the company. As a manufacturer of medical devices, we already adhere to strict quality
and safety requirements dictated by regulatory bodies such as the FDA, CE, Health Canada, TGA (Australia), Brazil, Japan, China’s
National Medical Products Administration, ISO, as well as international GMP standards. We successfully completed all audits conducted
by the regulatory bodies in 2025, including a physical audit of our facilities and the facilities of our Tier 1 subcontractors –
Medimor and Flex.
Our mission is to develop and produce innovative, life-changing technologies to enable
patients to become their ‘best possible self’, in the safest and most effective manner. Our commitment to CSR topics complements
InMode’s core values to provide the ultimate in customer care and support.
62
Community Involvement in the Periphery
Robotics Mentoring in Dimona
Since 2017, Moshe Mizrahy and InMode engineers have been involved with the FIRST Robotics
Group at Amit Zinman High School in Dimona. Dimona is located in southern Israel and is an area in the lower rungs of the socioeconomic
scale.
InMode supports the robotics team of Amit Zinman High School with more than just financial
resources. Our engineers provide ongoing mentoring and opportunities to design electromechanical devices. One of the program’s goals
is to introduce STEM subjects into the community through projects and our outreach programs and activities for kindergartens and elementary
schools. We continue to support the high school’s robotics team with mentoring, resources, and funds and plan to continue to do
so in 2026.
Technology Project at ORT Maale Tiberias High School
InMode, together with Medimor, our Tier 1 supplier, has established a partnership with
ORT Maale Tiberias school to create a sustainable technology project. We have earmarked one hundred thousand dollars to this educational
project. Tiberias is in an economically depressed area of Israel and we are proud to sponsor such an exciting and impactful project.
C. Organizational Structure
Our subsidiaries, the countries of their incorporation/residence and proportion of ownership
interest are as follows:
|
Name |
Jurisdiction of Incorporation
|
Percentage Ownership |
|
Invasix Inc. |
Delaware, USA |
100% |
|
Invasix Corp. |
Canada |
100% |
|
Invasix UK Ltd. |
United Kingdom |
100% |
|
InMode Japan KK |
Japan |
100% |
|
Invasix Iberia S.L. |
Spain |
100% |
|
Guangzhou InMode Medical Technology Ltd. |
China |
100% |
|
InMode India Private Limited |
India |
100% |
|
InMode Australia Pty Ltd |
Australia |
100% |
|
IMD France EURL |
France |
100% |
|
InMode Innovations Ltd. |
Israel |
100% |
|
InMode Italy S.r.l |
Italy |
100% |
|
InMode Germany GmbH |
Germany |
100% |
|
InMode (Thailand) Ltd. |
Thailand |
100%* |
|
Invasix SAS |
Argentina |
100% |
|
InMode Manufacturing Ltd |
Israel |
100% |
* Due to local requirements, InMode Innovations Ltd. and Rafael Lickerman each own less
than 0.1% of shares of InMode (Thailand) Ltd.
D. Property, Plants and Equipment
We lease our main office, manufacturing and research and development facilities, located
in the Industrial Zone in Yokneam, Israel, pursuant to a lease that expires in December 2027. The original agreement was signed in May
2018. In January 2019, February 2020, March 2021, May 2023, June 2024 and July 2024, we signed supplemental lease agreements, further
expanding our headquarters in Israel.
We currently lease approximately 44.1 thousand square feet in the Israeli facility.
Our current monthly rent payment is approximately $92.8 thousand. In addition, we currently lease a warehouse in Zarzir, Israel with approximately
12.4 square feet; our current monthly rent payment for such warehouse is approximately $12.9 thousand.
In August of 2020, our U.S. subsidiary, Invasix Inc., signed a leasing agreement for
an approximately 24-thousand-square-foot facility located in Orange County, California, to support our operations in the U.S. The lease
agreement is for seven years and four months and occupation of the facility commenced in the middle of April of 2021. The current monthly
rent payment is approximately $29.1 thousand.
63
Our Canadian subsidiary signed a lease agreement in April 2022 for an approximately
12-thousand-square-foot facility in Richmond Hill, Ontario. The lease agreement is for three years which began in July 2022. In April
2025 our Canadian subsidiary signed a new lease agreement, extending the lease for additional 5 years from July 2025. The current monthly
rent payment is approximately $18 thousand.
Our subsidiaries in France and Spain signed new lease agreement in January and February
2025 respectively, for an approximately 2-thousand-square-foot facility in France and approximately 3-thousand-square-foot facility in
Spain. The lease agreement is for approximately six years for each lease agreement, and the current monthly rent payment is approximately
$5 thousand for each lease agreement.
From time to time, we also lease small properties, mainly for offices for our subsidiaries
around the world, for periods that generally last up to three years.
We believe our current office space is sufficient to meet our anticipated needs for
the foreseeable future and is suitable for the conduct of our business.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion should be read in conjunction
with our consolidated financial statements and related notes for the years ended December 31, 2025, 2024 and 2023, which are included
elsewhere in this 2025 Annual Report.
Certain information called for by this Item 5, including
a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported previously in our Annual
Report on Form 20-F for the fiscal year ended December 31, 2024 under Item 5. “Operating and Financial Review and Prospects”,
filed with the SEC on February 4, 2025.
Overview
We design, develop, manufacture and commercialize innovative, energy-based, non-invasive,
minimally invasive surgical aesthetic and medical treatment solutions. Since 2010, we have launched 16 product platforms (BodyTite,
Optimas, Votiva, Contoura, Triton, EmbraceRF, EvolveX, Evoke, Morpheus8, EmpowerRF, Define, Envision, IgniteRF OptimasMAX, Luxora,
ApexRF and Solaria) that we market and sell
primarily to plastic and facial surgeons, aesthetic surgeons, medical spas, dermatologists and OB/GYNs.
As of December 31, 2025, we had a global installed base of approximately 30,900 product
platforms capable of running various multi-use applicators and minimally invasive consumables.
We anticipate that our quarterly results of operations may fluctuate from quarter to
quarter due to several factors, including seasonality, unexpected delays in the introduction and market acceptance of our products, unexpected
delays in our manufacturing operations, introduction of new and improved products by our competitors and the performance of our direct
sales organization.
Components of Our Operating Results
Revenues
We generate our revenues primarily from the sale of energy-based medical aesthetic products,
which consist of platforms and non-consumable handpieces and hands-free applicators. To a lesser extent, we generate revenue from the
sale of consumables and from the sale of extended warranties. For the year ended December 31, 2025, we derived approximately 78% of our
revenues from the sale of medical aesthetic products and approximately 22% of our revenues from the sale of consumables and extended warranties.
We expect our revenues from the sale of consumables and extended warranties to increase over time as our installed base continues to grow.
We expect continued growth in sales of consumables as a result of, increased patient and physician awareness of our medical aesthetic
products and additional sales representatives. We have expanded our sales and marketing organization as well as our number of platforms,
to help us drive and support revenue growth and hope to continue this expansion.
64
For the years ended December 31, 2025 and 2024 we derived approximately $289.0 million,
or 78% and $344.0 million, or 87%, respectively, of our total revenues from the sale of minimally invasive platforms, and we derived approximately
$7.4 million, or 2% and $20.1 million, or 5%, respectively, of our total revenues from the sale of hands-free platforms and approximately
$74.1 million, or 20% and $30.7 million, or 8%, respectively, of our total revenues from the sale of non-invasive platforms. This resulted
in the year ended December 31, 2025 a decrease of approximately $55.0 million, or 15.9%, $12.7 million, or 63.2% in revenues from the
sale of minimally invasive platforms, hands-free platforms, and increase of approximately $43.4 million, or 141.3% in revenues from non-invasive
platforms, respectively. The decrease in the total revenues for the year ended December 31, 2025 was primarily generated by a decrease
in the volume of medical aesthetic products sold by us as a result of the economic situation.
In the future, we expect that revenues from the sale of minimally invasive platforms
will continue to be a major contributor to our revenues.
We sell our products directly in the United States, Canada, the United Kingdom, Ireland,
Spain, Portugal, France, Belgium, Luxembourg, Italy, Germany, Austria, Japan, Australia, India, Thailand and Argentina, and indirectly
through third-party distributors in other countries.
The following table provides information regarding the breakdown of our revenue by geographic
region for the years ended December 31, 2025, 2024 and 2023:
|
Years Ended December 31, |
||||||||||||
|
Geographic region |
2025 |
2024 |
2023 |
|||||||||
|
Israel |
3,398 |
3,746 |
2,898 |
|||||||||
|
United States |
198,652 |
244,774 |
307,818 |
|||||||||
|
Europe |
79,045 |
63,441 |
62,532 |
|||||||||
|
Asia |
49,210 |
42,974 |
47,744 |
|||||||||
|
Other |
40,190
|
39,883
|
71,056
|
|||||||||
|
Total
|
370,495
|
394,818
|
492,048
|
|||||||||
We believe that there are opportunities for us to generate additional revenue from existing
customers who are already familiar with our products. We intend to continue to invest in research and development activities, increase
the number of sales representatives in our sales and marketing organization and introduce innovative next-generation pipeline products
to our customers. As a result, we expect that certain existing customers will be candidates for technological upgrades to enhance the
capabilities of their existing InMode products. In addition, as we continue to grow our support services program, we expect to increase
the number of customers that enter into service contracts and extended warranties with us, which would result in additional recurring
revenues. We also plan to expand our current product line in order to reach new customers, such as ENTs, ophthalmologists, general practitioners
and aesthetic clinicians, and generate additional revenue.
Cost of Revenues
Our cost of revenues consists primarily of the expenses we incur in connection with
the manufacture and assembly of our products by third parties and the direct costs we incur for the materials, labor and overhead needed
to manufacture and assemble our products.
Our cost of revenues also includes shipping, handling, service and warranty expenses,
as well as salaries and personnel-related expenses, including share-based compensation expenses, for our operations management team, which
is comprised of subcontractor supervisors and purchasing and quality control employees. We expect our cost of revenues to increase in
absolute dollars primarily as, and to the extent that, our revenue grows.
Our cost of revenues as a percentage of revenues has been, and we expect it to continue
to be, affected by a variety of factors, including the average selling price of our products, promotional prices being offered to existing
customers for our new products, manufacturing costs, the maturity of our existing products, and to a lesser extent the sales mix between
the United States and the rest of the world as our average selling price in the United States tends to be higher than in the rest of the
world after accounting for differences in currency value. We expect to see pressure on our gross margin due to increase costs and sales
of more expensive laser-based devices in the future.
Research and Development Expenses
Our research and development expenses consist of salaries and personnel-related expenses,
including share-based compensation expenses, for our employees that are primarily engaged in research, development and engineering activities.
Our research and development expenses also include regulatory-related costs and expenses, external engineering fees, materials and other
overhead expenses incurred in connection with the design and development of our products. We expense all of our research and development
costs as incurred. While we do not track our research and development spending by technology, product or application, we do expect that
our overall research and development costs will increase in absolute dollars in the future as we develop more products and technologies.
We expect research and development expenses as a percentage of our total revenue to vary over time depending on the level and timing of
initiating new product development efforts.
65
Sales and Marketing Expenses
Our sales and marketing expenses consist primarily of salaries, commissions and personnel-related
expenses, including share-based compensation expenses, for our employees that are engaged in sales and marketing activities, which include
marketing and public support of our products, participation in trade shows and industry events, promotional and public relations activities,
and administrative functions in support of sales and marketing. We expect sales and marketing expenses to continue to increase in absolute
dollars as we continue to expand our marketing organization to both drive and support our planned growth in revenue.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries and personnel-related
expenses, including share-based compensation expenses, for executive, accounting and administrative personnel, professional fees and other
general corporate expenses. We expect general and administrative expenses to grow at a steady state as our operations will continue to
expand. However, general and administrative expenses may vary over time, due to increasing legal and insurance premium costs and involvement
in IP related litigations.
Income Taxes
We are subject to income taxes in Israel, the United States and numerous foreign jurisdictions.
Our facilities in Israel were previously granted the status of “Benefited Enterprise”
which provided us with a ten-year corporate tax exemption for undistributed income from 2012 to 2021. From 2022, our corporate tax rate
under the Encouragement of Capital Investments Regulations (Preferred Technology Income and Capital Profits for a Technological Enterprise),
2017 and our Israeli subsidiary is expected to be approximately 7.5%. See “Item 10E. Additional Information-Taxation.”
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of our operations
is based upon our audited consolidated financial statements as of and for the years ended December 31, 2025, 2024 and 2023, which have
been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates and
judgments that affect the reported amount of assets, liabilities, sales and expenses and related disclosure of contingent assets and liabilities.
We base our estimates on historical experience, authoritative pronouncements and various other assumptions that we believe to be reasonable
under the circumstances. On a periodic basis, we evaluate our estimates. Actual results could differ from those estimates.
The following are our critical accounting policies and the significant judgments and
estimates affecting the application of those policies in our consolidated financial statements.
Revenue Recognition
Product revenue, Net
Revenues from product sales are recognized when the customer obtains control over our
product, typically upon shipment to the customer. Taxes collected from customers relating to product sales and remitted to governmental
authorities are excluded from revenues.
Variable consideration includes price concessions related to installment sales contracts.
We estimate variable consideration using the most likely outcome amount. Amounts included in the transaction price are recognized only
when it is probable that a significant reversal of cumulative revenues will not occur.
We do not grant any right of return, refund, cancelation or termination. From time to
time, we participate in our customers’ marketing activities and deduct costs related to such activities from revenue.
66
Service Revenue
We also generate revenues from long-term maintenance contracts or extended warranties.
Revenue from extended warranties is recognized ratably, on a straight-line basis, over the period of the applicable service contract.
Revenue from repairs performed in the absence of extended warranties is recognized when the related services are performed.
More information regarding revenue recognition is discussed in Note 2q in our consolidated
financial statements.
Income Taxes
The provision for income tax is calculated based on our assumptions as to our entitlement
to various benefits under the applicable tax laws in the jurisdictions in which we operate. The entitlement to such benefits depends upon
our compliance with the terms and conditions set out in these laws. We are subject to income taxes in Israel, the U.S. and other foreign
jurisdictions. Our effective tax rate is primarily impacted by the geographical mix of taxable income and loss. We record a tax provision
for the anticipated tax consequences of our reported operating results. Changes in tax laws, regulations, agreements and treaties, currency
exchange restrictions or the level of operations or profitability in each taxing jurisdiction could have an impact upon the amount of
current and deferred tax balances and hence our net income.
We estimate the degree to which deferred tax assets will result in a benefit, after
consideration of all positive and negative evidence, and provide a valuation allowance for deferred tax assets that we believe more likely
than not will not be realized. In situations in which we are able to determine that our deferred tax assets will be realized, that determination
generally relies on future reversals of taxable temporary differences and expected future taxable income. Applying judgment is required
in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, we considered
all available evidence, including past operating results, the most recent projections for taxable income, and prudent and feasible tax
planning strategies.
During the year ended December 31, 2024, we determined that the positive evidence
overcame any negative evidence, primarily due to cumulative income in recent years, including the effect of permanent adjustments, and
the expectation of profitability in future periods, and concluded that it was more likely than not that the United States net deferred
tax assets were realizable. As a result, we released the valuation allowance of $60.1 million related to the United States net deferred
tax assets during the year ended December 31, 2024, with $5.4 million used during 2024, and $54.7 million recorded as deferred
tax assets. As of December 31, 2025 and 2024, we concluded that the deferred tax assets for certain jurisdictions would not be realized
and therefore reserved valuation allowance in the amount of $4.8 million and $4.2 million, respectively, with respect to these deferred
tax assets.
Significant judgment is required in evaluating our uncertain tax positions. In evaluating
the exposure associated with our tax positions, we record reserves for uncertain tax positions in accordance with US GAAP, based on the
technical support for the positions and our past audit experience with similar positions. For those tax positions where it is more likely
than not that a tax benefit will be sustained, we record the largest amount of tax benefit with a greater than 50 percent likelihood of
being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. We believe our tax
positions comply with applicable tax laws and we intend to defend our positions, no assurance can be given that the final tax outcome
of these matters will not be different from that which is reflected in our historical income tax reserves and accruals. To the extent
that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income
taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and
changes to reserves that are considered appropriate. The liability for these unrecognized tax benefits totaled $4.4 million on December 31, 2025 (see
Note 13 to our consolidated financial statements for additional information).
67
Operating Results
The following table summarizes the results of our operations for the periods presented:
|
Years Ended December 31, |
||||||||||||||||||||||||
|
2025 |
2024 |
2023 |
||||||||||||||||||||||
|
($) |
(% of Revenues) |
($) |
(% of Revenues) |
($) |
(% of Revenues) |
|||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||
|
Revenues |
370,495 |
100 |
394,818 |
100 |
492,048 |
100 |
||||||||||||||||||
|
Cost of revenues |
79,525 |
21 |
77,752 |
20 |
80,708 |
16 |
||||||||||||||||||
|
Gross profit |
290,970 |
79 |
317,066 |
80 |
411,340 |
84 |
||||||||||||||||||
|
Operating expenses: |
||||||||||||||||||||||||
|
Research and development |
13,319 |
4 |
13,137 |
3 |
13,410 |
3 |
||||||||||||||||||
|
Sales and marketing |
180,578 |
49 |
181,366 |
46 |
193,042 |
39 |
||||||||||||||||||
|
General and administrative |
11,686 |
3 |
10,032 |
3 |
9,228 |
2 |
||||||||||||||||||
|
Total operating expenses |
205,583 |
56 |
204,535 |
52 |
215,680 |
44 |
||||||||||||||||||
|
Operating income |
85,387 |
23 |
112,531 |
28 |
195,660 |
40 |
||||||||||||||||||
|
Finance income, net |
24,943 |
7 |
30,938 |
8 |
21,607 |
4 |
||||||||||||||||||
|
Income before income taxes |
110,330 |
30 |
143,469 |
36 |
217,267 |
44 |
||||||||||||||||||
|
Income taxes benefit (expenses) |
(16,499 |
) |
5 |
37,806 |
10 |
(19,348 |
) |
4 |
||||||||||||||||
|
Net income |
93,831 |
25 |
181,275 |
46 |
197,919 |
40 |
||||||||||||||||||
Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
Revenues
Our revenues decreased by approximately $24.3 million, or 6%, to approximately $370.5
million for the year ended December 31, 2025, compared to approximately $394.8 million for the year ended December 31, 2024. This decrease
was attributable to a decrease in sales of our minimal invasive platforms worldwide in the amount of $55.0 million, a decrease in the
sales of our hand free platforms worldwide in the amount of $12.7 million, offset by increase of $43.4 million from non-invasive mainly
from introduction of 2 new products in 2025, ApexRF and Solaria.
The decrease in the total revenues for the year ended December 31, 2025 as compared to the prior year was primarily generated by a decrease
in the volume of medical aesthetic products sold by us during the period as a result of decrease in patient and physician demand due to
economic situation. Our revenues in the United States decreased by approximately $46.1 million, or 18.9%, to approximately $198.7 million
for the year ended December 31, 2025, compared to approximately $244.8 million for the year ended December 31, 2024. This decrease was
primarily attributable to the overall slowdown in the demand for aesthetic procedures, in addition to challenging financing market in
the United States.
Our revenues outside of the United States increased by approximately $21.8 million,
or 14.5%, to approximately $171.8 million for the year ended December 31, 2025, compared to approximately $150.0 million for the year
ended December 31, 2024. This increase was primarily due to increase in sales in Europe and Asia.
Our revenues from the sale of consumables and extended warranties for the year ended
December 31, 2025, increased by approximately 3% compared to the year ended December 31, 2024. This increase was primarily attributable
to turnaround and increase in demand for aesthetic procedures.
Cost of revenues
Our cost of revenues increased by approximately $1.7 million, or 2%, to approximately
$79.5 million for the year ended December 31, 2025, compared to approximately $77.8 million for the year ended December 31, 2024. This
increase was primarily due to an increase in freight costs in the amount of $2.2 million. Our gross margin decreased to 79% for the year
ended December 31, 2025, compared to approximately 80% for the year ended December 31, 2024. This decrease was primarily attributable
to an increase of freight costs and a different sales mix between the United States and rest of the world.
Research and development expenses
Our research and development expenses increased to approximately $13.3 million for the
year ended December 31, 2025, compared to approximately $13.1 million for the year ended December 31, 2024. This increase was primarily
attributable to an increase in salaries and related expenses in the amount of $1.3 million which was offset by decrease in share-based
compensation in the amount of $1.1 million.
Sales and marketing expenses
Our sales and marketing expenses decreased by approximately $0.8 million, or 0%, to
approximately $180.6 million for the year ended December 31, 2025, compared to approximately $181.4 million for the year ended December
31, 2024. This decrease was primarily attributable to decrease in commission for sales in the amount of $6.1 million and, decrease in
share-based compensation in the amount of $3.7 million, which was offset with increase in salaries in the amount of $3.6 million and employee-related
expenses in the amount of $3.8 million.
68
General and administrative expenses
Our general and administrative expenses increased by approximately $1.6 million, or
16%, to approximately $11.6 million for the year ended December 31, 2025, compared to approximately $10.0 million for the year ended December
31, 2024. This increase was primarily attributable to the increase in professional services in the amount of $1.4 million, increase in
salaries in the amount of $0.6 million which was offset with decrease in product liability provision in the amount of $0.5 million.
Finance income, net
Our finance income, net was approximately $24.9 million for the year ended December
31, 2025, compared to approximately $30.9 million for the year ended December 31, 2024. This decrease in finance income, net was primarily
attributable to decrease in interest income from our portfolio of investments in bonds and corporate debt securities, short-term bank
deposits and highly liquid investment classified as cash equivalent in the amount of $12.0 million. This
decrease was offset by increase in exchange rate income of $5.6 million due to fluctuations of USD to foreign currencies during 2025.
Income taxes benefit (expenses)
Our income taxes expenses increased by approximately $54.3 million, or -144%, to expenses
of approximately $16.5 million for the year ended December 31, 2025, compared to result in a benefit of approximately $37.8 million
for the year ended December 31, 2024. This increase was primarily attributable to recognition of a NOL deferred tax asset in amount of
$55.6 million during 2024. See “Item 10E. Additional Information–Taxation.”
Liquidity and Capital Resources
Historically, we have funded our operations primarily from cash flows from operations,
from private placements of our ordinary shares, from our initial public offering in August 2019 and from exercise of options. Since inception
in January 2008, we have not received any debt financing from banks or issued any preferred or debt securities. We have received aggregate
net proceeds of approximately $111.2 million from issuances of our ordinary shares, including approximately $69.8 million from our initial
public offering.
As previously disclosed, on February 3, 2025, we approved a share repurchase program
of up to 10% of the Company’s outstanding ordinary shares in accordance with the terms of Rule 10b-18 of the Exchange Act, to be
purchased out of our cash reserve. On April 4, 2025, we completed the repurchase of shares. In total and as of December 31, 2025, we purchased
6.95 million ordinary shares at an average price paid per share of $18.337 under the repurchase program.
As of December 31, 2025, we had working capital of approximately $627.9 million, and
our primary source of liquidity was approximately $555.3 million in cash and cash equivalents, marketable securities and short-term bank
deposits. Our major cash requirements are obligations to support our ongoing operations which consist primarily of salary and commissions
expenses for employees, and contractual obligations for our subcontractors and lease agreements. We expect our working capital to be sufficient
for the Company’s present requirements.
If existing cash and cash generated from operations are insufficient to satisfy our
liquidity requirements, we may seek to sell equity or debt securities or obtain a credit facility. If we raise funds by issuing equity
securities, our shareholders would experience dilution. Debt financing, if available, may involve covenants restricting our operations
or our ability to incur additional debt. Any debt financing or equity that we raise may contain terms that are not favorable to us or
our shareholders. Financing may not be available at all, or in amounts or on terms unacceptable to us. If we are unable to obtain financing,
we may be required to delay the development, commercialization and marketing of our aesthetic medical products.
Cash Flows
The following table represents a summary of our cash flow for the periods indicated
|
Years ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Net cash provided by (used in): |
(in thousands) |
|||||||||||
|
Operating activities
|
$ |
85,257 |
$ |
132,664 |
$ |
176,826 |
||||||
|
Investing activities
|
186,032 |
162,206 |
(136,064 |
) | ||||||||
|
Financing activities
|
(126,059 |
) |
(282,771 |
) |
5,504 |
|||||||
|
Effects of exchange rate changes on cash and cash equivalents
|
1,984 |
(1,181 |
) |
605 |
||||||||
|
Net increase in cash and cash equivalents |
$ |
147,214 |
$ |
10,918 |
46,871 |
|||||||
69
Net Cash Provided by Operating Activities
For the year ended December 31, 2025, our net cash provided by operating activities
was $85.3 million. The primary reason for net cash provided by operating activities was the net profit of $93.8 million, increase in accounts
payables of $4.1 million and increase in other liabilities of $2.1 million. The outflow from operating assets and liabilities in the amount
of $24.3 million was primarily due to an increase of $7.5 million in accounts receivable due to an increase in sales through distributors
and increase in inventory of $14.5 million and other receivables of $3.7 million. Additionally, our net profit for the year ended December
31, 2025, included $11.1 million in non-cash expenses primarily comprised of share-based compensation expense.
For the year ended December 31, 2024, our net cash provided by operating activities
was $132.7 million. The primary reason for net cash provided by operating activities was the net profit of $181.3 million, decrease in
accounts receivable of $5.9 million and increase in contract liabilities of $5.4 million. The outflow from deferred tax income in the
amount of $55.2 million was primarily due to release of valuation allowance in the U.S. and increase in inventory of $14.5 million and
other receivables of $5.7 million. Additionally, our net profit for the year ended December 31, 2024, included $16.6 million in non-cash
expenses primarily comprised of share-based compensation expense. As we expect our revenues to continue to grow, we anticipate our accounts
receivables, inventory and accounts payable will similarly continue to grow, including our available working capital.
Net Cash Used in Investing Activities
For the year ended December 31, 2025, net cash provided in investing activities was
$186.0 million, which primarily related to investment of short-term bank deposits and marketable securities of $314.0 million. These outflows
were partially offset by inflows of $500.5 million related to proceeds from short-term bank deposits and marketable securities.
For the year ended December 31, 2024, net cash provided in investing activities was
$162.2 million, which primarily related to investment of short-term bank deposits and marketable securities of $504.4 million. These outflows
were partially offset by inflows of $667.3 million related to proceeds from short-term bank deposits and marketable securities.
Net Cash Used in Financing Activities
For the year ended December 31, 2025, net cash used in financing activities was $126.1
million, which consisted of $127.4 million outflow as part of our share repurchase programs. This outflow was partially offset by inflow
of $1.4 million related to proceeds from the exercise of options.
For the year ended December 31, 2024, net cash used in financing activities was $282.8
million, which consisted of $285.4 million outflow as part of our share repurchase programs. This outflow was partially offset by inflow
of $2.6 million related to proceeds from the exercise of options.
Research and Development, Patents and Licenses, etc.
For a description of the Company’s research and development policies, see “Item
4B. Information on the Company–Business Overview–Intellectual Property.”
Trend Information
Other than as disclosed elsewhere in this Annual Report on Form 20-F, we are not aware
of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2025 that are reasonably likely to have a
material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial
information to be not necessarily indicative of future results of operations or financial condition.
Strategic Considerations
The Company’s Board of Directors regularly evaluates the Company’s strategic
direction and considers alternatives with a view to enhancing long-term shareholder value. The Company may from time to time receive
unsolicited inquiries or proposals from third parties. It may also consider a range of potential strategic transactions, which could
include, among others, mergers, acquisitions, divestitures, strategic partnerships or other business combinations, as well as continuation
of the Company’s existing business and strategy as discussed in this report.
70
Evaluation of any strategic alternative or unsolicited inquiry is subject to a number
of factors, including market conditions, the Company’s financial performance and prospects and the interests of the Company’s
stakeholders. Of course, any such process is subject to a legal and regulatory process. There can be no assurance that consideration
of any such matter would result in the Company entering into a transaction nor if a transaction were to come to pass can there be any
certainty regarding the likelihood, timing, structure or terms of any such transaction. The Company does not intend to disclose
developments regarding the evaluation of strategic alternatives or unsolicited inquiries unless and until it determines that such further
disclosure is appropriate or required under applicable securities laws.
Recently Issued Accounting Pronouncements
Certain recently issued accounting pronouncements are discussed in Note 2 in our consolidated
financial statements.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth the name, age and position of each of our executive officers
and directors as of the date of this Annual Report on Form 20-F.
|
Name |
Age |
Position | ||
|
Moshe Mizrahy |
73 |
Chief Executive Officer and Director | ||
|
Yair Malca |
48 |
Chief Financial Officer | ||
|
Michael Dennison |
45 |
President, North America | ||
|
Dr. Michael Kreindel |
59 |
Chief Technology Officer and Director | ||
|
Dr. Michael Anghel(1)(2)
|
87 |
Chairman of the Board of Directors | ||
|
Dr. Hadar Ron, M.D.(1)(2)
|
67 |
Director | ||
|
Mr. Nadav Kenneth(1)(2)
|
66 |
Director |
(1) Member of Audit & Investment Committee
(2) Member of Compensation, Nominating and
Corporate Governance Committee
A brief biography of each person who serves as an executive officer and/or director
of the Company is set forth below:
Moshe Mizrahy. Moshe Mizrahy
co-founded the Company in 2008 and has been our Chief Executive Officer and Director since inception and served as the Chairman of our
board of directors from 2008 to July 2024. Prior to that, Mr. Mizrahy was co-founder and chief executive officer of Syneron Medical Ltd.,
a medical aesthetic device company based in Israel. Mr. Mizrahy was also the former chief executive officer of Home Skinovations Ltd.
(under voluntary liquidation), an international medical aesthetic consumer devices company that was active in the home use market. In
addition, Mr. Mizrahy currently sits on the board of directors of the following companies: Alto Real Estate Management (IL) Ltd., Aquapass
Ltd., G.I. View Ltd., Himalaya (P.T.C) M.M 2021 Ltd., SipNose Ltd. (under voluntary liquidation), Pet Novations Ltd., Peri-Ness Technologies
Ltd., Urifer Ltd., Escape Rescue Systems Ltd. (under voluntary liquidation), New Forest Wood Products (2012) Ltd., Med Smart Hub Ltd.,
Ivy Next Ltd., MM INMD Ltd., Mizliz Real Estate Ltd., M.N. Business Strategy Ltd., Nidaria Technology Ltd., and Himalaya Family Office
Advising Ltd. Mr. Mizrahy has a B.S. in Engineering from the Tel Aviv University and an MBA from Pace University, New York.
Yair Malca. Yair Malca has
served as our Chief Financial Officer since 2017. In his previous role, Mr. Malca was the Director of Finance for Jazz Semiconductor,
Inc., a developer of integrated circuits and semiconductors, from 2013 to 2017. Before that, he served as the controller of Syneron from
2008 to 2013, as assistant controller of EZchip Semiconductor, a provider of network processors, from 2007 to 2008, as subsidiary controller
of Bermad, a provider of hydraulic control valves, from 2005 to 2007, and began his career in public accounting at Ernst & Young from
2002 to 2005. Mr. Malca holds a B.A. in Accounting and Economics from Haifa University and an MBA from Tel Aviv University, and is a Certified
Public Accountant in Israel.
71
Michael Dennison. Michael
Dennision serves as our newly appointed President of North America since September 2025. In his previous roles, Mr. Dennison served in
several positions in the Company, including as a sales manager from 2018 to 2022, regional manager from 2022 to 2024, and vice president
from 2024 to 2025. Mr. Dennison holds a degree in Business from Lake Erie Collage.
Dr. Michael Anghel. Dr. Michael
Anghel became the Chairman of the board of directors effective July 25, 2024. Dr. Anghel has been a director of the Company in August
2019. Dr. Anghel has previously served on the board of directors and on the Investment Monitoring Committee of BiolineRx Ltd. (Nasdaq:
BLRX) since 2010 and until 2024. From 1977 to 1999, he led the Discount Investment Corporation Ltd. (of the IDB Group) activities in the
fields of technology and communications. In 1999, he founded CAP Ventures, an advanced technology investment company. From 2004 to 2005,
Dr. Anghel served as CEO of DCM, the investment banking arm of the Israel Discount Bank (TASE: DSCT). Dr. Anghel has also previously served
as the Chairman of the Audit Committee and the Chairman of the Remuneration Committee of Ellomay Capital Ltd. (NYSE, TASE: ELLO) until
December 2023. Mr. Anghel also previously served as the chairman of the Center for Educational Technology and as the Chairman of the board
of directors of Lahav Ltd (Tel-Aviv University Executive Program). Prior to launching his business career, Dr. Anghel served as a full-time
member of the Graduate School of Business Administration of the Tel Aviv University, where he taught finance and corporate strategy. Dr.
Anghel holds a B.A. in Economics from the Hebrew University in Jerusalem and an M.B.A. and Ph.D. in Finance from Columbia University,
New York.
Dr. Michael Kreindel. Dr.
Michael Kreindel co-founded the Company in 2008 and has served as our Chief Technology Officer since inception. Dr. Kreindel became a
director for the Company in August 2019. He previously was a co-founder of, and served as CTO of, Syneron Medical Ltd. from 2001 to 2007.
Dr. Kreindel has a Ph.D. in physics and mathematics, and also graduated as an engineer and physicist in experimental and theoretical nuclear
physics from Ural Politechnical Institute, Russia.
Dr. Hadar Ron, M.D. L.L.B.
Dr. Hadar Ron became a director of the Company in August 2019. Since 2000, Dr. Ron has been the founding and managing partner of Israel
Healthcare Ventures, an Israeli life science venture capital fund. Dr. Ron is also the chief executive officer of the management company
for Israel Healthcare Ventures 2 LP Incorporated, or IHCV2, an Israeli life sciences venture capital fund. Dr. Ron serves as chairperson
of G.I. View Ltd., a medical device company specializing in colorectal screenings, and Neurohelp Ltd., a Neurotechnology start-up company,
and as a board member of the following companies: Home Skinovations Ltd. (under voluntary liquidation), SipNose Ltd. (under voluntary
liquidation), Pet Novations Ltd., Peri-Ness Technologies Ltd., O.G.D.H. Ltd., OrSense Ltd., and Unbox Ventures Ltd. In addition, Dr. Ron
serves as an external director of Together Pharma Ltd. In addition, Dr. Ron serves as a member of the advisory board of the Momentum Fund
Tech Transfer of Tel Aviv University, a board member of BIRAD Ltd., the tech transfer company of Bar Ilan University, and is the chairperson
of the scientific advisory board of Social Finance Israel’s Social Impact Bond for the prevention of diabetes and colon cancer.
Dr. Ron is a physician and attorney by education. She holds M.D. and L.L.B. degrees from Tel Aviv University and has studied at the School
of Business Administration at Tel Aviv University.
Mr. Nadav Kenneth. Mr. Nadav
Kenneth became a director of the Company in April 2024.Mr. Kenneth served for 22 years in the Israeli Army’s Intelligence corps
(Unit 8200) where he led large R&D functions, was in charge of the strategic planning branch (plans, methodology, budgeting and monitoring)
and commanded an intelligence unit. Following his service, Mr. Kenneth co-founded, managed and served as a board member of several startup
companies, worked for a large cellular operator, and provided consultation to companies and official entities. In 2009, Mr. Kenneth co-founded
Qrative Ltd., which developed an AI-based platform for analysis and crystallization of intellectual property and served as its CEO and
board member from 2009 to 2022. From 2007 to 2011, Mr. Kenneth provided consultation to the Government of Zanzibar with respect to restructuring
of the Zanzibar Revenue Authority and setting up the government’s HR and payroll systems. In 2004, Mr. Kenneth co-founded Trisixty
Security, which developed an automated system that monitored compliance with IT security regulations, and served as its country manager
and board member from 2004 to 2006. From 2014 to 2020, Mr. Kenneth served as volunteer Chairman of a pre-service education NGO (Mechinat
Aderet). Mr. Kenneth holds a B.A. in Economics and Political Sciences from the Bar-Ilan University and an M.A. in Business Entrepreneurship
from the Swinburne University in Australia/Israel.
72
Family Relationships
There are no family relationships among any of our directors or officers.
Special Arrangements
We are not a party to, and there are no special arrangements or understandings with
major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member
of senior management.
B. Compensation
Employment and Consulting Agreements
We have entered into employment or consulting agreements with all of our executive officers
and key employees. These agreements contain standard provisions for a company in our industry regarding non-solicitation, confidentiality
of information, non-competition and assignment of inventions. Our executive officers will not receive benefits upon the termination of
their respective employment with us, other than mandatory severance payments and payment of salary and benefits (and limited accrual of
vacation days) during the required notice period for termination of their employment, which varies for each individual. The agreements
are terminable by us at will, subject to prior notice, which varies for each individual.
Compensation of Individual Covered Executives
The table and summary below outline the compensation granted to our five most highly
compensated officeholders (as defined in the Companies Law) with respect to the year ended December 31, 2025. We refer to the five individuals
for whom disclosure is provided herein as our “Covered Executives.” For purposes of the table and the summary below, “compensation”
includes amounts accrued or paid in connection with salary costs, consulting fees, bonuses, equity-based compensation, retirement or termination
payments, benefits and perquisites such as car, phone and social benefits and any undertaking to provide such compensation. All amounts
reported in the table are in terms of cost to the Company, as recognized in our consolidated financial statements for the year ended December
31, 2025, plus compensation paid to such officers following the end of the year in respect of services provided during the year.
|
Name and Principal Position
(USD in thousands) |
Salary (1)
|
Bonus
|
Commission
|
Equity-Based Compensation (2) |
Total
|
|||||||||||||||
|
Michael Dennison
President, North America |
$ |
601 |
$ |
192 |
$ |
1,001 |
$ |
205 |
$ |
1,999 |
||||||||||
|
Yair Malca
Chief Financial Officer |
$ |
489 |
$ |
274 |
– |
$ |
781 |
$ |
1,544 |
|||||||||||
|
Alon Yaari
Vice President of Operation |
$ |
283 |
$ |
24 |
– |
$ |
312 |
$ |
619 |
|||||||||||
|
Nava Tal Launer
Chief Information Officer |
$ |
211 |
$ |
18 |
– |
$ |
95 |
$ |
324 |
|||||||||||
|
Dr. Michael Kreindel Chief Technology Officer |
$ |
267 |
– |
– |
– |
$ |
267 |
|||||||||||||
| (1) |
Salary includes Covered Executives’ gross salary plus payment of social benefits made by us on behalf of such Covered Executive.
Such benefits may include, to the extent applicable to the Covered Executive, payments, pension, car expenses, medical and other insurances,
401K company contribution, payments for social security and tax gross-up payments, severance pay, vacation and other benefits consistent
with our policies. |
| (2) |
Represents the share-based compensation expenses recorded in our consolidated financial statements for the year ended December 31,
2025, based on the Share-based Compensation fair value, calculated in accordance with accounting guidance for share-based compensation.
For a discussion of the assumptions used in reaching this valuation, see Note 13 to our consolidated financial statements. |
Compensation of Directors as a Group
The aggregate compensation paid by us to our directors for the year ended December 31,
2025, was approximately $861 thousand, including share-based compensation expenses of approximately $116 thousand. This amount does not
include reimbursements or coverage of expenses. Our directors also benefit from directors' and officers' indemnification and exculpation
agreements as well as from our directors' and officers' liability insurance policy.
73
We do not have any written agreement with any director providing for benefits upon the
termination of such director’s relationship with our Company, other than our consultancy agreement with our Chief Executive Officer
and our employment agreement with our Chief Medical Officer.
Employee Benefit Plans
2018 Incentive Plan
On June 17, 2018, our board of directors adopted the 2018 Incentive Plan allowing us
to grant shares, options to purchase our ordinary shares, restricted shares and restricted share units to our and our current and future
affiliates’ Israeli and other non-U.S. employees, officers, directors, consultants and service providers. In approving the 2018
Incentive Plan, our board of directors selected the capital gains tax treatment described above for grants to Israeli employees and other
office holders, including directors, under the 2018 Incentive Plan. The 2018 Incentive Plan also includes as an appendix a sub-plan, or
the U.S. Sub-Plan, allowing us to grant shares, options to purchase our ordinary shares, restricted shares and restricted share units
to our and our current and future affiliates’ U.S. employees, officers, directors, consultants, and service providers.
Under the 2018 Incentive Plan, as of December 31, 2025, we have granted restricted share
units and options to purchase ordinary shares in a total of 8,589,500, of which 6,277,313 ordinary shares have been issued upon exercise
of such restricted share units and options, and 994,702 options and restricted share units have been forfeited and returned to the reserved
authorized and unissued ordinary shares of the company under the 2018 Incentive Plan. The grant above does not include 2,533,300 options,
which we granted during January and February 2020, of which 2,518,300 were cancelled and regranted, in March 2020, following repricing
of exercise price, and 15,000 were forfeited prior to the repricing of those options.
As of December 31, 2025, 425,518 options are exercisable.
As of December 31, 2025, up to 1,583,202 of our authorized and unissued ordinary shares
may be issued pursuant to awards under the 2018 Incentive Plan. Upon adoption of the 2018 Incentive Plan, our board of directors resolved
that the number of reserved authorized and unissued ordinary shares of the company for issuance of awards pursuant to the 2018 Incentive
Plan, shall automatically increase on an annual basis in such manner that on the first business day of each calendar year beginning in
2019 such number of reserved ordinary shares equal to the lesser of (i) 800,000 ordinary shares, (ii) three percent (3%) of the number
of ordinary shares outstanding as of such date, or (iii) a lesser number of ordinary shares determined by the board of directors, will
be added to the reserved authorized and unissued ordinary shares of the company for issuance of awards pursuant to the 2018 Incentive
Plan. Accordingly, in January 2026, the number of reserved authorized and unissued ordinary shares of the company for issuance of awards
pursuant to the 2018 Incentive Plan was increased by an additional 800,000 ordinary shares to a total of 9,978,000. Awards are made pursuant
to agreements and are subject to vesting and other restrictions as determined by the board of directors or the compensation committee.
The following paragraphs summarize the terms of the 2018 Incentive Plan:
Plan Administration. Our board of directors
or the compensation committee acts as the plan administrator.
Types of Awards. The 2018 Incentive Plan permits
grants of options to purchase ordinary shares, ordinary shares, restricted shares, or restricted share units.
Exercise Period. Options granted under the 2018
Incentive Plan are exercisable for a period of seven years following the date of grant, unless otherwise determined by our board of directors
or our compensation committee.
Exercise Price. Our board of directors or compensation
committee has discretion in determining the exercise price of awards, subject to certain limitations. The 2018 Incentive Plan provides
procedures for the cashless exercise of options.
74
Transactions. The 2018 Incentive Plan provides
that in the event of a “Transaction” (which is defined as (i) a merger, acquisition or consolidation of the Company with one
or more other entities in which the Company is not the surviving entity; or (ii) a sale or other disposition of all or substantially all,
as determined by our board of directors in its discretion, of the outstanding ordinary shares of the Company; or (iii) a sale or other
disposition of all or substantially all, as determined by our board of directors in its discretion, of the consolidated assets of the
Company and its affiliates), if the unexercised awards then outstanding under the 2018 Incentive Plan are assumed or substituted for securities
of the successor company pursuant to the Transaction, then the board of directors or compensation committee, in their sole discretion
and subject to applicable laws, may adjust the exercise price and number and type of shares of such unexercised awards to reflect such
assumption and/or substitution. All other terms and conditions of the award agreements shall remain unchanged, including but not limited
to the vesting period. The 2018 Incentive Plan further provides that our board of directors shall have full power and authority to determine
that all outstanding awards shall terminate and cease to be outstanding, except to the extent assumed or substituted as aforesaid. In
the event that awards are not assumed or substituted by the successor company, our board of directors may provide the participant the
right to exercise the vested awards under such terms and conditions as our board of directors shall determine prior to the Transaction.
In addition, our 2018 Incentive Plan further provides that, subject to any applicable law, our board of directors or our compensation
committee shall have full power and authority to determine that in certain award agreements there shall be a clause providing different
provisions with respect to the vesting period of awards underlying such award agreement or any portion thereof in the event of a Transaction.
Termination. The 2018 Incentive Plan provides
that in the event of a participant’s termination of services as an employee, director, consultant or contractor of the Company and/or
its subsidiaries, other than by reason of such participant’s death or disability or due to termination for cause, all options which
are vested upon the date of termination shall be exercisable during a period of 90 days from the date of termination, unless otherwise
determined by our board of directors or our compensation committee. All options that are not vested upon the date of termination shall
terminate immediately. The participant shall forfeit any ordinary shares acquired pursuant to an award of restricted stock that remains
unvested as of the date of termination.
Plan Term. Unless terminated earlier, the 2018
Incentive Plan will continue in effect for a term of ten years from the date of its adoption.
C. Board Practices
Corporate Governance Practices
As an Israeli company, we are subject to various corporate governance requirements under
the Companies Law. However, pursuant to regulations promulgated under the Companies Law, companies with shares traded on certain U.S.
stock exchanges, including the Nasdaq, may, subject to certain conditions, “opt out” from the requirements to appoint external
directors and related rules concerning the composition of the audit committee and compensation committee of the board of directors, other
than the gender diversification rule, which requires the appointment of a director from the other gender if, at the time a director is
appointed, all members of the board of directors are of the same gender. In accordance with these regulations, following our listing on
the Nasdaq, in November 2019, we elected to “opt out” from these requirements of the Companies Law. Under these regulations,
the exemptions from such Companies Law requirements will continue to be available to us so long as: (i) we do not have a “controlling
shareholder”, as such term is defined under the Companies Law, (ii) our shares are traded on certain U.S. stock exchanges, including
the Nasdaq, and (iii) we comply with the director independence requirements and the audit committee and compensation committee composition
requirements under U.S. laws, including the rules of the applicable exchange, that are applicable to U.S. domestic issuers.
We are a “foreign private issuer”, as such term is defined in Rule 405 under
the Securities Act. As a foreign private issuer we are permitted to comply with Israeli corporate governance practices instead of the
corporate governance rules of Nasdaq, provided that we disclose which requirements we are not following and the equivalent Israeli requirement.
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content
of proxy statements, and our officers, directors and principal shareholders have historically been exempt from the reporting and short-swing
profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file
periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered
under the Exchange Act.
For more information regarding our corporate governance practices and foreign private
issuer status, see “Corporate Governance” in Item 16.G below.
Board of Directors
Under the Companies Law, our board of directors is responsible for setting our general
policies and supervising the performance of management. Our board of directors may exercise all powers and may take all actions that are
not specifically granted to our shareholders or to management. Our executive officers are responsible for our day-to-day management and
have individual responsibilities established by our board of directors. Our Chief Executive Officer is appointed by, and serves at the
discretion of, our board of directors, subject to the terms of the consultancy agreement that we have entered into with him. All other
executive officers who are not directors are appointed by our Chief Executive Officer, and are subject to the terms of any applicable
employment or consultancy agreements that we may enter into with each of them.
75
Under our amended and restated articles of association, our board of directors must
consist of at least three directors and not more than seven directors. Our board of directors consists of five directors. Our directors
are elected in three staggered classes by the vote of a majority of the ordinary shares present, in person or by proxy, at a shareholders’
meeting (excluding abstentions). Each class of directors consists, as nearly as possible, of one-third of the total number of directors
constituting the entire board of directors (other than the external directors, if applicable). At each annual general meeting of our shareholders,
the election or re-election of directors following the expiration of the term of office of the directors of that class of directors will
be for a term of office that expires on the third annual general meeting following such election or re-election, such that from 2020 and
after, at each annual general meeting the term of office of only one class of directors will expire. Each director holds office until
the third annual general meeting of our shareholders, unless the tenure of such director expires earlier pursuant to the Companies Law
or unless removed from office as described below.
Our directors are divided among three classes as follows: the Class I director, consisting
of Dr. Hadar Ron, will hold office until our annual general meeting of shareholders to be held in 2026; the Class II directors, consisting
of Dr. Michael Anghel and Mr. Nadav Kenneth, will hold office until our annual general meeting of shareholders to be held in 2027 and
until their successors are duly elected and qualified, or until their earlier resignation or retirement; and the Class III directors,
consisting of Mr. Moshe Mizrahy and Dr. Michael Kreindel, will hold office until our upcoming annual general meeting of shareholders to
be held in 2028.
The provisions of our amended and restated articles of association relating to the number
of directors, staggered board and election and removal of a director from office prior to the lapse of their tenure may be changed only
by a resolution adopted by two-thirds of our ordinary shares voting on the proposed change.
Under the Companies Law, our board of directors is required to employ independent judgment
and discretion when voting, and is prohibited from entering into any voting arrangements with respect to actions taken at meetings of
the board. Further, the Companies Law provides that in the event a director learns about an alleged breach of law or improper conduct
of business relating to a company matter, said director must promptly take action to summon a meeting of the board of directors to address
any such breach.
In accordance with the exemptions available to foreign private issuers under Nasdaq
rules, we follow Israeli law and practice, in accordance with which our board of directors (or a committee thereof) is authorized to recommend
to our shareholders director nominees for election.
In addition, our amended and restated articles of association allow our board of directors
to appoint directors to fill vacancies on our board of directors, including filling empty board seats up to the maximum number of directors
permitted under our amended and restated articles of association, for a term of office equal to the remaining period of the term of office
of each director whose office has been vacated. Vacancies on our board of directors may be filled by a vote of a simple majority of the
directors then in office even if they do not constitute a quorum (subject to the limitation on the number of directors and their qualifications).
A director so appointed will hold office until the next applicable annual general meeting of our shareholders in which such director’s
class is to be replaced.
Directors may be removed from office by a resolution at a general meeting of shareholders
adopted by holders of two-thirds of our ordinary shares voting on the proposed removal, provided that the director being removed from
office is given a reasonable opportunity to state his or her case before the general meeting, or under other circumstances set forth in
our amended and restated articles of association. If a director is removed from office as set forth above, the general meeting will be
entitled, in the same session, to elect another director in his or her place subject to the maximum number of directors permitted as stated
above. Should it fail to do so, the board of directors will be entitled to do so. Any director who is appointed in this manner will serve
in office for the remainder of the removed director’s term in office, and will be eligible for re-election.
Under the Companies Law, we would be required to include on our board of directors at
least two members, each of whom qualifies as an external director, and as to whom special qualifications, voting requirements and other
provisions would be applicable. We would also be required to include one such external director on each of our board committees.
76
However, under regulations promulgated under the Companies Law, Israeli companies whose
shares are traded on stock exchanges such as Nasdaq that do not have a controlling shareholder (as defined therein) and which comply with
the requirements of the jurisdiction where the company’s shares are traded with respect to the appointment of independent directors
and the composition of an audit committee and compensation committee, may elect not to follow the Companies Law requirements with respect
to the composition of its audit committee and compensation committee and the appointment of external directors (provided that in the event
that upon the appointment of a certain director all members of the board of directors of the company are from one and the same gender
only, a director from the opposite gender will be appointed). As we do not have a controlling shareholder, we have elected to comply with
the requirements of Nasdaq with respect to the composition of our board and such committees, and therefore we are exempt from the Companies
Law requirements with respect thereto, including the appointment of external directors.
Under the Companies Law, our Board of Directors must determine the minimum number of
directors who are required to have accounting and financial expertise. Our Board of Directors has determined that the minimum number of
our directors of who are required to have accounting and financial expertise is one.
Alternate Directors
Our amended and restated articles of association provide, as allowed by the Companies
Law, that any director may, by written notice to us, appoint another person to serve as an alternate director at a meeting of the board
of directors. The alternate director will be regarded as a director. Under the Companies Law, a person who is not qualified to be appointed
as a director, a person who is already serving as a director or a person who is already serving as an alternate director for another director,
may not be appointed as an alternate director, unless otherwise permitted by applicable law. Nevertheless, a director who is already serving
as a director may be appointed as an alternate director for a member of a committee of the board of directors so long as he or she is
not already serving as a member of such committee. The term of appointment of an alternate director may be for one meeting of the board
of directors or until notice is given of the cancellation of the appointment.
Leadership Structure of the Board
In accordance with the Companies Law and our amended and restated articles of association,
our board of directors is required to appoint one of its members to serve as chairman of the board of directors. Dr. Michael Anghel currently
serves as the Chairman of our board of directors.
Under the Companies Law, the chairman of the board of directors of a public company
or his relatives cannot be vested with the authority of the chief executive officer of such a public company. In addition, a person who
reports, directly or indirectly, to the chief executive officer may not serve as the Chairman of the Board of Directors; the Chairman
may not be vested with authorities of a person who reports, directly or indirectly, to the chief executive officer; and the Chairman may
not serve in any other position in the company or a controlled company, but he or she may serve as a director or chairman of a controlled
company. However, and notwithstanding the foregoing, the Companies Law permits the shareholders of a company to determine, for periods
not exceeding three years from each such determination, that the Chairman or his or her relative may serve as chief executive officer
or be vested with the chief executive officer’s authorities, and that the chief executive officer or his or her relative may serve
as Chairman or be vested with the Chairman’s authorities. Such determination of a company’s shareholders requires a special
majority of either:
| • |
such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not
have a personal interest in approving such resolution that are voted at the meeting, excluding abstentions; or |
| • |
the total number of shares voted by non-controlling shareholders and by shareholders who do not have a personal interest against
approving such resolution does not exceed 2% of the aggregate voting rights in the company. |
Committees of the Board of Directors
Under the Companies Law and our amended and restated articles of association, our board
of directors is permitted to form committees, and to delegate to any such committee powers allotted to the board of directors, subject
to certain exceptions. In general, the board of directors may overturn a resolution adopted by a committee it has formed; however, the
board’s decision shall not affect the ability of third parties, who were not aware of such decision, to rely on the committee’s
resolution prior to the time it is overturned. Only members of the board of directors can be members of a board committee, unless the
committee is solely advisory.
77
Audit and Investment Committee
Our audit and investment committee consists of Dr. Michael Anghel, Dr. Hadar Ron and
Mr. Nadav Kenneth. Dr. Anghel serves as chairperson of the audit and investment committee.
Israeli Companies Law Requirements
Under the Companies Law, we are required to maintain an audit committee.
Nasdaq Listing Requirements
Under Nasdaq rules, we are required to maintain an audit committee consisting of at
least three independent directors, each of whom is financially literate and one of whom has accounting or related financial management
expertise.
All members of our audit and investment committee meet the requirements for financial
literacy under the applicable rules and regulations of the SEC and Nasdaq. Our board of directors has determined that Dr. Michael Anghel
is an audit committee financial expert as such term is defined by the SEC rules and has the requisite financial experience as defined
by Nasdaq rules. Each of the members of our audit and investment committee is “independent” as such term is defined in Rule
10A-3(b)(1) under the Exchange Act and satisfies the independent director requirements under Nasdaq rules.
Audit and Investment Committee Role
Our audit and investment committee charter sets forth the responsibilities of the audit
and investment committee consistent with the rules and regulations of the SEC and Nasdaq rules as well as the requirements for such committee
under the Companies Law, including the following:
| • |
oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement
of our independent registered public accounting firm to the board of directors in accordance with Israeli law; |
| • |
recommending the engagement or termination of the person filling the office of our internal auditor; and |
| • |
recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval
by our board of directors. |
Our audit and investment committee provides assistance to our board of directors in
fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, risk assessment and
risk management, internal control and legal compliance functions by pre-approving the services performed by our independent accountants
and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. Our audit and
investment committee also oversees the audit efforts of our independent accountants and takes those actions that it deems necessary to
satisfy itself that the auditors are independent of management.
Our audit and investment committee also periodically reviews the Company’s investment
policy and guidelines, the investments made by the Company, the Company’s investment strategy and its compliance with the Company’s
investment policy, and suggests to the board of directors modifications to be made to the Company’s investment policy.
Under the Companies Law, our audit and investment committee is responsible for:
| • |
determining whether there are deficiencies in the business management practices of the Company, including in consultation with our
internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices; |
| • |
determining whether to approve certain related party transactions (including transactions in which an office holder has a personal
interest and whether such transaction is extraordinary or material under the Companies Law) (see “—Approval of Related Party
Transactions under Israeli Law—Office Holders”); |
| • |
establishing the approval process (including by conducting competitive proceedings) for certain transactions with a controlling shareholder
or in which a controlling shareholder has a personal interest; |
| • |
where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission
to the board of directors and proposing amendments thereto; |
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| • |
examining our internal audit controls and internal auditor’s performance, including whether the internal auditor has sufficient
resources and tools to fulfill his responsibilities; |
| • |
examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board
of directors or shareholders, depending on which of them is considering the appointment of our auditor; and |
| • |
establishing procedures for the handling of employees’ complaints as to deficiencies in the management of our business and
the protection to be provided to such employees. |
Compensation, Nominating and Governance Committee
Following our initial public offering, we established a compensation, nominating and
corporate governance committee. The members of this committee are Dr. Hadar Ron, Dr. Michael Anghel and Mr. Nadav Kenneth. Dr. Ron serves
as chairperson of the committee. Our Board of Directors has determined that each member of our compensation committee is independent under
the corporate governance rules of Nasdaq, including the additional independence requirements applicable to the members of a compensation
committee.
Israeli Companies Law Requirements
Under the Companies Law, the board of directors of a public company must appoint a compensation
committee. The compensation committee must be comprised of at least three directors. The duties of the compensation, nominating and corporate
governance committee include the recommendation to our board of directors of a policy regarding the terms of engagement of office holders
(as defined in the Companies Law), to which we refer as a compensation policy. The term “office holder” is defined under the
Companies Law as a chief executive officer (referred to in the Companies Law as the general manager), chief business manager, deputy general
manager, vice general manager, any other person assuming the responsibilities of any of these positions regardless of that person’s
title, a director and any other manager directly subordinate to the general manager. That policy must be adopted by the board of directors,
after considering the recommendations of the compensation, nominating and corporate governance committee, and needs to be approved by
the company’s shareholders, which approval requires what we refer to as a Special Majority Approval for Compensation. A Special
Majority Approval for Compensation requires shareholder approval by a majority vote of the ordinary shares present and voting at a meeting
of shareholders called for such purpose, provided that either: (i) such majority includes at least a majority of the ordinary shares held
by all shareholders who are not controlling shareholders and do not have a personal interest in such compensation arrangement, excluding
abstentions; or (ii) the total number of ordinary shares of non-controlling shareholders and shareholders who do not have a personal interest
in the compensation arrangement and who vote against the arrangement does not exceed 2% of the company’s aggregate voting rights.
Even if the shareholders do not approve the compensation policy, the board of directors
may resolve to approve the compensation policy if and to the extent the compensation committee and the board determine, in its judgment
following internal discussions and after reconsidering the compensation policy, that approval of the compensation policy is in the best
interests of the company. Historically, our compensation committee and board of directors has exercised such authority.
Pursuant to regulations promulgated under the Companies Law, if a company adopts a compensation
policy in advance of its initial public offering and describes it in its prospectus, then the compensation policy shall be deemed a validly
adopted policy and will remain in effect for a term of five years from the date the company becomes a public company. Following the rejection
by our shareholders at the 2024 Annual General Meeting of the proposed resolution to approve our updated compensation policy for an additional
three year period, our compensation committee and board of directors made the decision to nonetheless approve our updated compensation
for an additional three year period until the annual general meeting of the shareholders to be held in 2027 consistent with their authorities
under the Companies Law. The compensation policy will be reviewed from time to time by our compensation committee and our board of directors,
according to the requirements of the Companies Law.
The compensation policy must serve as the basis for decisions concerning the financial
terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation
of payment in respect of employment or engagement. Under the Companies Law, the compensation policy must relate to certain factors, including
advancement of the company’s long-term objectives, business plan and policies, and creation of appropriate incentives for office
holders. It must also consider, among other things, the company’s risk management, size and the nature of its operations. The compensation
policy must furthermore consider the following additional factors:
| • |
the education, skills, expertise and accomplishments of the relevant office holder; |
79
| • |
the office holder’s roles and responsibilities and prior compensation agreements with him or her; |
| • |
the ratio between the cost of the terms offered and the cost of the employment of other employees of the company, including those
employed through outsourcing firms, in particular the ratio between such cost to the average and median salary of such employees of the
company; |
| • |
the impact of disparities in salary upon work relationships in the company; |
| • |
the possibility of reducing variable compensation at the discretion of the board of directors; |
| • |
the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and |
| • |
as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service
period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement
of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company. |
The compensation policy must also include the following principles:
| • |
with the exception of office holders who report directly to the chief executive officer, determining the link between variable compensation
and long-term performance and measurable criteria; however, the company may determine that an immaterial part of the variable components
of an office holder’s compensation package shall be awarded based on non-measurable criteria, if such amount is not higher than
three months’ salary per annum, while taking into account such office holder’s contribution to the company; |
| • |
the ratio between variable and fixed compensation, and the ceiling for the value of variable compensation at the time of their payment,
or in the case of share-based compensation, at the time of grant; |
| • |
the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that
the data upon which such compensation was based was inaccurate and was restated in the company’s financial statements; |
| • |
the minimum holding or vesting period for variable, equity-based compensation while referring to an appropriate long-term perspective
based incentives; and |
| • |
maximum limits for retirement payments. |
Our compensation policy is designed to promote retention and motivation of directors
and executive officers. Additionally, our compensation policy is designed to align the interests of our directors and executive officers
with our long-term performance and serves as a risk management tool. Under our compensation policy, a portion of an executive officer’s
compensation package is targeted to reflect our short- and long-term goals as well as the executive officer’s individual performance.
Our compensation policy also includes measures designed to reduce an executive officer’s incentives to take excessive risks that
may harm us in the long term. Such measures include limits on the value of cash bonuses and equity-based compensation for executive officers,
limits on the ratio between an executive officer’s variable and total compensation, and minimum vesting periods for equity-based
compensation.
Our compensation policy takes into account an executive officer’s individual characteristics,
such as his or her respective position, educational background, scope of responsibilities and contributions to the attainment of our goals,
as the basis for compensation variation among our executive officers and considers the internal ratios between compensation of our executive
officers and directors and other employees.
Pursuant to our compensation policy, compensation that may be granted to an executive
officer may include base salary, an annual bonus, other cash bonuses (such as a signing bonus or special bonus for special achievements,
such as an outstanding personal achievement, outstanding personal effort or outstanding company performance), equity-based compensation,
benefits and retirement compensation and termination of service arrangements. All cash bonuses are limited to a maximum amount linked
to the executive officer’s base salary. In addition, the total variable compensation components (cash bonuses and equity-based compensation)
may not exceed 90% of each executive officer’s total compensation package with respect to any given calendar year.
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An annual cash bonus may be awarded to executive officers upon the attainment of pre-set
periodic objectives and individual targets. The annual cash bonus that may be granted to our executive officers (excluding our chief executive
officer) will be based on performance objectives and a discretionary evaluation of the executive officer’s overall performance by
our chief executive officer and is subject to minimum thresholds. The annual cash bonus that may be granted to executive officers (excluding
our chief executive officer) may be based entirely on a discretionary evaluation. Furthermore, our chief executive officer will be entitled
to recommend performance objectives, and such performance objectives will be approved by our compensation committee and, if required by
law, by our board of directors.
The performance-measurable objectives of our chief executive officer will be determined
annually by our compensation committee and board of directors. Such objectives will include the weight assigned to each achievement in
the overall evaluation. A less significant portion of the chief executive officer’s annual cash bonus may be based on a discretionary
evaluation of the chief executive officer’s overall performance by the compensation committee and the board of directors based on
quantitative and qualitative criteria.
Under our compensation policy, equity-based compensation for executive officers (including
members of our board of directors) is designed in a manner consistent with the underlying objectives in determining such person’s
annual cash bonus; namely, to enhance the alignment between such person’s interests with the company’s long-term interests
and those of our shareholders and to strengthen the retention and motivation of such persons in the medium to long term.
Our compensation policy provides for executive officer’s compensation to be in
the form of share options or other equity-based awards, such as restricted shares and restricted share units, in accordance with our share
incentive plan then in place. All equity-based incentives granted to executive officers shall be subject to vesting periods in order to
promote long-term retention of the awarded executive officers.
Equity-based compensation shall be granted from time to time and will be individually
determined and awarded based on the performance, educational background, prior business experience, qualifications, role and the personal
responsibilities of the executive officer.
In addition, our compensation policy contains compensation recovery provisions that
allow the Company, under certain conditions, to recover bonuses paid in excess. Moreover, the compensation policy enables our chief executive
officer to approve immaterial changes to the terms of an executive officer’s employment (provided that the changes of the terms
of employment are in accordance our compensation policy) and allows the Company to exculpate, indemnify and insure our executive officers
and directors subject to certain limitations.
Our compensation policy also provides for compensation for the members of our board
of directors to be determined either (i) in accordance with the amounts set forth in the Companies Regulations (Rules Regarding the Compensation
and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange
Outside of Israel) of 2000, as such regulations may be amended from time to time, or (ii) in accordance with the amounts determined in
our compensation policy.
Compensation, Nominating and Corporate Governance Committee Roles
The compensation, nominating and corporate governance committee is responsible for (i)
recommending the compensation policy to our board of directors for its approval (and subsequent approval by our shareholders) and (ii)
undertaking duties related to the compensation policy and to the compensation of our office holders, including:
| • |
recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than five
years from the Company’s initial public offering, or otherwise three years (approval of either a new compensation policy or the
continuation of an existing compensation policy must in any case occur five years from the Company’s initial public offering, or
otherwise every three years); |
| • |
recommending to the board of directors periodic updates to the compensation policy; |
| • |
assessing implementation of the compensation policy; |
| • |
determining whether to approve the terms of compensation of certain office holders which, according to the Companies Law, require
the committee’s approval; |
| • |
determining whether the compensation terms of a candidate for the position of the chief executive officer of the Company needs to
be brought to approval of the shareholders according to the Companies Law; and |
| • |
determining, subject to the approval of the board of directors and under special circumstances, whether to override a determination
of the Company’s shareholders regarding certain compensation related issues. |
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Our compensation, nominating and corporate governance charter sets forth the responsibilities
of the compensation, nominating and corporate governance committee, which include:
| • |
the responsibilities set forth in the compensation policy; |
| • |
reviewing and approving the granting of options and other incentive awards to the extent such authority is delegated by our board
of directors; and |
| • |
reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors. |
In addition, our compensation, nominating and corporate governance committee is responsible
for:
| • |
overseeing our corporate governance functions on behalf of the board; |
| • |
making recommendations to the board regarding corporate governance issues; |
| • |
identifying and evaluating candidates to serve as our directors consistent with the criteria approved by the board; |
| • |
reviewing and evaluating the performance of the board; |
| • |
serving as a focal point for communication between director candidates, non-committee directors and our management;
|
| • |
selecting or recommending to the board for selection candidates to the board; and |
| • |
making other recommendations to the board regarding affairs relating to our directors. |
Internal Auditor
Under the Companies Law, the board of directors of an Israeli public company must appoint
an internal auditor recommended by the audit committee. An internal auditor may not be:
| • |
a person (or a relative of a person) who holds more than 5% of the company’s outstanding shares or voting rights; |
| • |
a person (or a relative of a person) who has the power to appoint a director or the general manager of the company (i.e., the chief
executive officer); |
| • |
an office holder (including a director) of the company (or a relative thereof); or |
| • |
a member of the company’s independent accounting firm, or anyone on its behalf. |
The role of the internal auditor is to examine, among other things, our compliance with
applicable law and orderly business procedures, and to report to the chief executive officer, the chairman of the board and the chairman
of the audit committee. The internal auditor is entitled to receive notice of audit committee meetings and to participate in them. In
addition, the internal auditor may request that the chairman of the audit committee convene a meeting within a reasonable time to discuss
an issue raised by the internal auditor The internal auditor will submit his internal auditor’s work plan for the approval of our
audit committee. The audit committee is required to oversee the activities and to assess the performance of the internal auditor.
Somech Chaikin of KPMG currently serves as our internal auditor.
Approval of Related Party Transactions under Israeli Law
Office Holders
The Companies Law codifies the fiduciary duties that office holders owe to a company.
Each person listed in the table above under “Item 6A. Directors, Senior Management and Employees-Directors and Senior Management”
who is engaged by us is an office holder under the Companies law.
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Fiduciary duties. An office holder’s fiduciary
duties consist of a duty of loyalty and a duty of care. The duty of loyalty requires the office holder to act in good faith and for the
benefit of the company, and includes, among other things, the duty to avoid any conflict of interest between the office holder’s
position in the company and personal affairs, and proscribes any competition with the company or the exploitation of any business opportunity
of the company in order to receive personal advantage for himself or herself or others. This duty also requires him or her to reveal to
the company any information or documents relating to the company’s affairs that the office holder has received due to his or her
position as an office holder. The duty of care requires an office holder, among other things, to act with a level of care that a reasonable
office holder in the same position would employ under the same circumstances. This includes the duty to use reasonable means to obtain
information regarding the advisability of a given action submitted for his or her approval or performed by virtue of his or her position
and all other relevant information pertaining to these actions. We may approve an act specified above which would otherwise constitute
a breach of an office holder’s duty of loyalty, provided that the office holder acted in good faith, the act or its approval does
not harm the Company, and the office holder discloses his or her personal interest, including any related material information or document,
in a timely manner before the date for discussion of approval of such act. Any such approval is subject to the terms of the Companies
Law, setting forth, among other things, the appropriate parties of the company entitled to provide such approval, and the methods of obtaining
such approval.
Disclosure of personal interest. The Companies
Law requires that an office holder promptly disclose to the company any personal interest that he or she may have and all related documents
and material information known to him or her, in connection with any existing or proposed transaction by the company. “Personal
interest,” as defined by the Companies Law, includes a personal interest of any person in an act or transaction of the company,
including a personal interest of his or her relative or of a corporate body in which that person or a relative of that person is a 5%
or greater shareholder, a holder of 5% or more of the voting rights, a director or chief executive officer, or in which he or she has
the right to appoint at least one director or the chief executive officer. “Personal interest” does not apply to a personal
interest stemming merely from one’s ownership of shares in the company. A personal interest also includes (1) a personal interest
of a person who votes according to a proxy of another person, including in the event that the other person has no personal interest, and
(2) a personal interest of a person who gave a proxy to another person to vote on his or her behalf, regardless of whether or not the
discretion of how to vote lies with the person voting.
The office holder must make the disclosure of his personal interest promptly and no
later than the first meeting of the company’s board of directors that discusses the particular transaction. This duty to disclose
such information does not apply if the personal interest of the office holder derives solely from the personal interest of a relative
of the office holder in a transaction unless it is an “extraordinary transaction.” The Companies Law defines an extraordinary
transaction as a transaction not in the ordinary course of business, not on market terms or that is likely to have a material impact on
the company’s profitability, assets or liabilities, and defines a relative as a spouse, sibling, parent, grandparent, descendent,
spouse’s descendant, sibling or parent, and the spouse of any of the foregoing.
Approvals of related party transactions. The
Companies Law provides that a transaction with an office holder or a transaction in which an office holder has a personal interest may
not be approved if it is adverse to the company’s interest. In addition, such a transaction generally requires board approval, unless
the transaction is an extraordinary transaction or the articles of association provide otherwise and provided that the transaction is
in the company’s interest and is performed by the office holder in good faith. If the transaction is an extraordinary transaction,
first the audit committee and then the board of directors, in that order, must approve the transaction. Under certain circumstances, shareholder
approval may also be required. Generally, a director (and any person in general) who has a personal interest in an extraordinary transaction
that is considered at a meeting of the board of directors or the audit committee may not attend that meeting or vote on that matter, unless
(1) the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present to present the
transaction that is subject to approval, or (2) a majority of the board of directors or the audit committee, as the case may be, also
has a personal interest in the matter then, in such event, all directors may participate in discussions of the audit committee or the
board of directors (as applicable) on such transaction and the voting on approval thereof. If a majority of the board of directors or
the audit committee has a personal interest in the transaction, shareholder approval also would be required for the approval of such transaction.
See “-Approval of Related Party Transactions under Israeli Law-Office Holders-Approval of office holders’ compensation.”
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Approval of office holders’ compensation. The
compensation of, or an undertaking to indemnify or insure, an office holder who is not a director generally requires approval first by
our compensation committee, then by our board of directors. If the compensation arrangement or undertaking to indemnify or insure is inconsistent
with our compensation policy, or if the office holder is the chief executive officer (apart from a number of specific exceptions), then
the arrangement is further subject to a Special Majority Approval for Compensation. If the shareholders of a company do not approve the
compensation terms of office holders at a meeting of the shareholders, other than directors, the compensation committee and board of directors
may override the shareholders’ decision, subject to certain conditions. Arrangements regarding the compensation, indemnification
or insurance of a director require the approval of the compensation committee, board of directors and shareholders by simple majority,
in that order, and under certain circumstances, a Special Majority Approval for Compensation.
Controlling Shareholders
The Companies Law imposes the same disclosure requirements that apply to directors and
office holders, as described above, on a controlling shareholder of a public company. The term “controlling shareholder” is
defined in the Companies Law as a shareholder with the ability to direct the activities of the company, other than by virtue of being
an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights
in a company or has the right to appoint the majority of the directors of the company or its general manager. In the context of a transaction
involving a shareholder of the company, a controlling shareholder is deemed to include any shareholder holding 25% or more of the voting
rights if no other shareholder owns more than 50% of the voting rights in the company. For this purpose, two or more shareholders with
a personal interest in the approval of the same transaction are deemed to be one shareholder.
Approval of the audit committee or the compensation committee (with respect to compensation
arrangements) as the case may be, the board of directors and our shareholders, in that order, is required for:
| • |
extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including
a private placement in which a controlling shareholder has a personal interest; and |
| • |
transactions for the provision of services, whether directly or indirectly, by a controlling shareholder or his or her relative,
or a company such controlling shareholder controls, and transactions concerning the terms of engagement of a controlling shareholder or
a controlling shareholder’s relative, whether as an office holder or an employee. |
The shareholder approval must include the majority of shares voted at the meeting. In
addition, either:
| • |
at least a majority of the shares held by the shareholders who have no personal interest in the transaction and are present and voting
at the meeting must be voted in favor of approving the transaction, excluding abstentions; or |
| • |
the total shareholdings of those who have no personal interest in the transaction and who vote against the transaction must not represent
more than 2% of the aggregate voting rights in the company. |
In addition, any extraordinary transaction with a controlling shareholder or in which
a controlling shareholder has a personal interest with a term of more than three years, and under certain conditions, five years from
a company’s initial public offering, requires the abovementioned approval at the end of such period; however, such transactions
not involving the receipt of services or compensation can be approved for a longer term, provided that the audit committee determines
that such longer term is reasonable under the circumstances.
Pursuant to regulations promulgated under the Companies Law, certain transactions with
a controlling shareholder or his or her relative, or with directors or other office holders, which would otherwise require approval of
a company’s shareholders, may be exempt from shareholder approval upon certain conditions.
Shareholder Duties
Under the Companies Law, a shareholder has a duty to act in good faith and in a customary
manner towards the company and other shareholders and to refrain from abusing his or her power in the company including, among other things,
when voting in a general meeting of shareholders or in a class meeting on the following matters:
| • |
an amendment to the articles of association; |
| • |
an increase in the company’s authorized share capital; |
| • |
a merger; or |
| • |
approval of related party transactions and acts of office holders that require shareholder approval. |
A shareholder also has a general duty to refrain from discriminating against other shareholders.
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The remedies generally available upon a breach of contract will also apply to a breach
of the shareholder duties mentioned above, and in the event of discrimination against other shareholders, additional remedies may be available
to the injured shareholder.
In addition, any controlling shareholder, any shareholder who knows that it possesses
the power to determine the outcome of a shareholder vote and any shareholder who, under the company’s articles of association, has
the power to appoint or prevent the appointment of an office holder in the company, or has any other power with respect to the company,
is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty of fairness except
to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with
fairness, taking the shareholder’s position in the company into account. There is limited case law available to assist in understanding
the nature of these duties or the implications of these provisions.
Approval of Private Placements
Under the Companies Law and the regulations promulgated thereunder, a private placement
of securities does not require approval at a general meeting of the shareholders of a company; provided however, that in special circumstances,
such as a private placement completed in lieu of a special tender offer (see “Item 10.–Additional Information–B. Articles
of Association”) or a private placement which qualifies as a related party transaction (see “Item 6. –Directors, Senior
Management and Employees–C. Board Practices–Approval of Related Party Transactions under Israeli Law”), approval at
a general meeting of the shareholders of a company is required.
Exculpation, Indemnification and Insurance of Directors and Officers
Indemnification
Our amended and restated articles of association allow us to indemnify, exculpate and
insure our office holders, either pursuant to an undertaking made in advance of an event or following an event, to the fullest extent
permitted by the Companies Law, the Israeli Securities Law, 5738-1968, or the Securities Law, and the Economic Competition Law, 5748-1988,
or the Economic Competition Law, in respect of liabilities, payments and expenses incurred for acts performed and omissions committed
as an office holder. Our articles of association also allow us to exculpate, insure or indemnify any person who is not an office holder,
including any employee, agent, consultant or contractor who is not an office holder.
Under the Companies Law, the Securities Law and the Economic Competition Law, a company
may indemnify an office holder against the following liabilities, payments and expenses incurred in his or her capacity as an office holder,
either in advance of the act or following the act, provided its articles of association authorize such indemnification:
| • |
a monetary liability incurred by or imposed on him or her in favor of another person pursuant to a judgment, including a settlement
or arbitration award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided
in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based
on the company’s activities when the undertaking to indemnify is given, and to an amount, or according to criteria, determined by
the board of directors as reasonable under the circumstances. Such undertaking shall detail the foreseen events and amount or criteria
mentioned above; |
| • |
reasonable litigation expenses, including reasonable attorneys’ fees, incurred by the office holder (i) as a result of an investigation
or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (a)
no indictment was filed against such office holder as a result of such investigation or proceeding, and (b) no financial liability was
imposed upon him or her as a substitute for a criminal proceeding against them as a result of such investigation or proceeding or, if
such financial liability was imposed, it was imposed with respect to an offense that did not require proof of criminal intent; and (ii)
in connection with a monetary sanction; |
| • |
reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings
instituted against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which
the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent; |
| • |
expenses incurred by the office holder with respect to proceedings held pursuant to certain provisions of the Economic Competition
Law; |
85
| • |
a monetary liability imposed on the office holder in favor of a payment for a breach offended at an Administrative Procedure (as
defined below) as set forth in Section 52(54)(a)(1)(a) of the Securities Law; |
| • |
expenses expended by the office holder with respect to an Administrative Procedure under the Securities Law, including reasonable
litigation expenses and reasonable attorneys’ fees; and |
| • |
any other obligation or expense in respect of which it is permitted or will be permitted under applicable law to indemnify an office
holder, including, without limitation, matters referenced in Section 56H(b)(1) of the Securities Law. |
An “Administrative Procedure” is defined as a procedure pursuant to Chapters
H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement
Committee) or Il (Arrangement to Prevent Procedures or Interruption of Procedures Subject to Conditions) of the Securities Law.
Our amended and restated articles of association allow us to indemnify our office holders
up to a certain amount. The Companies Law also permits a company to undertake in advance to indemnify an office holder, provided that
if such indemnification relates to financial liability imposed on him or her, as described above, then the undertaking should be limited:
| • |
To such events which the Board of Directors shall deem to be likely to occur in light of the operations of the Company at the time
that the undertaking to indemnify is made and for such amounts or criterion which the Board of Directors may, at the time of the giving
of such undertaking to indemnify, deem to be reasonable under the circumstances; and |
| • |
Such events which the Board of Directors shall deem to be likely to occur in light of the operations of the Company at the time that
the undertaking to indemnify is made, and the amounts and/or criterion which the Board of Directors may, at the time of the giving of
such undertaking to indemnify, deem to be reasonable under the circumstances. |
We have entered into indemnification agreements, with each of our directors and with
certain members of our senior management. Each such indemnification agreement provides the office holder with indemnification to the fullest
extent permitted under applicable law and up to a certain amount, and including with respect to liabilities resulting from our initial
public offering in the United States and any other subsequent public offerings, and to the extent that the directors and officers insurance
do not cover these liabilities.
Insurance
Under the Companies Law, the Securities Law and the Economic Competition Law, a company
may obtain insurance for an office holder against the following liabilities incurred in his or her capacity as an office holder, to the
extent provided in the company’s articles of association:
| • |
a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to
believe that the act would not harm the company; |
| • |
a breach of the duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct
of the office holder; |
| • |
a financial liability imposed on the office holder in favor of a third party; |
| • |
expenses incurred by the office holder with respect to proceedings held pursuant to certain provisions of the Economic Competition
Law; |
| • |
a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section
52(54)(a)(1)(a) of the Securities Law; and |
| • |
expenses incurred by an office holder in connection with an Administrative Procedure, including reasonable litigation expenses and
reasonable attorneys’ fees. |
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Under the Companies Law, a company may not exculpate an office holder from liability
for a breach of the duty of loyalty. A company may exculpate an office holder in advance from liability to the company, in whole or part,
for damages caused to the company as a result of a breach of the duty of care, but only if a provision authorizing such exculpation is
included in its articles of association. A company may not exculpate in advance a director from liability arising out of a breach of a
duty of care with respect to a distribution.
Under the Companies Law, a company may not indemnify, exculpate or insure an office
holder against any of the following:
| • |
a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the
extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;
|
| • |
a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the
office holder; |
| • |
an act or omission committed with intent to derive illegal personal benefit; or |
| • |
a fine, civil fine, monetary sanction or forfeit levied against the office holder. |
The Securities Law and the Economic Competition Law also provide certain limitations
on the ability of a company to indemnify, exculpate and insure office holders.
We have obtained directors’ and officers’ liability insurance for the benefit
of our office holders and intend to continue to maintain such coverage and pay all premiums thereunder to the fullest extent permitted
by applicable law. In addition, we have entered into agreements with each of our directors and executive officers, exculpating them from
a breach of their duty of care to us to the fullest extent permitted by law, and undertaking to indemnify them to the fullest extent permitted
by law. Such indemnification is in addition to any amounts available under our directors’ and office holders’ liability insurance
policy. Each office holder who agreed to receive this letter of indemnification also agreed to give his or her approval to terminate all
previous letters of indemnification that we have provided to him or her, if any. The maximum and aggregate indemnification amount for
all current and future indemnified persons under such agreements is the greater of (i) an amount equal to 25% of our shareholders’
equity on a consolidated basis, based on our most recent financial statements made publicly available before the date on which the indemnity
payment is made and (ii) $40 million.
D. Employees
As of December 31, 2025, we had 660 employees worldwide, across four departments, including
three employees on the executive team, 51 employees in finance, IT and administration, 440 employees in sales and marketing, 39 employees
in research and development and 127 employees in manufacturing and assembly and supply chain. As of December 31, 2025, 326 of our employees
were located in the United States and Canada, 112 were located in Israel and the remainder were located in Europe, Asia and Latin America.
We believe our employee relations are good.
Israeli labor laws govern the length of the workday and workweek, minimum wages for
employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of
termination of employment, equal opportunity and antidiscrimination laws, and other conditions of employment. Subject to certain exceptions,
Israeli law generally requires severance pay upon the retirement, death or dismissal of employees and requires us and our employees to
make payments to the National Insurance Institute, which is similar to the U.S. Social Security Administration. Our Israeli employees
have pension plans that comply with applicable Israeli legal requirements, which also include the mandatory pension payments required
by applicable law and allocation of severance pay.
While none of our Israeli employees work under any collective bargaining agreements,
certain provisions of the collective bargaining agreements between the Histadrut (General Federation of Labor Law in Israel) and the Coordination
Bureau of Economic Organizations (including the Industrialists’ Associations) are applicable to our employees in Israel by extension
orders issued by the Israeli Ministry of Economy and Industry. These provisions primarily affect such matters as length of working hours
and workweek, recuperation pay, travel expenses and pension rights with respect to our Israeli employees.
All of our employment and consulting agreements include employees’ and consultants’
undertakings with respect to confidentiality, noncompetition and assignment to us of intellectual property rights developed in the course
of their employment or engagement with us. However, there can be no assurance that these agreements will be enforceable or that they will
provide us with adequate protection.
87
E. Share Ownership
The beneficial ownership of our ordinary shares is determined in accordance with the
rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power,
which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of
or to direct the disposition of the security. For purposes of the table below, we deem ordinary shares issuable pursuant to options, restricted
share units or warrants that are currently exercisable or exercisable within 60 days of December 31, 2025, if any, to be outstanding and
to be beneficially owned by the person holding the options, restricted share units or warrants for the purposes of computing the percentage
ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
All arrangements for involving employees in our capital is discussed in “Item
6B. Directors, Senior Management and Employees–Compensation–Employee Benefit Plans” above.
Unless otherwise noted below, each shareholder’s address is do InMode Ltd., Tavor
Building, Sha’ar Yokneam, P.O. Box 533, Yokneam 2069200, Israel.
|
Name of Beneficial Owner: |
Number of Ordinary Shares |
Percentage(1)
|
||||||
|
Directors and Named Executive Officers |
||||||||
|
Dr. Michael Kreindel
|
3,114,762 |
4.91 |
% | |||||
|
Moshe Mizrahy
|
3,499,226 |
5.51 |
% | |||||
|
Dr. Hadar Ron, M.D.(2)
|
57,270 |
* |
||||||
|
Dr. Michael Anghel (3)
|
20,000 |
* |
||||||
|
Yair Malca(4)
|
137,138 |
* |
||||||
|
Nadav Kenneth(5)
|
1,500 |
* |
||||||
|
Michael Dennison(6)
|
10,500 |
- |
||||||
|
Total for all directors and executive officers as a group (7 persons) |
6,840,396 |
10.78 |
% | |||||
| * |
Represents less than 1.0%. |
| (1) |
Percentage ownership is based on (i) 63,358,750 ordinary shares outstanding (excluding treasury shares) as of December 31, 2025,
and (ii) restricted share units and options to purchase ordinary shares in a total of 101,000 exercisable within 60 days of December 31,
2025, of our officers, directors and major shareholders (see “Item 7A. Major Shareholders and Related Party Transactions–Major
Shareholders”). |
| (2) |
Consists of: (i) 55,270 ordinary shares, and (ii) 2,000 restricted share units vesting within 60 days of December 31, 2025.
|
| (3) |
Consists of: (i) 7,000 ordinary shares, (ii) options to purchase 11,000 ordinary shares exercisable within 60 days of December 31,
2025, with an exercise price of $7, with such options expiring on August 13, 2026, and (iii) 2,000 restricted share units vesting within
60 days of December 31, 2025. |
| (4) |
Consists of: (i) 71,138 ordinary shares, (ii) options to purchase 30,000 ordinary shares exercisable within 60 days of December 31,
2025, with an exercise price of $9.845, with such options expiring on March 14, 2027, and (iii) 36,000 restricted share units vesting
within 60 days of December 31, 2025. |
| (5) |
Consists of 1,500 restricted share units vesting within 60 days of December 31, 2025. |
| (6) |
Consists of 10,500 restricted share units vesting within 60 days of December 31, 2025. |
F. Disclosure of a Registrant’s
Action to Recover Erroneously Awarded Compensation.
We were not required to prepare an accounting restatement, in accordance with the final
clawback rules adopted by the SEC under Section 10D and Rule 10-D1 of the Exchange Act during the period covered by this Annual Report
on Form 20-F which would require recoupment of any erroneously awarded incentive compensation.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth certain information regarding the beneficial ownership
of our outstanding ordinary shares, as of the date of this Annual Report on Form 20-F, by each person or entity who we know beneficially
owns 5% or more of the outstanding ordinary shares. For purposes of the table below, we deem ordinary shares issuable pursuant to options,
restricted share units or warrants that are currently exercisable or exercisable within 60 days of the date of this Annual Report on Form
20-F, if any, to be outstanding and to be beneficially owned by the person holding the options, restricted share units or warrants for
the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing
the percentage ownership of any other person. Percentages for table below are based on 63,358,750 ordinary shares (excluding treasury
shares) outstanding as of December 31, 2025, and options to purchase ordinary shares and restricted share units in a total of 101,000
exercisable within 60 days of December 31, 2025, of our officers, directors and major shareholders (see “Item 6E. Directors, Senior
Management and Employees-Share Ownership”).
88
As of February 2, 2026, we had approximately 39,694 shareholders of record of our
ordinary shares, approximately 32,602 of which are U.S. persons. These U.S. persons hold approximately 51% of our outstanding share capital.
The actual number of beneficial owners is substantially greater than the number of shareholders of record because a large portion of our
ordinary shares are held in street name by brokers and other nominees. This number of shareholders of record also does not include shareholders
whose shares may be held in trust by other entities.
None of our shareholders have different voting rights from other shareholders. We are
not aware of any arrangement that may, at a subsequent date, result in a change of control of the Company.
|
Number of Ordinary Shares |
Percentage |
|||||||
|
Moshe Mirazhy |
3,499,226 |
5.51 |
% | |||||
B. Related Party Transactions
Relationship with Home Skinovations Ltd. (under voluntary liquidation)
Mr. Moshe Mizrahy, our Chief Executive Officer and director, is a substantial shareholder
and board member of Home Skinovations, and Dr. Hadar Ron, one of our directors, serves on the board of directors of Home Skinovations.
Home Skinovations is involved in the development, manufacture and distribution of home-use
light-based devices for aesthetic applications, which include hair removal, anti-aging, microdermabrasion, cellulite and acne treatments.
Except as detailed below, we have no commitments to, or agreements with, Home Skinovations or any of its subsidiaries, including with
respect to any mutual research and development, indebtedness, financing, debt or credit lines, or any jointly-owned intellectual property
or like arrangements, and we do not share tangible or intangible assets with Home Skinovations or any of its subsidiaries. Any future
agreements with Home Skinovations must be reviewed and approved by our audit committee and board of directors.
Service Agreements
From time to time, we receive certain services from, and provide certain services to,
Home Skinovations. We do not consider these services to be material. The services have historically included an office sublease in Israel,
mobile phone services, use of certain computer hardware and switchboard infrastructure, certain software licenses and limited personnel
services. We did not receive any services from Home Skinovations for the year ended December 31, 2025.
Relationship with Himalaya Family Office Consulting Ltd.
Mr. Moshe Mizrahy, our Chief Executive Officer and Director, is a minor shareholder
and board member of Himalaya Family Office Consulting Ltd., a company engaged in providing global investment portfolio management and
risk management & analysis services.
We receive certain investment portfolio management services from Himalaya Family Office
Consulting Ltd., with respect to part of our investment portfolio, and recorded expenses related to those services in the amount of $62
thousand for the year ended December 31, 2025.
Agreements and Arrangements with Directors and Executive Officers
We have entered into written employment or consulting agreements with each of our executive
officers. See “Item 6. Directors, Senior Management and Employees – B. Compensation- Employment and Consulting Agreements.”
89
Members of our board of directors are entitled to certain compensation for their services.
See “Item 6. Directors, Senior Management and Employees – C. Board Practices – Committees of the Board of Directors
– Compensation, Nominating and Governance Committee.”
Options
Since our inception, we have granted options to purchase our ordinary shares to our
executive officers and certain of our directors. The options are generally subject to the further terms of the respective option plans,
which we describe under “Item 6.B. Compensation-Employee Benefit Plans.”
RSUs (restricted share units)
Under the 2018 Incentive Plan, we have granted RSUs to our executive officers and certain
of our directors. The RSUs are generally subject to the further terms of the 2018 Incentive Plan, which we describe under “Item
6.B. Compensation-Employee Benefit Plans-2018 Incentive Plan.”
Directors and Officers Insurance Policy and Indemnification and Exculpation Agreements
We have entered into separate indemnification agreements with each of our current directors,
office holders and other executives exculpating them from a breach of their duty of care to us to the fullest extent permitted by law
and undertaking to indemnify them to the fullest extent permitted by law. We have also obtained directors’ and officers’ liability
insurance for each of our executive officers and directors. See “Item 6C. Directors, Senior Management and Employees-Board Practices-Exculpation,
Indemnification and Insurance of Directors and Officers” for additional information.
C. Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and other Financial Information
See “Item 18. Financial Statements.”
Legal Proceedings
As noted above, on February 14, 2024, a purported shareholder of the Company filed
the Securities Class Action with the Court, captioned Cement Masons and Plasterers Local No. 502 Pension Fund v. InMode Ltd. et al., Case
No. 2:24-cv-01219, against the Company and certain of its officers and directors. The complaint alleges claims under Sections 10(b) and
20(a) of the Exchange Act based on allegedly false or misleading statements related to the Company’s business, operations, sales
practices and financial outlook. The lawsuit seeks unspecified damages and other relief. On December 4, 2024, the Court entered an order
appointing a group of shareholder funds as the lead plaintiffs. On January 31, 2025, the lead plaintiffs filed an amended complaint. The
amended purported to bring claims on behalf of purchasers of the Company’s ordinary shares between February 18, 2020 and December
6, 2023, inclusive. On April 11, 2025, the Company filed a motion to dismiss the amended complaint, asserting, among other arguments,
that the allegations in the amended complaint are legally insufficient and fail to support the lead plaintiffs’ claims. On September
12, 2025, the Court entered an order dismissing 19 of the 24 statements challenged by the lead plaintiffs and providing an opportunity
to replead. On October 14, 2025, the lead plaintiffs filed a second amended complaint, which alleges the same claims and putative class
period as the amended complaint. On December 5, 2025, the Company filed a motion to dismiss the second amended complaint. On January 26,
2026, the lead plaintiffs filed an opposition to the Company’s motion to dismiss. The Company’s reply in support of its motion
to dismiss is due by February 26, 2026. As of the date of this filing, the Company is unable to estimate a range of loss, if any, that
could result were there to be an adverse final decision in the Securities Class Action, and an estimated liability has not been recorded
in the Company’s financial statements. The defendants intend to continue to deny the allegations of wrongdoing and vigorously defend
against the claims in the Securities Class Action.
We may be party from time to time to various other lawsuits, claims and other legal
proceedings that arise in the ordinary course of our business. There can be no assurance that matters that arise in the future, individually
or in aggregate, will not have a material adverse effect on our financial condition or results of operations.
B. Significant Changes
Since December 31, 2025, no significant changes have occurred.
90
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Our ordinary shares have been trading on the Nasdaq Global Select Market under the symbol
“INMD” since August 8, 2019. Prior to that date, there was no public trading market for our ordinary shares.
B. Plan of Distribution
Not applicable.
C. Markets
Our ordinary shares trade on the Nasdaq Global Select Market under the symbol “INMD.”
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the
Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Articles of Association
A copy of our amended and restated articles of association is attached as Exhibit 1.1
to this Annual Report. Other than as set forth below, the information called for by this Item is attached as Exhibit 2.1 to this Annual
Report and is incorporated by reference into this Annual Report.
C. Material Contracts
Except as otherwise disclosed in this Annual Report on Form 20-F (including its exhibits),
we are not currently, and have not been in the last two years, party to any material contract, other than contracts entered into in the
ordinary course of business.
D. Exchange Controls
There are currently no Israeli government laws, decrees or regulations that restrict
or that affect our export or import of capital or the remittance of dividends, interest or other payments to non-resident holders of our
securities, including the availability of cash and cash equivalents for use by us and our wholly-owned subsidiaries, except under certain
circumstances, for shareholders who are subjects of countries that are, or have been, in a state of war with Israel, and except or otherwise
as set forth under “Item 10E. Additional Information–Taxation.”
However, under current Israeli laws, currency controls may be imposed by administrative
action at any time. Israeli residents also have an obligation to file reports with the Bank of Israel regarding certain transactions.
E. Taxation
The following description is not intended to constitute a complete
analysis of all tax consequences relating to the ownership or disposition of our ordinary shares, both referred to in this Item 10E as
the ordinary shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as
any tax consequences that may arise under the laws of any state, local, foreign, including Israeli, or other taxing jurisdiction.
91
Material Israeli Tax Considerations
The following is a summary of the material Israeli tax laws applicable to us, and some
Israeli Government programs benefiting us. This section also contains a discussion of some Israeli tax consequences to persons acquiring
ordinary shares. This summary does not discuss all the acts of Israeli tax law that may be relevant to a particular investor in light
of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples
of this kind of investor include residents of Israel, traders in securities or persons that own, directly or indirectly, 10% or more of
our outstanding voting capital, all of whom are subject to special tax regimes not covered in this discussion. To the extent that the
discussion is based on new tax legislation which has not yet been subject to judicial or administrative interpretation, we cannot assure
you that Israeli governmental and tax authority or the Israeli courts will accept the views expressed below. The discussion below is subject
to amendment under Israeli law or changes to the applicable judicial or administrative interpretations of Israeli law, which could affect
the tax consequences described below. The discussion should not be construed as legal or professional tax advice and does not cover all
possible tax considerations.
Potential investors are urged to consult their own tax advisors as to the Israeli or
other tax consequences of the purchase, ownership and disposition of our ordinary shares, including, in particular, the effect of any
foreign, state or local taxes.
General Corporate Tax Structure in Israel
Israeli companies are generally subject to tax on their taxable income at the corporate
tax rate of 23% in 2018 and thereafter. Capital gains derived by an Israeli resident company are subject to tax at the regular corporate
tax rate.
Tax Benefits under the Law for the Encouragement of Capital Investments,
5719-1959
The Law for the Encouragement of Capital Investments, 5719-1959, or the Investment Law,
provides certain incentives for capital investments in production facilities (or other eligible assets) by “Industrial Enterprises”
(as defined under the Investment Law).
Tax Benefits Under the 2005 Amendment
An amendment to the Investment Law, which became effective as of April 1, 2005, or the
2005 Amendment, changed certain provisions of the Investment Law. An eligible investment program under the 2005 Amendment qualifies for
benefits as a “Benefited Enterprise.” Prior to the 2005 Amendment, investment programs under the Investment Law were called
“Approved Enterprises.” According to the 2005 Amendment, only Approved Enterprises receiving cash grants require the prior
approval of the Investment Center. Rather, a company may claim the tax benefits offered by the Investment Law directly in its tax returns,
provided that its facilities meet the criteria for tax benefits set forth in the 2005 Amendment. A company that has a Benefited Enterprise
may, in its discretion, approach the Israel Tax Authority for a pre-ruling confirming that it is in compliance with the provisions of
the Investment Law.
The duration of the tax benefits for a Benefited Enterprise is limited to the earlier
of seven or ten years (depending on the geographic location of the Benefited Enterprise within Israel) from the Commencement Year (as
described below) or 12 years from the first day of the year of election. Commencement Year is defined as the later of the first tax year
in which a company had derived taxable income for tax purposes from the Benefited Enterprise, or the year of election, which is the year
in which a company requested to have the tax benefits apply to the Benefited Enterprise. The tax benefits granted to a Benefited Enterprise
are determined, depending on the geographic location of the Benefited Enterprise within Israel, according to one of the following:
(i) Exemption from corporate tax may be available on undistributed income for a period
of two to ten years, depending on the geographic location of the Benefited Enterprise within Israel, and a reduced corporate tax rate
of 10% to 25% for the remainder of the benefits period, depending on the level of foreign investment in each year.
In addition, a company that has a Benefited Enterprise program is eligible for further
tax benefits if it qualifies as a Foreign Investors’ Company, or FIC. The level of foreign investment is measured as the percentage
of rights in the company (in the terms of shares, rights to profits, voting and appointment of directors) and of combined share capital
and shareholder loans that are owned, directly or indirectly, by persons who are not residents of Israel. The determination as to whether
a company qualifies as an FIC is made on an annual basis.
92
The 2011 Amendment as described below has eliminated the definition of a FIC. However,
according to the 2011 Amendment’s transitional provisions, the tax benefits of companies with Benefited Enterprise plans that opt
to remain under the Benefited Enterprise regime in accordance with the Investment Law prior to the 2011 Amendment will be preserved.
If the company pays a dividend out of income derived from the Benefited Enterprise during
the tax exemption period, such income will be subject to deferred corporate tax with respect to the amount distributed (grossed up to
reflect such pre-tax income that it would have had to earn in order to distribute the dividend) at the corporate tax rate which would
have otherwise been applied. The company is required to withhold tax on such distribution at a rate of 15%, or such lower rate may be
provided in an applicable tax treaty (subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing
for a reduced tax rate); or
(ii) Reduced corporate tax rates for companies with facilities in certain geographical
locations in Israel.
Our facilities in Israel were granted Benefited Enterprise status and thereunder we
enjoyed a ten-year tax exemption from corporate tax on our undistributed income derived from the Benefited Enterprise. The first year
in which we were exempted from tax was 2012 and the ten-year eligibility period of tax exemption ended in 2021.
Tax Benefits Under the 2011 Amendment
In December 2010, the Israeli Parliament approved amendment 68 to the Investment Law,
or the 2011 Amendment. The 2011 Amendment significantly revised the tax incentive regime in Israel and it commenced on January 1, 2011.
The 2011 Amendment provided for a new and additional status of a “Preferred Enterprise,”
which introduced new benefits for income generated by a “Preferred Company” through its Preferred Enterprise. The definition
of a Preferred Company, includes, inter alia, a company incorporated in Israel that (1) is not wholly owned by a government entity, (2)
owns a Preferred Enterprise and (3) is controlled and managed from Israel and is subject to further conditions set forth in the Investment
Law. Moreover, a Preferred Company needs to meet certain condition stipulated in the Investment Law such as being an industrial company
(including a minimum threshold of 25% export).
A Preferred Company is entitled to a reduced corporate tax rate of 16% with respect
to income attributable to its Preferred Enterprise, unless the Preferred Enterprise is located in a specified development zone, known
as Development Zone “A,” in which case the rate for a beneficial activity is currently 7.5%.
Dividends paid out of income attributed to a Preferred Enterprise are generally subject
to tax at the rate of 20% or such lower rate as may be provided in an applicable tax treaty. Claim of tax benefits afforded by an applicable
tax treaty is subject to the receipt in advance of a valid certificate from the Israel Tax Authority, allowing for a reduced tax rate.
However, if such dividends are paid to an Israeli company, no tax is required to be withheld (although, if the funds are subsequently
distributed to individuals or non-Israeli residents (individuals and corporations), withholding tax would apply when distributing the
dividend to such individuals or non-Israeli residents).
Tax Benefits Under the 2017 Amendment
Additional amendments to the Investment Law became effective in January 2017, or the
2017 Amendment. Under the 2017 Amendment, and provided the conditions stipulated therein are met, income derived by Preferred Companies
from “Preferred Technological Enterprises,” or PTE (as defined in the 2017 Amendment), would be subject to reduced corporate
tax rates of 7.5% in Development Zone “A” and 12% elsewhere in Israel, or 6% in the case of a “Special Preferred Technological
Enterprise,” or SPTE (as defined in the 2017 Amendment) regardless of the company’s geographical location within Israel. A
Preferred Company distributing dividends from income derived from its PTE or SPTE, would subject the recipient to a 20% tax (or lower,
if so provided under an applicable tax treaty). The 2017 Amendment further provides that, in certain circumstances, a dividend distributed
to a corporate shareholder who is not an Israeli resident for tax purposes would be subject to a 4% tax (inter alia, if the amount of
foreign investors in the distributing company exceeds 90%). Such taxes would generally be withheld at source by the distributing company.
93
On June 14, 2017, the Encouragement of Capital Investments Regulations (Preferred Technology
Income and Capital Profits for a Technological Enterprise), 2017, or the Regulations, were published, which adopted Action 5 under the
base erosion and profit shifting, or BEPS, regulations. The Regulations describe, inter alia, the mechanism used to determine the calculation
of the benefits under the PTE and under the SPTE regimes and determine certain requirements relating to documentation of intellectual
property for the purpose of a PTE. According to these provisions, a company that complies with the terms under the PTE regime may be entitled
to certain tax benefits with respect to income generated during the company’s regular course of business and derived from the preferred
intangible asset (as determined in the Investment Law), excluding income derived from intangible assets used for marketing and income
attributed to production activity. In the event that intangible assets used for marketing purposes generate over 10% of the PTE’s
income, the relevant portion, calculated using a transfer pricing study, would be subject to regular corporate income tax. If such income
does not exceed 10%, the PTE will not be required to exclude the marketing income from the PTE’s total income. The Regulations set
a presumption of direct production expenses plus 10% with respect to income related to production, which can be countered by the results
of a supporting transfer pricing study. Tax rates applicable to such production income expenses will be similar to the tax rates under
the Preferred Enterprise regime, to the extent such income would be considered as eligible. In order to calculate the preferred income,
the PTE is required to take into account the income and the research and development expenses that are attributed to each single preferred
intangible asset. However, the transitional provisions allow companies to take into account the income and research and development expenses
attributed to all of the preferred intangible assets they have. Under the Regulations, our corporate tax rate for the Company for a beneficial
activity is expected to be approximately [7.5]%.
Under the transitional provisions of the 2017 Amendment, a company is allowed to continue
to enjoy the tax benefits available under the Investment Law prior to the 2017 Amendment until the end of the period of benefits, as defined
in the Investment Law. In each year during the period of benefit under its Benefited Enterprise status, the Company will be able to opt-in
for application of the 2017 Amendment, thereby making itself available to the tax rates described above. A company’s decision to
opt-in for application of the 2017 Amendment is irrecoverable.
Pursuant to the amendment to the Investments Law which became effective on November 15,
2021, a company that elects by November 15, 2022 to pay a reduced corporate tax rate as set forth in that amendment (rather than
the regular corporate tax rate applicable to Approved Enterprise income) with respect to undistributed exempt income accumulated by the
company until December 31, 2020 will be entitled to distribute a dividend from such income or to be used for any other reason found
by the Company, without being required to pay additional corporate tax. A company that has so elected must make certain qualified investments
in Israel over the five-year period commencing on the year of which the Company has elected to pay the reduced corporate tax rate. A company
that has elected to apply the amendment cannot withdraw from its election. The Company elected to take advantage of the amendment, and
has paid NIS 42.5 million (approximately $12 million) as a one-time payment, and as a result NIS 591 million (approximately $165.7 million)
of the Company’s undistributed exempt income for years 2012 until 2020 will be entitled to be distributed as dividend or to be used
for any other reason found by the Company without being required to pay additional corporate tax. As a result, the Company is required
to invest NIS 32 million (approximately $9 million) in its industrial enterprises in Israel over a five year period. Such investment may
be in the form of the acquisition of industrial assets (excluding real estate assets), investment in R&D in Israel, or payroll payments
to new employees to be hired by the enterprise.
In February 2022, the Company settled the 2017-2020 income tax assessment with the Israeli
tax authority, paying $1.3 million. In addition, the Company reached an agreement of tax assessment with the Israeli tax authority under
which the Company paid during January 2023 NIS 50.2 million (approximately $14.3 million) on its undistributed exempt income for the year
ended December 31, 2021. As a result, NIS 517.8 million (approximately $147.5 million) of the Company’s undistributed exempt income
for 2021 may be distributed or used by the Company without being subject to additional corporate tax.
Law for the Encouragement of Industry (Taxes), 5729-1969
We believe that we currently qualify as an “Industrial Company” within the
meaning of the Law for the Encouragement of Industry (Taxes), 5729-1969, or the Industry Encouragement Law. The Industry Encouragement
Law defines an “Industrial Company” as an Israeli-resident company, incorporated in Israel, of which 90% or more of its income
in any tax year, other than of income from defense loans, capital gains, interest and dividends, is derived from an “Industrial
Enterprise” owned by it and located in Israel or in the “Area,” in accordance with the definition in section 3a of the
Tax Ordinance. An “Industrial Enterprise” is defined as an enterprise which is held by an Industrial Company whose principal
activity in a given tax year is industrial production.
The following tax benefits, among others, are available to Industrial Companies:
| • |
amortization of the cost of purchased know-how, patents and certain other intangible property rights (other than goodwill), which
are used for the development or promotion of the Industrial Enterprise, over an eight-year period for tax purposes, commencing in the
year where the Industrial Company began to utilize them; |
| • |
accelerated depreciation rates on equipment and buildings; |
| • |
under specified conditions, an election to file consolidated tax returns with additional related Israeli Industrial Companies; and
|
94
| • |
expenses related to a public offering are deductible in equal amounts over three years, beginning from the year of the offering.
|
Eligibility for the benefits under the Industry Encouragement Law is not subject to
receipt of prior approval from any governmental authority. We cannot assure that we will continue to qualify as an “Industrial Company”
or that the benefits described above will be available to us in the future.
Capital Gains Taxes Applicable to Israeli Resident and Non-Israeli
Resident Shareholders
Capital gains tax is imposed on the sale of capital assets by an Israeli resident and
on the sale of such assets by non-Israeli residents if those assets are either: (i) located in Israel, (ii) shares or rights to shares
in Israeli resident companies or (iii) represent, directly or indirectly, rights to assets located in Israel, unless a specific exemption
is available under Israeli tax law or unless a treaty between Israel and the country of the nonresident provides otherwise. The Tax Ordinance
distinguishes between “Real Capital Gain” and the “Inflationary Surplus.” Real Capital Gain is the excess of the
total capital gain over Inflationary Surplus computed generally on the basis of the increase in the Israeli Consumer Price Index or, in
certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of disposition. You should consult
with your own tax advisor as to the method you should use to determine the Inflationary Surplus. Inflationary Surplus is not subject to
tax in Israel.
Generally, the tax rate applicable to real capital gains derived by individuals on the
sale of our ordinary shares will be taxed at the rate of 25%, unless such shareholder claims a deduction for interest and linkage differences
expenses in connection with such shares, in which case the gain will generally be taxed at a rate of 30%. If the individual shareholder
is a Controlling Shareholder at the time of the sale or at any time during the 12-month period preceding such sale, such gain will be
taxed at the rate of 30%. A “Controlling Shareholder” is defined as a person who holds, directly or indirectly, including
together with others, at least 10% of any means of control in the company (including, among other things, the right to receive profits
of the company, voting rights, the right to receive the proceeds upon the company’s liquidation and the right to appoint a director).
Real capital gains derived by corporations will be generally subject to the regular
corporate tax rate (23% in 2018 and thereafter). Individual and corporate shareholders dealing in securities are taxed at the tax rates
applicable to business income: 23% for corporations in 2018 and thereafter and a marginal tax rate of up to 47% in 2018 and thereafter
for individuals plus an additional excess tax of up to 5% as described below.
Non-Israeli Resident Shareholders
Non-Israeli residents (individuals and corporations) are generally exempt from Israeli
capital gains tax on any gains derived from the sale, exchange or disposition of shares of Israeli companies publicly traded on a recognized
stock exchange outside of Israel, provided, among other things, that such shareholders did not acquire their shares prior to the company’s
initial public offering and the gains were not derived from a permanent establishment of such shareholders in Israel. However, shareholders
that are non-Israeli entities will not be entitled to such exemption if Israeli residents: (1) have directly or indirectly, alone or together
with another, a controlling interest of more than 25% of any of the means of control in such non-Israeli corporation or (2) are the beneficiaries
of or are entitled to 25% or more of the revenues or profits of such non-Israeli entity, whether directly or indirectly. This exemption
is not applicable to a person whose gains from selling or otherwise disposing of the shares are deemed to be business income.
In addition, a sale of shares may be exempt from Israeli capital gains tax under the
provisions of an applicable tax treaty and subject to the receipt in advance of a valid certificate from the Israeli tax authority allowing
of such exemption.
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For example, pursuant to the Convention Between the Governments of the United States
and Israel with respect to Taxes of Income, as amended, or the U.S.-Israel Tax Treaty, the sale, exchange or disposition of ordinary shares
by a person who qualifies as a resident of the United States within the meaning of the U.S.-Israel Tax Treaty and who holds the shares
as a capital asset and is entitled to claim the benefits afforded to such person by the U.S.-Israel Tax Treaty generally will not be subject
to the Israeli capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate
located in Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) such person
holds, directly or indirectly, shares representing 10% or more of our voting power during any part of the 12-month period preceding such
sale, exchange or disposition, subject to certain conditions; (iv) the capital gains arising from such sale, exchange or disposition can
be allocated to a permanent establishment of the shareholder in Israel, under certain terms; or (v) such person is an individual and was
present in Israel for a period or periods of 183 days or more in the aggregate during the relevant tax year. In any such case, the sale,
exchange or disposition of such shares would be subject to Israeli tax, to the extent applicable. Eligibility to benefit from tax treaties
is conditioned upon the shareholder presenting a withholding certificate issued by the Israel Tax Authority prior to the applicable payment.
Withholding and Reporting
Either the purchaser, the Israeli stockbrokers or financial institutions through which
the shares are held is obliged to withhold tax on the amount of consideration paid upon the sale of our ordinary shares (or on the capital
gain realized on the sale, if known), at the Israeli corporate tax rate for Israeli companies (23% in 2018 and thereafter). In case the
seller is an individual, the applicable withholding tax rate would be 25% of the amount of consideration paid upon the sale of shares
(or on the capital gain realized on the sale, if known).
In some instances where our shareholders may be liable for Israeli tax on the sale of
our ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders, including
non-Israeli resident shareholders, may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid
withholding at source at the time of sale. In transactions involving a sale of all of the securities of an Israeli resident company, in
the form of a merger or otherwise, the Israel Tax Authority may require non-Israeli resident shareholders who are not liable for Israeli
tax to sign a declaration in a form specified by the Israel Tax Authority or obtain a specific exemption from the Israel Tax Authority
to confirm their status as a non-resident of Israel, and, in the absence of such declarations or exemptions, may require the purchaser
of the securities to withhold taxes at source.
The sale of securities traded on a stock exchange, requires that a detailed return,
including a computation of the tax due, be filed and an advanced payment must be paid on January 31 and July 31 of every tax year in respect
of sales of securities made within the previous six months. However, if all tax due was withheld at source according to applicable provisions
of the Tax Ordinance and the regulations promulgated thereunder, then the aforementioned return need not be filed and no advance payment
must be made.
Taxation of Dividend Distributions
A distribution of dividends from income, which is not attributed to an Approved Enterprise/Benefited
Enterprise/Preferred Enterprise/Technology Enterprises to an Israeli resident individual, will generally be subject to income tax at a
rate of 25%. However, a 30% tax rate will apply if the dividend recipient is a “Controlling Shareholder” (as defined above)
at the time of the distribution or at any time during the preceding 12-month period, and a non-Israeli resident individual will be generally
subject to withholding tax at source at the rate of 15% or such lower rate as may be provided in an applicable tax treaty.
The Tax Ordinance generally provides that a non-Israeli resident (either individual
or corporation) is subject to Israeli income tax on the receipt of dividends at the rate of 25% (30% if the dividends recipient is a “Controlling
Shareholder” (as defined above), at the time of the distribution or at any time during the preceding 12 months).
Generally, Israeli resident corporations are not subject to Israeli tax on the receipt
of dividends paid on shares of Israeli corporations, other than with respect to dividends distributed from income that has accrued during
the benefits period and attributed to a Benefited Enterprise as described above.
Payers of dividends on our shares, including the Israeli stockbrokers or the financial
institutions through which the shares are held, are generally required, subject to reduced tax rates and the demonstration of a shareholder
of his, her or its foreign residency, to withhold taxes upon the distribution of dividends at a rate of 25% (whether or not the recipient
is a “Controlling Shareholder”) provided that the shares are registered with a nominee company in Israel (for corporations
and individuals), unless a reduced tax rate under the provisions of an applicable double tax treaty (subject to the receipt in advance
of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate) is available.
Dividends paid out of income attributed to a Preferred Technology Enterprises are generally
subject to withholding tax at source at the rate of 20% or such lower rate as may be provided in an applicable tax treaty.
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For example, under the U.S.-Israel Tax Treaty, the following rates will apply in respect
of dividends distributed by an Israeli resident company to a U.S. resident (for purposes of the U.S.-Israel Treaty): (i) with regard to
a dividend distributed from income which is not attributed to an Approved Enterprise/Benefited Enterprise/Preferred Enterprise/Preferred
Technology Enterprise or Special Preferred Technology Enterprise, if the U.S. resident is a corporation which holds during that portion
of the taxable year which precedes the date of payment of the dividend and during the whole of its prior taxable year (if any), at least
10% of the outstanding shares of the voting stock of the Israeli resident paying corporation and not more than 25% of the gross income
of the Israeli resident paying corporation for such prior taxable year (if any) consists of certain types of interest or dividends –
the maximum tax rate of withholding is 12.5% if a certificate for a reduced withholding tax rate would be provided in advance from the
Israel Tax Authority, (ii) with regard to a dividend distributed from income derived from an Approved Enterprise/Benefited Enterprise/Preferred
Enterprise under the Investment Law, if the U.S. resident is a corporation which holds during that portion of the taxable year which precedes
the date of payment of the dividend and during the whole of its prior taxable year (if any), at least 10% of the outstanding shares of
the voting stock of the Israeli resident paying corporation and not more than 25% of the gross income of the Israeli resident paying corporation
for such prior taxable year (if any) consists of certain types of interest or dividends, the tax rate of withholding 15% will be applicable
if a certificate for a reduced withholding tax rate would be provided in advance from the Israel Tax Authority and (iii) in all other
cases, the tax rate is 25%, or the domestic rate (if such is lower). The aforementioned rates under the U.S.-Israel Tax Treaty will not
apply if the dividend income was derived through a permanent establishment of the U.S. resident in Israel.
If the dividend is attributable partly to income derived from an Approved Enterprise,
Benefited Enterprise or Preferred Enterprise, and partly from other sources of income, the income tax rate will be a blended rate reflecting
the relative portions of the types of income.
A non-Israeli resident who receives dividend income derived from or accrued from Israel,
from which the full amount of tax was withheld at source, is generally exempt from the obligation to file tax returns in Israel with respect
to such income, provided that (i) such income was not generated from a business conducted in Israel by the taxpayer, and (ii) the taxpayer
has no other taxable sources of income in Israel with respect to which a tax return is required to be filed.
We have never declared or paid cash dividends to our shareholders and currently we do
not intend to distribute cash or other dividends in the foreseeable future. We cannot assure you that, in the event we declare a dividend,
we will designate the profits that are being distributed in a way that will reduce shareholders’ tax liability.
Foreign Exchange Regulations
Non-residents of Israel who hold our ordinary shares are able to receive any dividends,
and any amounts payable upon the dissolution, liquidation and winding up of our affairs, freely repayable in non-Israeli currency at the
rate of exchange prevailing at the time of conversion. However, Israeli income tax is generally required to have been paid or withheld
on these amounts. In addition, the statutory framework for the potential imposition of currency exchange controls has not been eliminated,
and may be restored at any time by administrative action.
Excess Tax
Individuals who are subject to tax in Israel are also subject to an additional tax at
a rate of 3% on annual income exceeding a certain threshold (NIS 721,560 for 2025), which amount is linked to the annual change in the
Israeli consumer price index, including, but not limited to income derived from dividends, interest and capital gains, and additional
tax at a rate of 2% on annual income exceeding a certain threshold (NIS 721,560 for 2024), which amount is linked to the annual change
in the Israeli consumer price index, including, income derived from dividends, interest and capital gains, subject to the provisions of
an applicable tax treaty.
Estate and Gift Tax
Israeli law presently does not impose estate or gift taxes.
Material U.S. Federal Income Tax Considerations to U.S. Holders
The following discussion is a description of the material U.S. federal income tax considerations
applicable to an investment in our ordinary shares by U.S. Holders who hold the ordinary shares as capital assets for U.S. federal income
tax purposes, (generally, property held for investment). As used in this section, the term “U.S. Holder” means a beneficial
owner of an ordinary share who, for U.S. federal income tax purposes, is or is treated as any of the following:
| • |
a citizen or resident of the United States; |
| • |
a corporation created or organized in or under the laws of the United States or any political subdivision thereof, including the
District of Columbia; |
| • |
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
| • |
a trust if the trust has elected validly to be treated as a United States person for U.S. federal income tax purposes or if a U.S.
court is able to exercise primary supervision over the trust’s administration and one or more United States persons have the authority
to control all of the trust’s substantial decisions. |
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This description is based on provisions of the U.S. Internal Revenue Code of 1986, as
amended, referred to in this discussion as the Code, existing U.S. Treasury regulations and administrative and judicial interpretations,
each as available and in effect as of the date of this prospectus. These sources may change and are open to differing interpretations,
possibly with retroactive effect in a manner that could adversely affect a U.S. Holder. This description does not discuss all aspects
of U.S. federal income taxation that may be applicable to investors in light of their particular circumstances or to investors who are
subject to special treatment under U.S. federal income tax law, including:
| • |
insurance companies; |
| • |
dealers in stocks, securities or currencies; |
| • |
financial institutions and financial services entities; |
| • |
real estate investment trusts; |
| • |
regulated investment companies; |
| • |
partnerships and other pass-through entities, and investors in such entities; |
| • |
persons that receive ordinary shares as compensation for the performance of services; |
| • |
tax-exempt organizations; |
| • |
persons that hold ordinary shares as a position in a straddle or as part of a hedging, conversion or other integrated instrument
or persons entering into a constructive sale with respect to the ordinary shares; |
| • |
persons subject to special tax accounting rules under Section 451(b) of the Code; |
| • |
individual retirement and other tax-deferred accounts; |
| • |
expatriates of the United States; |
| • |
persons having a functional currency other than the U.S. dollar; and |
| • |
direct, indirect or constructive owners of 10% or more of our ordinary shares and/or other equity by vote or value. |
This discussion does not address any U.S. state or local or non-U.S. tax consequences
or any U.S. federal gift or estate tax or alternative minimum tax considerations.
If an entity or arrangement treated as a partnership for U.S. federal income tax purposes
holds ordinary shares, the U.S. federal income tax consequences relating to an investment in the ordinary shares will depend in part upon
the status and activities of such entity or arrangement and the particular partner and certain determinations made at the partner level.
Any such entity or arrangement should consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it
and its partners of the purchase, ownership and disposition of ordinary shares.
We urge you to consult with your own tax advisor regarding the tax consequences of investing
in the ordinary shares, including the effects of federal, state, local, foreign and other tax laws.
Distributions Paid on the Ordinary Shares
We have never paid cash dividends on our ordinary shares and we may not distribute cash
or other dividends on our ordinary shares in the foreseeable future. Subject to the discussion below under “- Passive Foreign Investment
Company Considerations,” a U.S. Holder generally will be required to include in gross income as ordinary dividend income the amount
of any distributions paid on the ordinary shares, including the amount of any Israeli taxes withheld, to the extent that those distributions
are paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Subject to the discussion
below under “-Passive Foreign Investment Company Considerations,” distributions in excess of our earnings and profits will
be applied against and will reduce the U.S. Holder’s tax basis in its ordinary shares and, to the extent they exceed that tax basis,
will be treated as gain from a sale or exchange of those ordinary shares. Our dividends will not qualify for the dividends-received deduction
applicable in some cases to U.S. corporations. Dividends paid in NIS, including the amount of any Israeli taxes withheld, will be includible
in the income of a U.S. Holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day they are received
by the U.S. Holder. Any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend is includible
in the income of the U.S. Holder to the date that payment is converted into U.S. dollars generally will be treated as ordinary income
or loss. Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should
expect all distributions to be reported to them as dividends. Distributions on ordinary shares that are treated as dividends generally
will constitute income from sources outside the United States for foreign tax credit purposes and generally will constitute passive category
income. Subject to certain complex conditions and limitations, Israeli taxes withheld on any distributions on ordinary shares may be eligible
for credit against a U.S. Holder’s federal income tax liability. The rules relating to the determination of the U.S. foreign tax
credit are complex, and U.S. Holders should consult their tax advisors regarding the availability of a foreign tax credit in their particular
circumstances and the possibility of claiming an itemized deduction (in lieu of the foreign tax credit) for any foreign taxes paid or
withheld.
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Dividends paid by a “qualified foreign corporation” to non-corporate U.S.
Holders are eligible for taxation at a reduced capital gains rate rather than the marginal tax rates generally applicable to ordinary
income provided that certain requirements are met. Each U.S. Holder is advised to consult its tax advisors regarding the availability
of the reduced tax rate on dividends with regard to its particular circumstances. Distributions on ordinary shares that are treated as
dividends generally will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders
with respect to dividends received from U.S. corporations.
A corporation organized outside of the United States, or a non-U.S. corporation (other
than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally
will be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the
United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which
includes an exchange of information provision, or (b) with respect to any dividend it pays on ordinary shares that are readily tradable
on an established securities market in the United States. We believe that we qualify as a resident of Israel for purposes of, and are
eligible for the benefits of, the U.S.-Israel Treaty, although there can be no assurance in this regard. Further, the Internal Revenue
Service, or IRS, has determined that the U.S.-Israel Treaty is satisfactory for purposes of the qualified dividend rules and that it includes
an exchange of information provision. Therefore, subject to the discussion below under “- Passive Foreign Investment Company Considerations,”
if the U.S.-Israel Treaty is applicable, such dividends will generally be “qualified dividend income” in the hands of individual
U.S. Holders, provided that certain conditions are met, including holding period and the absence of certain risk reduction transaction
requirements. Each U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends
with regard to its particular circumstances.
Disposition of Ordinary Shares
Subject to the discussion below under “- Passive Foreign Investment Company Considerations,”
a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes upon the sale, exchange or other disposition
of ordinary shares in an amount equal to the difference, if any, between the amount realized (i.e., the amount of cash plus the fair market
value of any property received) on the sale, exchange or other disposition and such U.S. Holder’s adjusted tax basis in the ordinary
shares. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for non-corporate U.S. Holders or
long-term capital loss if, on the date of sale, exchange or other disposition, the ordinary shares were held by the U.S. Holder for more
than one year. Any capital gain of a non-corporate U.S. Holder that is not long-term capital gain is taxed at ordinary income rates. The
deductibility of capital losses is subject to limitations. Any gain or loss recognized from the sale or other disposition of ordinary
shares will generally be gain or loss from sources within the United States for U.S. foreign tax credit purposes.
Passive Foreign Investment Company Considerations
We believe that we were not a PFIC for our taxable year ended December 31, 2025, and
we do not expect to be classified as a PFIC for U.S. federal income tax purposes for the current year ending December 31, 2026, or the
foreseeable future. However, the determination of whether we are a PFIC is a factual determination made annually based on all the facts
and circumstances and thus is subject to change. The relevant rules for determining whether or not we are a PFIC as applied to our business
are not entirely clear and certain aspects of the relevant tests will be outside our control. Therefore, no assurance can be given that
we will not be a PFIC for any taxable year.
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In general, a non-U.S. corporation will be treated as a PFIC, for any taxable year in
which either (1) at least 75% of its gross income is “passive income,” referred to as the PFIC income test, or (2) on average
at least 50% of its assets, determined on a quarterly basis, are assets that produce passive income or are held for the production of
passive income, referred to as the PFIC asset test. Passive income for this purpose generally includes, among other things, dividends,
interest, royalties, rents, and gains from the sale or exchange of property that gives rise to passive income. Assets that produce or
are held for the production of passive income generally include cash, even if held as working capital or raised in a public offering,
marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation is a
PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest
(by value) is taken into account.
A separate determination must be made after the close of each taxable year as to whether
we were a PFIC for that year. Because the value of our assets for purposes of the PFIC test will generally be determined by reference
to the market price of our ordinary shares, fluctuations in the market price of our ordinary shares may cause us to become a PFIC. In
addition, changes in the composition of our income or assets may cause us to become a PFIC.
If we are a PFIC in any taxable year during which a U.S. Holder owns ordinary shares,
the U.S. Holder could be liable for additional taxes and interest charges under the “PFIC excess distribution regime” upon
(1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding
taxable years, or, if shorter, the U.S. Holder’s holding period for the ordinary shares, and (2) any gain recognized on a sale,
exchange or other disposition, including, under certain circumstances, a pledge, of the ordinary shares, whether or not we continue to
be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution
or gain ratably over the U.S. Holder’s holding period for ordinary shares. The amount allocated to the current taxable year (i.e.,
the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC
will be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the
highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an
interest charge, generally applicable to underpayments of tax, will be added to the tax.
If we are a PFIC for any year during which a U.S. Holder holds ordinary shares, we must
generally continue to be treated as a PFIC by such U.S. Holder for all succeeding years during which such U.S. Holder holds the ordinary
shares, unless we cease to meet the requirements for PFIC status and such U.S. Holder makes a “deemed sale” election with
respect to the ordinary shares. If the election is made, the U.S. Holder will be deemed to sell the ordinary shares it holds at their
fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale
would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s ordinary shares would
not be treated as shares of a PFIC unless we subsequently become a PFIC.
If we are a PFIC for any taxable year during which a U.S. Holder holds ordinary shares
and one of our non-U.S. corporate subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a
proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution regime on distributions
by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive
the proceeds of those distributions or dispositions. Each U.S. Holder is advised to consult its tax advisors regarding the application
of the PFIC rules to our non-U.S. subsidiaries.
If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution
regime on distributions or gain recognized on ordinary shares if such U.S. Holder makes a valid “mark-to-market” election
for our ordinary shares. A mark-to-market election is available to a U.S. Holder only for “marketable stock.” Our ordinary
shares will be marketable stock as long as they remain listed on Nasdaq and are regularly traded, other than in de
minimis quantities, on at least 15 days during each calendar quarter. There can be no assurance that the ordinary shares will be
“marketable stock” for purposes of the mark-to-market election. If a mark-to-market election is in effect, a U.S. Holder generally
would take into account, as ordinary income for each taxable year of the U.S. Holder, the excess of the fair market value of ordinary
shares held at the end of such taxable year over the adjusted tax basis of such ordinary shares. The U.S. Holder would also take into
account, as an ordinary loss each year, the excess of the adjusted tax basis of such ordinary shares over their fair market value at the
end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as
a result of the mark-to-market election. The U.S. Holder’s tax basis in ordinary shares would be adjusted to reflect any income
or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of ordinary shares
in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition
would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as
capital loss.
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A mark-to-market election will not apply to ordinary shares for any taxable year during
which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election
will not apply to any non-U.S. subsidiaries that we may organize or acquire in the future. Accordingly, a U.S. Holder may continue to
be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs that we may organize or acquire in the
future notwithstanding the U.S. Holder’s mark-to-market election for the ordinary shares.
The tax consequences that would apply if we are a PFIC would also be different from
those described above if a U.S. Holder were able to make a valid qualified electing fund, or QEF, election. At this time, we do not expect
to provide U.S. Holders with the information necessary for a U.S. Holder to make a QEF election. Prospective investors should assume that
a QEF election will not be available.
Each U.S. person that is an investor of a PFIC is generally required to file an annual
information return on IRS Form 8621 containing such information as the U.S. Treasury Department may require. The failure to file IRS Form
8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax.
The U.S. federal income tax rules relating to PFICs are very complex. Prospective U.S.
investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and
disposition of ordinary shares, the consequences to them of an investment in a PFIC, any elections available with respect to the ordinary
shares and the IRS information reporting obligations with respect to the purchase, ownership and disposition of ordinary shares of a PFIC.
Medicare Tax
Certain U.S. Holders that are individuals, estates or trusts and whose income exceeds
certain thresholds generally are subject to a 3.8% tax on all or a portion of their net investment income, which may include their gross
dividend income and net gains from the disposition of ordinary shares. If you are a U.S. person that is an individual, estate or trust,
you are encouraged to consult your tax advisors regarding the applicability of this Medicare tax to your income and gains in respect of
your investment in ordinary shares.
Information Reporting and Back-up Withholding
U.S. Holders may be required to file certain U.S. information reporting returns with
the IRS with respect to an investment in ordinary shares, including, among others, IRS Form 8938 (Statement of Specified Foreign Financial
Assets). As described above under “– Passive Foreign Investment Company Considerations,” each U.S. Holder who is a shareholder
of a PFIC must file an annual report containing certain information. U.S. Holders paying more than $100,000 for ordinary shares may be
required to file IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) reporting this payment. Substantial penalties
may be imposed upon a U.S. Holder that fails to comply with the required information reporting.
Dividends on and proceeds from the sale or other disposition of ordinary shares may
be reported to the IRS unless the U.S. Holder establishes a basis for exemption. Backup withholding may apply to amounts subject to reporting
if the holder (1) fails to provide an accurate United States taxpayer identification number or otherwise establish a basis for exemption
(usually on IRS Form W-9), or (2) is described in certain other categories of persons. However, U.S. Holders that are corporations generally
are excluded from these information reporting and backup withholding tax rules. Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal
income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.
U.S. Holders should consult their own tax advisors regarding the backup withholding
tax and information reporting rules.
EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR
ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN ORDINARY SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.
F. Dividends and Paying
Agents
Not applicable.
G. Statement by Experts
Not applicable.
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H. Documents on Display
We are subject to the information reporting requirements of the Exchange Act applicable
to foreign private issuers and under those requirements will file reports with the SEC. Those reports may be inspected without charge
at the locations described below. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing
and content of proxy statements, and our officers, directors and principal shareholders have historically been exempt from the reporting
and short swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange
Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are
registered under the Exchange Act. Nevertheless, we will file with the SEC an Annual Report on Form 20-F containing financial statements
that have been examined and reported on, with and opinion expressed by an independent registered public accounting firm, and we intend
to submit quarterly interim consolidated financial data to the SEC under cover of the SEC’s Form 6-K.
We maintain a corporate website at www.inmodemd.com.
We intend to post our Annual Report on Form 20-F on our website promptly following it being filed with the SEC. Information contained
on, or that can be accessed through, our website does not constitute a part of this Annual Report on Form 20-F. We have included our website
address in this Annual Report on Form 20-F solely as an inactive textual reference.
Our SEC filings are available to you on the SEC’s website at http://www.sec.gov.
This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the
SEC. The information on that website is not part of this Annual Report on Form 20-F.
With respect to references made in this Annual Report on Form 20-F to any contract or
other document of InMode, such references are not necessarily complete and you should refer to the exhibits attached or incorporated by
reference to this Annual Report on Form 20-F for copies of the actual contract or document.
I. Subsidiary Information
Not applicable.
J. Annual Report to
Security Holders.
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Foreign Currency Risk
Our consolidated revenues are generated primarily in U.S. dollars. In addition, a substantial
portion of our consolidated costs are incurred in dollars. We believe that the U.S. dollar is the primary currency of the economic environment
we operate in. Thus, the U.S. dollar is our primary functional and reporting currency.
Our transactions and balances originally denominated in dollars are presented at their
original amounts. Balances in non-dollar currencies are translated into U.S. dollars using historical and current exchange rates for non-monetary
and monetary balances, respectively. For non-U.S. dollar transactions and other items in the consolidated statements of income (indicated
below), the following exchange rates are used: (i) for transactions, exchange rates at transaction dates or average rates; and (ii) for
other items (derived from non-monetary balance sheet items such as depreciation and amortization), historical exchange rates. Currency
translation gains and losses are presented in finance income or expenses, as appropriate.
A significant portion of our operations is conducted through operations in countries
other than the United States and Israel. Revenues from our global operations that were recorded in U.S. dollars represented approximately
64% 72% and 74% for the years ended December 31, 2025, 2024 and 2023, respectively.
The functional currency of our subsidiaries is the U.S. dollar. For purposes of consolidation,
the financial statements of the Foreign Subsidiaries are translated into U.S. dollars in accordance with ASC No. 830, “Foreign Currency
Matters” (“ASC 830”).
Interest Rate Risk
The primary objective of our investment activities is to preserve principal while maximizing
the interest income we receive from our investments, without increasing risk. Currently, we do not have any outstanding borrowings. We
intend to invest our cash balances primarily in bank deposits and fixed-income securities issued by corporations, the United States and
non-U.S. governments. We are exposed to market risks resulting from changes in interest rates relating primarily to our financial investments
in cash, cash equivalents, deposits and marketable securities. We do not use derivative financial instruments to limit exposure to interest
rate risk. Our interest gains may decline in the future as a result of changes in the financial markets; however, we believe any such
potential loss would be immaterial to us.
102
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN
EQUITY SECURITIES
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary
Shares
Not applicable.
103
ITEM
13. DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES
Not
applicable.
ITEM
14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
On
April 3, 2023, we amended and restated our Articles of Association. The only material change made was to increase the number of authorized
ordinary shares from 100,000,000 to 200,000,000. No other material modifications were made to the rights of holders of our ordinary shares.
A copy of our amended and restated articles of association is attached as Exhibit 1.1 to this Annual Report.
ITEM
15. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
We
have performed an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and
Chief Financial Officer (our principal executive officer and principal financial officer, respectively), of the effectiveness of our disclosure
controls and procedures that are designed to provide a reasonable level of assurance that the information required to be disclosed in
reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the specified time periods
and accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure.
Based
on our evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of the end of the period covered by this report are
effective in ensuring that the information required to be disclosed in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our
Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s
Annual Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Rule 13a-15(f) promulgated under the Exchange Act. Our internal control system was designed to provide reasonable assurance to our
management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of published
financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with policies or procedures may deteriorate.
Management
has assessed the effectiveness of our internal control over financial reporting as of December 31, 2025, using criteria described in the
Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based
on its assessment, management concluded that the internal control over financial reporting was effective as of December 31, 2025, based
on the criteria established in the Internal Control-Integrated Framework (2013).
The
effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by Kesselman & Kesselman,
Certified Public Accountants (Isr.), a member of PricewaterhouseCoopers International Limited, independent registered public accounting
firm, as stated in their report on pages F-[2] to F-[3] under “Item 18. Financial Statements” in this Annual Report on Form
20-F.
Changes
in Internal Control Over Financial Reporting
There
were no changes in our internal control over financial reporting that occurred during the period covered by this Annual Report on Form
20-F that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
104
ITEM
16. [RESERVED]
ITEM
16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our
board of directors has determined that all members of our audit committee are financially literate as determined in accordance with Nasdaq
rules and that Dr. Michael Anghel is qualified to serve as an “audit committee financial expert” as defined by SEC rules.
Dr. Anghel is independent, as defined by Nasdaq listing standards.
ITEM
16B. CODE OF ETHICS
We
have adopted a Code of Business Conduct and Ethics applicable to all of our directors and employees, including our Chief Executive Officer,
Chief Financial Officer, controller or principal accounting officer, or other persons performing similar functions. The full text of the
Code of Business Conduct and Ethics has been posted on our website at www.inmodemd.com. If we make any amendment to the Code of Business
Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision of the code of ethics, we will disclose the nature
of such amendment or waiver on our website to the extent required by the rules and regulations of the SEC.
ITEM
16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees
Paid to Independent Registered Public Accounting Firm
The
following table sets forth, for each of the years indicated, the fees billed by Kesselman & Kesselman, Certified Public Accountants
(Isr.), a member of PricewaterhouseCoopers International Limited, our independent registered public accounting firm.
|
Year
ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
USD,
in thousands |
||||||||
|
Audit fees(1) |
737 |
664 |
||||||
|
Audit-related fees(2) |
— |
— |
||||||
|
Tax fees(3) |
113 |
95 |
||||||
|
All other fees |
— |
— |
||||||
|
Total |
850 |
759 |
||||||
| (1) |
Audit fees consist of fees billed or expected
to be billed for the annual audit services engagement and other audit services, which are those services that only the external auditor
can reasonably provide, and include the Company audit; statutory audits; comfort letters and consents; attest services; and assistance
with and review of documents filed with the SEC. |
| (2) |
Audit-related fees consist of fees billed
for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements or
that are traditionally performed by the external auditor, and include consultations concerning financial accounting and reporting standards;
internal control reviews of new systems, programs and projects; review of security controls and operational effectiveness of systems;
review of plans and control for shared service centers, due diligence related to acquisitions; accounting assistance and audits in connection
with proposed or completed acquisitions; and employee benefit plan audits. |
| (3) |
Tax fees include fees billed for tax compliance
services that were rendered during the most recent fiscal year, including the preparation of original and amended tax returns and claims
for refund; tax consultations, such as assistance and representation in connection with tax audits and appeals, tax advice related to
mergers and acquisitions, transfer pricing, and requests for rulings or technical advice from taxing authority; tax planning services;
and expatriate tax planning and services. |
Our
Audit and Investment Committee, in accordance with its charter, reviews and pre-approves all audit services and permitted non-audit services
(including the fees and other terms) to be provided by our independent auditors.
ITEM
16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not
applicable.
ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
As
previously disclosed, on February 3, 2025 we approved a share repurchase program of up to 10% of the Company’s outstanding ordinary
shares in accordance with the terms of Rule 10b-18 of the Exchange Act, to be purchased out of our cash reserve. On April 4, 2025, we
completed the repurchase of shares pursuant to our share repurchase program, and did not purchase any additional shares between April
5, 2025 and December 31, 2025. In total and as of December 31, 2025, we purchased 6.95 million ordinary shares at an average price paid
per share of $18.337 under the repurchase program.
105
See
below for the Company’s purchases of shares under the share repurchase programs in 2025:
Issuer
Purchases of Equity Securities in 2025
|
|
(a) Total Number
of Shares (or Units Purchased) |
(b) Average Price
Paid per Share (or Unit) |
(c) Total Number
of Shares (or Units) Purchased as Part of Publicly Announced Share Repurchase Plans or Programs |
(d) Maximum Number
(or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Publicly Announced Share Repurchase Plans or Programs |
||||||||||||
|
February 6, 2025
through April 4, 2025 |
6,950,000 |
$ |
18.337 |
6,950,000 |
0 |
|||||||||||
|
Total |
6,950,000 |
$ |
18.337 |
6,950,000 |
0 |
|||||||||||
ITEM
16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not
applicable.
ITEM
16G. CORPORATE GOVERNANCE
Nasdaq
Listing Rules and Home Country Practices
Companies
incorporated under the laws of the State of Israel, whose shares are publicly traded, including companies with shares listed on Nasdaq,
are considered public companies under the Companies Law and are required to comply with various corporate governance requirements under
Israeli law relating to such matters as the composition and responsibilities of the audit committee and the compensation committee (subject
to certain exceptions that we intend to utilize), and a requirement to have an internal auditor. This is the case even if our ordinary
shares are not listed on the Tel Aviv Stock Exchange, which our ordinary shares are not expected to be. These requirements are in addition
to the corporate governance requirements imposed by Nasdaq rules and other applicable provisions of U.S. securities laws to which we are
subject (as a foreign private issuer). Under Nasdaq rules, a foreign private issuer may generally follow its home country rules of corporate
governance in lieu of the comparable requirements of Nasdaq rules, except for certain matters including the composition and responsibilities
of the audit committee and the independence of its members within the meaning of the rules and regulations of the SEC.
In
accordance with Israeli law and practice and subject to the “home country practice exemption” set forth in Rule 5615 of the
Nasdaq rules, we currently follow the provisions of the Companies Law, rather than the Nasdaq requirements, with respect to the following
requirements:
| • |
Quorum.
As permitted under the Companies Law and pursuant to our amended and restated articles of association, the quorum required for an ordinary
meeting of shareholders consists of at least two shareholders present in person, by proxy or by other voting instrument in accordance
with the Companies Law, who hold at least 25% of the voting rights in the Company (and in an adjourned meeting, with some exceptions,
at least one shareholder holding any number of the voting rights in the Company), instead of 33 1/3% of the issued share capital required
under Nasdaq rules. A proxy may be deemed to be two (2) or more shareholders pursuant to the number of shareholders represented by the
proxy holder. |
| • |
Nomination
of Directors. Our directors are elected through a staggered board mechanism. With the exception of directors elected by our board
of directors due to vacancy, our directors are elected by an annual general meeting of our shareholders to hold office until the next
annual meeting following three years from his or her election. The nominations for directors, which are presented to our shareholders
by our board of directors, are generally made by the board of directors itself or a duly authorized committee thereof, but nominations
may be made by one or more of our shareholders, all in accordance with the provisions of our amended and restated articles of association
and the Companies Law and regulations promulgated thereunder. Nominations need not be made by a nominating committee of our board of directors
consisting solely of independent directors, as required under Nasdaq rules. |
106
| • |
Compensation
Committee. Nasdaq rules require a listed company to have a compensation committee composed entirely of independent directors that
operates pursuant to a written charter addressing its purpose, responsibilities and membership qualifications and may receive counselling
from independent consultants, after evaluating their independence. The purpose, responsibilities and membership qualifications of our
compensation committee are governed by the Companies Law, rather than the Nasdaq rules. In addition, under the Companies Law, there are
no specific independence evaluation requirements for outside consultants. |
| • |
Compensation
of Officers. We comply with the requirements set forth under the Companies Law with respect to the approval of officer compensation.
For a discussion regarding the approvals required under the Companies Law and the regulations promulgated thereunder for the approval
of compensation of the chief executive officer, all other executive officers and directors, see “Item 6.C – Board Practices
–Approval of Related Party Transactions and under Israeli Law.” |
| • |
Proxy Statements.
We are not required to and, in reliance on home country practice, we do not intend to, comply with certain Nasdaq rules regarding the
provision of proxy statements for general meetings of shareholders. Israeli corporate law does not have a regulatory regime for the solicitation
of proxies. We intend to provide notice convening an annual general meeting, including an agenda and other relevant documents. |
| • |
Shareholder
Approval. We are not required to and, in reliance on home country practice, we do not intend to comply with certain Nasdaq rules
regarding shareholder approval for certain issuances of securities under Nasdaq Rule 5635. Instead, we will seek our shareholders’
approval for all corporate actions requiring such approval under the requirements of the Companies Law. In accordance with the provisions
of our amended and restated articles of association and the Companies Law, our board of directors is authorized to issue securities, including
ordinary shares, warrants and convertible notes. |
| • |
Executive
Sessions. We are not required to and, in reliance on home country practice, we do not intend to comply with certain Nasdaq rules
regarding regularly scheduled meetings at which only independent directors are present. |
| • |
Approval
of Related Party Transactions. All related party transactions are approved in accordance with the requirements and procedures for
approval of interested party acts and transactions, set forth in the Companies Law and the regulations promulgated thereunder, which require
the approval of the audit committee or the compensation committee, as the case may be, the board of directors and shareholders, as may
be applicable, for specified transactions, rather than approval by the audit committee or other independent body of our board of directors
as required under the Nasdaq rules. |
| • |
Third Party
Director Compensation. We follow Israeli law requirements with respect to disclosure of compensation for our directors and executive
officers. Israeli law does not require that we disclose information regarding third party compensation of our directors or director nominees.
As a result, our practice varies from the third-party compensation disclosure requirements of Nasdaq. |
| • |
Annual Shareholders
Meeting. As opposed to the Nasdaq Rule 5620(a), which mandates that a listed company hold its annual shareholders meeting within
one year of the company’s fiscal year-end, we are required, under the Companies Law, to hold an annual shareholder meeting each
calendar year and within 15 months of the last annual shareholders meeting. |
Other
than as stated above, we currently intend to take all actions necessary for us to maintain compliance as a foreign private issuer under
the applicable corporate governance requirements of the Sarbanes-Oxley Act of 2002, the rules adopted by the SEC and Nasdaq’s listing
standards.
We
may in the future elect to follow home country corporate governance practices in Israel with regard to other matters. Following our home
country governance practices, as opposed to the requirements that would otherwise apply to a company listed on Nasdaq, may provide less
protection than is accorded to investors under Nasdaq rules applicable to domestic issuers.
107
ITEM
16H. MINE SAFETY DISCLOSURE
Not
applicable.
ITEM
16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not
applicable.
ITEM
16J. INSIDER TRADING POLICIES
ITEM
16K. CYBERSECURITY
The
level of each identified risk is determined by considering the impact of the risk itself and the likelihood of the risk materializing
and high scoring risks are actioned upon. Risks are analyzed to determine whether the risk meets Company risk acceptance criteria to be
accepted or whether a mitigation plan will be applied. Mitigation plans include both the individual or department responsible for the
plan and may include budget considerations.
PART
III
ITEM
17. FINANCIAL STATEMENTS
Not
applicable.
ITEM
18. FINANCIAL STATEMENTS
See
the financial statements beginning on page F-1. The following financial statements are filed as part of this Annual Report on Form 20-F
together with the report of the independent registered public accounting firm.
108
ITEM
19. EXHIBITS
|
Exhibit
No. |
Description
|
|
101 |
Interactive Data File. | |
|
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
109
SIGNATURES
The Registrant hereby
certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to
sign this annual report on its behalf.
|
|
INMODE LTD.
| |
|
|
|
|
|
By:
|
/s/ Yair Malca
| |
|
|
|
Yair Malca
|
|
|
|
Chief Financial Officer
|
Date: February 10, 2026
110
INMODE
LTD.
CONSOLIDATED
FINANCIAL STATEMENTS
INDEX
TO FINANCIAL STATEMENTS:
|
Page
| |
|
F-2
| |
|
CONSOLIDATED
FINANCIAL STATEMENTS: |
|
|
F-4
| |
|
F-5
| |
|
F-6
| |
|
F-7
| |
|
F-8
| |
|
F-9
|
F
- 1
Report
of Independent Registered Public Accounting Firm
To the Board
of Directors and Shareholders of InMode Ltd.
Opinions
on the Financial Statements and Internal Control over Financial Reporting
We
have audited the accompanying consolidated balance sheets of InMode Ltd. and its subsidiaries (the “Company”) as of December
31, 2025 and 2024, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and
cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as
the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as
of December 31, 2025, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis
for Opinions
The
Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report
on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s
consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud,
and whether effective internal control over financial reporting was maintained in all material respects.
Our
audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in
the circumstances. We believe that our audits provide a reasonable basis for our opinions.
|
Kesselman & Kesselman, 146 Derech Menachem
Begin, Tel-Aviv 6492103, Israel, |
P.O
Box 7187 Tel-Aviv 6107120, Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il
F
- 2
Definition
and Limitations of Internal Control over Financial Reporting
A
company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on
the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
Critical
Audit Matters
Critical
audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required
to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. We determined there are no critical audit matters.
|
/s/ |
|
Certified Public
Accountants (Isr.) |
|
A member firm of
PricewaterhouseCoopers International Limited |
|
|
|
February 10, 2026
|
We have served
as the Company’s auditor since 2008.
F
- 3
INMODE
LTD.
CONSOLIDATED
BALANCE SHEETS
(U.S.
dollars in thousands, except for per share data)
|
December
31 |
||||||||
|
2025
|
2024
|
|||||||
|
Assets
|
||||||||
|
CURRENT
ASSETS: |
||||||||
|
Cash
and cash equivalents |
|
|
||||||
|
Marketable
securities (amortized cost of $ |
|
|
||||||
|
Short-term
bank deposits |
|
|
||||||
|
Accounts
receivable, net of allowance for credit losses of $ |
|
|
||||||
|
Prepaid
expenses and other receivables |
|
|
||||||
|
Inventories
|
|
|
||||||
|
TOTAL
CURRENT ASSETS |
|
|
||||||
|
NON-CURRENT
ASSETS: |
||||||||
|
Accounts
receivable net of allowance for credit losses of $ |
|
|
||||||
|
Deferred
income tax assets |
|
|
||||||
|
Operating
lease right-of-use assets |
|
|
||||||
|
Property
and equipment, net |
|
|
||||||
|
Other
investments |
|
|
||||||
|
TOTAL
NON-CURRENT ASSETS |
|
|
||||||
|
TOTAL
ASSETS |
|
|
||||||
|
Liabilities
and shareholders’ equity |
||||||||
|
CURRENT
LIABILITIES: |
||||||||
|
Accounts
payables |
|
|
||||||
|
Contract
liabilities |
|
|
||||||
|
Other
liabilities |
|
|
||||||
|
TOTAL
CURRENT LIABILITIES |
|
|
||||||
|
NON-CURRENT
LIABILITIES: |
||||||||
|
Contract
liabilities |
|
|
||||||
|
Other
liabilities |
|
|
||||||
|
Operating
lease liabilities |
|
|
||||||
|
TOTAL
NON-CURRENT LIABILITIES |
|
|
||||||
|
TOTAL
LIABILITIES |
|
|
||||||
|
COMMITMENTS
AND CONTINGENCIES (note 11) |
||||||||
|
SHAREHOLDERS’
EQUITY: |
||||||||
|
Ordinary
shares, NIS
Outstanding
|
|
|
||||||
|
Additional
paid-in capital |
|
|
||||||
|
Retained
earnings |
|
|
||||||
|
Accumulated
other comprehensive loss |
|
(
|
)
| |||||
|
Less
treasury shares, at cost: |
(
|
)
|
(
|
)
| ||||
|
TOTAL
SHAREHOLDERS’ EQUITY |
|
|
||||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
||||||
The
accompanying notes are an integral part of these consolidated financial statements
F - 4
INMODE
LTD.
CONSOLIDATED
STATEMENTS OF INCOME
(U.S.
dollars in thousands, except for per share data)
|
Year
ended December 31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
REVENUES
|
|
|
|
|||||||||
|
COST
OF REVENUES |
|
|
|
|||||||||
|
GROSS
PROFIT |
|
|
|
|||||||||
|
OPERATING
EXPENSES: |
||||||||||||
|
Research
and development |
|
|
|
|||||||||
|
Sales
and marketing |
|
|
|
|||||||||
|
General
and administrative |
|
|
|
|||||||||
|
TOTAL
OPERATING EXPENSES |
|
|
|
|||||||||
|
OPERATING
INCOME |
|
|
|
|||||||||
|
Finance income, net
|
|
|
|
|||||||||
|
INCOME
BEFORE INCOME TAXES |
|
|
|
|||||||||
|
INCOME
TAXES BENEFIT (EXPENSES) |
(
|
)
|
|
(
|
)
| |||||||
|
NET
INCOME |
|
|
|
|||||||||
|
EARNINGS
PER SHARE: |
||||||||||||
|
Basic
|
|
|
|
|||||||||
|
Diluted
|
|
|
|
|||||||||
|
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF EARNINGS PER SHARE |
||||||||||||
|
Basic
|
|
|
|
|||||||||
|
Diluted
|
|
|
|
|||||||||
The
accompanying notes are an integral part of these consolidated financial statements.
F - 5
INMODE
LTD.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(U.S.
dollars in thousands, except for per share data)
|
Year
ended December 31 |
||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
|
NET
INCOME |
|
|
|
|||||||||
|
OTHER
COMPREHENSIVE INCOME: |
||||||||||||
|
Change
in net unrealized gains of marketable securities, net of tax |
|
|
|
|||||||||
|
TOTAL
COMPREHENSIVE INCOME |
|
|
|
|||||||||
The
accompanying notes are an integral part of these consolidated financial statements.
F - 6
INMODE
LTD.
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(U.S. dollars in thousands, except for per share data)
(U.S. dollars in thousands, except for per share data)
|
Ordinary
Shares |
||||||||||||||||||||||||||||
|
Number
of shares outstanding |
Amount
|
Additional
paid-in capital |
Retained
earnings |
Accumulated
other comprehensive income |
Treasury
shares |
Total
|
||||||||||||||||||||||
|
BALANCE
AS OF JANUARY 1, 2023
CHANGES
DURING 2023: |
|
|
|
(
|
) |
(
|
) |
|
||||||||||||||||||||
|
Net
income |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Other
comprehensive income, net |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Share-based
compensation |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Exercise
of options and vesting of RSUs |
|
|
|
|
|
|
|
|||||||||||||||||||||
|
BALANCE
AT DECEMBER 31, 2023
CHANGES
DURING 2024: |
|
|
|
|
(
|
) |
(
|
) |
|
|||||||||||||||||||
|
Net
income |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Other
comprehensive income, net |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Share-based
compensation |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Repurchase
of ordinary shares |
(
|
)
|
|
|
|
|
(
|
)
|
(
|
)
| ||||||||||||||||||
|
Exercise
of options and vesting of RSUs |
|
|
|
|
|
|
|
|||||||||||||||||||||
|
BALANCE
AT DECEMBER 31, 2024
CHANGES DURING 2025:
|
|
|
|
(
|
) |
(
|
) |
|
||||||||||||||||||||
|
Net
income |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Other
comprehensive income, net |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Share-based
compensation |
-
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Repurchase
of ordinary shares |
(
|
)
|
|
|
|
|
(
|
)
|
(
|
)
| ||||||||||||||||||
|
Exercise
of options and vesting of RSUs |
|
|
|
|
|
|
|
|||||||||||||||||||||
|
BALANCE
AT DECEMBER 31, 2025 |
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
The
accompanying notes are an integral part of these consolidated financial statements.
F - 7
INMODE
LTD.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(U.S.
dollars in thousands, except per share data)
|
Year ended December 31 |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||
|
Net income |
|
|
|
|||||||||
|
Adjustments required to reconcile net income to net cash provided by
operating activities: |
||||||||||||
|
Depreciation |
|
|
|
|||||||||
|
Share-based compensation expenses |
|
|
|
|||||||||
|
Change in allowance for credit losses of trade receivable |
|
|
|
|||||||||
|
Loss on marketable securities, net |
|
|
|
|||||||||
|
Finance expenses (income), net |
|
(
|
) |
(
|
) | |||||||
|
Deferred income tax assets, net |
|
(
|
) |
(
|
) | |||||||
|
Changes in operating assets and liabilities: |
||||||||||||
|
Decrease (increase) in accounts receivable (including non-current) |
(
|
) |
|
(
|
) | |||||||
|
Increase in other receivables |
(
|
) |
(
|
) |
(
|
) | ||||||
|
Increase in inventories |
(
|
) |
(
|
) |
(
|
) | ||||||
|
Increase (decrease) in accounts payable |
|
(
|
) |
(
|
) | |||||||
|
Increase (decrease) in other liabilities (including non-current) |
|
|
(
|
) | ||||||||
|
Increase (decrease) in contract liabilities (including non-current) |
(
|
) |
|
(
|
) | |||||||
|
Net cash provided by operating activities |
|
|
|
|||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||
|
Investment in short-term deposits |
(
|
) |
(
|
) |
(
|
) | ||||||
|
Proceeds from short-term deposits |
|
|
|
|||||||||
|
Purchase of fixed assets |
(
|
) |
(
|
) |
(
|
) | ||||||
|
Other investments |
|
|
(
|
) | ||||||||
|
Purchase of marketable securities |
(
|
) |
(
|
) |
(
|
) | ||||||
|
Proceeds from sale of marketable securities |
|
|
|
|||||||||
|
Proceeds from maturity of marketable securities |
|
|
|
|||||||||
|
Net cash provided by (used in) investing activities |
|
|
(
|
) | ||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||
|
Repurchase of ordinary shares |
(
|
) |
(
|
) |
|
|||||||
|
Exercise of options |
|
|
|
|||||||||
|
Net cash provided by (used in) financing activities |
(
|
) |
(
|
) |
|
|||||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS |
|
(
|
) |
|
||||||||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
|
|||||||||
|
CASH AND CASH EQUIVALENTS AT |
||||||||||||
|
BEGINNING OF THE YEAR |
|
|
|
|||||||||
|
CASH AND CASH EQUIVALENTS AT |
||||||||||||
|
END OF THE YEAR |
|
|
|
|||||||||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
|
||||||||||||
|
Income taxes paid |
|
|
|
|||||||||
|
Interest received |
|
|
|
|||||||||
|
NON-CASH ACTIVITIES |
||||||||||||
|
Recognition of operating lease right-of-use assets and liabilities |
|
|
|
|||||||||
|
Exercise of options |
|
|
|
|||||||||
The accompanying notes are an integral part of these consolidated financial
statements.
F - 8
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
1 - GENERAL:
InMode
Ltd. (separately and together with its subsidiaries, the “Company”) was incorporated on January 2, 2008 and commenced operations
shortly thereafter. The Company’s headquarters are located in Israel. The Company is traded in the Nasdaq Global Select Market (the
“Nasdaq”) since August 2019.
The
Company designs, develops, manufactures and markets innovative minimally-invasive aesthetic medical products based on its proprietary
radio frequency assisted lipolysis and deep subdermal fractional radio frequency technologies. These technologies are used to remodel
subdermal adipose or fatty tissue in a variety of procedures including liposuction with simultaneous skin tightening, body and face contouring
and ablative skin rejuvenation treatments, as well as, for use in certain women’s health conditions and procedures. In addition
to the minimally-invasive technologies, the Company designs, develops, manufactures and markets non‑invasive medical aesthetic products
that target a wide array of procedures including permanent hair reduction, facial skin rejuvenation, wrinkle reduction, cellulite treatment,
skin appearance and texture and superficial benign vascular and pigmented lesions. The Company also designs, develops, manufactures and
markets hands-free medical aesthetic products that target a wide array of procedures such as skin tightening, fat reduction and muscle
stimulation.
The
Company has wholly-owned subsidiaries located in the United States and two subsidiaries in Canada (“North America”), Hong
Kong, Japan, Spain, two subsidiaries in Israel, India, Australia, China, the United Kingdom (“UK”), France, Italy and Germany.
During 2025, the Company established two wholly-owned subsidiaries located in Thailand and Argentina. As of December 31, 2025, there was
no activity in the subsidiary located in Argentina. The Company’s subsidiaries are referred to collectively herein as the “Subsidiaries.”
The Company sells its products primarily through its Subsidiaries.
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES:
| a. |
Basis
of presentation |
The
Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the
United States (“U.S. GAAP”).
| b. |
Use of estimates
|
The
preparation of financial statements in conformity with U.S. GAAP requires management 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 consolidated financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| c. |
Functional currency
|
The
U.S. dollar (“U.S. dollar” or “$”) is the currency of the primary economic environment in which the operations of
the Company is conducted. Substantial revenues and a substantial portion of the operational costs are denominated in U.S. dollars. Accordingly,
the functional currency of the Company is the U.S. dollar (“primary currency”).
F - 9
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
Transactions
and balances originally denominated in U.S. dollars are presented at their original amounts. Balances in non-U.S. dollar currencies are
translated into U.S. dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. For non-U.S.
dollar transactions and other items in the statements of income (indicated below), the following exchange rates are used: (i) for transactions
– exchange rates at transaction dates or average exchange rates; and (ii) for other items (derived from non-monetary balance sheet
items such as depreciation and amortization) – historical exchange rates. Currency transaction gains and losses are presented
in finance income (expenses), as appropriate.
The
functional currency of each of the Subsidiaries is the U.S. dollar.
| d. |
Principles of consolidation
and presentation |
The
consolidated financial statements include the accounts of the Company and its Subsidiaries. Intercompany transactions and balances are
eliminated in consolidation.
| e. |
Cash and cash equivalents
|
The
Company considers cash equivalents to be all short-term, highly liquid investments, which include money market instruments, that are not
restricted as to withdrawal or use, and short-term bank deposits with original maturities of three months or less from the date of purchase
that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash.
| f. |
Short-term bank deposits
|
Bank
deposits with maturities of more than three months but less than one year are included in short-term deposits. Such short-term deposits
bear interest at an annual rate of approximately 0.5 %-5.05 %
in 2025 and 0.5 %-6.15 %
in 2024.
| g. |
Marketable securities
|
AFS
Securities
Marketable
securities consist of government bonds and corporate debt securities (together “Debt Securities”) measured at fair value in
each reporting period. The fair value of quoted securities is based on current market value.
Debt
Securities are classified as available-for-sale (together “AFS Securities”) under current assets in the consolidated balance
sheet as they represent the investment of funds available for the Company’s current operations. Changes in fair value, excluding credit
losses and impairments, net of taxes (if applicable), are reflected in other comprehensive income or loss. Realized gains and losses
on sales of Debt Securities as well as premium or discount amortization are included in the consolidated statements of income as finance
income, net. Fair value is calculated based on publicly available market information. The amortized cost of the Debt Security will be
reduced to its fair value if it is more likely than not that the Company is required to sell the impaired security before recovery of
its amortized cost basis, or it has the intention to sell the security. If neither of these conditions are met, the Company determines
whether the impairment is due to credit losses by comparing the present value of the expected cash flows of the security with its amortized
cost basis. The amount of impairment recognized is limited to the excess of the amortized cost over the fair value of the security. An
allowance for credit losses for the excess of amortized cost over the expected cash flows is recognized in finance income, net on the
consolidated statements income.
F - 10
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
The
Company classifies investments that are readily convertible to known amounts of cash and have stated maturities of three months or less
from the date of purchase as cash equivalents and those with stated maturities of greater than three months as marketable securities.
The
Company determines the appropriate classification of its investments in marketable securities at the time of purchase.
| h. |
Other Investments
|
The
Company applies the measurement alternative upon the adoption of ASU 2016-01, and elected to record equity investments without readily
determinable fair values at cost for other investments, less impairment, adjusted for subsequent observable price changes. In this measurement
alternative method, changes in the carrying value of the equity investments are reflected in current earnings. Changes in the carrying
value of the equity investment are required to be made whenever there are observable price changes in orderly transactions for the identical
or similar investment of the same issuer.
| i. |
Inventories
|
Inventories
include raw materials and finished products are valued at the lower of cost, “moving average” method, or net realizable
value. The Company regularly evaluates its ability to realize the value of inventory based on a combination of factors including the following:
historical usage rates, forecasted sales or usage, estimated current and future market values and new product introductions.
| j. |
Leases
|
The
Company determines if an arrangement is a lease at inception. Balances related to operating leases are included in operating lease right-of-use
(“ROU”) assets, other current liabilities, and operating lease liabilities in the consolidated balance sheets.
The
Company also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance
sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.
ROU
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized as of the commencement
date based on the present value of lease payments over the lease term. The Company’s lease terms may include options to extend or
terminate the lease when it is reasonably certain that the Company will exercise that option. The discount rate for the lease is the rate
implicit in the lease unless that rate cannot be readily determined. As the Company’s leases do not provide an implicit rate, the
Company uses its estimated incremental borrowing rate based on the information available at the commencement date in determining the present
value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term (see also note 9).
F - 11
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
| k. |
Property and equipment
|
Property
and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis
over the following estimated useful lives:
|
Computers
|
|
|
Molds
|
|
|
Equipment and furniture
|
|
Leasehold
improvements are depreciated using the straight-line method over the shorter of the term of the lease or the estimated useful lives of
the improvements.
| l. |
Impairment of long-lived
assets |
The
Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may no longer be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the long-lived asset
to the estimated undiscounted future cash flows expected to be generated by the asset. If the sum of the expected undiscounted cash flow
is less than the carrying amount of the asset, the Company recognizes an impairment loss, which is the excess of the carrying amount over
the fair value of the asset, using the expected future discounted cash flows.
During
the years ended December 31, 2025, 2024 and 2023, the Company did not recognize an impairment loss on its long-lived assets.
| m. |
Legal and other contingencies
|
Certain
conditions may exist as of the date of the consolidated financial statements, which may result in a loss to the Company but which will
only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities,
if any, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings
that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s management evaluates
the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected
to be sought.
Management
applies the guidance in ASC 450-20, “Loss Contingencies” when assessing losses resulting from contingencies. If the assessment
of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be reasonable
estimated, then the estimated liability is recorded as accrued expenses in the Company’s consolidated financial statements.
Legal
costs incurred in connection with loss contingencies are expensed as incurred.
|
n. |
Income taxes:
| |
| 1) |
The Company accounts for income taxes in accordance
with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 prescribes the use of the liability method whereby deferred
tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more
likely than not that a portion or all of the deferred tax assets will not be realized, based on the weight of available positive and negative
evidence. Deferred tax liabilities and assets are classified as non-current. |
F - 12
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
| 2) |
The Company may incur an additional tax liability
in the event of an inter-company dividend distribution from Subsidiaries outside of Israel; no additional deferred income tax assets have
been provided, since the Company does not expect to distribute inter-company dividends in the foreseeable future that may result in additional
tax liability. |
| 3) |
Taxes that would apply in the event of disposal
of investments in Subsidiaries have not been taken into account in computing the deferred income tax assets, as it is the Company’s
intent and ability to hold these investments. |
| 4) |
The Company accounts for uncertain tax positions
in accordance with ASC 740-10. ASC 740‑10 contains a two-step approach to recognizing and measuring uncertain tax positions. The
first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence
indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit,
including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit of the largest amount
that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement. |
| o. |
Advertising expenses
|
Advertising
expenses are charged to sales and marketing on the consolidated statement of income as incurred. Advertising expenses for the years
ended December 31, 2025, 2024 and 2023 amounted to $11
million, $15
million, and $15
million, respectively.
| p. |
Share-based compensation
|
The
Company grants share options and restricted share units (“RSU”) (together “Share-Based Compensation”) to its employees,
officers, directors and non-employees in consideration for services rendered and for acquiring goods. See note 12(a)(2) for details on
outstanding share capital.
The
Company accounts for Share-Based Compensation awards classified as equity awards using the grant-date fair value method. The fair value
at grant-date of the issued equity award is recognized as an expense on a straight-line basis over the requisite service period. The fair
value of each share option granted is estimated using the Binomial Model, and for each RSU granted is based on the Company’s share
price at the close of the last trading day prior to the date of the grant. The Company estimates forfeitures based on historical experience
and anticipated future conditions at the time of grant and revises such estimates in subsequent periods if actual forfeitures differ from
those estimates.
The
Company elected to recognize Share-Based Compensation cost for awards with only service conditions that have a graded vesting schedule
using the straight-line method based on the multiple-option award approach. Performance-based Share-Based Compensation expenses are calculated
based on the valuation at the grant date, and recognized based on the probability of achieving those targets. The Company assess at what
scale can the performance targets be reached at each balance sheet date, and expenses are recognized accordingly.
The
Company issues new shares upon option exercise or RSU vesting.
F - 13
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
| q. |
Revenue recognition
|
The
Company applies ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, an entity recognizes
revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity
expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines
are within the scope of ASC 606, the entity performs the following five steps:
| (i) |
Identify the contract(s) with a customer;
|
| (ii) |
Identify the performance obligations in the contract.
The Company determined that its arrangements are generally comprised of the following elements that are recognized as separate performance
obligations: products, consumables and extended warranties; |
| (iii) |
Determine the transaction price;
|
| (iv) |
Allocate the transaction price to the performance
obligations in the contract; |
The
Company estimates the standalone selling prices of the services to be provided based on actual sales transactions of service contract
purchased on a standalone basis and uses the residual approach to estimate the selling price of the products; and
| (v) |
Recognize revenue when (or as) the performance
obligation is satisfied. |
The
Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled
to in exchange for the goods or services it transfers to the customer, after considering any price concession expected to be provided
to the customer, when applicable. At contract inception, the Company assesses the goods or services promised within each contract
and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company
then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as)
the performance obligation is satisfied.
The
Company uses the following practical expedients that are permitted under the rules:
| • |
The Company recognizes the incremental costs of
obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized
is one year or less. These costs are included in sales and marketing expenses. |
| • |
The Company does not disclose the value of unsatisfied
performance obligations for contracts with an original expected length of one year or less. |
The
following is a description of the principal activities from which the Company generates its revenue.
Product
Revenue, Net
Revenues
from product sales are recognized when the customer obtains control over the Company’s product, typically upon shipment to the customer.
Revenues from shipping and handling activities that occur after the customer has obtained control of a good are recognized according to
an accounting policy election as a fulfilment cost rather than as an additional promised service. Taxes collected from customers
relating to product sales and remitted to governmental authorities are excluded from revenues.
F - 14
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
Payment
terms and conditions vary by customer. The Company’s standard terms for end users usually require of payment upon delivery and for
distributors require a down payment and payments made within several month from the invoice date.
The
Company may enter into installment sales contracts with end users in North America that provide them with long-term (generally up to 60
months) financing for the purchase of the Company’s products. The interest rate used in these contracts reflects the credit characteristics
of the party receiving financing in the contract, as well as any collateral or security provided by the customer. Interest income on these
receivables is recognized as finance income and earned over the terms of the contract.
Variable
considerations include price concessions related to installment sales contracts. The Company estimates variable consideration using the
most likely outcome amount. Amounts included in the transaction price are recognized only when it is probable that a significant
reversal of cumulative revenues will not occur.
During
the years ended December 31, 2025 and 2024, the Company entered into risk sharing agreements with several leasing partners to facilitate
and support the financing of capital equipment sales for its customers. Under these arrangements, a portion of each sale transaction
funded by those leasing partners goes into a reserve fund used by the Company to provide a limited guarantee, up to the reserve fund amount,
and used to compensate the leasing partners in the event of customer defaults. The guarantee is recognized on the estimated fair value
amount according to ASC 460. The Company assesses credit losses in accordance with ASC 326. As of December 31, 2025 and 2024, the total
reserve fund amount was $4,016
and $5,507 ,
respectively, after recognizing credit loss of $6,616
and $2,018
for the years ended December 31, 2025 and 2024, respectively.
The
Company does not grant a right of return, refund, cancelation or termination. From time to time, the Company participates in its customers’
marketing activities and deducts such amounts from revenue.
Service
Revenue
The
Company also generates revenues from long-term maintenance contracts (“Extended Warranty”). Revenue from Extended Warranty
is recognized ratably, on a straight-line basis, over the period of the applicable service contract. These maintenance agreements are
included in contract liabilities. Revenue from repairs performed in the absence of Extended Warranty is recognized when the related services
are performed.
The
Company classifies the portion of contract liabilities not expected to be earned in the subsequent 12 months as long-term.
| r. |
Allowance for doubtful
accounts and financial instruments – credit loss |
The
Company maintains the allowance for doubtful account resulting from the inability of the Company’s customers to make required payments.
The
allowance represents the current estimate of lifetime expected credit losses over the remaining duration of existing accounts receivable.
This information includes among other the historic experience, the extent and amount of the account and future expectations.
Allowance
for credit losses due to the Company’s accounts receivable amounted to $3,227
and $2,749
as of December 31, 2025 and 2024 respectively. Changes in the allowance for credit losses are recognized in general
and administrative expenses. Accounts receivable are written-off against the allowance for credit losses when management deems
the accounts are no longer collectible.
F - 15
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
The
following table sets forth activity in the Company’s allowance for credit losses for each of the years ended December 31, 2025,
2024 and 2023, respectively:
|
2025
|
2024
|
2023
|
||||||||||
|
Balance at beginning
of year |
|
|
|
|||||||||
|
Current-period provision
|
|
|
|
|||||||||
|
Write-offs charged against
the Allowance and revaluation |
|
(
|
)
|
(
|
)
| |||||||
|
Balance at end of year
|
|
|
|
|||||||||
| s. |
Warranty reserve
|
The
Company provides a one-year standard warranty for its products. The Company records a provision for the estimated cost to repair or replace
products under warranty at the time of sale. Factors that affect the Company’s warranty reserve include the number of units sold,
historical and anticipated rates of warranty repairs, the cost per repair and shipping cost. The Company periodically assesses the adequacy
of its recorded warranty liabilities and adjusts the amounts as necessary.
The
following table sets forth activity in the Company’s accrued warranty account for each of the years ended December 31, 2025, 2024
and 2023, respectively:
|
2025
|
2024
|
2023
|
||||||||||
|
Balance at beginning
of year |
|
|
|
|||||||||
|
Cost incurred
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Expense recognized
|
|
|
|
|||||||||
|
Balance at end of year
|
|
|
|
|||||||||
| t. |
Cost of revenues
|
Cost
of revenue consists of products purchased from turnkey sub-contractors which are responsible for the production of most of the Company’s
products under the Company’s directions and supervision, raw materials for in-house assembly line, shipping and handling costs to
customers and to subsidiaries, salary, employee-related expenses and overhead expenses of internal assembly line and service costs associate
with warranty.
| u. |
Research and development
costs |
Research
and development costs are expensed as incurred and includes salaries and employee-related expenses, overhead expenses, material and third-party
contractor’s charges related to product development, regulatory affairs and clinical studies.
| v. |
Net earnings per
share |
Basic
earnings per share are computed by dividing net income attributed to the shareholders of InMode Ltd. by the weighted average number of
the Company’s ordinary shares, par value NIS 0.01
per share (including vested RSUs), outstanding for each period, net of treasury shares.
For
the diluted earnings per share calculation, the weighted average number of shares outstanding during the year is adjusted for the average
number of shares that are potentially issuable in connection with employee share-based payment, using the treasury stock method.
F - 16
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
| w. |
Fair value measurement
|
The
Company measures fair value and discloses fair value measurements for financial assets and liabilities. Fair value is based on the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. In the absence of active markets for identical assets or liabilities, such measurements involve developing assumptions based on
market observable data and, in the absence of such data, internal information that is consistent with what market participants would use
in a hypothetical transaction that occurs at the measurement date. Observable inputs reflect market data obtained from independent sources,
while unobservable inputs reflect the Company’s market assumptions.
The
three levels of inputs that may be used to measure fair value are as follows:
Level
1 – Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
The fair value hierarchy gives the highest priority to Level 1 inputs.
Level
2 – Observable prices that are based on identical or similar instruments not quoted on active markets, but corroborated by observable
market data, or quoted prices for similar instruments in active markets.
Level
3 – Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority
to Level 3 inputs.
The
Company maintains policies and procedures to determine the fair value of financial assets and liabilities using what it considers to be
the most relevant and reliable market data available.
As of
December 31, 2025, and 2024, the fair values of the Company's cash, cash equivalents, short term bank deposits, accounts receivable, accounts
payable, approximated the carrying values of these instruments presented in the Company's consolidated balance sheets because of their
nature.
| x. |
Employee severance benefits
|
The
Company is required to make severance payments upon dismissal of an Israeli employee or upon termination of employment in certain circumstances.
In
accordance with the current employment terms with all of its employees (Section 14 of the Israeli Severance Pay Law, 1963) located in
Israel, the Company makes regular deposits with certain insurance companies for accounts controlled by each applicable employee in order
to secure the employee’s full retirement benefit and severance obligation. The Company is relieved from any severance pay liability
with respect to each such employee after it makes the payments on behalf of the employee. The liability accrued in respect of these employees
and the amounts funded, as of the respective agreement dates, are not reflected on the Company’s consolidated balance sheet, as
the amounts funded are not under the control and management of the Company and the pension or severance pay risks have been irrevocably
transferred to the applicable insurance companies.
The
amounts of severance payment expenses were $731
$581
and $522
and for the years ended December 31, 2025, 2024 and 2023, respectively.
The
Company expects to contribute approximately $732
in the year ending December 31, 2026 to insurance companies in connection with its expected severance liabilities for the year.
| y. |
Treasury Shares
|
Treasury
shares are presented as a reduction of equity, at their cost to the Company.
F - 17
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
| z. |
Concentration of credit
risks |
Most
of the cash and cash equivalents were deposited with U.S., European and Israeli banks and financial institutions and were comprised mainly
of money market fund. The U.S. market constituted approximately 54% of the revenues in 2025.
The
exposure of credit risks relating to other trade receivables outside the U.S. is limited, due to the relatively large number of group
customers and their wide geographic distribution. The Company performs ongoing credit evaluations of its customers for the purpose of
determining the appropriate allowance for Credit Losses and generally does not require collateral and from time to time the Company may
choose to purchase trade credit insurance.
| aa. |
War risk situation in
Israel |
In
October 2023, Israel was attacked by Hamas, a terrorist organization and entered a state of war. Since the commencement of these events,
there have been additional active hostilities, including with Hezbollah in Lebanon, the Houthi movement which controls parts of Yemen,
and with Iran. On October 9, 2025, Israel, Hamas, the United States and other countries in the region agreed to a framework for a ceasefire
in Gaza between Israel and Hamas. How long and how severe the current conflicts in Gaza, Northern Israel, Lebanon, Iran or the broader
region become is unknown at this time and any continued clash among Israel, Hamas, Hezbollah, Iran or other countries or militant groups
in the region may escalate in the future into a greater regional conflict. As of the date of these consolidated financial statements and,
the ceasefire between Israel and Hamas formally remains in place, but the broader regional situation continues to be unstable and subject
to sudden escalation, and the ultimate political and security outcomes of these arrangements remain uncertain. The Company's headquarters,
its R&D operations, and certain manufacturing facilities are located in Israel.
Currently,
such activities in Israel remain largely unaffected. During the years ended December 31, 2025 and December 31, 2024, the impact of this
war on the Company’s results of operations and financial condition was immaterial.
| ab. |
Recently adopted accounting
pronouncements |
In December
2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. This guidance is intended
to enhance the transparency and decision-usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests
for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in
the U.S. and in foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company adopted
this standard retrospectively to all prior periods presented in the Company's financial statements, refer to note 13.
In July 2025,
the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable
and Contract Assets, which provides new optional guidance relating to the estimation of expected credit losses on current accounts receivable
and current contract assets under ASC326. This ASU permits entities to apply a practical expedient when estimating credit losses and is
effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual
reporting periods, with early adoption permitted, and should be applied prospectively. The Company elected to early adopt this standard
prospectively with no material impact on the Company’s consolidated financial statements.
F - 18
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
| ac. |
Newly issued accounting
pronouncements, not yet adopted: |
In November
2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure about the types of costs and expenses
included in certain expense captions presented on the income statement. ASU 2024-03 is effective for fiscal years beginning after December
15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively
or retrospectively. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial
statements disclosures.
NOTE
3 - MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS:
AFS
securities as of December 31, 2025, and 2024, consisted of U.S government bonds and corporate debt securities. These marketable securities
are recorded at fair value.
The
following table sets forth the Company’s marketable securities for the periods indicated:
|
December
31 |
||||||||
|
2025
|
2024
|
|||||||
|
U.S. Government bonds
|
|
|
||||||
|
Corporate debt securities
|
|
|
||||||
|
Total
|
|
|
||||||
The
Company classifies AFS securities within Level 2 because it uses alternative pricing sources and models utilizing market observable inputs
to determine their fair value. See also note 2(w).
The
following table sets forth the Company’s financial assets as of December 31, 2025, and 2024, that are measured at fair value
on a recurring basis during the period:
|
December
31, 2025 |
||||||||||||||||
|
Fair
value
|
Cost
or
amortized
cost |
Gross
unrealized
holding
loss |
Gross
unrealized
holding
gains |
|||||||||||||
|
Level
2 securities: |
||||||||||||||||
|
Government
bonds |
|
|
(
|
)
|
|
|||||||||||
|
Corporate
debt securities |
|
|
(
|
)
|
|
|||||||||||
| Total |
|
|
(
|
)
|
|
|||||||||||
|
December
31, 2024 |
||||||||||||||||
|
Fair
value
|
Cost
or
amortized
cost |
Gross
unrealized
holding
loss |
Gross
unrealized
holding
gains |
|||||||||||||
|
Level
2 securities: |
||||||||||||||||
|
Government
bonds |
|
|
(
|
)
|
|
|||||||||||
|
Corporate
debt securities |
|
|
(
|
)
|
||||||||||||
| Total |
|
|
(
|
)
|
||||||||||||
As
of December 31, 2025 and 2024, the Company considered, based on its evaluation, that the decreases in market value on relevant marketable
securities were temporarily impaired and primarily attributable to changes in interest rates, and therefore did not result in an impairment
charge in finance income, net.
F - 19
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
3 - MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS (continued):
As
of December 31, 2025, and 2024, the Company’s debt securities had the following maturity dates:
|
December
31 |
||||||||
|
2025
|
2024
|
|||||||
|
Due within one year
|
|
|
||||||
|
1 to 2 years
|
|
|
||||||
|
2 to 3 years
|
|
|
||||||
|
Total
|
|
|
||||||
NOTE
4 - ACCOUNTS RECEIVABLE:
Accounts
receivable consist of the following:
|
December
31 |
||||||||
| 2025 |
2024
|
|||||||
|
Trade
|
|
|
||||||
|
Notes receivable
|
|
|
||||||
|
Less - allowance for
credit losses |
(
|
)
|
(
|
)
| ||||
|
|
|
|||||||
|
Less - non-current accounts
receivable, net |
(
|
)
|
(
|
)
| ||||
|
Total current accounts
receivable, net |
|
|
||||||
NOTE
5 - PREPAID EXPENSES AND OTHER CURRENT RECEIVABLES:
Prepaid
expenses and other current receivables consist of the following:
|
December
31 |
||||||||
|
2025
|
2024
|
|||||||
|
Advances to suppliers
|
|
|
||||||
|
Prepaid expenses
|
|
|
||||||
|
Income tax
|
|
|
||||||
|
Government institutions
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total other current receivables
|
|
|
||||||
NOTE
6 - INVENTORIES:
Inventories
consist of the following:
|
December
31 |
||||||||
| 2025 |
2024
|
|||||||
|
Raw materials
|
|
|
||||||
|
Finished products
|
|
|
||||||
|
Total inventories
|
|
|
||||||
F - 20
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
7 - PROPERTY AND EQUIPMENT, NET:
Composition
of property and equipment grouped by major classifications is as follows:
|
December
31 |
||||||||
| 2025 | 2024 | |||||||
|
Computers
|
|
|
||||||
|
Office
furniture and equipment |
|
|
||||||
|
Molds
|
|
|
||||||
|
Leasehold
improvements |
|
|
||||||
|
|
|
|||||||
|
Less: accumulated depreciation
|
(
|
)
|
(
|
)
| ||||
|
Total
property and equipment, net |
|
|
||||||
Total
depreciation and amortization in respect of property and equipment were $695 ,
$728
and $623
for the years ended December 31, 2025, 2024 and 2023, respectively.
NOTE
8 - OTHER INVESTMENTS:
In
November 2019, the Company signed a Share Purchase and Shareholders Agreement (the “SPA”) with (BY) Medimor Ltd., one of the
Company’s turnkey manufacturing subcontractors (“Medimor”). Pursuant to the SPA, the Company has invested (in December
2019 and July 2020) an aggregate amount of $600
in consideration for 1,369,863
ordinary shares of Medimor (which reflected at the signing date a 14.78 %
ownership interest on an as-issued basis and 10.34 %
ownership interest on a fully diluted basis).
In
November 2023, the Company signed an additional SPA with Medimor and invested $100
in consideration for 117,440
ordinary shares of Medimor.
The
SPAs together reflected as of December 31, 2025 and 2024 a 11.73 %
and 14.78 %,
respectively, ownership interest on an as-issued basis and 11.23
The
Company’s investment in Medimor is measured at cost, less impairment and adjusted for subsequent observable price changes if any.
As of December 31, 2025, 2024 and 2023, the Company did not recognize an impairment or adjustment on its other investments.
NOTE
9 - LEASES:
The
Company’s main leasing properties are located in Israel, USA and Canada as detailed below:
| a. |
In May 2018, the Company signed a lease
agreement for its headquarters in Israel. In January 2019, February 2020, March 2021, March 2023, May 2023 and June 2024 the Company signed
supplement lease agreements, further expanding its headquarters in Israel (collectively, the “Lease Agreement”). The Lease
Agreement will expire in
|
The
costs under the Lease Agreement in Israel are linked to the Israeli Consumer Price Index. For purposes of ensuring the Company’s
obligation towards the lessor, the Company has provided the lessor with a bank guarantee of NIS 966
thousand (approximately $303 ).
The
Company also leases warehouse outside the Company's offices. The Lease Agreement is for one year, with the Company options to renewal
every year for 10 years. According to management's assessment, the lease will last until August
2027 . The current monthly rent payment under the Lease Agreement is approximately $12.9 .
F - 21
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
9 - LEASES (continued):
| b. |
In August 2020, the Company’s U.S.
subsidiary, signed a lease agreement, for additional lease agreement of property and for its offices (“U.S Lease”). The U.S.
Lease is for which began in the middle of April of 2021.
The current monthly rent payment is approximately $
|
| c. |
The Company’s Canadian subsidiary
signed a lease agreement in April 2022 for property and for its offices (“Canadian Lease”). The Canadian Lease was for
3 years and expired in
|
| d. |
The Company’s subsidiaries in France
and Spain signed new lease agreement in January and
|
The
Company also leases vehicles for several employees in Israel and in subsidiaries in Europe for a period of 3 -4
years.
From
time to time the Company also leases small properties, mainly for offices for Subsidiaries around the world.
The
lease cost was as follows:
|
Year
ended
December
31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Operating lease
cost |
|
|
|
|||||||||
Supplemental
cash flow information related to leases was as follows:
|
Year
ended
December
31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Operating cash
flows from operating leases |
|
|
|
|||||||||
Supplemental
balance sheet information related to leases was as follows:
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Operating
Leases |
||||||||
|
Operating lease
right-of-use assets |
|
|
||||||
|
Other current liabilities
|
|
|
||||||
|
Operating lease
liabilities |
|
|
||||||
|
Total operating
lease liabilities |
|
|
||||||
|
Weighted
Average Remaining Lease Term |
||||||||
|
Operating leases
|
|
|
||||||
|
Weighted
Average Discount Rate |
||||||||
|
Operating leases
|
|
%
|
|
%
| ||||
F - 22
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
9 - LEASES (continued):
As
of December 31, 2025, the maturities of lease liabilities were as follows:
|
Operating
Leases |
||||
|
Year
Ending December 31, |
||||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
2030 and beyond
|
|
|||
|
Total lease payments
|
|
|||
|
Less imputed interests
|
(
|
)
| ||
|
Total
|
|
|||
NOTE
10 - OTHER CURRENT LIABILITIES:
Other
current liabilities consist of the following:
|
December
31 |
||||||||
|
2025
|
2024
|
|||||||
|
Employees and related
expenses |
|
|
||||||
|
Government institutions
|
|
|
||||||
|
Income tax payable
|
|
|
||||||
|
Warranty reserve
|
|
|
||||||
|
|
|
|
||||||
|
Credit risk sharing
liabilities |
|
|
||||||
|
Contractor liability
|
|
|
||||||
|
Accrued commissions
|
|
|
||||||
|
Other
|
|
|
||||||
|
Total other current
liabilities |
|
|
||||||
NOTE
11 - COMMITMENTS AND CONTINGENCIES:
| a. |
Subcontracting Agreements
|
The
Company has an existing turnkey manufacturing agreements with three of its major subcontractors in Israel in connection with manufacturing
and assembling the Company’s products.
The
Company has agreements with two of the subcontractors which are renewed automatically every year for an additional one-year period, unless
either the Company or the turnkey manufacturer gives written notice three months prior to the expiration of the term of its decision not
to renew the agreement.
Additionally,
the Company or the turnkey manufacturer has the ability to terminate the contract at any time and for any reason with a prior written
notice of four months.
In
addition, in October 2019, the Company entered into a turnkey manufacturing agreement with another of its major subcontractors in Israel,
Medimor (See also note 8). The agreement is for three years and renewed automatically every year afterwards for an additional one-year
period, unless either the Company or Medimor gives written notice three months prior to the expiration of the term of its decision not
to renew the agreement. Additionally, the Company or Medimor has the ability to terminate the agreement at any time and for any reason
with a prior written notice of six months.
F - 23
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
11 - COMMITMENTS AND CONTINGENCIES (continued):
According
to the agreements above, the Company does not have a minimum order obligation, but the Company provides the subcontractors a six-month
rolling forecast with the projected demand for products. In case of termination of the agreement with each subcontractor, the Company
has to compensate that subcontractor for non-returnable inventory, materials in orders that cannot be cancelled and finished products
inventory. As of December 31, 2025, the subcontractors’ finished goods inventory, raw materials and open orders amounted to approximately
$33,483 .
In order to secure these obligations, the Company paid its subcontractors advances in the amount of $11,192 .
| b. |
Litigation and contingencies
|
On
February 14, 2024, a purported shareholder of the Company filed a putative shareholder class action in the United States District Court
for the Central District of California against the Company and certain of its officers and directors. The lawsuit is purportedly brought
on behalf of purchasers of the Company’s common stock between February 18, 2020 and December 6, 2023, inclusive. The complaint alleges
claims under Sections 10(b) and 20(a) of the Exchange Act based on allegedly false or misleading statements related to the Company’s
business, operations, sales practices and financial outlook. The lawsuit seeks unspecified damages and other relief. The court entered
an order appointing a group of shareholder funds as the lead plaintiffs, who filed an amended complaint on January 31, 2025. The Company’s
deadline to respond to the amended complaint was April 1, 2025.
On
April 11, 2025, the Company filed a motion to dismiss the amended complaint, asserting, among other arguments, that the allegations in
the amended complaint are legally insufficient and fail to support the lead plaintiffs’ claims. On September 12, 2025, the Court
entered an order dismissing 19 of the 24 statements challenged by the lead plaintiffs, and providing an opportunity to replead. On October
14, 2025, the lead plaintiffs filed a second amended complaint, which alleges the same claims and putative class period as the amended
complaint. On December 5, 2025, the Company filed a motion to dismiss the second amended complaint. On January 26, 2026, the lead plaintiffs
filed an opposition to the Company’s motion to dismiss. The Company’s reply in support of its motion to dismiss is due by
February 26, 2026.
As
of the date of this filing, the Company is unable to estimate the range of loss, if any, that could result were there to be an adverse
final decision in this case, and an estimated liability has not been recorded in the Company’s financial statements. The defendants
intend to deny the allegations of wrongdoing and vigorously defend itself against the claims.
In
addition, as is the case from time to time, the Company was involved in various claims, legal proceedings and investigations.
NOTE
12 - SHAREHOLDERS’ EQUITY:
| a. |
Share Capital:
|
1)
Ordinary shares
Each
holder of the Company’s ordinary shares is entitled to one vote. The holders of ordinary shares are also entitled to receive dividends
whenever funds are legally available, when and if declared by the Company’s Board of Directors. Since inception, the Company has
not declared any dividends.
In
May 2024, the Company approved an additional share repurchase program of up to 8.37
million ordinary shares. In September 2024, the Company approved an additional share repurchase program of up to 7.68
million ordinary shares.
F - 24
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
12 - SHAREHOLDERS’ EQUITY (continued):
During
2024 the Company purchased 16,050,000
shares in the amount of $285.4
million.
During
February 2025, the Board of Directors of the Company approved a new Share repurchase program of 10 %
of the Outstanding Shares (i.e., an aggregate number of Ordinary Shares of up to 6.95 M).
During
2025 the Company purchased 6,950,000
shares in the amount of $127.4
million.
As
of December 31, 2025, the Company purchased in aggregate 25,557,829
shares in the amount of $508.1
million under these repurchase programs.
2)
Share-based compensation
On
January 30, 2008, the Company’s Board of Directors adopted two share option plans as follows (collectively, the “2008 Plans”):
| a) |
2008 Israeli Option Plan (“2008 Israeli
Plan”) allowing the Company to grant ordinary shares andoptions to purchase ordinary shares to Israeli employees, officers, directors,
consultants and service providers. Each option under the 2008 Israeli Plan grants the right to exercise such option into one ordinary
share of the Company. |
| b) |
2008 ROW Option Plan (“2008 ROW Plan”)
allowing the Company to grant ordinary shares and options to purchase ordinary shares to non-Israeli employees, officers, directors, consultants
and service providers. Each option under the 2008 ROW Plan grants the right to exercise such option into one ordinary share of the Company.
|
In
June 2018, the Company’s Board of Directors adopted a new incentive plan (“2018 Incentive Plan”), allowing the Company
to grant ordinary shares, options to purchase ordinary shares, restricted shares and restricted share unit (“RSUs”) (together,
“Awards”) to Israeli and other non-U.S. employees, officers, directors, consultants and service providers of the Company and
its Subsidiaries. The 2018 Incentive Plan also includes as an appendix a sub-plan allowing the Company to grant awards to U.S. employees,
officers, consultants and service providers of the Company and its Subsidiaries. Each option award under 2018 Incentive Plan grants the
right to exercise such option into one ordinary share of the Company. The Company’s subsidiary in U.S. may recognize under U.S.
corporate tax laws, a tax benefit for RSU and options exercised for U.S. employees and U.S. service providers for tax purposes.
The
grant of awards to Israeli employees, officers and directors under the 2008 Israeli Plan and the 2018 Incentive Plan is subject to the
terms stipulated by Sections 102 and 102A of the Israeli Income Tax Ordinance. Each award grant is subject to the track chosen by
the Company, either Section 102 or Section 102A of the Israeli Income Tax Ordinance, and pursuant to the terms thereof, the Company is
not allowed to claim as an expense for tax purposes the amounts credited to employees as benefits, including amounts recorded as salary
benefits in the Company’s accounts, in respect of options granted to employees under the 2008 Israeli Plan, with the exception of
the work-income benefit component, if any, determined on grant date. For consultants and service providers, grants under the 2008 Israeli
Plan and the 2018 Incentive Plan are subject to Section 3(i) of the Israeli Income Tax Ordinance.
Upon
the adoption of the 2018 Incentive Plan, the then-current pool of awards available for future grants under the 2008 Plans was canceled
and returned to the Company’s authorized and un-issued share capital. In addition, any shares returning to the free pool of options
under the 2008 Plans, due to options expirations or otherwise, are automatically returning to the Company’s authorized and un-issued
share capital.
F - 25
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
12 - SHAREHOLDERS’ EQUITY (continued):
Upon
adoption of the 2018 Incentive Plan, the Board and the shareholders resolved to approve an evergreen mechanism with respect to the 2018
Incentive Plan, under which the number of reserved, authorized and unissued ordinary shares of the Company available for issuance of awards
pursuant to the 2018 Incentive Plan shall automatically increase on an annual basis, by such number of ordinary shares as follows: on
the first business day of each calendar year beginning in 2019, the number of awards equal to the lesser of (i) 800,000
ordinary shares, (ii) three percent of the number of shares outstanding as of such date or (iii) a lesser number of ordinary shares as
shall be determined by the Company’s board of directors.
As
of December 31, 2025, the total awards under 2018 Incentive Plan that have been authorized to be issued as ordinary shares were 9,178,000
of which 1,583,202
awards were available for grant under the 2018 Incentive Plan.
At
January 2026, the Board of the Company approved to increase by another 800,000
ordinary shares through the evergreen mechanism to amount of 9,978,000
ordinary shares.
Share
Options
The
following tables are a summary of stock option activity for the year ended on December 31, 2025:
|
Year
ended December 31 |
||||||||
|
2025
|
||||||||
|
Weighted
|
||||||||
|
Number
|
Average
|
|||||||
|
of
|
Exercise
|
|||||||
|
Options
|
Price*
|
|||||||
|
Outstanding at beginning
of year |
|
$
|
|
|||||
|
Changes during the year:
|
||||||||
|
Granted
|
|
|
||||||
|
Canceled
|
|
|
||||||
|
Exercised
|
(
|
)
|
|
|||||
|
Forfeited
|
|
|
||||||
|
Expired
|
|
|
||||||
|
Outstanding at end of
year |
|
$ |
|
|||||
|
Exercisable at end of
year |
|
$ |
|
|||||
*
In U.S. dollars per Ordinary Share
As
of December 31, 2025, the weighted-average remaining contractual life of exercisable options was 1.02
years. The total intrinsic value of options exercised during 2025, 2024 and 2023 were approximately $1,296 ,
$12,184
and $24,819 ,
respectively.
F - 26
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
12 - SHAREHOLDERS’ EQUITY (continued):
The
following tables summarize information concerning outstanding and exercisable options as of December 31, 2025:
|
Options
outstanding and exercisable | ||||
|
Number
of |
Weighted
| |||
|
options
|
average | |||
|
Outstanding
and exercisable |
remaining | |||
|
Exercise
|
at
end of |
contractual | ||
|
Prices
* |
year
|
life | ||
|
$
|
|
| ||
|
$
|
|
| ||
|
$
|
|
| ||
|
$
|
|
| ||
|
$
|
|
| ||
|
$
|
|
| ||
*
In U.S. dollars per Ordinary Share.
The
aggregate intrinsic value of total exercisable options as of December 31, 2025 is $2,342 .
Restricted
Share Units
The
following tables summarize information concerning RSUs as of December 31, 2025:
|
Year ended December 31
|
||||||||
|
2025
|
||||||||
|
Weighted
|
||||||||
|
Number
|
Average
|
|||||||
|
of
|
Grant Date
|
|||||||
|
RSUs
|
Fair
Value |
|||||||
|
Outstanding at beginning
of year |
|
|
||||||
|
Changes during the year:
|
||||||||
|
Granted
|
|
|
||||||
|
Vested
|
(
|
)
|
|
|||||
|
Forfeited
|
(
|
)
|
|
|||||
|
Outstanding at end of
year |
|
|
||||||
Each
RSU represents the right to receive one ordinary share of the Company upon the vesting thereof. The fair value of an RSU is identical
to the value of the underlying share at the close of the last trading day prior to the day of grant. The weighted average fair value of
each RSU granted in 2025 was 17.9 ,
in 2024 was 25.9
and in 2023 34.44
based on the Company’s share price at closing of trading day prior to the day of grant.
The
total fair value of RSUs granted during the year ended December 31, 2025, 2024 and 2023, was $14,970 ,
$18,556
and $24,334 ,
respectively.
As
of December 31, 2025, the Company had 891,967
unvested RSUs. The total unrecognized compensation cost of employee RSUs as of December 31, 2025 is $7,765 ,
which is expected to be recognized over a weighted average period of 0.64
years.
The
total vesting-date value of equity classified RSUs vested during 2025 is $10,411 .
F - 27
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
12 - SHAREHOLDERS’ EQUITY (continued):
The
following table illustrates the effect of share-based compensation on the consolidated statements of income:
|
Year
ended December 31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Cost of sales
|
|
|
|
|||||||||
|
Research
and development expenses |
|
|
|
|||||||||
|
Selling
and marketing expenses |
|
|
|
|||||||||
|
General
and administrative expenses |
|
|
|
|||||||||
|
|
|
|
||||||||||
NOTE
13- INCOME TAXES:
| a. | InMode Ltd. |
The
Company is taxed according to Israeli tax laws:
| 1) |
Measurement of results for tax purposes
|
The
Company as a “foreign-investment company” measures its results for tax purposes in dollar based on Income Tax Regulations
(Bookkeeping Principles of Foreign Invested Companies and of Certain Partnerships and the Determination of Their Taxable Income), 1986.
These
consolidated financial statements are presented in U.S. dollars. The changes in the exchange rate of the dollar, both on an annual and
a cumulative basis, cause a difference between taxable income and income reflected in these consolidated financial statements. ASC 740-10-25
prohibits the recognition of deferred tax liabilities or assets that arise from differences between the financial reporting and tax bases
of assets and liabilities that are re-measured from the local currency into dollars using historical exchange rates, and that result from
changes in exchange rates or indexing for tax purposes. Consequently, the above-mentioned differences were not reflected in the computation
of deferred tax assets and liabilities.
| 2) |
Basis of taxation |
Incentives
Applicable starting 2021 - The New Technological Enterprise and Preferred Enterprise Incentives Regime - Amendment 73 to the Investment
Law
On
June 14, 2017, the Encouragement of Capital Investments Regulations (Preferred Technology Income and Capital Profits for a Technological
Enterprise), 2017 (the “Regulations”) were published, which adopted Action 5 under the base erosion and profit shifting (“BEPS”)
regulations. The Regulations describe, inter alia, the mechanism used to determine the calculation of the benefits under the PTE (Preferred
technological enterprise) or PE (Preferred enterprise) and under the SPTE (Special Preferred Technology Enterprise) regime and determine
certain requirements relating to documentation of intellectual property for the purpose of the PTE or PE. According to these provisions,
a company that complies with the terms under the PTE or PE regime may be entitled to certain tax benefits with respect to income generated
during the company’s regular course of business and derived from the preferred intangible asset (as determined in the Investments
Law) and income attributed to production activity (different tax rate), excluding income derived from intangible assets used for marketing.
F - 28
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
13 - INCOME TAXES (continued):
In the
event that intangible assets used for marketing purposes generate over 10% of the PTE’s or PE’s income, the relevant portion,
calculated using a transfer pricing study, would be subject to regular corporate income tax. If such income does not exceed 10%, the PTE
or PE will not be required to exclude the marketing income from the PTE’s or PE’s total income. The Regulations set a presumption
of direct production expenses plus 10% with respect to income related to production, which can be countered by the results of a supporting
transfer pricing study. Tax rates applicable to such production income expenses will be similar to the tax rates under the Preferred Enterprise
regime, to the extent such income would be considered as eligible. In order to calculate the preferred income, the PTE and PE is required
to take into account the income and the research and development expenses that are attributed to each single preferred intangible asset.
The
Company reviews every year whether it meets the conditions of the PTE or PE. The difference for the Company is immaterial since it located
in development area A.
Under
the Regulations the Company’s tax rate is expected to be approximately 7.5 %.
| 3) |
Corporate tax rate in Israel
|
The
income of Israeli companies, other than preferred income, is taxed in accordance with Israeli tax laws at the regular corporate tax rates.
The corporate tax rate is 23 %
for 2018 and thereafter. Capital gain is subject to capital gain tax according to the corporate tax rate in the year the assets are sold.
| b. |
Subsidiaries outside
of Israel |
Subsidiaries
that are incorporated outside of Israel are assessed for taxes under the tax laws in their countries of residence.
The
corporate tax rates of Subsidiaries outside of Israel for the year ended on December 31, 2025, is between 15 %
to 30 %.
As of
December 31, 2025, the Company’s subsidiary in U.S has an accumulated federal tax loss carryforward of approximately $195
million and state tax loss carryforward (post apportionment) of approximately $161
million derived mainly from exercises of options by employees which provided the Company tax deductions in excess of the actual compensation
expenses (recognized in loss), under the Tax Cuts and Jobs Act of 2017 (“TCJA”).
Under
U.S. tax laws, subject to certain limitations, carryforward tax losses originating in tax years beginning after January 1, 2018, have
no expiration date, but they are limited to 80% of the company's taxable income in any given tax year.
F - 29
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
13 - INCOME TAXES (continued):
Deferred
taxes are determined by utilizing the asset and liability method based on the estimated future tax effects of differences between the
financial accounting and tax bases of assets and liabilities under the applicable tax laws. Valuation allowances are provided if, based
upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As
of each reporting date, management considers new evidence, both positive and negative, that could impact management’s view with
regard to the future realization of deferred tax assets for each jurisdiction.
In the
determination of the appropriate valuation allowances, the Company considers the most recent projections of future business results and
taxable income by jurisdiction as well as the reversal of existing taxable temporary differences. The Company also considers the prior
earnings history. Actual results may vary in comparison to current projections.
During
the year ended December 31, 2024, the Company determined that the positive evidence overcame any negative evidence, primarily due
to cumulative income in recent years, including the effect of permanent adjustments, and the expectation of profitability in future periods,
and concluded that it was more likely than not that the United States net deferred tax assets were realizable. As a result, the Company
released the valuation allowance of $60,129 related
to the United States net deferred tax assets during the year ended December 31, 2024. As of December 31, 2025, the Company concluded
that the deferred tax assets for certain jurisdictions would not be realized and therefore reserved valuation allowance in the amount
of $4,770
with respect to these deferred tax assets.
| c. |
Deferred income tax assets
|
Deferred
income tax assets reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s
net deferred tax assets (liabilities) at December 31, 2025 and 2024 were as follows:
|
December
31 |
||||||||
|
2025
|
2024
|
|||||||
|
Deferred
tax assets in respect of: |
||||||||
|
Subsidiaries
carryforward losses |
|
|
||||||
|
Other
temporary differences |
|
|
||||||
|
Share-based
compensation |
|
|
||||||
|
Deferred
tax assets (liabilities) in respect to other comprehensive income, net |
(
|
)
|
|
|||||
|
Total
deferred tax assets before valuation allowance |
|
|
||||||
|
Valuation
allowance |
(
|
)
|
(
|
)
| ||||
|
Total deferred tax assets
|
|
|
||||||
Deferred
taxes are computed using the tax rates expected to be in effect when those differences reverse.
| d. |
Valuation allowance
|
|
2025
|
2024
|
2023
|
||||||||||
|
Balance at January 1
|
|
|
|
|||||||||
|
Utilization of carry
forward tax losses |
|
(
|
)
|
(
|
)
| |||||||
|
Additions (reductions)
for the current year that record against defer tax asset |
|
(
|
)
|
|
||||||||
|
Balance at December 31
|
|
|
|
|||||||||
F - 30
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
13 - INCOME TAXES (continued):
| e. |
Reconciliation of theoretical
tax expense to actual tax expense |
Following
is a reconciliation of the theoretical provision for income tax, assuming all income is taxed at the statutory corporate tax rate applicable
to Israeli corporations, and the actual tax on income:
|
Year
Ended December 31, 2025 |
Year
Ended December 31, 2024 |
Year
Ended December 31, 2023 |
||||||||||||||||||||||
| $ |
%
|
$ |
%
|
$ |
%
|
|||||||||||||||||||
|
Statutory
corporate tax rate |
|
|
|
|
|
|
||||||||||||||||||
|
Foreign
tax effects |
||||||||||||||||||||||||
|
United
state of America |
||||||||||||||||||||||||
|
Change
in Valuation Allowance (federal tax only) |
|
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||||
|
State
and local income taxes, net of federal income tax effect* |
|
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||||
|
Other
|
|
|
|
|
|
|
||||||||||||||||||
|
Other
foreign jurisdictions |
||||||||||||||||||||||||
|
Other
|
|
|
|
|
|
|
||||||||||||||||||
|
Benefits
to the Benefited Enterprise |
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||||||||
|
Non-taxable or non-deductible items: |
||||||||||||||||||||||||
|
Capital
Gains, net |
|
|
|
|
|
|
||||||||||||||||||
|
Other
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|||||||||||||||
|
Changes
in uncertain tax positions |
|
|
|
|
|
|
||||||||||||||||||
|
Effective
tax rate |
|
|
(
|
)
|
(
|
)
|
|
|
||||||||||||||||
*
Consist mainly of change in Valuation Allowance.
| f. |
Tax assessments
|
As of
December 31, 2025, tax assessments of the Israeli Company through tax year 2021 are considered final. In addition, all tax assessments
of one of the Company’s subsidiaries in Israel through tax year 2020 are considered final. Additional Israeli subsidiaries were
established in recent years and therefore does not have any tax year that considered final.
As of
December 31, 2025, all tax assessments on the Company’s subsidiary in the United States, through tax year 2020, are considered final.
The
other Subsidiaries' open tax years range from 2020-2025.
F - 31
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
13 - INCOME TAXES (continued):
| g. |
Income before income
taxes is composed of the following: |
|
Year
ended December 31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
InMode Ltd. and Israeli
subsidiaries |
|
|
|
|||||||||
|
Subsidiaries outside
of Israel |
|
|
|
|||||||||
|
|
|
|
||||||||||
| h. |
Tax expenses (tax benefit):
|
|
Year
ended December 31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Current:
|
||||||||||||
|
Israel
|
|
|
|
|||||||||
|
Subsidiaries
outside of Israel |
|
|
|
|||||||||
|
|
|
|
||||||||||
|
Deferred:
|
||||||||||||
|
Israel
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Subsidiaries
outside of Israel |
|
(
|
)
|
|
||||||||
|
|
(
|
)
|
(
|
)
| ||||||||
|
Total expenses (income)
taxes on income |
|
(
|
)
|
|
||||||||
| i. |
Uncertain tax positions:
|
ASC
No. 740, Income Taxes, requires significant judgment in determining what constitutes an individual tax position as well as assessing the
outcome of each tax position. Changes in judgment as to recognition or measurement of tax positions can materially affect the estimate
of the effective tax rate and consequently, affect the operating results of the Company.
The
following table summarizes the activity of the Company’s unrecognized tax benefits:
|
Year
ended December 31 |
||||||||
|
2025
|
2024
|
|||||||
|
Balance at January 1
|
|
|
||||||
|
Increase in uncertain
tax positions for the current year |
|
|
||||||
|
Balance at December 31
|
|
|
||||||
| j. |
Income Taxes Paid:
|
The
income taxes paid by the Company are as follows:
|
Year
ended December 31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Israel
|
|
|
|
|||||||||
|
United States
|
|
|
|
|||||||||
|
Canada
|
|
|
|
|||||||||
|
Other
|
|
|
|
|||||||||
|
|
|
|
||||||||||
F - 32
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
14 - Segments:
The
Company operates globally, and its business is unified for the purposes of valuation of its performance.
Management
does not segregate its business for internal reporting purposes. The Company's Chief Operating Decision Maker (“CODM”), who
is the CEO evaluates the Company's performance based on its unified internal reporting which is consistent with the presentation in the
Company’s consolidated financial statements. The Company’s CODM use consolidated net income, as shown on the consolidated
statements of comprehensive income, as the measure of segment profitability. The CODM use net income to evaluate the Company’s ongoing
operations and for internal planning and forecasting purposes. This analysis is used in making strategic investment decisions.
In
order to make operating decisions, the CODM examines the employee salaries including the commission expenses. In addition, the CODM examines
the segment's marketing expenses, which include advertising and trade shows, and the amounts that will be invested in them.
|
Year
ended December 31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Revenues from customers
|
|
|
|
|||||||||
|
Less:
|
||||||||||||
|
Employee
salaries including commission expenses |
|
|
|
|||||||||
|
Marketing
expenses |
|
|
|
|||||||||
|
Share
based compensation |
|
|
|
|||||||||
|
Interest
income |
|
|
|
|||||||||
|
Depreciation
|
|
|
|
|||||||||
|
*Other expenses |
|
|
|
|||||||||
|
Income
before income taxes |
|
|
|
|||||||||
|
Income
taxes benefit (expenses) |
(
|
)
|
|
(
|
)
| |||||||
|
Net
income |
|
|
|
|||||||||
*
Other expenses included in net income includes cost of revenues (excluding salaries, depreciation and share based compensation); research
and development expenses (excluding salaries, depreciation and share based compensation); sales expenses (excluding salaries, commission,
depreciation and share based compensation); general and administrative expenses (excluding salaries and share based compensation); and
finance expenses of exchange rate and bank commission.
NOTE 15 - ENTITY-WIDE DISCLOSURE:
| a. |
Revenue |
| 1) |
Revenues by geographic area were as follows:
|
|
Year ended December
31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Israel |
|
|
|
|||||||||
|
United States |
|
|
|
|||||||||
|
Europe |
|
|
|
|||||||||
|
Asia |
|
|
|
|||||||||
|
Other |
|
|
|
|||||||||
|
|
* |
|
* |
|
* | |||||||
*Revenues
are attributed to geographic areas based on the location of customer. No single customer accounted for 10% or more of Company’s
total revenues, or Company’s net accounts receivable, in any fiscal year presented.
F - 33
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE 15 - ENTITY-WIDE
DISCLOSURE (continued):
| 2) |
Revenues based on products' category were as follows:
|
|
Year ended December
31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Capital Equipment revenues |
|
|
|
|||||||||
|
Consumables and service revenues |
|
|
|
|||||||||
|
|
|
|
||||||||||
| 3) |
Revenues based on products' technology were as follows:
|
|
Year ended December
31 |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
%
|
||||||||||||
|
Minimal-Invasive |
|
|
|
|||||||||
|
Hands-Free |
|
|
|
|||||||||
|
Non-Invasive |
|
|
|
|||||||||
|
|
|
|
||||||||||
| 4) |
The changes in contract liabilities are as follows: |
|
Year ended December 31
|
||||||||
|
2025
|
2024
|
|||||||
|
Balance as
of January 1 |
|
|
||||||
|
Increases
due to issuance of new contracts, excluding amounts recognized as revenue during the period |
|
|
||||||
|
Revenue recognized
that was included in the contract liability balance at the beginning of the period |
(
|
) |
(
|
) | ||||
|
Balance as
of December 31 |
|
|
||||||
|
Contract
liability presented in non-current liabilities (1) |
|
|
||||||
|
Contract
liability presented in current liabilities |
|
|
||||||
| (1) |
As of December 31, 2025, non-current deferred revenue is estimated to be recognized
as following: |
| b. |
Long-Lived Assets
|
|
December 31
|
||||||||
|
2025
|
2024
|
|||||||
|
Israel
|
|
|
||||||
|
United States
|
|
|
||||||
|
Other
|
|
|
||||||
|
|
|
|||||||
|
Other long-term
assets* |
|
|
||||||
|
|
|
|||||||
*Consists
of non-current accounts receivable, net and other investments
F - 34
|
INMODE LTD. |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
(U.S. dollars in thousands, except for share and per amounts) |
NOTE
16 - RELATED PARTIES:
| a. |
The Company receives and provides certain services
from and to Home Skinovations Ltd., a related party as part of a service agreement between them. The services include an office sublease
in Israel, use of certain computer hardware and switchboard infrastructure, certain software licenses, joint purchases of employee’s
welfare products and services from third parties and limited manpower services. The Chief Executive Officer of the Company is also a substantial
shareholder and board member of Home Skinovations Ltd. and one of the Company’s directors, serves on the board of directors of Home
Skinovations Ltd. The Company recorded expenses related to services received and provided from and to Home Skinovations Ltd. of $ |
In
addition, the balance of the accounts payable as of December 31, 2025, 2024 was $0
The
Company’s subsidiary in Canada receives and provides certain services from and to a subsidiary of Home Skinovations Ltd. in Canada
as part of a service agreement between them. The services include mobile phone services, an office sublease, use of certain computer
hardware and switchboard infrastructure, certain software licenses, joint purchases of employee’s welfare products and services
from third parties and limited manpower services. In relation to these services received and provided, the Company recorded expenses (income)
in the amount of $0 ,
$0
and $(30 )
for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, the balance of the accounts receivable as of December
31, 2025, 2024 was $0
The
Company’s subsidiaries in North America received marketing services from SpaMedica International SRL, which was amalgamated with
an affiliate company into the Company’s major shareholder BoomerangFX International SRL during 2021. Dr. Stephan Mulholland is a
beneficiary owner of 100% of the Company's major shareholder BoomerangFX. Starting from 2022 calendar year, Dr. Stephen Mulholland provides
the Company and its subsidiaries with certain marketing services as an independent contractor. The Company recorded expenses related to
those services in the amount of $636
for the year ended December 31, 2023.
During
2023 Dr. Stephen Mulholland ceased to be a related party.
The
Company receives certain investment portfolio management services from Himalaya Family Office Consulting Ltd., with respect to part of
its investment portfolio. The Chief Executive Officer of the Company, is a minor shareholder and a board member of Himalaya Family Office
Consulting Ltd. In relation to these services, the Company recorded expenses in the amount of $62 ,
$333
and $193
for the years ended December 31, 2025, 2024 and 2023, respectively.
In
addition, the balance of the accounts payable as of December 31, 2025 and 2024, was $1
and $27 ,
respectively.
F - 35
|
|
Exhibit 1.1
|
|
InMode Ltd.
|
Amended and Restated Articles of Association
of a Public Company
Effective as of April 3, 2023
Public Company Limited by Shares
The Companies Law, 5759 - 1999
Amended and Restated Articles of Association
of
InMode Ltd.
(אינמוד בע"מ)
Preliminary
| 1. |
Definitions; Interpretation
|
| 1.1 |
In these Articles, the following terms (whether or not capitalized) shall bear the meanings set forth opposite them, respectively, unless the subject or context requires otherwise.
|
|
“Articles”
|
shall mean these Articles of Association, as amended from time to time.
|
|
“Board of Directors”
|
shall mean the Board of Directors of the Company.
|
|
“Chairperson”
|
shall mean the Chairperson of the Board of Directors, or the Chairperson of the General Meeting, as the context implies.
|
|
“Company”
|
shall mean InMode LTD.
|
|
“Companies Law”
|
shall mean the Israeli Companies Law, 5759-1999, and the regulations promulgated thereunder. The Companies Law shall include reference to the Israeli Companies Ordinance (New Version),
5743-1983, to the extent in effect according to the provisions thereof.
|
|
“Director(s)”
|
shall mean the member(s) of the Board of Directors holding office at any given time, including alternate directors.
|
|
“External Director(s)”
|
shall have the meaning provided for such term in the Companies Law.
|
|
“General Meeting”
“IEC Law”
|
shall mean an Annual General Meeting or Special General Meeting of the Shareholders, as the case may be.
shall mean the Israeli Economic Competition Law, 5748-1988.
|
|
“NIS”
|
shall mean New Israeli Shekels.
|
|
“Office”
|
shall mean the registered office of the Company at any given time.
|
|
“Office Holder”or “Officer” (“Nosse Misra”)
|
shall have the meaning provided for such term in the Companies Law.
|
- 2 -
|
“Securities Law”
|
shall mean the Israeli Securities Law, 5728-1968.
|
|
“Shareholder(s)”
|
shall mean the shareholder(s) of the Company, at any given time.
|
|
“Supermajority Resolution”
|
means a resolution adopted at the (Annual or Special) General Meeting by a special majority of 2/3 (two thirds) of those votes cast excluding abstaining votes.
|
|
“in writing” or “writing”
|
shall mean written, printed, photocopied, photographed or typed, including if appearing in an email, facsimile or if produced by any visible substitute for a writing, or partly one and partly
another. The term “signed” or “signature” shall be construed in a corresponding manner.
|
| 1.2 |
Unless otherwise defined in these Articles or required by the context, terms used herein shall have the meaning provided therefor under the Companies Law.
|
| 1.3 |
Unless the context shall otherwise require: words in the singular shall also include the plural, and vice versa; any pronoun shall include the corresponding masculine, feminine and neuter forms; the words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”; the words “herein”, “hereof” and “hereunder” and words of similar import refer to these Articles in their entirety and not to any part hereof; all references herein
to Articles, Sections or clauses shall be deemed references to Articles, Sections or clauses of these Articles; any references to any agreement or other instrument or law, statute or regulation are to it as amended, supplemented or restated,
from time to time (and, in the case of any law, to any successor provisions or re-enactment or modification thereof being in force at the time); any reference to “law” shall include any supranational, national, federal, state, local, or foreign
statute or law and all rules and regulations promulgated thereunder (including, any rules, regulations or forms prescribed by any governmental authority or securities market or exchange, if and to the extent applicable); any reference to a
“day” or a number of “days” (without any explicit reference otherwise, such as to business days) shall be interpreted as a reference to a calendar day or number of calendar days; any reference to a month or year shall be interpreted in
accordance with the Gregorian calendar; any reference to a “company”, “corporate body” or “entity” shall include a partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency
or political subdivision thereof, and any reference to a “person” shall include any of the foregoing types of entities or a natural person.
|
| 1.4 |
The captions in these Articles are for convenience only and shall not be deemed a part hereof or affect the construction or interpretation of any provision hereof.
|
| 1.5 |
These Articles may be translated into Hebrew and/or into other languages. Notwithstanding the aforesaid, the English version of these Articles shall be binding upon the Company, its Shareholders and/or any third party and shall supersede any
translation thereof.
|
- 3 -
Limited Liability
| 2. |
The Company is a company with limited liability and each Shareholder’s obligations to the Company shall therefore be limited to the payment of the nominal value of the shares held by such Shareholder, subject to the provisions of the
Companies Law.
|
| 3. |
Public Company; Objectives
|
| 3.1 |
The Company is a public company as such term is defined and for so long as it so qualifies under the Companies Law.
|
| 3.2 |
The Company’s objectives are to engage in any lawful activity.
|
| 4. |
Donations
|
The Company may donate a reasonable amount of money (in cash or in kind, including the Company’s securities) for any purpose that the Board of Directors finds appropriate.
Share Capital
| 5. |
Authorized Share Capital
|
The authorized share capital of the Company shall consist of NIS 2,000,000 divided into 200,000,000 Ordinary Shares, of a nominal value of NIS 0.01 each (the “Shares”).
The Shares shall rank pari passu in all respects. The Shares may be redeemable to the extent set forth in Article 13.
| 6. |
Increase of Authorized Share Capital
|
| 6.1 |
The Company may, from time to time, by a Shareholders’ resolution, whether or not all of the shares then authorized have been issued, increase its authorized share capital. Any such increase shall be in such amount and shall be divided into
shares of such nominal amounts, and such shares shall confer such rights and preferences, and shall be subject to such restrictions, as such resolution shall provide.
|
| 6.2 |
Except to the extent otherwise provided in such resolution, any new shares included in the authorized share capital increase as aforesaid shall be subject to all of the provisions of these Articles that are applicable to shares of such class
that are included in the existing share capital.
|
| 7. |
Special or Class Rights; Modification of Rights
|
| 7.1 |
The Company may, from time to time, by a Shareholders’ resolution, provide for shares with such preferred or deferred rights or other special rights and/or such restrictions, whether in regard to dividends, voting, repayment of share capital
or otherwise, as may be stipulated in such resolution.
|
| 7.2 |
If at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class, unless otherwise provided by these Articles, may be modified or cancelled by the Company by a resolution of the
holders of a majority of shares of that class present and voted at the class meeting, excluding abstentions.
|
| 7.3 |
The provisions of these Articles relating to General Meetings shall apply, mutatis mutandis, to any separate General Meeting of the holders of the shares of a particular class, it being clarified that the requisite quorum at any such
separate General Meeting shall be two or more Shareholders present in person or by proxy and holding not less than twenty-five percent (25%) of the issued shares of such class.
|
| 7.4 |
Unless otherwise provided by these Articles, an increase in the authorized share capital, the creation of a new class of shares, an increase in the authorized share capital of a class of shares, or the issuance of additional shares thereof
out of the authorized and unissued share capital, shall not be deemed, for purposes of this Article 7, to modify or derogate or cancel the rights attached to previously issued shares of such class or of any other class.
|
- 4 -
| 8. |
Consolidation, Division, Cancellation and Reduction of Share Capital
|
| 8.1 |
The Company may, from time to time, by or pursuant to an authorization of a Shareholders’ resolution, and subject to applicable law:
|
| 8.1.1 |
consolidate all or any part of its issued or unissued authorized share capital into shares of a per share nominal value which is larger, equal to or smaller than the per share nominal value of its existing shares;
|
| 8.1.2 |
divide or sub-divide its shares (issued or unissued) or any of them, into shares of smaller or the same nominal value (subject, however, to the provisions of the Companies Law), and the resolution whereby any share is divided may determine
that, as among the holders of the shares resulting from such subdivision, one or more of the shares may, in contrast to others, have any such preferred or deferred rights or rights of redemption or other special rights, or be subject to any
such restrictions, as the Company may attach to unissued or new shares;
|
| 8.1.3 |
cancel any shares which, at the date of the adoption of such resolution, have not been taken or agreed to be taken by any person, and reduce the amount of its share capital by the amount of the shares so canceled; or
|
| 8.1.4 |
reduce its share capital in any manner.
|
| 8.2 |
With respect to any consolidation of issued shares and with respect to any other action which may result in fractional shares, the Board of Directors may settle any difficulty which may arise with regard thereto, as it deems fit, and, in
connection with any such consolidation or other action which could result in fractional shares, may, without limiting its aforesaid power:
|
| 8.2.1 |
determine, as to the holder of shares so consolidated, which issued shares shall be consolidated into a share of a larger, equal or smaller nominal value per share;
|
| 8.2.2 |
issue, in contemplation of or subsequent to such consolidation or other action, shares sufficient to preclude or remove fractional share holdings;
|
| 8.2.3 |
redeem such shares or fractional shares sufficient to preclude or remove fractional share holdings;
|
| 8.2.4 |
round up, round down or round to the nearest whole number, any fractional shares resulting from the consolidation or from any other action which may result in fractional shares; or;
|
| 8.2.5 |
cause the transfer of fractional shares by certain Shareholders of the Company to other Shareholders thereof so as to most expediently preclude or remove any fractional shareholdings, and cause the transferees of such fractional shares to
pay the transferors thereof the fair value thereof, and the Board of Directors is hereby authorized to act in connection with such transfer, as agent for the transferors and transferees of any such fractional shares, with full power of
substitution, for the purposes of implementing the provisions of this sub-Article 8.2.5.
|
- 5 -
| 9. |
Issuance of Share Certificates, Replacement of Lost Certificates
|
| 9.1 |
To the extent that the Board of Directors determines that all shares shall be certificated or, if the Board of Directors does not so determine, to the extent that any Shareholder requests a share certificate or the Company’s transfer agent
so requires, share certificates shall be issued under the corporate seal of the Company or its written, typed or stamped name and shall bear the signature of one Director, the Company’s Chief Executive Officer, or any person or persons
authorized therefor by the Board of Directors. Signatures may be affixed in any mechanical or electronic form, as the Board of Directors may prescribe.
|
| 9.2 |
Subject to the provisions of Article 9.1, each Shareholder shall be entitled to one numbered certificate for all of the shares of any class registered in his name. Each certificate shall specify the serial numbers of the shares represented
thereby and may also specify the amount paid up thereon. The Company (as determined by an Officer of the Company to be designated by the Chief Executive Officer) shall not refuse a request by a Shareholder to obtain several certificates in
place of one certificate, unless such request is, in the opinion of such Officer, unreasonable. Where a Shareholder has sold or transferred some of such Shareholder’s shares, such Shareholder shall be entitled to receive a certificate in
respect of such Shareholder’s remaining shares, provided that the previous certificate is delivered to the Company before the issuance of a new certificate.
|
| 9.3 |
A share certificate registered in the names of two or more persons shall be delivered to the person first named in the Register of Shareholders in respect of such co-ownership.
|
| 9.4 |
A share certificate which has been defaced, lost or destroyed, may be replaced, and the Company shall issue a new certificate to replace such defaced, lost or destroyed certificate upon payment of such fee, and upon the furnishing of such
evidence of ownership and such indemnity, as the Board of Directors and the transfer agent in their discretion deems fit.
|
| 10. |
Registered Holder
Except as otherwise provided in these Articles or the Companies Law, the Company shall be entitled to treat the registered holder of each share as the absolute owner thereof, and
accordingly, shall not, except as ordered by a court of competent jurisdiction, or as required by the Companies Law, be obligated to recognize any equitable or other claim to, or interest in, such share on the part of any other person.
|
| 11. |
Issuance and Repurchase of Shares
|
| 11.1 |
The unissued shares from time to time shall be under the control of the Board of Directors (and, to the full extent permitted by law, any Committee thereof), which shall have the power to issue or otherwise dispose of shares and of
securities convertible or exercisable into or other rights to acquire from the Company to such persons, on such terms and conditions, and either at par or at a premium, or subject to the provisions of the Companies Law, at a discount and/or
with payment of commission, and at such times, as the Board of Directors (or the Committee, as the case may be) deems fit, and the power to give to any person the option to acquire from the Company any shares or securities convertible or
exercisable into or other rights to acquire from the Company, either at par or at a premium, or, subject as aforesaid, at a discount and/or with payment of commission, during such time and for such consideration as the Board of Directors (or
the Committee, as the case may be) deems fit.
|
- 6 -
| 11.2 |
The Company may at any time and from time to time, subject to the Companies Law, repurchase or finance the purchase of any shares or other securities issued by the Company, in such manner and under such terms as the Board of Directors shall
determine, whether from any one or more Shareholders. Such purchase shall not be deemed as payment of dividends and no Shareholder will have the right to require the Company to purchase his shares or offer to purchase shares from any other
Shareholders.
|
| 12. |
Payment in Installment
If pursuant to the terms of issuance of any share, all or any portion of the price thereof shall be payable in installments, every such installment shall be paid to the Company on the due
date thereof by the then registered holder(s) of the share or the person(s) then entitled thereto.
|
| 13. |
Redeemable Shares
The Company may, subject to applicable law, issue redeemable shares or other securities and redeem the same upon terms and conditions to be set forth in a written agreement between the
Company and the holder of such shares or in their terms of issuance.
|
Transfer of Shares
| 14. |
Registration of Transfer
No transfer of shares shall be registered unless a proper writing or instrument of transfer (in any customary form or any other form satisfactory to the Board of Directors) has been
submitted to the Company (or its transfer agent), together with any share certificate(s) and such other evidence of title as the Board of Directors may reasonably require. Notwithstanding anything to the contrary herein, shares registered in
the name of The Depository Trust Company or its nominee shall be transferrable in accordance with the policies and procedures of The Depository Trust Company. Until the transferee has been registered in the Register of Shareholders in respect
of the shares so transferred, the Company may continue to regard the transferor as the owner thereof. The Board of Directors, may, from time to time, prescribe a fee for the registration of a transfer, and may approve other methods of
recognizing the transfer of shares in order to facilitate the trading of the Company’s shares on the Nasdaq Stock Market or on any other stock exchange on which the Company’s shares are then listed for trading.
|
| 15. |
Suspension of Registration
The Board of Directors may, in its discretion to the extent it deems necessary, close the Register of Shareholders of registration of transfers of shares for a period determined by the Board
of Directors, and no registrations of transfers of shares shall be made by the Company during any such period during which the Register of Shareholders is so closed.
|
- 7 -
Transmission of Shares
| 16. |
Decedents’ Shares
|
| 16.1 |
In the case of the death of one of the holders of a share registered in the names of two or more persons, the Company may recognize the survivor(s) as the sole owner(s) thereof unless and until the provisions of Article 16.2 have been
effectively invoked.
|
| 16.2 |
Any person becoming entitled to a share in consequence of the death of any person, upon producing evidence of the grant of probate or letters of administration or declaration of succession (or such other evidence as the Board of Directors,
or an Officer of the Company to be designated by the Chief Executive Officer, may reasonably deem sufficient), shall be registered as a Shareholder in respect of such share, or may, subject to the provisions as to transfer contained herein,
transfer such share.
|
| 17. |
Receivers and Liquidators
|
| 17.1 |
The Company may recognize any receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate Shareholder, and a trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or
in connection with the reorganization of, or similar proceeding with respect to a Shareholder or its properties, as being entitled to the shares registered in the name of such Shareholder.
|
| 17.2 |
Such receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate Shareholder and such trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the
reorganization of, or similar proceedings with respect to a Shareholder or its properties, upon producing such evidence as the Board of Directors (or an Officer of the Company to be designated by the Chief Executive Officer) may deem sufficient
as to his authority to act in such capacity or under this Article, shall with the consent of the Board of Directors (which the Board of Directors may grant or refuse in its absolute discretion), be registered as a Shareholder in respect of such
shares, or may, subject to the regulations as to transfer herein contained, transfer such shares.
|
General Meetings
| 18. |
General Meetings
|
| 18.1 |
An annual General Meeting (“Annual General Meeting”) shall be held at least once in every calendar year, not later than 15 months after the last preceding Annual General Meeting, at such time and at
such place, either within or out of the State of Israel, as may be determined by the Board of Directors.
|
| 18.2 |
All General Meetings other than Annual General Meetings shall be called “Special General Meetings”.
|
| 19. |
Record Date for General Meeting
Notwithstanding any provision of these Articles to the contrary, and to allow the Company to determine the Shareholders entitled to notice of or to vote at any General Meeting or any
adjournment thereof, or entitled to receive payment of any dividend or other distribution or grant of any rights, or entitled to exercise any rights in respect of or to take or be the subject of any other action, the Board of Directors may
fix a record date, which shall not be more than the maximum period and not less than the minimum period permitted by law. A determination of Shareholders of record entitled to notice of or to vote at a meeting shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
|
- 8 -
| 20. |
Shareholder Proposal Request
|
| 20.1 |
Any Shareholder or Shareholders of the Company holding at least one percent (1%) of the voting rights of the Company (the “Proposing Shareholder(s)”) may request, subject to the Companies Law, that the
Board of Directors include a matter on the agenda of a General Meeting to be held in the future, provided that the Board of Directors determines that the matter is appropriate to be considered at a General Meeting (a “Proposal Request”). In order for the Board of Directors to consider a Proposal Request and whether to include the matter stated therein in the agenda of a General Meeting, notice of the Proposal Request must be timely delivered
in accordance with applicable law, and the Proposal Request must comply with the requirements of these Articles (including this Article 20) and any applicable law including, for the avoidance of doubt, stock exchange rules and regulations. The
Proposal Request must be in writing, signed by all of the Proposing Shareholder(s) making such request, delivered, either in person or by certified mail, postage prepaid, and received by the Secretary (or, in the absence thereof by the Chief
Executive Officer of the Company). To be considered timely, a Proposal Request must be received within the time periods prescribed by applicable law. The announcement of an adjournment or postponement of a General Meeting shall not commence a
new time period (or extend any time period) for the delivery of a Proposal Request as described above. In addition to any information required to be included in accordance with applicable law, a Proposal Request must include the following: (i)
the name, address, telephone number, fax number and email address of the Proposing Shareholder (or each Proposing Shareholder, as the case may be) and, if an entity, the name(s) of the person(s) that controls or manages such entity; (ii) the
number of Shares held by the Proposing Shareholder(s), directly or indirectly (and, if any of such Shares are held indirectly, an explanation of how they are held and by whom), which shall be in such number no less than as is required to
qualify as a Proposing Shareholder, accompanied by evidence satisfactory to the Company of the record holding of such Shares by the Proposing Shareholder(s) as of the date of the Proposal Request, and a representation that the Proposing
Shareholder(s) intends to appear in person or by proxy at the meeting; (iii) the matter requested to be included on the agenda of a General Meeting, all information related to such matter, the reason that such matter is proposed to be brought
before the General Meeting and the complete text of the resolution that the Proposing Shareholder proposes to be voted upon at the General Meeting, (iv) a description of all arrangements or understandings between the Proposing Shareholders and
any other person(s) (naming such person or persons) in connection with the matter that is requested to be included on the agenda and a declaration signed by all Proposing Shareholder(s) of whether any of them has a personal interest in the
matter and, if so, a description in reasonable detail of such personal interest; (v) a description of all Derivative Transactions (as defined below) by each Proposing Shareholder(s) during the previous twelve (12) month period, including the
date of the transactions and the class, series and number of securities involved in, and the material economic terms of, such Derivative Transactions; and (vi) a declaration that all of the information that is required under the Companies Law
and any other applicable law, including, for the avoidance of doubt, stock exchange rules and regulations, to be provided to the Company in connection with such matter, if any, has been provided to the Company. The Board of Directors, may, in
its discretion, to the extent it deems necessary, request that the Proposing Shareholder(s) provide additional information necessary so as to include a matter in the agenda of a General Meeting, as the Board of Directors may reasonably require.
|
- 9 -
A “Derivative Transaction” means any agreement, arrangement, interest or understanding entered into by, or on behalf or for the benefit of,
any Proposing Shareholder or any of its affiliates or associates, whether of record or beneficial: (1) the value of which is derived in whole or in part from the value of any class or series of shares or other securities of the Company, (2) which
otherwise provides any direct or indirect opportunity to gain or share in any gain derived from a change in the value of securities of the Company, (3) the effect or intent of which is to mitigate loss, manage risk or benefit of security value or price
changes, or (4) which provides the right to vote or increase or decrease the voting power of, such Proposing Shareholder, or any of its affiliates or associates, with respect to any shares or other securities of the Company, which agreement,
arrangement, interest or understanding may include, without limitation, any option, warrant, debt position, note, bond, convertible security, swap, stock appreciation right, short position, profit interest, hedge, right to dividends, voting agreement,
performance-related fee or arrangement to borrow or lend shares (whether or not subject to payment, settlement, exercise or conversion in any such class or series), and any proportionate interest of such Proposing Shareholder in the securities of the
Company held by any general or limited partnership, or any limited liability company, of which such Proposing Shareholder is, directly or indirectly, a general partner or managing member.
| 20.2 |
The information required pursuant to this Article shall be updated as of (i) the record date of the General Meeting, (ii) five business days before the General Meeting, and (iii) as of the General Meeting, and any adjournment or postponement
thereof.
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| 20.3 |
The provisions of Articles 20(a) and 20(b) shall apply, mutatis mutandis, on any matter to be included on the agenda of a Special General Meeting which is convened pursuant to a request of a
Shareholder duly delivered to the Company in accordance with the Companies Law.
|
| 21. |
Notice of General Meetings; Omission to Give Notice
|
| 21.1 |
The Company is not required to give notice of a General Meeting, subject to any mandatory provision of the Companies Law. Notwithstanding anything herein to the contrary, to the extent permitted under the Companies Law, with the consent of
all Shareholders entitled to vote thereon, a resolution may be proposed and passed at a General Meeting although a lesser notice period than hereinabove prescribed has been given.
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- 10 -
| 21.2 |
The accidental omission to give notice of a General Meeting to any Shareholder, or the non-receipt of notice sent to such Shareholder, shall not invalidate the proceedings at such meeting or any resolution adopted thereat.
|
| 21.3 |
No Shareholder present, in person or by proxy, at any time during a General Meeting shall be entitled to seek the cancellation or invalidation of any proceedings or resolutions adopted at such General Meeting on account of any defect in the
notice of such meeting relating to the time or the place thereof, or any item acted upon at such meeting.
|
| 21.4 |
The full text of the proposed resolutions to be adopted at a General Meeting will be published in the manner set forth in Article 62.7. The Company may add additional places for Shareholders to review the full text of the proposed
resolutions to be adopted at a General Meeting.
|
Proceedings at General Meetings
| 22. |
Quorum
|
| 22.1 |
No business shall be transacted at a General Meeting, or at any adjournment thereof, unless the quorum required under these Articles for such General Meeting or such adjourned meeting, as the case may be, is present when the meeting proceeds
to business.
|
| 22.2 |
In the absence of contrary provisions in these Articles, two or more Shareholders, present in person or by proxy and holding shares conferring in the aggregate at least twenty-five percent (25%) of the voting power of the Company, shall
constitute a quorum of General Meetings. A proxy may be deemed to be two (2) or more Shareholders pursuant to the number of Shareholders represented by the proxy holder.
|
| 22.3 |
If within half an hour from the time appointed for the meeting a quorum is not present, then without any further notice the meeting shall be adjourned either (i) to the same day in the next week, at the same time and place, (ii) to such day
and at such time and place as indicated in the notice to such meeting, or (iii) to such day and at such time and place as the Chairperson of the General Meeting shall determine (which may be earlier or later than the date pursuant to clause (i)
above). No business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting as originally called. At such adjourned meeting, if the original meeting was convened upon requisition
under Section 63 or Section 64 of the Companies Law, one or more Shareholders, present in person or by proxy, and holding the number of shares required for making such requisition, shall constitute a quorum, but in any other case any
Shareholder present in person or by proxy, shall constitute a quorum.
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| 23. |
Chairperson of General Meeting
The Chairperson of the Board of Directors, shall preside as Chairperson of every General Meeting of the Company. If at any meeting the Chairperson is not present within fifteen (15) minutes
after the time fixed for holding the meeting or is unwilling to act as Chairperson, any of the following may preside as Chairperson of the meeting (and in the following order): Director, Chief Executive Officer, Chief Financial Officer,
Secretary, General Legal Counsel, in each case, of the Company, or any person designated by any of the foregoing. If at any such meeting none of the foregoing persons is present or all are unwilling to act as Chairperson, the Shareholders
present (in person or by proxy) shall choose a Shareholder or its proxy present at the meeting to be Chairperson. The office of Chairperson shall not, by itself, entitle the holder thereof to vote at any General Meeting nor shall it entitle
such holder to a second or casting vote (without derogating, however, from the rights of such Chairperson to vote as a Shareholder or proxy of a Shareholder if, in fact, he is also a Shareholder or such proxy).
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| 24. |
Adoption of Resolutions at General Meetings
|
| 24.1 |
Except as required by the Companies Law or these Articles (such as set out in Article 34 below), a resolution of the Shareholders shall be adopted if approved by the holders of a simple majority of the voting power represented at the General
Meeting in person or by proxy and voting thereon, as one class, and disregarding abstentions from the count of the voting power present and voting.
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| 24.2 |
Every question submitted to a General Meeting shall be decided by a show of hands, but the Chairperson of the General Meeting may determine that a resolution shall be decided by a written ballot. A written ballot may be implemented before
the proposed resolution is voted upon or immediately after the declaration by the Chairperson of the results of the vote by a show of hands. If a vote by written ballot is taken after such declaration, the results of the vote by a show of
hands shall be of no effect, and the proposed resolution shall be decided by such written ballot.
|
| 24.3 |
A declaration by the Chairperson of the General Meeting that a resolution has been carried unanimously, or carried by a particular majority, or rejected, and an entry to that effect in the minute book of the Company, shall be prima facie
evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against such resolution.
|
| 25. |
Power to Adjourn
A General Meeting, the consideration of any matter on its agenda or the resolution on any matter on its agenda, may be postponed or adjourned, from time to time and from place to place: (i)
by the Chairperson of a General Meeting at which a quorum is present (and he shall if so directed by the General Meeting, with the consent of the holders of a majority of the voting power represented in person or by proxy and voting on the
question of adjournment), but no business shall be transacted at any such adjourned meeting except business which might lawfully have been transacted at the General Meeting as originally called, or a matter on its agenda with respect to which
no resolution was adopted at the meeting originally called; or (ii) by the Board of Directors (whether prior to or at a General Meeting).
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| 26. |
Voting Power
Subject to any provision hereof conferring special rights as to voting, or restricting the right to vote, each share shall entitle the holder thereof, who is present at a General Meeting and
participating in the vote, whether in person, or by proxy, to one vote on every resolution, without regard to whether the vote thereon is conducted by a show of hands, by written ballot or by any other means.
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- 12 -
| 27. |
Voting Rights
|
| 27.1 |
A company or other corporate body being a Shareholder of the Company may duly authorize any person to be its representative at any meeting of the Company or to execute or deliver a proxy on its behalf. Any person so authorized shall be
entitled to exercise on behalf of such Shareholder all the power, which the Shareholder could have exercised if it were an individual. Upon the request of the Chairperson of the General Meeting, written evidence of such authorization (in form
acceptable to the Chairperson) shall be delivered to him.
|
| 27.2 |
Any Shareholder entitled to vote may vote either in person or by proxy (who need not be Shareholder of the Company), or, if the Shareholder is a company or other corporate body, by representative authorized pursuant to Article 27.1 above.
|
| 27.3 |
If two or more persons are registered as joint holders of any share, the vote of the senior who tenders a vote, in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s). For the purpose of this
Article 27.3, seniority shall be determined by the order of registration of the joint holders in the Register of Shareholders.
|
Proxies
| 28. |
Instrument of Appointment
|
| 28.1 |
An instrument appointing a proxy shall be in writing and shall be substantially in the following form:
|
“I _______________________ of ______________________
(Name of Shareholder) (Address of Shareholder)
Being a shareholder of InMode Ltd. hereby appoints
_______________________ of ______________________
(Name of Proxy) (Address of Proxy)
as my proxy to vote for me and on my behalf at the General Meeting of the Company to be held on the ___ day of _______, _______ and at any adjournment(s) thereof.
Signed this ____ day of ___________, ______.
(Signature of Appointor)”
or in any usual or common form or in such other form as may be approved by the Board of Directors. Such proxy shall be duly signed by the appointor or such person’s duly
authorized attorney, or, if such appointor is company or other corporate body, in the manner in which it signs documents which binds it together with a certificate of an attorney with regard to the authority of the signatories.
| 28.2 |
Subject to the Companies Law, the original instrument appointing a proxy or a copy thereof certified by an attorney (and the power of attorney or other authority, if any, under which such instrument has been signed) shall be delivered to the
Company (at its Office, at its principal place of business, or at the offices of its registrar or transfer agent, or at such place as notice of the meeting may specify) not less than forty eight (48) hours (or such shorter period as the notice
shall specify) before the time fixed for such meeting. Notwithstanding the above, the Chairperson of the General Meeting shall have the right to waive the time requirement provided above with respect to all instruments of proxies and to accept
any and all instruments of proxy until the beginning of a General Meeting. A document appointing a proxy shall be valid for every adjourned meeting of the General Meeting to which the document relates.
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- 13 -
| 29. |
Effect of Death of Appointor of Transfer of Share and or Revocation of Appointment
|
| 29.1 |
A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the prior death or bankruptcy of the appointing Shareholder (or of his attorney-in-fact, if any, who signed such instrument), or the transfer of
the share in respect of which the vote is cast, unless written notice of such matters shall have been received by the Company or by the Chairperson of such meeting prior to such vote being cast.
|
| 29.2 |
Subject to the Companies Law, an instrument appointing a proxy shall be deemed revoked (i) upon receipt by the Company or the Chairperson of the General Meeting, subsequent to receipt by the Company of such instrument, of written notice
signed by the person signing such instrument or by the Shareholder appointing such proxy canceling the appointment thereunder (or the authority pursuant to which such instrument was signed) or of a later-dated instrument appointing a different
proxy (and such other documents, if any, required under Article 28.2 for such new appointment), provided such notice of cancellation or instrument appointing a different proxy were so received at the place and within the time for delivery of
the instrument revoked thereby as referred to in Article 28.2 hereof, or (ii) if the appointing Shareholder is present in person at the meeting for which such instrument of proxy was delivered. A vote cast in accordance with an instrument
appointing a proxy shall be valid notwithstanding the revocation or purported cancellation of the appointment, or the presence in person or vote of the appointing Shareholder at a meeting for which it was rendered, unless such instrument of
appointment was deemed revoked in accordance with the foregoing provisions of this Article 29.2 at or prior to the time such vote was cast.
|
Board of Directors
| 30. |
Powers of Board of Directors
|
| 30.1 |
The Board of Directors may exercise all such powers and do all such acts and things as the Board of Directors is authorized by law or as the Company is authorized to exercise and do and are not hereby or by law required to be exercised or
done by the General Meeting, the Chief Executive Officer or any other organ of the Company. The authority conferred on the Board of Directors by this Article 30 shall be subject to the provisions of the Companies Law, these Articles and any
regulation or resolution consistent with these Articles adopted from time to time at a General Meeting, provided, however, that no such regulation or resolution shall invalidate any prior act done by or pursuant to a decision of the Board of
Directors which would have been valid if such regulation or resolution had not been adopted.
|
| 30.2 |
Without limiting the generality of the foregoing, the Board of Directors may, from time to time, set aside any amount(s) out of the profits of the Company as a reserve or reserves for any purpose(s) which the Board of Directors, in its
absolute discretion, shall deem fit, including without limitation, capitalization and distribution of bonus shares, and may invest any sum so set aside in any manner and from time to time deal with and vary such investments and dispose of all
or any part thereof, and employ any such reserve or any part thereof in the business of the Company without being bound to keep the same separate from other assets of the Company, and may subdivide or re-designate any reserve or cancel the same
or apply the funds therein for another purpose, all as the Board of Directors may from time to time think fit.
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- 14 -
| 31. |
Exercise of Powers of Board of Directors
|
| 31.1 |
A meeting of the Board of Directors at which a quorum is present shall be competent to exercise all the authorities, powers and discretion vested in or exercisable by the Board of Directors.
|
| 31.2 |
A resolution proposed at any meeting of the Board of Directors shall be deemed adopted if approved by a majority of the Directors present, entitled to vote and voting thereon when such resolution is put to a vote.
|
| 31.3 |
The Board of Directors may adopt resolutions, without convening a meeting of the Board of Directors, in writing or in any other manner permitted by the Companies Law.
|
| 31.4 |
The Board of Directors may hold meetings by use of any means of communication on the condition that all participating directors can hear each other at the same time.
|
| 32. |
Delegation of Powers
|
| 32.1 |
The Board of Directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees (in these Articles referred to as a “Committee of the Board of Directors”, or
“Committee”), each consisting of one or more persons (who may or may not be Directors), and it may from time to time revoke such delegation or alter the composition of any such Committee. No regulation
imposed by the Board of Directors on any Committee and no resolution of the Board of Directors shall invalidate any prior act done or pursuant to a resolution by the Committee which would have been valid if such regulation or resolution of the
Board of Directors had not been adopted. The meeting and proceedings of any such Committee of the Board of Directors shall, mutatis mutandis, be governed by the provisions herein contained for
regulating the meetings of the Board of Directors, to the extent not superseded by any regulations adopted by the Board of Directors. Unless otherwise expressly prohibited by the Board of Directors or applicable law, in delegating powers to a
Committee of the Board of Directors, such Committee shall be empowered to further delegate such powers.
|
| 32.2 |
Without derogating from the provisions of Article 44, the Board of Directors may from time to time appoint a Secretary to the Company, as well as Officers, agents, employees and independent contractors, as the Board of Directors deems fit,
and may terminate the service of any such person. The Board of Directors may, subject to the provisions of the Companies Law, determine the powers and duties, as well as the salaries and compensation, of all such persons.
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- 15 -
| 32.3 |
The Board of Directors may from time to time, by power of attorney or otherwise, appoint any person, company, firm or body of persons to be the attorney or attorneys of the Company at law or in fact for such purposes(s) and with such powers,
authorities and discretions, and for such period and subject to such conditions, as it deems fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any
such attorney as the Board of Directors deems fit, and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him.
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| 33. |
Number of Directors
|
| 33.1 |
The Board of Directors shall consist of such number of Directors not less than three (3) nor more than 7 (seven), including External Directors (if any were elected), as may be fixed from time to time by the Board of Directors.
|
| 33.2 |
Notwithstanding anything to the contrary herein, this Article 33 may only be amended or replaced by a resolution adopted at a General Meeting by a Supermajority Resolution.
|
| 34. |
Election and Removal of Directors
|
| 34.1 |
The Directors, excluding the External Directors if any were elected, shall be classified, with respect to the term for which they each severally hold office, into three classes, as nearly equal in number as practicable, hereby designated as
Class I, Class II and Class III. The Board of Directors may assign members of the Board of Directors already in office to such classes at the time such classification becomes effective.
|
| 34.1.1 |
The term of office of the initial Class I directors shall expire at the first Annual General Meeting to be held in 2020,
|
| 34.1.2 |
The term of office of the initial Class II directors shall expire at the first Annual General Meeting following the Annual General Meeting referred to in clause (1) above, and
|
| 34.1.3 |
The term of office of the initial Class III directors shall expire at the first Annual General Meeting following the Annual General Meeting referred to in clause (2) above.
|
| 34.2 |
At each Annual General Meeting, commencing with the Annual General Meeting to be held in 2020, each of the nominees elected to replace the Directors of a Class whose term shall have expired at such Annual General Meeting shall be elected to
hold office until the third Annual General Meeting next succeeding his or her election.
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| 34.3 |
If the number of Directors (excluding External Directors, if any were elected) that constitutes the Board of Directors is hereafter changed, any newly created directorships or decrease in directorships shall be so apportioned by the Board of
Directors among the classes as to make all classes as nearly equal in number as is practicable.
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| 34.4 |
Prior to every General Meeting of the Company at which Directors are to be elected, and subject to clauses (1) and (7) of this Article, the Board of Directors (or a Committee thereof) shall select, by a resolution adopted by a majority of
the Board of Directors (or such Committee), a number of persons to be proposed to the Shareholders for election as Directors at such General Meeting (the “Nominees”).
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- 16 -
| 34.5 |
Any Proposing Shareholder requesting to include on the agenda of a General Meeting a nomination of a person to be proposed to the Shareholders for election as Director (such person, an “Alternate Nominee”),
may so request provided that it complies with this Article 34(5) and Article 20 and applicable law. In addition to any information required to be included in accordance with applicable law, such a
Proposal Request shall include information required pursuant to Article 20, and shall also set forth: (i) the name, address, telephone number, fax number and email address of the Alternate Nominee and all citizenships and residencies of the
Alternate Nominee; (ii) a description of all arrangements, relations or understandings between the Proposing Shareholder(s) or any of its affiliates and each Alternate Nominee; (iii) a declaration signed by the Alternate Nominee that he or she
consents to be named in the Company’s notices and proxy materials relating to the General Meeting, if provided or published, and, if elected, to serve on the Board of Directors and to be named in the Company’s disclosures and filings, (iv) a
declaration signed by each Alternate Nominee as required under the Companies Law and any other applicable law, including, for the avoidance of doubt, stock exchange rules and regulations, for the appointment of such an Alternate Nominee and an
undertaking that all of the information that is required under law, including, for the avoidance of doubt, stock exchange rules and regulations to be provided to the Company in connection with such an appointment has been provided (including,
information in respect of the Alternate Nominee as would be provided in response to the applicable disclosure requirements under Form 20-F or any other applicable form prescribed by the U.S. Securities and Exchange
Commission (the “SEC”); (v) a declaration made by the Alternate Nominee of whether he or she meets the criteria for a Director, an independent director and/or External Director of the Company under the
Companies Law and/or under any applicable law, regulation or stock exchange rules, and if not, then an explanation of why not; and (vi) any other information required at the time of submission of the Proposal Request by applicable law,
regulations or stock exchange rules. In addition, the Proposing Shareholder shall promptly provide any other information reasonably requested by the Company. The Board of Directors may refuse to acknowledge the nomination of any person not
made in compliance with the foregoing. The Company shall be entitled to publish any information provided by a Proposing Shareholder pursuant to this Article 34.5 and Article 20, and the Proposing Shareholder shall be responsible for the
accuracy and completeness thereof.
|
| 34.6 |
The Nominees or Alternate Nominees shall be elected by a resolution adopted at the General Meeting at which they are subject to election.
|
| 34.7 |
Notwithstanding anything to the contrary herein, this Article 34 and Article 37.5 may only be amended, replaced or suspended by a resolution adopted at a General Meeting by a Supermajority Resolution.
|
| 34.8 |
Notwithstanding anything to the contrary in these Articles, the election, qualification, removal or dismissal of External Directors, if so elected, shall be only in accordance with the applicable provisions set forth in the Companies Law.
|
- 17 -
| 35. |
Commencement of Directorship
Without derogating from Article 34, the term of office of a Director shall commence as of the date of his appointment or election, or on a later date if so specified in his appointment or
election.
|
| 36. |
Continuing Directors in the Event of Vacancies
The Board may at any time and from time to time appoint any person as a Director to fill a vacancy (whether such vacancy is due to a Director no longer serving or due to the number of
Directors serving being less than the maximum number stated in Article 33 hereof). In the event of one or more such vacancies in the Board of Directors, the continuing Directors may continue to act in every matter, provided, however, that if
they number less than the minimum number provided for pursuant to Article 33 hereof, they may only act in an emergency or to fill the office of director which has become vacant up to a number equal to the minimum number provided for pursuant
to Article 33 hereof, or in order to call a General Meeting of the Company for the purpose of electing Directors to fill any or all vacancies. The office of a Director that was appointed by the Board of Directors to fill any vacancy shall
only be for the remaining period of time during which the Director whose service has ended was filled would have held office, or in case of a vacancy due to the number of Directors serving being less than the maximum number stated in Article
33 hereof the Board of Directors shall determine at the time of appointment the class pursuant to Article 34 to which the additional Director shall be assigned.
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| 37. |
Vacation of Office
The office of a Director shall be vacated and he shall be dismissed or removed:
|
| 37.1 |
ipso facto, upon his death;
|
| 37.2 |
if he is prevented by applicable law from serving as a Director;
|
| 37.3 |
if the Board of Directors determines that due to his mental or physical state he is unable to serve as a director;
|
| 37.4 |
if his directorship expires pursuant to these Articles and/or applicable law;
|
| 37.5 |
by a resolution adopted at a General Meeting by a Supermajority Resolution. Such removal shall become effective on the date fixed in such resolution;
|
| 37.6 |
by his written resignation, such resignation becoming effective on the date fixed therein, or upon the delivery thereof to the Company, whichever is later; or
|
| 37.7 |
with respect to an External Director, if so elected, and notwithstanding anything to the contrary herein, only pursuant to applicable law.
|
| 38. |
Conflict of Interests; Approval of Related Party Transactions
Subject to the provisions of the Companies Law and these Articles, no Director shall be disqualified by virtue of his office from holding any office or place of profit in the Company or in
any company in which the Company shall be a shareholder or otherwise interested, or from contracting with the Company as vendor, purchaser or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf
of the Company in which any Director shall be in any way interested, be avoided, nor, other than as required under the Companies Law, shall any Director be liable to account to the Company for any profit arising from any such office or place
of profit or realized by any such contract or arrangement by reason only of such Director’s holding that office or of the fiduciary relations thereby established, but the nature of his interest, as well as any material fact or document, must
be disclosed by him at the meeting of the Board of Directors at which the contract or arrangement is first considered, if his interest then exists, or, in any other case, at no later than the first meeting of the Board of Directors after the
acquisition of his interest.
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| 39. |
Alternate Directors
|
| 39.1 |
Subject to the provisions of the Companies Law, a Director may, by written notice to the Company, appoint, remove or replace any person as an alternate for himself; provided that the appointment of such person shall have effect only upon and
subject to its being approved by the Board of Directors (in these Articles, an “Alternate Director”). Unless the appointing Director, by the instrument appointing an Alternate Director or by written
notice to the Company, limits such appointment to a specified period of time or restricts it to a specified meeting or action of the Board of Directors, or otherwise restricts its scope, the appointment shall be for all purposes, and for a
period of time concurrent with the term of the appointing Director.
|
| 39.2 |
Any notice to the Company pursuant to Article 39.1 shall be given in person to, or by sending the same by mail to the attention of the Chairperson of the Board of Directors at the principal office of the Company or to such other person or
place as the Board of Directors shall have determined for such purpose, and shall become effective on the date fixed therein, upon the receipt thereof by the Company (at the place as aforesaid) or upon the approval of the appointment by the
Board of Directors, whichever is later.
|
| 39.3 |
An Alternate Director shall have all the rights and obligations of the Director who appointed him, provided however, that (i) he may not in turn appoint an alternate for himself (unless the instrument appointing him otherwise expressly
provides), and (ii) an Alternate Director shall have no standing at any meeting of the Board of Directors or any Committee thereof while the Director who appointed him is present.
|
| 39.4 |
Any individual, who qualifies to be a member of the Board of Directors, may act as an Alternate Director. One person may not act as Alternate Director for several directors or if he is serving as a Director.
|
| 39.5 |
The office of an Alternate Director shall be vacated under the circumstances, mutatis mutandis, set forth in Article 37, and such office shall ipso facto be vacated if the office of the Director who appointed such Alternate Director is
vacated, for any reason.
|
Proceedings of the Board of Directors
| 40. |
Meetings
|
| 40.1 |
The Board of Directors may meet and adjourn its meetings and otherwise regulate such meetings and proceedings as the Board of Directors think fit.
|
| 40.2 |
Any Director may at any time, and the Secretary, upon the request of such Director, shall, convene a meeting of the Board of Directors, but not less than two (2) days’ notice shall be given of any meeting so convened, unless such notice is
waived in writing by all of the Directors as to a particular meeting or unless the matters to be discussed at such meeting are of such urgency and importance that notice ought reasonably to be waived under the circumstances.
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- 19 -
| 40.3 |
Notice of any such meeting shall be given orally, by telephone, in writing or by mail, email, electronic means or facsimile or such other means of delivery of notices as the Company may apply, from time to time.
|
| 40.4 |
Notwithstanding anything to the contrary herein, failure to deliver notice to a Director of any such meeting in the manner required hereby may be waived by such Director, and a meeting shall be deemed to have been duly convened
notwithstanding such defective notice if such failure or defect is waived by all Directors entitled to participate at such meeting to whom notice was not duly given as aforesaid. Without derogating from the foregoing, no Director present at
any time during a meeting of the Board of Directors shall be entitled to seek the cancellation or invalidation of any proceedings or resolutions adopted at such meeting on account of any defect in the notice of such meeting relating to the
date, time or the place thereof or the convening of the meeting.
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| 41. |
Quorum
Until otherwise unanimously decided by the Board of Directors, a quorum at a meeting of the Board of Directors shall be constituted by the presence in person or by any means of communication
of a majority of the Directors then in office who are lawfully entitled to participate and vote in the meeting. No business shall be transacted at a meeting of the Board of Directors unless the requisite quorum is present (in person or by
any means of communication) when the meeting first proceeds to business.
|
| 42. |
Chairperson of the Board of Directors
The Board of Directors shall, from time to time, elect one of its members to be the Chairperson of the Board of Directors, remove such Chairperson from office and appoint in his place. The
Chairperson of the Board of Directors shall preside at every meeting of the Board of Directors, but if there is no such Chairperson, or if at any meeting he is not present within fifteen (15) minutes of the time fixed for the meeting or if he
is unwilling to take the chair, the Directors present shall choose one of the Directors present at the meeting to be the Chairperson of such meeting. The office of Chairperson of the Board of Directors shall not, by itself, entitle the
holder to a second or casting vote. The Chief Executive Officer may also serve as Chairperson according to the limitations set out in applicable laws.
|
| 43. |
Validity of Acts Despite Defects
All acts done or transacted at any meeting of the Board of Directors, or of a Committee of the Board of Directors, or by any person(s) acting as Director(s), shall, notwithstanding that it
may afterwards be discovered that there was some defect in the appointment of the participants in such meeting or any of them or any person(s) acting as aforesaid, or that they or any of them were disqualified, be as valid as if there were no
such defect or disqualification.
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- 20 -
Chief Executive Officer
| 44. |
Chief Executive Officer
|
| 44.1 |
The Board of Directors shall from time to time appoint one or more persons, whether or not Directors, as Chief Executive Officer of the Company and may confer upon such person(s), and from time to time modify or revoke, such titles and such
duties and authorities of the Board of Directors as the Board of Directors may deem fit, subject to such limitations and restrictions as the Board of Directors may from time to time prescribe. Such appointment(s) may be either for a fixed term
or without any limitation of time, and the Board of Directors may from time to time (subject to any additional approvals required under, and the provisions of, the Companies Law and of any contract between any such person and the Company) fix
their salaries and compensation, remove or dismiss them from office and appoint another or others in his or their place or places.
|
| 44.2 |
Unless otherwise determined by the Board of Directors, the Chief Executive Officer shall have authority with respect to the management and operations of the Company in the ordinary course of business.
|
Minutes
| 45. |
Minutes
Any minutes of the General Meeting or the Board of Directors or any committee thereof, if purporting to be signed by the Chairperson of the General Meeting, the Board of Directors or a
committee thereof, as the case may be, or by the Chairperson of the next succeeding General Meeting, meeting of the Board of Directors or meeting of a committee thereof, as the case may be, shall constitute prima facie evidence of the matters
recorded therein.
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Dividends
| 46. |
Declaration of Dividends
The Board of Directors may from time declare, and cause the Company to pay, such dividend as may appear to the Board of Directors to be justified by the profits of the Company and as
permitted by the Companies Law. The Board of Directors shall determine the time for payment of such dividends and the record date for determining the Shareholders entitled thereto.
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| 47. |
Amount Payable by Way of Dividends
Subject to the provisions of these Articles and subject to the rights or conditions attached at that time to any share in the capital of the Company granting preferential, special or
deferred rights or not granting any rights with respect to dividends, any dividend paid by the Company shall be allocated among the Shareholders entitled thereto in proportion to their respective holdings of the shares in respect of which
such dividends are being paid.
|
| 48. |
Interest
No dividend shall carry interest as against the Company.
|
| 49. |
Capitalization of Profits, Reserves, etc
The Board of Directors may determine that the Company (i) may cause any moneys, investments, or other assets forming part of the undivided profits of the Company, standing to the credit of a
reserve fund, or to the credit of a reserve fund for the redemption of capital, or in the hands of the Company and available for dividends, or representing premiums received on the issuance of shares and standing to the credit of the share
premium account, to be capitalized and distributed among such of the Shareholders as would be entitled to receive the same if distributed by way of dividend and in the same proportion, on the footing that they become entitled thereto as
capital; and (ii) may cause such distribution or payment to be accepted by such Shareholders in full satisfaction of their interest in the said capitalized sum.
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- 21 -
| 50. |
Implementation of Powers
For the purpose of giving full effect to any resolution under Article 49, the Board of Directors may settle any difficulty which may arise in regard to the distribution as it thinks
expedient, and, in particular, may fix the value for distribution of any specific assets and may determine that cash payments shall be made to any Shareholders upon the footing of the value so fixed, or that fractions of less value than a
certain determined value may be disregarded in order to adjust the rights of all persons, and may vest any such cash, shares, debentures, debenture stock or specific assets in trustees upon such trusts for the persons entitled to the dividend
or capitalized fund as may seem expedient to the Board of Directors. Where requisite, a proper contract shall be made in accordance with Section 291 of the Companies Law, and the Board of Directors may appoint any person to sign such
contract on behalf of the persons entitled to the dividend or capitalized fund.
|
| 51. |
Unclaimed Dividends
All unclaimed dividends or other moneys payable in respect of a share may be invested or otherwise made use of by the Board of Directors for the benefit of the Company until claimed. The
payment by the Directors of any unclaimed dividend or such other moneys into a separate account shall not constitute the Company a trustee in respect thereof, and any dividend unclaimed after a period of seven (7) years from the date of
declaration of such dividend, and any such other moneys unclaimed after a like period from the date the same were payable, shall be forfeited and shall revert to the Company, provided, however, that the Board of Directors may, at its
discretion, cause the Company to pay any such dividend or such other moneys, or any part thereof, to a person who would have been entitled thereto had the same not reverted to the Company. The principal (and only the principal) of any
unclaimed dividend of such other moneys shall be, if claimed, paid to a person entitled thereto.
|
| 52. |
Mechanics of Payment
Any dividend or other moneys payable in cash in respect of a share may be paid by check or payment order sent through the post to, or left at, the registered address of the person entitled
thereto or by transfer to a bank account specified by such person (or, if two or more persons are registered as joint holders of such share or are entitled jointly thereto in consequence of the death or bankruptcy of the holder or otherwise,
to the joint holder whose name is registered first in the Register of Shareholders or his bank account or the person who the Company may then recognize as the owner thereof or entitled thereto under Article 16 or 17 hereof, as applicable, or
such person’s bank account), or to such person and at such other address as the person entitled thereto may by writing direct, or in any other manner the Board of Directors deems appropriate. Every such check or warrant or other method of
payment shall be made payable to the order of the person to whom it is sent, or to such person as the person entitled thereto as aforesaid may direct, and payment of the check or warrant by the banker upon whom it is drawn shall be a good
discharge to the Company.
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- 22 -
| 53. |
Receipt from a Joint Holder
If two or more persons are registered as joint holders of any share, or are entitled jointly thereto in consequence of the death or bankruptcy of the holder or otherwise, any one of them may give effectual
receipts for any dividend or other moneys payable or property distributable in respect of such share.
|
Accounts
| 54. |
Books of Account
The Company’s books of account shall be kept at the Office of the Company, or at such other place or places as the Board of Directors may think fit, and they shall always be open to
inspection by all Directors. No shareholder, not being a Director, shall have any right to inspect any account or book or other similar document of the Company, except as conferred by law or authorized by the Board of Directors. The Company
shall make copies of its annual financial statements available for inspection by the Shareholders at the principal offices of the Company. The Company shall not be required to send copies of its annual financial statements to Shareholders.
|
| 55. |
Auditors
The appointment, authorities, rights and duties of the auditor(s) of the Company, shall be regulated by applicable law, provided, however, that in exercising its authority to fix the
remuneration of the auditor(s), the Shareholders in a General Meeting may act (and in the absence of any action in connection therewith shall be deemed to have so acted) to authorize the Board of Directors (with right of delegation to a
Committee or management) to fix such remuneration subject to such criteria or standards, and if no such criteria or standards are so provided, such remuneration shall be fixed in an amount commensurate with the volume and nature of the
services rendered by such auditor(s).
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Supplementary Registers
| 56. |
Supplementary Registers
Subject to and in accordance with the provisions of Sections 138 and 139 of the Companies Law, the Company may cause supplementary registers to be kept in any place outside Israel as the
Board of Directors may think fit, and, subject to all applicable requirements of law, the Board of Directors may from time to time adopt such rules and procedures as it may think fit in connection with the keeping of such branch registers.
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- 23 -
Exemption, Indemnity and Insurance
| 57. |
Insurance
Subject to the provisions of the Companies Law, and to the extent applicable, the Securities Law and the IEC Law, with regard to such matters, the Company may enter into a contract for the
insurance of the liability, in whole or in part, of any of its Office Holders imposed on such Office Holder due to an act performed by or an omission of the Office Holder in the Office Holder’s capacity as an Office Holder of the Company
arising from any matter permitted by law, including the following:
|
| 57.1 |
a breach of duty of care to the Company or to any other person, to the extent such a breach arises out of the negligent conduct of the Office Holder;
|
| 57.2 |
a breach of his duty of loyalty to the Company, provided that the Office Holder acted in good faith and had reasonable grounds to assume that the act would not harm the Company;
|
| 57.3 |
a financial liability imposed on such Office Holder in favor of a third party;
|
| 57.4 |
expenses incurred by the Office Holder with respect to proceedings held pursuant to certain provisions of the IEC Law;
|
| 57.5 |
a monetary liability imposed on the Office Holder in favor of an injured party at an Administrative Procedure pursuant to Section 52(54)(a)(1)(a) of the Securities Law; and
|
| 57.6 |
expenses incurred by an Office Holder in connection with an Administrative Procedure, including reasonable litigation expenses and reasonable attorneys’ fees.
|
| 58. |
Indemnity
|
| 58.1 |
Subject to the provisions of the Companies Law, and to the extent applicable, the Securities Law and the IEC Law, the Company may retroactively indemnify an Office Holder of the Company with respect to the following liabilities, payments and
expenses, provided that such liabilities, payments or expenses were imposed on such Office Holder or incurred by such Office Holder for acts performed or omissions committed by him or her as an Office Holder:
|
| 58.1.1 |
a financial liability imposed on an Office Holder in favor of another person by any court judgment, including a judgment given as a result of a settlement or an arbitrator’s award which has been confirmed by a court in respect of an act
performed by the Office Holder;
|
| 58.1.2 |
reasonable litigation expenses, including attorneys’ fees, expended by the Office Holder (A) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding,
provided that (1) no indictment (as defined in the Companies Law) was filed against such Office Holder as a result of such investigation or proceeding; and (2) no financial liability in lieu of a criminal proceeding (as defined in the Companies
Law) was imposed upon him or her as a result of such investigation or proceeding or if such financial liability was imposed, it was imposed with respect to an offence that does not require proof of criminal intent; and (B) in connection with a
monetary sanction;
|
| 58.1.3 |
reasonable litigation costs, including attorney’s fees, expended by an Office Holder or which were imposed on an Office Holder by a court in proceedings filed against the Office Holder by the Company or in its name or by any other person or
in a criminal charge in respect of which the Office Holder was acquitted or in a criminal charge in respect of which the Office Holder was convicted for an offence which did not require proof of criminal intent;
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- 24 -
| 58.1.4 |
a financial obligation imposed upon an Office Holder and reasonable litigation costs, including attorney’s fees, expended by an Office Holder as a result of an Administrative Procedure under the Securities Law, instituted against an Office
Holder. Without derogating from the generality of the foregoing, such obligation or expenses will include a payment which an Office Holder is obligated to make to an injured party as set forth in Section 52(54)(a)(1)(a) of the Securities Law
and expenses that an Office Holder incurred in connection with a proceeding under Chapters H’3, H’4 or I’1 of the Securities Law; and
|
| 58.1.5 |
any other event, occurrence, matter or circumstances under any law with respect to which the Company may, or will be able to, indemnify an Office Holder, and to the extent such law requires the inclusion of a provision permitting such
indemnity in these Articles, then such provision is deemed to be included and incorporated herein by reference (including, without limitation, in accordance with Section 56h(b)(1) of the Securities Law, if and to the extent applicable, and
Section 50P(b)(2) of the IEC Law).
|
| 58.2 |
Subject to the provisions of the Companies Law, the Company may undertake to indemnify an Office Holder, in advance, with respect to those liabilities and expenses described in the following Articles:
|
| 58.2.1 |
Sub-Article 58.1.2 to 58.1.5; and;
|
| 58.2.2 |
Sub-Article 58.1.1, provided that:
|
| 58.2.2.1. |
the undertaking to indemnify is limited to such events which the Board of Directors shall deem to be likely to occur in light of the operations of the Company at the time that the undertaking to indemnify is made and for such amounts or
criterion which the Board of Directors may, at the time of the giving of such undertaking to indemnify, deem to be reasonable under the circumstances; and
|
| 58.2.2.2. |
the undertaking to indemnify shall set forth such events which the Board of Directors shall deem to be likely to occur in light of the operations of the Company at the time that the undertaking to indemnify is made, and the amounts and/or
criterion which the Board of Directors may, at the time of the giving of such undertaking to indemnify, deem to be reasonable under the circumstances.
|
| 59. |
Exemption
Subject to the provisions of the Companies Law, the Company may, to the maximum extent permitted by law exempt and release, in advance, any Office Holder from any liability to the Company
for damages arising out of a breach of a duty of care towards the Company.
|
| 60. |
General
|
| 60.1 |
Any amendment to the Companies Law adversely affecting the right of any Office Holder to be indemnified or insured pursuant to Articles 57 to 59 and any amendments to Articles 57 to 59 shall be prospective in effect, and shall not affect the
Company’s obligation or ability to indemnify or insure an Office Holder for any act or omission occurring prior to such amendment, unless otherwise provided by applicable law.
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- 25 -
| 60.2 |
The provisions of Articles 57 to 59 : (i) shall apply to the maximum extent permitted by law (including, the Companies Law, the Securities Law and the IEC Law); and (ii) are not intended, and shall not be interpreted so as to restrict the
Company, in any manner, in respect of the procurement of insurance and/or in respect of indemnification (whether in advance or retroactively) and/or exemption, in favor of any person who is not an Office Holder, including, without limitation,
any employee, agent, consultant or contractor of the Company who is not an Office Holder; and/or any Office Holder to the extent that such insurance and/or indemnification is not specifically prohibited under law.
|
Winding Up
| 61. |
Winding Up
If the Company is wound up, then, subject to applicable law and to the rights of the holders of shares with special rights upon winding up, the assets of the Company available for
distribution among the Shareholders shall be distributed to them in proportion to the nominal value of their respective holdings of the shares in respect of which such distribution is being made.
|
Notices
| 62. |
Notices
|
| 62.1 |
Any written notice or other document may be served by the Company upon any Shareholder either personally, by facsimile, email or other electronic transmission, or by sending it by prepaid mail (airmail if sent internationally) addressed to
such Shareholder at his address as described in the Register of Shareholders or such other address as he may have designated in writing for the receipt of notices and other documents.
|
| 62.2 |
Any written notice or other document may be served by any Shareholder upon the Company by tendering the same in person to the Chief Executive Officer of the Company at the principal office of the Company, by facsimile transmission, email or
by sending it by prepaid registered mail (airmail if posted outside Israel) to the Company at its Office.
|
| 62.3 |
Any such notice or other document shall be deemed to have been served:
|
| 62.3.1 |
in the case of mailing, forty-eight (48) hours after it has been posted, or when actually received by the addressee if sooner than forty-eight hours after it has been posted,
|
| 62.3.2 |
in the case of overnight air courier, on the next business day following the day sent, with receipt confirmed by the courier, or when actually received by the addressee if sooner than three business days after it has been sent;
|
| 62.3.3 |
in the case of personal delivery, when actually tendered in person, to such addressee, or
|
| 62.3.4 |
in the case of facsimile, email or other electronic transmission, on the first business day (during normal business hours in place of addressee) on which the sender receives automatic electronic confirmation by the addressee’s facsimile
machine that such notice was received by the addressee or delivery confirmation from the addressee’s email or other communication server.
|
- 26 -
| 62.4 |
If a notice is, in fact, received by the addressee, it shall be deemed to have been duly served, when received, notwithstanding that it was defectively addressed or failed, in some other respect, to comply with the provisions of this Article
62.
|
| 62.5 |
All notices to be given to the Shareholders shall, with respect to any share to which persons are jointly entitled, be given to whichever of such persons is named first in the Register of Shareholders, and any notice so given shall be
sufficient notice to the holders of such share.
|
| 62.6 |
Any Shareholder whose address is not set forth in the Register of Shareholders, and who shall not have designated in writing an address for the receipt of notices, shall not be entitled to receive any notice from the Company.
|
| 62.7 |
Notwithstanding anything to the contrary contained herein, notice by the Company of a General Meeting, containing the information required by applicable law and these Articles to be set forth therein, which is published, within the time
otherwise required for giving notice of such meeting, in either or several of the following manners (as applicable) shall be deemed to be notice of such meeting duly given, for the purposes of these Articles, to any Shareholder whose address
as registered in the Register of Shareholders (or as designated in writing for the receipt of notices and other documents) is located either inside or outside the State of Israel:
|
| 62.7.1 |
if the Company’s shares are then listed for trading on a national securities exchange in the United States or quoted in an over-the-counter market in the United States, publication of notice of a General Meeting by a Report of Foreign
Private Issuer on Form 6-K (or an equivalent form subsequently adopted by the SEC) furnished to the SEC; and/or
|
| 62.7.2 |
on the Company’s internet site.
|
| 62.8 |
The mailing or publication date and the record date and/or date of the meeting (as applicable) shall be counted among the days comprising any notice period under the Companies Law and the regulations thereunder.
|
* * *
- 27 -
Exhibit 2.1
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
As of December 31, 2025, InMode Ltd. had one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: our ordinary shares. References
herein to “we,” “us,” “our” and the “Company” refer to InMode Ltd. and not to any of its subsidiaries. The following description may not contain all of the information that is important to you, and we therefore refer you to our amended and restated
articles of association, a copy of which was filed on February 10, 2026, with the Securities and Exchange Commission (“SEC”) as an exhibit 1.1 to Form 20-F (file no. 001-39016).
Registration Number and Purposes
Our registration number with the Israeli Companies Registrar is 51-407361-8. Pursuant to Section 3 of our articles of association, our objectives are to engage in any lawful activity.
Share capital
Our authorized share capital consists of 200,000,000 ordinary shares, par value NIS 0.01 per ordinary share.
All of our outstanding ordinary shares are validly issued, fully paid and non-assessable. Our ordinary shares are not redeemable and do not have any preemptive rights.
Our board of directors may determine the issue prices and terms for such shares or other securities, and may further determine any other provision relating to such issue of shares
or securities. We may also issue and redeem redeemable securities on such terms and in such manner as our board of directors shall determine.
Transfer of shares and Notices
Under the Companies Law, shareholders’ meetings require prior notice of at least 21 days, and if the agenda of the meeting includes certain matters prescribed under the Companies
Law and the regulations promulgated thereunder, among others, the appointment or removal of directors, the approval of related party transactions, or an approval of a merger, notice must be provided at least 35 days prior to the meeting.
Our fully paid ordinary shares are issued in registered form and may be freely transferred under our amended and restated articles of association, unless the transfer is restricted
or prohibited by another instrument, applicable law or the rules of a stock exchange on which the ordinary shares are listed for trade. The ownership or voting of our ordinary shares by non-residents of Israel is not restricted in any way by our
amended and restated articles of association or the laws of the State of Israel, except for ownership by nationals of some countries that are, or have been, in a state of war with Israel.
Election of directors
Under our amended and restated articles of association, our board of directors must consist of not less than three but no more than seven directors. Pursuant to our amended and
restated articles of association, each of our directors shall be appointed by a simple majority vote of holders of our ordinary shares, participating and voting at an annual general meeting of our shareholders. In addition, our directors are divided
into three classes, one class being elected each year at the annual general meeting of our shareholders, and serve on our board of directors until the third annual general meeting following such election or re-election or until they are removed by a
vote of a special majority of 2/3 (two thirds) of those votes cast excluding abstaining votes or upon the occurrence of certain events, in accordance with the Companies Law and our amended and restated articles of association. In addition, our
amended and restated articles of association allow our board of directors to fill vacancies on the board of directors or to appoint new directors up to the maximum number of directors permitted under our amended and restated articles of association.
Any director so appointed serves for a term of office equal to the remaining period of the term of office of the director whose office has been vacated (or in the case of any new director, for a term of office according to the class to which such
director was assigned upon appointment).
Dividend and liquidation rights
We may declare a dividend to be paid to the holders of our ordinary shares in proportion to their respective shareholdings. Under the Companies Law, dividend distributions are
determined by the board of directors and do not require the approval of the shareholders of a company unless the company’s articles of association provide otherwise. Our amended and restated articles of association do not require shareholder approval
of a dividend distribution and provide that dividend distributions may be determined by our board of directors.
Pursuant to the Companies Law, the distribution amount is limited to the greater of retained earnings or earnings generated over the previous two years, according to our then last
reviewed or audited financial statements (less the amount of previously distributed dividends, if not reduced from the earnings), provided that the end of the period to which the financial statements relate is not more than six months prior to the
date of the distribution. If we do not meet such criteria, then we may distribute dividends only with court approval. In each case, we are only permitted to distribute a dividend if our board of directors and, if applicable, the court determines that
there is no reasonable concern that payment of the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due. As a company listed on an exchange outside of Israel, however, court approval is not required if
the proposed distribution is in the form of an equity repurchase, provided that we notify our creditors of the proposed equity repurchase and allow such creditors an opportunity to initiate a court proceeding to review the repurchase. If within 30
days such creditors do not file an objection, then we may proceed with the repurchase without obtaining court approval.
In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our ordinary shares in proportion to their
shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.
Voting rights
All ordinary shares have identical voting and other rights in all respects.
Quorum
Under the Companies Law, an annual general meeting of our shareholders should be held once every calendar year, but no later than 15 months from the date of the previous annual
general meeting. The quorum required for a general meeting of shareholders consists of at least two shareholders present in person or by proxy holding at least 25% of the voting power in the Company. A meeting adjourned for lack of a quorum generally
is adjourned to the same day in the following week at the same time and place (without requirement of additional notification to the shareholders) or any time and place as the directors designate in a notice to the shareholders. Under our amended and
restated articles of association, the required quorum for the reconvened adjourned meeting will be, with some exceptions, at least two shareholders holding any number of the voting rights in the Company.
Vote requirements
Holders of ordinary shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders. This right may be changed if shares with special voting
rights are authorized in the future. Our amended and restated articles of association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required under the Companies Law or our articles of association. A
shareholder may vote in general meetings in person, by proxy or by a written ballot.
Shareholders Meetings
An annual meeting should be convened at least once every calendar year, and no later than 15 months after the preceding annual meeting, to review the Company’s financial statements
and to transact any other business required pursuant to the Articles or to the Companies Law, and any other matter which the board of directors places on the agenda of the annual meeting, at a time and place that the board of directors will
determine. Under our Articles, the Companies Law, and the regulations promulgated thereunder, a special meeting may be called by the board of directors and at the demand of any of the following: (i) any two directors; (ii) one-quarter of the
directors then serving; and (iii) as a company listed on an exchange in the U.S., one or more shareholders holding, in the aggregate, either (a) 10% or more of our outstanding issued shares and 1% or more of our outstanding voting power or (b) 10% or
more of our outstanding voting power.
Under Israeli law, one or more shareholders holding at least 1% of the voting rights at the general meeting of the shareholders may request that the board of directors include a
matter in the agenda of a general meeting of the shareholders to be convened in the future, provided that it is appropriate to discuss such a matter at the general meeting of the shareholders. Notwithstanding the foregoing, as a company listed on an
exchange outside of Israel, a matter relating to the appointment or removal of a director may only be requested by one or more shareholders holding at least 5% of the voting rights at the general meeting of the shareholders. Our Articles contain
procedural guidelines and disclosure items with respect to the submission of shareholder proposals for general meetings.
Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings of shareholders are the
shareholders of record on a date to be decided by our board of directors, which, as a company listed on an exchange outside Israel, may be between 4 and 60 days prior to the date of the meeting.
According to the Articles, the quorum required for an ordinary meeting of shareholders is at least two shareholders present in person or by proxy who together hold or represent in
the aggregate 25% or more of the voting power, and a meeting adjourned for lack of a quorum is reconvened one week thereafter (on the same day) at the same time and place or to such other day, time and place as our board of directors may indicate in
a notice to the shareholders, with the quorum at the reconvened meeting being (a) in the case of a meeting convened upon a shareholder requisition under the Companies Law, one or more shareholders present in person or by proxy holding the number of
shares required to make such a requisition, and (b) in any other case, any shareholder present in person or by proxy regardless of the number of shares represented.
The Companies Law and regulations determine that prior notice of no less than 21 days should be given to the company’s shareholders, prior to convening a meeting. In the event that
the issue to be resolved is an issue subject to the Israeli proxy rules, a notice of no less than 35 days should be given to the company’s shareholders. In some cases, a prior notice of not less than 14 days may be given to the company’s
shareholders.
Access to corporate records
Under the Companies Law, all shareholders generally have the right to review minutes of our general meetings, our shareholder register, including with respect to material
shareholders, our articles of association, our financial statements, other documents as provided in the Companies Law, and any document we are required by law to file publicly with the Israeli Companies Registrar or the Israeli Securities Authority.
Any shareholder who specifies the purpose of its request may request to review any document in our possession that relates to any action or transaction with a related party which requires shareholder approval under the Companies Law. We may deny a
request to review a document if we determine that the request was not made in good faith, that the document contains a commercial secret or a patent or that the document’s disclosure may otherwise impair our interests.
Acquisitions under Israeli law
Merger
The Companies Law permits merger transactions with the approval of each party’s board of directors and shareholders (unless certain requirements described under the Companies Law
are met). In accordance with the Companies Law, a merger may be approved at a shareholders meeting by a majority of the voting power represented at the meeting, in person or by proxy, and voting on that resolution and, in the case of the target
company, a majority vote of each class of its shares, voted on the proposed merger at a shareholders meeting. For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the votes of
shares represented at the meeting of shareholders that are held by parties other than the other party to the merger, or by any person (or group of persons acting in concert) who holds (or hold, as the case may be) 25% or more of the voting rights or
the rights to appoint 25% or more of the directors of the other party, vote against the merger. If, however, the merger involves a merger with a company’s own controlling shareholder or if the controlling shareholder has a personal interest in the
merger, then the merger is instead subject to the same special majority approval that governs all extraordinary transactions with controlling shareholders.
If the transaction would have been approved by the shareholders of a merging company but for the separate approval of each class or the exclusion of the votes of certain
shareholders as provided above, a court may still approve the merger upon the petition of holders of at least 25% of the voting rights of a company. For such petition to be granted, the court must find that the merger is fair and reasonable, taking
into account the respective values assigned to each of the parties to the merger and the consideration offered to the shareholders of the target company.
Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that, as a
result of the merger, the surviving company will be unable to satisfy the obligations of the merging entities, and may further give instructions in order to secure the rights of creditors. Moreover, a merger may not be completed until at least 50
days have passed from the time that the merger proposals were filed with the Israeli Registrar of Companies and 30 days have passed since the merger was approved by the shareholders of each merging company.
Special Tender Offer
The Companies Law requires a purchaser to conduct a special tender offer in order to purchase shares in publicly held companies, if as a result of the purchase the purchaser would
(i) become a holder of 25% or more of the voting rights in a company in which no other shareholder holds at least 25% of the voting rights, or (ii) become a holder of more than 45% of the voting rights in a company, if there is no other shareholder
who holds more than 45% of the voting rights in the company, in each case, subject to certain exceptions.
A special tender offer must be extended to all shareholders, but the offeror is not required to purchase shares representing more than 5% of the voting power attached to the
company’s outstanding shares, regardless of how many shares are tendered by shareholders. In general, a special tender offer may be consummated only if (i) at least 5% of the voting power of the company’s outstanding shares will be acquired by the
offeror and (ii) the number of shares tendered in the offer exceeds the number of shares whose holders objected to the offer (excluding the purchaser, controlling shareholders, holders of 25% or more of the voting rights in the company or any person
having a personal interest in the acceptance of the tender offer or any other person acting on their behalf, including relatives and entities under such person’s control). If a special tender offer is accepted, then the purchaser or any person or
entity controlling it or under common control with the purchaser or such controlling person or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger with the target company for
a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial special tender offer.
Full Tender Offer
Under the Companies Law, a person may not purchase shares of an Israeli public company if, following the purchase of shares, the purchaser would hold more than 90% of the company’s
shares or of any class of shares, unless the purchaser makes a tender offer to purchase all of the company’s shares or all the shares of the particular class, as applicable. If the shareholders who do not accept the offer hold less than 5% of the
issued and outstanding share capital of the company or of the applicable class, and more than half of the shareholders who do not have a personal interest in the offer accept the offer, all of the shares that the acquirer offered to purchase will be
transferred to the acquirer by operation of law.
However, a tender offer will also be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the
applicable class of shares. The foregoing also applies to the acquisition of voting rights.
Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder accepted the tender offer or not, may,
within six months from the date of acceptance of the tender offer, petition an Israeli court to determine whether the tender offer was for less than fair value and that the fair value should be paid as determined by the court. However, under certain
conditions, the offeror may include in the terms of the tender offer that an offeree who accepted the offer will not be entitled to petition the Israeli court as described above.
If (a) the shareholders who did not respond or accept the tender offer hold at least 5% of the issued and outstanding share capital of the company or of the applicable class or
the shareholders who accept the offer constitute less than a majority of the offerees that do not have a personal interest in the acceptance of the tender offer, or (b) the shareholders who did not accept the tender offer hold 2% or more of the
issued and outstanding share capital of the company (or of the applicable class), the acquirer may not acquire shares of the company that will increase its holdings to more than 90% of the company’s issued and outstanding share capital or of the
applicable class from shareholders who accepted the tender offer.
Shares purchased in contradiction to the tender offer rules under the Companies Law will have no rights and will become dormant shares.
Anti-takeover measures
The Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including shares providing certain preferred or
additional rights to voting, distributions or other matters and shares having preemptive rights. Currently, we do not have any authorized or issued shares other than ordinary shares. In the future, if we do create and issue a class of shares other
than ordinary shares, such class of shares, depending on the specific rights that may be attached to them, may delay or prevent a takeover or otherwise prevent our shareholders from realizing a potential premium over the market value of their
ordinary shares. The authorization of a new class of shares will require an amendment to our articles of association which requires the prior approval of a majority of our ordinary shares represented and voting at a general meeting. Shareholders
voting at such a meeting will be subject to the restrictions under the Companies Law as described under “Vote Requirements”.
Tax Law
Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. For
example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of
a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect
to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. These provisions could delay, prevent or impede an acquisition of us or
our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.
Changes in capital
Our amended and restated articles of association enable us to increase or reduce our share capital. Any such changes are subject to the provisions of the Companies Law and must be
approved by a resolution duly passed by our shareholders at a general meeting. In addition, transactions that have the effect of reducing capital, such as the distribution of dividends in the absence of sufficient retained earnings or profits require
the approval of both our board of directors and an Israeli court.
Transfer agent and registrar
We have engaged American Stock Transfer & Trust Company]to act as the transfer agent and registrar for our ordinary shares.
Listing
Our ordinary shares are listed on the Nasdaq Global Select Market under the symbol “INMD.”
Exhibit 8.1
InMode Ltd.
List of Subsidiaries
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Subsidiary
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Jurisdiction of Incorporation
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Invasix Inc.
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Delaware, USA
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Invasix Corp.
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Canada
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InMode Innovations Ltd.
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Israel
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Invasix UK Ltd.
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United Kingdom
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InMode Japan KK
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Japan
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Invasix Iberia S.L.
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Spain
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Guangzhou InMode Medical Technology Ltd.
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China
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InMode India Private Limited.
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India
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InMode Australia Pty Ltd.
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Australia
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IMD France EURL.
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France
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InMode Italy S.r.l.
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Italy
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InMode Germany GmbH.
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Germany
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InMode (Thailand) Ltd.
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Thailand
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Invasix SAS.
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Argentina
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InMode Manufacturing Ltd.
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Israel
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Exhibit 12.1
Certification of the Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Section 302 of the Sarbanes-Oxley Act of 2002
I, Moshe Mizrahy, Chief Executive Officer of InMode Ltd. (the “Company”), certify that:
| 1. |
I have reviewed this Annual Report on Form 20-F of the Company;
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| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for,
the periods presented in this report;
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| 4. |
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
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| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| (b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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| (c) |
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
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| (d) |
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting; and
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| 5. |
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or
persons performing the equivalent functions);
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report
financial information; and
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| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
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Dated: February 10, 2026
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/s/ Moshe Mizrahy |
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By: Moshe Mizrahy
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Title: Chief Executive Officer
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Exhibit 12.2
Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Section 302 of the Sarbanes-Oxley Act of 2002
I, Yair Malca, Chief Financial Officer of InMode Ltd. (the “Company”), certify that:
I have reviewed this Annual Report on Form 20-F of the Company;
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for,
the periods presented in this report;
|
| 4. |
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
|
| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| (b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| (c) |
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
|
| (d) |
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting; and
|
| 5. |
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or
persons performing the equivalent functions);
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report
financial information; and
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
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February 10, 2026
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/s/ Yair Malca |
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Yair Malca
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Chief Financial Officer
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(principal financial officer)
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Exhibit 13.1
Certification of Principal Executive Officer Pursuant to
18 U.S.C. Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
18 U.S.C. Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section §1350, as adopted pursuant to Section § 906 of the Sarbanes-Oxley Act of 2002, I, Moshe Mizrahy, Chief Executive Officer of InMode Ltd. (the
“Company”), hereby certify, to my knowledge, that:
| 1. |
The Annual Report on Form 20-F for the year ended December 31, 2025 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 10, 2026
| /s/ Moshe Mizrahy | |
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Moshe Mizrahy
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|
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Chief Executive Officer
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Exhibit 13.2
Certification of Principal Financial Officer Pursuant to
18 U.S.C. Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
18 U.S.C. Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Yair Malca, Chief Financial Officer of InMode Ltd. (the “Company”),
hereby certify, to my knowledge, that:
| 1. |
The Annual Report on Form 20-F for the year ended December 31, 2025 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: February 10, 2026
| /s/ Yair Malca | |
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Yair Malca
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Chief Financial Officer
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Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-233873, 333-236477, 333-252935, 333-262617, 333-269749 and 333-284679) of InMode Ltd. of our
report dated February 10, 2026 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ Kesselman & Kesselman
Certified Public Accountants (Isr.)
A member firm of PricewaterhouseCoopers International Limited
Tel-Aviv, Israel
February 10, 2026