SEC Form 20-F filed by InMode Ltd.
Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Accelerated filer ☐
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Non-accelerated filer ☐
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Emerging growth company
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International Financial Reporting Standards as
issued by the International Accounting Standards Board ☐
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Other ☐
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references to “InMode,” the “Company,” “us,” “we” and “our” refer to
InMode Ltd., an Israeli company, and its consolidated subsidiaries; |
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references to “ordinary shares,” “our shares” and similar expressions refer to the Company’s ordinary
shares; |
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references to “dollars,” “U.S. dollars” and “$” are to U.S. Dollars; |
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references to “shekels” and “NIS” are to New Israeli Shekels, the Israeli currency; |
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references to the “Companies Law” are to Israel’s Companies Law, 5759-1999, as amended; |
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references to the “SEC” are to the U.S. Securities and Exchange Commission; and |
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references to “U.S. GAAP” are to U.S. generally accepted accounting principles. |
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our ability to identify and penetrate new markets for our products and technology; |
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our ability to innovate, develop and commercialize our existing and new products and to expand beyond our traditional customer base;
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our ability to obtain and maintain regulatory clearances; |
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the impact of the political, economic and military instability in Israel and the latest Israel-Hamas war on our ability to operate
and develop, manufacture and deliver products and components; |
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our expectation regarding the safety and efficacy of our products; |
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the commercial experience of our management team; |
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our commercialization, marketing and manufacturing capabilities and strategy; |
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our estimates regarding the potential market opportunity for our products; |
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developments and projections relating to our competitors or our industry; |
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our ability to differentiate and distinguish our products from those of our competitors; |
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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
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our sales and marketing capabilities and strategy in the United States and internationally; |
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the implementation of our business model, strategic plans for our business, products and technology; |
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our ability to attract or retain key personnel; |
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the impact of climate-related events and increasing regulatory requirements and security on our operating costs and business operations;
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our intellectual property portfolio and position and our ability to protect our intellectual property rights; and |
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our assessment of the impact to us of any third-party litigation claiming patent infringement. |
A. |
[Reserved] |
B. |
Capitalization and Indebtedness |
C. |
Reasons for the Offer and Use of Proceeds |
D. |
Risk Factors |
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our success depends upon market acceptance of our products; |
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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; |
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the success and continued development of our products depends, in part, upon maintaining strong relationships with physicians and
other healthcare professionals; |
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the impact of the political, economic and military instability in Israel and the latest Israel-Hamas war could impede our ability
to operate and develop, manufacture and deliver products and components and harm our financial results; |
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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; |
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the failure to attract and retain key personnel could adversely affect our business; |
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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; |
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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 traditional customer base, and our revenues and operating results could suffer; |
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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; |
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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; |
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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; |
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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; |
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our operating costs and business operations could be adversely affected by climate-related events and increasing regulatory requirements
and security; |
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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 |
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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. |
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continue to further penetrate our existing, traditional 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; |
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expand our customer base to include non-traditional customers, such as ear, nose and throat physicians, or ENTs, ophthalmologists,
general practitioners and aesthetic clinicians; |
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leverage our existing technology to expand into new minimally invasive and non-invasive applications that either add to or significantly
improve our current products; |
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increase our sales presence to target and expand our market globally; |
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actively pursue business development opportunities, including potential acquisitions and strategic partnerships to augment our product
and technology portfolio; and |
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expand and maintain our intellectual property and patent portfolio. |
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consumer disposable income and access to consumer credit; |
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the cost of procedures performed using our products; |
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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; |
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the success of our sales and marketing efforts; |
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the education of our customers and patients on the benefits and uses of our products compared to competitors’ products and
technologies; and |
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consumer confidence, which may be impacted by economic and political conditions. |
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implementing appropriate operational and financial systems; |
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expanding our sales and marketing infrastructure and capabilities; |
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ensuring compliance with applicable Food and Drug Administration, or FDA, and other regulatory requirements; |
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providing adequate training and supervision to maintain high quality standards; and |
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preserving our culture and values. |
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customer adoption of our products; |
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the willingness of individuals to pay directly for aesthetic medical procedures in light of the lack of reimbursement by third-party
payors; |
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continued availability of attractive equipment leasing terms for our customers, which may be negatively influenced by interest rate
increases; |
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the impact of the political, economic and military instability in Israel and the latest Israel-Hamas war; |
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changes in our ability to obtain and maintain regulatory approvals and maintain compliance with applicable regulatory requirements;
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actual or perceived breaches of, or failures relating to, privacy, data protection or data security; |
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positive or negative coverage in the media or clinical publications of our products or products of our competitors or industry;
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increases in the length of our sales cycle; |
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performance of our independent distributors; |
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delays in, or failure of, product and component deliveries by our subcontractors and suppliers;• |
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the impact on our operating costs and business operations by climate-related events and increasing regulatory requirements and security;
and |
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the impact of global health crises on our business and general economic conditions. |
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properly identify and anticipate physician and patient needs; |
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develop and introduce new products and product enhancements in a timely manner; |
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avoid infringing upon the intellectual property rights of third parties; |
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demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials; |
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obtain the necessary regulatory clearances or approvals for expanded indications, new products or product modifications; and
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be fully FDA-compliant with marketing of new devices or modified products. |
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product performance; |
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product pricing; |
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product safety; |
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intellectual property protection; |
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quality of customer support; |
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success and timing of new product development and introductions; and |
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development of successful distribution channels. |
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difficulties in staffing and managing our foreign operations; |
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difficulties in penetrating markets in which our competitors’ products are more established; |
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reduced protection for intellectual property rights in some countries; |
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export restrictions, trade regulations and foreign tax laws; |
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fluctuating foreign currency exchange rates; |
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obtaining and maintaining foreign certification and compliance with other regulatory requirements; |
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customs clearance and shipping delays; and |
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political and economic instability. |
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loss of customer orders and delay in order fulfillment; |
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damage to our brand reputation; |
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increased cost of our warranty program due to product repair or replacement; |
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inability to attract new customers; |
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diversion of resources from our manufacturing and research and development departments into our service department;
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product recalls; and |
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legal action. |
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Disruptions or restrictions on our employees’ ability to work effectively due to illness. |
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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. |
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Outbreaks of contagious disease could cause delays or disruptions in our supply chain |
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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. |
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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. |
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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;
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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; |
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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; |
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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; |
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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 |
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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. |
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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; |
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pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology;
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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;
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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;
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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; |
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enter into cross-licenses with our competitors, which could weaken our overall intellectual property position; |
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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; |
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find alternative suppliers for non-infringing products and technologies, which could be costly and create significant delay; or
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relinquish rights associated with one or more of our patent claims, if our claims are held invalid or otherwise unenforceable.
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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; |
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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; |
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we or any future strategic partners might not have been the first to file patent applications covering certain of our inventions;
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others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our
intellectual property rights; |
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it is possible that our pending patent applications will not lead to issued patents; |
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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; |
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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; |
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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; |
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we may not develop or in-license additional proprietary technologies that are patentable; |
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we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and |
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the patents of others may have an adverse effect on our business. |
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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; |
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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; |
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serious and unexpected adverse device effects experienced by participants in our clinical trials; |
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the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required;
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our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; |
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the manufacturing process or facilities we use may not meet applicable requirements; and |
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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. |
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warning letters or untitled letters, fines, injunctions, consent decrees and civil penalties; |
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repair, replacement, refunds, recalls, termination of distribution, administrative detention or seizure of our products; |
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operating restrictions or partial suspension or total shutdown of production; |
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refusing our requests for 510(k) clearance or premarket approval of new products, new intended uses, or modifications to existing
products; |
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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 |
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criminal prosecution. |
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fluctuations in our operating results or the operating results of our competitors; |
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changes in the estimates of the future size and growth rate of our market opportunities; |
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changes in the general economic, industry and market conditions; |
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political, economic and military instability in Israel and the impact from the latest Israel-Hamas war; |
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success of competitive technologies and procedures; |
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recruitment or departure of key personnel; |
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the announcement of new products or enhancements by us or our competitors; |
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the commencement or outcome of litigation against us, or involving our general industry or both; |
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business; |
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changes in earnings estimates, investors’ perceptions, recommendations by securities analysts or our failure to achieve analysts’
earnings estimates; |
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developments in our industry, including the announcement of significant new technologies, procedures or acquisitions by us or our
competitors; |
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actual or expected sales of our ordinary shares by the holders of our ordinary shares; and |
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the trading volume of our ordinary shares. |
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For ENTs, 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 snoring is based on our Deep Subdermal Fractional RF technology
and is expected to contract and stiffen the soft palate (located on the back of the roof of the mouth), which blocks the airway, causing
tissues to vibrate during sleep. This platform and both handpieces are in the concept design phase. |
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For urologists, we are in the early-stages of developing a device using RF energy to treat ED (Erectile Dysfunction). We registered
a patent application to protect our technological concept, and we believe that our technological concept will work well for this indication
but much more research and development is needed. |
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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. |
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Outpatient procedures that typically do not require general anesthesia, which can decrease patient downtime, discomfort and other
potential complications and typically reduces cost. |
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Minimally invasive procedures with similar efficacy to surgical procedures that have the ability to expand the addressable patient
population for aesthetics procedures. |
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Effective and long-lasting aesthetic solutions, many of which are supported by compelling clinical data, including 90 peer-reviewed
publications. |
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Differentiated, RF energy-based technology simultaneously kills fat and tightens skin, overcoming the many shortcomings of traditional
surgical, minimally and non-invasive aesthetic procedures. |
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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. |
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Typically less expensive than other aesthetic solutions on the market that provide comparable results as a result of less required
physician time and training required. |
![](https://www.sec.gov/Archives/edgar/data/0001742692/000117891324000490/image00001.jpg)
![](https://www.sec.gov/Archives/edgar/data/0001742692/000117891324000490/image1.jpg)
![](https://www.sec.gov/Archives/edgar/data/0001742692/000117891324000490/image2.jpg)
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Simultaneous non-invasive fat killing and skin tightening. We believe our technology is the
first and only RF-based, noninvasive body contouring technology that permanently kills 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. |
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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. 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. |
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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 nanometer, 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 platform and the Lumecca handpiece.
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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, Votiva, Contoura, Evoke and EvolveX
hands-free platforms, EmpowerRF for women’s health, Envision
and Define. |
i. |
A visit by a new physician to one of our many highly qualified plastic surgery facilities for instruction followed by a live patient
demonstration; |
ii. |
A visit to the new physician’s office by a trained registered nurse or physician’s assistant to attend the first day
of treatments to in-service; and |
iii. |
Open house workshops organized by us, wherein the new physician invites his or her patient base and we assist him or her in “kick
starting” marketing efforts. These events typically secure significant procedural revenues for the physician. |
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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 can generally only be achieved with more expensive and invasive surgical procedures. Our RF proprietary energy-based technology simultaneously
kills 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. 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. |
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Strong brand recognition. Our brand is associated with product leadership, significant technological
advances and extensive clinical data, which has led to strong customer loyalty. 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. 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. |
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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.
|
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Broad regulatory approvals supported by extensive clinical data. We have 31 FDA clearances
and in addition to the United States, are permitted to sell in Europe, Argentina, Australia, Brazil, Canada, China, Colombia, the Commonwealth
of Independent States, Israel, Mexico, Panama, Philippines, Russia, South Korea, Taiwan and Thailand. To date, we also have a portfolio
of 90 peer-reviewed publications and there are 85 completed and 7 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, Forma I, Lumecca I and AccuTite). 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. |
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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 15 years of medical aesthetics industry experience and has served in various leadership positions at Syneron Medical Ltd. and
Cynosure, Inc. |
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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 traditional 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 enhance our network of exclusive distributors in Argentina, Brazil,
Colombia, Mexico, Panama and Chile. |
• |
Asia-Pacific: In addition to our direct sales presence in India and Australia, we may also
establish direct sales presence in China through our fully-owned subsidiary in Guangzhou, as well as enhance our network of exclusive
distributors in Japan, Philippines, South Korea, Taiwan and Thailand. |
• |
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.
Additionally, we have experienced growth in the sales of consumables over the past six years. Since inception, we have sold over 2.6 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 traditional 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 SUI, vaginal laxity pelvic floor muscle
restoration, labiaplasty procedures, post-partum treatments and other GSM symptoms, snoring and rhinitis treatments, dry eye and eyelid
treatments, TMJ (Temporomandibular Joint Disorders) and ED (Erectile Dysfunction). We launched two new product platforms in 2021 and one
of them (EvolveX) replaced our Evolve platform, which
we believe will allow us to continue to grow our revenues over the long term and further penetrate the market for aesthetic solutions.
Each such product is or will be subject to the FDA regulatory framework, specifically, the FDA’s 510(k) clearance requirements,
described in this Annual Report on Form 20-F. |
• |
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 against potential infringement
by our competitors. |
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
|
Laser Bipolar RF IPL |
2016 |
Morpheus8 |
Skin Rejuvenation (MI) |
Forma |
Skin Rejuvenation (NI) | |||
Lumecca |
Skin Rejuvenation & Pigmentation (NI)
| |||
DiolazeXL |
Hair Removal (NI) | |||
Vasculaze |
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 Health (MI) |
Women’s Health (NI) | ||||
Morpheus8
|
Bipolar RF |
2021 |
Morpheus8 |
Face and body fractional RF treatment (MI)
|
Morpheus8 Body
|
||||
EmpowerRF
|
Bipolar RF and EMS |
2021 |
FormaV, Morpheus8V,
VTone, Aviva |
Women’s health (MI) |
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
Triton Duo Dark
|
Hair Removal
Hair Removal |
Envision
|
IPL and Bipolar RF |
2023 |
Forma I |
Dry eye treatment |
Lumeca I |
Dry eye treatment |
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)
Chin (HF) |
Skin Rejuvenation
Skin Rejuvenation |
Define
|
Bipolar RF and Morpheus8 |
2023 |
Cheek (HF) |
Skin Rejuvenation |
Chin (HF) |
Skin Rejuvenation |
* |
“MI” = Minimally Invasive, “NI” = Non-Invasive, “HF” = Hands-free application
|
• |
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; |
• |
product sales and distribution; |
• |
import, export and shipping; |
• |
establishment registration and device listing; and |
• |
recalls, field-safety corrective actions and post-market surveillance. |
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 spasm, 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. |
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 venlous 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 spasm, 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 spasm, 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. |
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications |
InMode RF Multi Platform – Contoura |
Radiofrequency (RF) |
Forma(Plus), Plus90, |
K201150 (07/21/2020) |
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 |
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 spasm, 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 |
Powered muscle |
Tone |
K192249 (12/17/2019) |
|
stimulator |
||
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. |
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications |
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 |
K191855 (10/29/2019) |
Chin |
|||
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 spasm, and temporary improvement of local
blood circulation. | |||
EmBody (Evolve) |
Radiofrequency (RF) |
EMBodyPlus – Tite |
K183450 (06/20/2019) |
EmBodyFX – Trim |
|||
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 spasm, 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 spasm, and temporary improvement of local blood circulation; and
• temporary
reduction in the appearance of cellulite. | |||
InMode RF / BodyTite / 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. |
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications |
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 |
K192695 (12/27/2019)
|
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) |
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. | ||
InMode |
Radiofrequency (RF) |
Morpheus8 24 Pin Applicator |
K200947 (06/12/2020)
|
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) |
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.
|
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications |
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 spasm, 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. |
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 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 spasm, 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. |
Product Platform |
Energy Source |
Handpiece |
FDA 510(k) Clearance and Cleared Indications |
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 spasm, 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 dyschrornia, 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, poikilodenna 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 Vhandpiece
is indicated for the temporary relief of minor muscle aches and pain, temporary relief of muscle spasm, and temporary improvement of local
blood circulation. |
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 (27/02/2013)
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. |
• |
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. |
• |
warning or untitled letters, fines, injunctions, consent decrees and civil penalties; |
• |
unanticipated expenditures, repair, replacement, refunds, recalls, administrative detention or seizure of products; |
• |
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. |
Name |
Jurisdiction of Incorporation
|
Percentage Ownership |
Invasix Inc. |
Delaware, USA |
100% |
Invasix Corp. |
Canada |
100% |
InMode M.D. Ltd. |
Israel |
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 Asia Limited. |
Hong Kong |
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% |
Years Ended December 31, |
||||||||
Geographic region* |
2023 |
2022 |
||||||
United States |
63 |
% |
66 |
% | ||||
Europe |
13 |
% |
11 |
% | ||||
International |
24 |
% |
23 |
% | ||||
Total |
100 |
% |
100 |
% |
Years Ended December 31, |
||||||||||||||||
2023 |
2022 |
|||||||||||||||
($) |
(% of Revenues) |
($) |
(% of Revenues) |
|||||||||||||
(in thousands) |
||||||||||||||||
Revenues |
492,048 |
100 |
454,271 |
100 |
||||||||||||
Cost of revenues |
80,708 |
16 |
73,485 |
16 |
||||||||||||
Gross profit |
411,340 |
84 |
380,786 |
84 |
||||||||||||
Operating expenses: |
||||||||||||||||
Research and development
|
13,410 |
3 |
12,425 |
3 |
||||||||||||
Sales and marketing
|
193,042 |
39 |
160,576 |
35 |
||||||||||||
General and administrative |
9,228 |
2 |
9,931 |
2 |
||||||||||||
Total operating expenses |
215,680 |
44 |
182,932 |
40 |
||||||||||||
Income from operations |
195,660 |
40 |
197,854 |
44 |
||||||||||||
Finance income, net |
21,607 |
4 |
3,612 |
1 |
||||||||||||
Income before taxes |
217,267 |
44 |
201,466 |
45 |
||||||||||||
Income taxes |
19,348 |
4 |
39,946 |
9 |
||||||||||||
Net income |
197,919 |
40 |
161,520 |
36 |
Years ended December 31, |
||||||||
2023 |
2022 |
|||||||
Net cash provided by (used in): |
(in thousands) |
|||||||
Operating activities
|
$ |
176,826 |
$ |
181,578 |
||||
Investing activities
|
(136,064 |
) |
(109,474 |
) | ||||
Financing activities
|
5,504 |
(41,085 |
) | |||||
Effects of exchange rate changes on cash
|
605 |
(1,615 |
) | |||||
Net increase in cash and cash equivalents
|
$ |
46,871 |
$ |
29,404 |
Name |
Age |
Position | ||
Moshe Mizrahy |
71 |
Chief Executive Officer and Chairman of Board of Directors | ||
Yair Malca |
46 |
Chief Financial Officer | ||
Dr. Michael Kreindel |
57 |
Chief Technology Officer and Director | ||
Shakil Lakhani |
41 |
President, North America | ||
Dr. Hadar Ron, M.D.(1)(2)
|
65 |
Director | ||
Bruce Mann(1)(2)
|
89 |
Director (Chairman of the Compensation Committee) | ||
Dr. Michael Anghel(1)(2)
|
85 |
Director (Chairman of the Audit & Investment Committee) |
Board Diversity Matrix | ||||
Country of Principal Executive Offices: |
Israel | |||
Foreign Private Issuer |
Yes | |||
Disclosure Prohibited under Home Country Law |
No | |||
Total Number of Directors |
5 | |||
|
Female |
Male |
Non-
Binary |
Did Not Disclose Gender |
Part I: Gender Identity |
| |||
Directors |
[1] |
[4] |
[0] |
[0] |
Part II: Demographic Background |
| |||
Underrepresented Individual in Home Country Jurisdiction |
[0] | |||
LGBTQ+ |
[0] | |||
Did Not Disclose Demographic Background |
[0] |
B. |
Compensation |
Name and Principal Position |
Salary (1)
(USD in thousands) |
Bonus (USD in thousands) |
Equity-Based Compensation (2) (USD in thousands) |
Total (USD in thousands) |
||||||||||||
Shakil Lakhani
President, North America (3) |
$ |
1,105 |
$ |
2,386 |
$ |
1,750 |
$ |
5,241 |
||||||||
Yair Malca
Chief Financial Officer (4) |
$ |
448 |
$ |
133 |
$ |
1,324 |
$ |
1,905 |
||||||||
Alon Yaari
VP Operations (5) |
$ |
269 |
$ |
15 |
$ |
459 |
$ |
743 |
||||||||
Nava Tal-Launer
Chief Information Officer (6) |
$ |
174 |
$ |
11 |
$ |
136 |
$ |
321 |
||||||||
Dr. Michael Kreindel
Chief Technology Officer and Director |
$ |
266 |
$ |
- |
$ |
- |
$ |
266 |
(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, 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,
2023, 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 12 to our consolidated financial statements. |
(3) |
On February 13, 2023, Mr. Lakhani was granted 40,000 RSUs under our 2018 Incentive Plan, none of which are vested as of December
31, 2023. On May 1, 2023, Mr. Lakhani was further granted 10,000 RSUs under our 2018 Incentive Plan, none of which are vested as of December
31, 2023. |
(4) |
On February 13, 2023, Mr. Malca was granted 34,000 RSUs under our 2018 Incentive Plan, none of which are vested as of December 31,
2023. |
(5) |
On February 13, 2023, Mr. Yaari was granted 12,000 RSUs under our 2018 Incentive Plan, none of which are vested as of December 31,
2023. On July 26, 2023, Mr. Yaari was further granted 2,000 RSUs under our 2018 Incentive Plan, none of which are vested as of December
31, 2023. |
(6) |
On February 13, 2023, Ms. Tal-Launer was granted 3,500 RSUs under our 2018 Incentive Plan, none of which are vested as of December
31, 2023. |
C. |
Board Practices |
• |
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. |
• |
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. |
• |
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; |
• |
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. |
• |
the education, skills, expertise and accomplishments of the relevant office holder; |
• |
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. |
• |
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. |
• |
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. |
• |
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. |
• |
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. |
• |
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. |
• |
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. |
• |
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. |
• |
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 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; |
• |
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. |
• |
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. |
• |
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. |
D. |
Employees |
E. |
Share Ownership |
Name of Beneficial Owner: |
Number of Ordinary Shares |
Percentage(1)
|
||||||
Directors and Named Executive Officers |
||||||||
Dr. Michael Kreindel(2)
|
3,114,762 |
3.7 |
% | |||||
Moshe Mizrahy(3)
|
2,005,280 |
2.38 |
% | |||||
Dr. Hadar Ron, M.D.(4)
|
89,270 |
* |
||||||
Bruce Mann(5)
|
22,270 |
* |
||||||
Dr. Michael Anghel (6)
|
16,000 |
* |
||||||
Yair Malca(7)
|
93,314 |
* |
||||||
Shakil Lakhani(8)
|
42,500 |
* |
||||||
Total for all directors and executive officers as a group (7 persons)
|
5,383,396 |
6.4 |
% |
* |
Represents less than 1.0%. |
(1) |
Percentage ownership is based on 83,982,462 ordinary shares outstanding (excluding treasury shares) as of December 31, 2023, and
(ii) restricted share units and options to purchase ordinary shares in a total of 152,500 exercisable within 60 days of December 31, 2023,
of our officers, directors and major shareholders (see “Item 7A. Major Shareholders and Related Party Transactions-Major Shareholders”).
|
(2) |
Consists of 3,114,762 ordinary shares. |
(3) |
Consists of 2,005,280 ordinary shares. |
(4) |
Consists of: (i) 57,270 ordinary shares, (ii) options to purchase 30,000 ordinary shares exercisable within 60 days of December 31,
2023, with an exercise price of $7. These options expire on August 13, 2026, and (iii) 2,000 restricted share units vested within 60 days
of December 31, 2023. |
(5) |
Consists of: (i) 20,270 ordinary shares, and (ii) 2,000 restricted share units vested within 60 days of December 31, 2023.
|
(6) |
Consists of: (i) 3,000 ordinary shares, (ii) options to purchase 11,000 ordinary shares exercisable within 60 days of December 31,
2023, with an exercise price of $7 These options expire on August 13, 2026, and (ii) 2,000 restricted share units vested within 60 days
of December 31, 2023. |
(7) |
Consists of: (i) 30,314 ordinary shares, (ii) options to purchase 30,000 ordinary shares exercisable within 60 days of December 31,
2023, with an exercise price of $9.845. These options expire on March 14, 2027, and (iii) 33,000 restricted share units vested within
60 days of December 31, 2023. |
(8) |
Consists of (i) 42,500 restricted share units vested within 60 days of December 31, 2023. |
F. |
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation. |
A. |
Major Shareholders |
B. |
Related Party Transactions |
C. |
Interests of Experts and Counsel |
A. |
Consolidated Statements and other Financial Information |
B. |
Significant Changes |
A. |
Offer and Listing Details |
B. |
Plan of Distribution |
C. |
Markets |
D. |
Selling Shareholders |
E. |
Dilution |
F. |
Expenses of the Issue |
A. |
Share Capital |
B. |
Articles of Association |
C. |
Material Contracts |
D. |
Exchange Controls |
E. |
Taxation |
• |
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
|
• |
expenses related to a public offering are deductible in equal amounts over three years, beginning from the year of the offering.
|
• |
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. |
• |
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. |
F. |
Dividends and Paying Agents |
G. |
Statement by Experts |
H. |
Documents on Display |
I. |
Subsidiary Information |
J. |
Annual Report to Security Holders. |
B. |
Warrants and Rights |
C. |
Other Securities |
D. |
American Depositary Shares |
Year ended December 31, |
||||||||
2023 |
2022 |
|||||||
USD, in thousands |
||||||||
Audit fees(1)
|
630 |
564 |
||||||
Audit-related fees(2)
|
- |
— |
||||||
Tax fees(3)
|
116 |
108 |
||||||
Other fees |
- |
— |
||||||
Total |
746 |
672 |
(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. |
• |
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. Nominations need not be made by a nominating committee of our board of directors
consisting solely of independent directors, as required under Nasdaq rules. |
• |
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.
|
Exhibit No. |
Description | |
97 |
|
INMODE LTD. |
||
|
|
|
|
By: |
/s/ Yair Malca |
||
|
|
Yair Malca |
|
|
|
Chief Financial Officer |
Page
|
|
F-2 |
|
CONSOLIDATED FINANCIAL STATEMENTS:
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
|
F-9
|
|
![image0.jpg](https://www.sec.gov/Archives/edgar/data/0001742692/000117891324000490/inmd_img01.jpg)
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
|
![image0.jpg](https://www.sec.gov/Archives/edgar/data/0001742692/000117891324000490/inmd_img01.jpg)
/s/
|
Certified Public Accountants (lsr.)
|
A member firm of PricewaterhouseCoopers International Limited
|
|
February 13, 2024
|
December 31
|
||||||||
2023
|
2022
|
|||||||
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 expense 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 payable
|
|
|
||||||
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
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Less treasury shares, at cost:
|
(
|
)
|
(
|
)
|
||||
TOTAL SHAREHOLDERS’ EQUITY
|
|
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
F-4
Year ended December 31
|
||||||||||||
2023
|
2022
|
2021 | ||||||||||
REVENUES
|
|
|
|
|||||||||
COST OF REVENUES
|
|
|
|
|||||||||
GROSS PROFIT
|
|
|
|
|||||||||
OPERATING EXPENSES:
|
||||||||||||
Research and development
|
|
|
|
|||||||||
Sales and marketing
|
|
|
|
|||||||||
General and administrative
|
|
|
|
|||||||||
Other income
|
|
|
(
|
) | ||||||||
TOTAL OPERATING EXPENSES
|
|
|
|
|||||||||
OPERATING INCOME
|
|
|
|
|||||||||
Finance income, net
|
|
|
|
|||||||||
INCOME BEFORE INCOME TAXES
|
|
|
|
|||||||||
INCOME TAXES
|
|
|
|
|||||||||
NET INCOME
|
|
|
|
|||||||||
Add: Net income attributable to non-controlling interests
|
|
|
(
|
)
|
||||||||
NET INCOME ATTRIBUTABLE TO INMODE LTD
|
|
|
|
|||||||||
EARNINGS PER SHARE:
|
||||||||||||
Basic
|
|
|
|
|||||||||
Diluted
|
|
|
|
|||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF EARNINGS PER SHARE
|
||||||||||||
Basic
|
|
|
|
|||||||||
Diluted
|
|
|
|
F-5
Year ended December 31
|
||||||||||||
2023
|
2022 |
2021
|
||||||||||
NET INCOME
|
|
|
|
|||||||||
OTHER COMPREHENSIVE INCOME:
|
||||||||||||
Change in net unrealized gains (loss) of marketable securities, net of tax
|
|
(
|
)
|
(
|
)
|
|||||||
TOTAL COMPREHENSIVE INCOME
|
|
|
|
|||||||||
Add: Comprehensive income attributable to non-controlling interests
|
|
|
(
|
)
|
||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO INMODE LTD.
|
|
|
|
F-6
(U.S. dollars in thousands, except for per share data)
InMode Ltd. Shareholders’ Equity
|
|||||||||||||||||||||||||||||||||
Ordinary Shares
|
Additional paid-in capital
|
Retained
earnings
|
Accumulated other comprehensive income
|
Treasury
shares |
Non-
controlling
Interests
|
||||||||||||||||||||||||||||
Number of shares outstanding
|
Amount
|
Total
|
|||||||||||||||||||||||||||||||
BALANCE AS OF JANUARY 1, 2021
|
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||||||
CHANGES DURING 2021:
|
|||||||||||||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Other comprehensive loss, net
|
-
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Acquisition of non-controlling interest in exchange of ordinary shares (see note 12b)
|
|
|
(
|
)
|
|
|
|
(
|
)
|
|
|||||||||||||||||||||||
Repurchase of ordinary shares
|
(
|
)
|
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Exercise of options
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2021
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|
|||||||||||||||||||||||
CHANGES DURING 2022:
|
|||||||||||||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Other comprehensive loss, net
|
-
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Repurchase of ordinary shares
|
(
|
)
|
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Exercise of options
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2022
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|
|||||||||||||||||||||||
CHANGES DURING 2023:
|
|||||||||||||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Other comprehensive loss, net
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Exercise of options
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2023
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|
F-7
Year ended December 31
|
||||||||||||
2023
|
2022
|
2021 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net income
|
|
|
|
|||||||||
Adjustments required to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Share-based compensation expenses
|
|
|
|
|||||||||
Change in allowance for credit losses of trade receivable
|
|
|
|
|||||||||
Loss on marketable securities, net
|
|
|
|
|||||||||
Finance expense (income), net
|
(
|
)
|
(
|
)
|
|
|||||||
Deferred income tax assets, net
|
(
|
)
|
|
(
|
)
|
|||||||
Changes in operating assets and liabilities:
|
||||||||||||
Increase in accounts receivable
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Increase in other receivables
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Increase in inventories
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Increase (decrease) in accounts payable
|
(
|
)
|
|
|
||||||||
Increase (decrease) in other liabilities
|
(
|
)
|
|
|
||||||||
Increase (decrease) in contract liabilities
|
(
|
)
|
|
|
||||||||
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 used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Repurchase of ordinary shares
|
|
(
|
)
|
(
|
)
|
|||||||
Exercise of options
|
|
|
|
|||||||||
Net cash used in financing activities
|
|
(
|
)
|
(
|
)
|
|||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
(
|
)
|
(
|
)
|
|||||||
NET INCREASE (DECREASE) 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
|
|
|
|
|||||||||
Acquisition of non-controlling interest in exchange of ordinary shares
|
|
|
|
F-8
|
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. The Company’s subsidiaries are referred to collectively herein as the “Subsidiaries.” The Company sells its products primarily through its Subsidiaries. See note 12b for an update regarding change in ownership of the UK subsidiary.
|
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) |
|
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 average annual rate of approximately
|
g. |
Marketable securities
AFS Securities
Marketable securities consist of government bonds, municipal bonds, and corporate debt securities (together “Debt Securities”), and certificates of deposit measured at fair value in each reporting period. The fair value of quoted securities is based on current market value.
Debt Securities and certificates of deposit 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 and certificates of deposit as well as premium or discount amortization are included in the consolidated statements of income as finance income (expenses), net. Fair value is calculated based on publicly available market information. When the estimated fair value of a Debt Security is below its amortized cost, the Debt Security is assessed using the Current Expected Credit Losses model (in accordance with ASU 2016-13) in order to determine what portion of that difference, if any, is caused by expected credit losses. 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 (expenses), 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) |
|
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 and are valued at the lower of cost or net realizable value. During the year ended December 31, 2022, the Company changed the cost determination method of raw materials from first in, first out (“FIFO”) method to a “moving average” method. This voluntary change in accounting method was implemented and considered preferable because the Company's ERP system supports automatic calculation of inventory according to the “moving average” method and it allows consistency of the cost determination method among the different components of inventory. The change in method was immaterial to all periods presented. 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’s 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) |
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, 2023, 2022 and 2021, 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 in accordance with ASU 2015‑17.
|
|
F-12
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
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, 2023, 2022 and 2021 amounted to $
|
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) |
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) |
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 consideration includes 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.
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 $
|
The following table sets forth activity in the Company’s allowance for credit losses for each of the years ended December 31, 2023, 2022 and 2021, respectively:
|
2023
|
2022
|
2021
|
||||||||||
Balance at beginning of year
|
|
|
|
|||||||||
Current-period provision
|
|
|
|
|||||||||
Write-offs charged against the
allowance
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Balance at end of year
|
|
|
|
F-15
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
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, 2023, 2022 and 2021, respectively:
|
2023
|
2022
|
2021
|
||||||||||
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.
|
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.
|
F-16
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
w. |
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, 2023, and 2022, 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. |
Segments
The Company operates in
Entity-wide disclosures on revenue and long-lived assets are presented in note 14.
|
y. |
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 $
The Company expects to contribute approximately $
|
z. |
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) |
aa. |
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 63% of the revenues in 2023.
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.
|
ab. |
War risk situation in Israel
In October 2023, Israel was attacked by a terrorist organization and entered a state of war. As of the date of these consolidated financial statements, the war is ongoing and continues to evolve. The Company's headquarter, its R&D operations, and certain manufacturing facilities are located in Israel. Currently, such activities in Israel remain largely unaffected. During the year ended December 31, 2023, the impact of this war on the Company’s results of operations and financial condition was immaterial, but such impact may increase, which could be material, as a result of the continuation, escalation or expansion of such war.
|
ac. |
Newly issued accounting pronouncements, not yet adopted
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 on a prospective basis. Early adoption is permitted, with the option to apply the standard retrospectively. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.
In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable.
|
AFS securities as of December 31, 2023 and 2022, consisted of government bonds, municipal bonds, corporate debt securities, commercial paper and certificates of deposit. These marketable securities are recorded at fair value.
|
F-18
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
The following table sets forth the Company’s marketable securities for the periods indicated:
|
December 31
|
||||||||
2023
|
2022
|
|||||||
Government bonds *
|
|
|
||||||
Municipal bonds
|
|
|
||||||
Corporate debt securities
|
|
|
||||||
Commercial paper
|
|
|
||||||
Certificates of deposit
|
|
|
||||||
Total
|
|
|
* As of December 31, 2023 and 2022, consists of $
|
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, 2023 and 2022, that are measured at fair value on a recurring basis during the period:
|
December 31, 2023
|
||||||||||||||||
Fair
value
|
Cost or
amortized
cost
|
Gross
unrealized
holding loss
|
Gross unrealized holding gains |
|||||||||||||
Level 2 securities:
|
||||||||||||||||
Government bonds
|
|
|
(
|
)
|
|
|||||||||||
Municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
Corporate debt securities
|
|
|
(
|
)
|
|
|||||||||||
Certificates of deposit
|
|
|
|
|
||||||||||||
Total
|
|
|
(
|
)
|
|
December 31, 2022 | ||||||||||||||||
Fair
value
|
Cost or
amortized
cost
|
Gross
unrealized
holding loss
|
Gross |
|||||||||||||
Level 2 securities:
|
||||||||||||||||
Government bonds
|
|
|
(
|
)
|
|
|||||||||||
Municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
Corporate debt securities
|
|
|
(
|
)
|
|
|||||||||||
Commercial paper
|
|
|
|
|
||||||||||||
Certificates of deposit
|
|
|
(
|
)
|
|
|||||||||||
Total
|
|
|
(
|
)
|
|
As of December 31, 2023 and 2022, 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 (expenses), 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, 2023 and 2022, the Company’s debt securities and certificates of deposit had the following maturity dates:
|
December 31
|
||||||||
2023
|
2022
|
|||||||
Due within one year
|
|
|
||||||
1 to 2 years
|
|
|
||||||
2 to 3 years
|
|
|
||||||
Total
|
|
|
Accounts receivable consist of the following:
|
December 31
|
||||||||
2023 | 2022 | |||||||
Trade
|
|
|
||||||
Notes receivable
|
|
|
||||||
Less - allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
|
|
|||||||
Less - non-current accounts receivable, net
|
(
|
)
|
(
|
)
|
||||
Total current accounts receivable, net
|
|
|
Prepaid expenses and other current receivables consist of the following:
|
December 31
|
||||||||
2023
|
2022
|
|||||||
Advances to suppliers
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Government institutions
|
|
|
||||||
Income tax
|
|
|
||||||
Other
|
|
|
||||||
Total other current receivables
|
|
|
NOTE 6 - INVENTORIES:
Inventories consist of the following:
|
December 31
|
||||||||
2023
|
2022
|
|||||||
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) |
Composition of property and equipment grouped by major classifications is as follows:
|
December 31
|
||||||||
2023
|
2022
|
|||||||
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 $
|
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 $ In November 2023, the Company signed an additional SPA with Medimor and invested $ The SPAs together reflected as of December 31, 2023 a 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, 2023, 2022 and 2021, the Company did not recognize an impairment or adjustment on its other investments.
|
|
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 and May 2023 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
|
F-21
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
The Company also leases warehouse outside the company's offices. The Lease Agreement will expire in
The Company also leases vehicles for several employees in Israel for a period of
|
b. |
In August 2020, the Company’s U.S. subsidiary, has signed a new lease agreement, for additional lease agreement of property and for its offices (“U.S Lease”). The U.S. Lease is for
|
c. |
The Company’s Canadian subsidiary has signed a new lease agreement in April 2022 for property and for its offices (“Canadian Lease”). The Canadian Lease is for
|
|
From time to time the Company also leases small properties, mainly for offices for Subsidiaries around the world which range for periods of up to 3 years. |
The lease cost was as follows:
|
Year ended
December 31
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Operating lease cost
|
|
|
|
Supplemental cash flow information related to leases was as follows:
|
Year ended
December 31
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Operating cash flows from operating leases
|
|
|
|
Supplemental balance sheet information related to leases was as follows:
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
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) |
As of December 31, 2023, the maturities of lease liabilities were as follows:
|
Operating Leases
|
||||
Year Ending December 31,
|
||||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028 and beyond
|
|
|||
Total lease payments
|
|
|||
Less imputed interests
|
(
|
)
|
||
Total
|
|
NOTE 10 - OTHER CURRENT LIABILITIES:
Other current liabilities consist of the following:
|
December 31
|
||||||||
2023
|
2022
|
|||||||
Employees and related expenses
|
|
|
||||||
Government institutions
|
|
|
||||||
Income tax payable
|
|
|
||||||
Warranty reserve
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Contractor liability
|
|
|
||||||
Other
|
|
|
||||||
Total other current liabilities
|
|
|
NOTE 11 - COMMITMENTS AND CONTINGENCIES:
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.
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, 2023, the subcontractors’ finished goods inventory, raw materials and open orders amounted to approximately $
F-23
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
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 September 2020, the Company approved a share repurchase program of up to
During 2021, the Company purchased
On September 30, 2021, the Company executed a
Unless otherwise indicated, and except for authorized capital, all of the share numbers, number of RSUs, number of options to purchase ordinary shares, net income per share amounts, share prices and option exercise prices in these financial statements have been adjusted, on a retroactive basis, to reflect the 2021 Share Split.
|
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 and options 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.
|
F-24
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
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.
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)
As of December 31, 2023, the total awards under 2018 Incentive Plan that have been authorized to be issued as ordinary shares were
|
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):
As of December 31, 2023,
Share Options
|
The following tables is a summary of stock option activity for the year ended on December 31, 2023 :
|
Year ended December 31
|
||||||||
2023
|
||||||||
Weighted
|
||||||||
Number
|
Average
|
|||||||
of
|
Exercise
|
|||||||
Options
|
Price*
|
|||||||
Outstanding at beginning of year
|
|
$
|
|
|||||
Changes during the year:
|
||||||||
Granted
|
|
|
||||||
Exercised
|
(
|
)
|
|
|||||
Forfeited
|
|
|
||||||
Expired
|
|
|
||||||
Outstanding at end of year
|
|
$
|
|
|||||
Exercisable at end of year
|
|
$
|
|
|||||
* In U.S. dollars per Ordinary Share
|
As of December 31, 2023, the weighted-average remaining contractual life of exercisable options were
|
The following tables summarize information concerning outstanding and exercisable options as of December 31, 2023:
|
Options outstanding and exercisable
|
||||||||||
Exercise
Prices *
|
Number of
options
Outstanding and exercisable
at end of
year
|
Weighted
average
remaining
contractual
life
|
||||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
|||||||
$
|
|
|
|
* In U.S. dollars per Ordinary Share.
|
The aggregate intrinsic value of total exercisable options as of December 31, 2023 is $
|
F-26
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
Restricted Share Units
|
The following tables summarize information concerning RSUs as of December 31, 2023 :
|
Year ended December 31
|
||||||||
2023
|
||||||||
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 *
|
|
|
* As of December 31, 2023,
|
|
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 2023 was
The total fair value of RSUs granted during the year ended December 31, 2023, 2022 and 2021, was $
As of December 31, 2023, the Company had
The total vesting-date value of equity classified RSUs vested during, 2023 is $
|
Year ended December 31
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Cost of sales
|
|
|
|
|||||||||
Research and development expenses
|
|
|
|
|||||||||
Selling and marketing expenses
|
|
|
|
|||||||||
General and administrative expenses
|
|
|
|
|||||||||
|
|
|
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):
b. |
Non-Controlling Interests:
On April 23, 2021, the Company, Dilazar Limited (“Dilazar”), Wigmore and Invasix UK (the UK subsidiary) entered into a share exchange agreement (the “UK Exchange Agreement”) whereby, Dilazar (which owned
|
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
|
a) |
Incentives Applicable until 2020
Under the Encouragement of Capital Investments Law, including Amendment No. 60 thereof as published in April 2005, by virtue of the “Approved Enterprise” or “Benefited Enterprise” status, the Israeli Company was tax exempt from 2012 to 2020 for income derived from the Benefited Enterprise. See also note 13a(2)(b).
|
b) |
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) |
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
Amendment 74 to the Investment Law
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.
The Company elected to take advantage of the amendment, and during November 2022 has paid NIS
|
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, 2023 is between
|
F-29
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in the US, which provides among others, tax relief measures for businesses including a five-year net operating loss (“NOL”) carry back. As a result, the Company recognized in its consolidated financial statements a receivable tax asset in the amount of $
As of December 31, 2023, the Company’s subsidiary in U.S has an accumulated tax loss carryforward of approximately $
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. However, the 80% limitation was temporarily removed by the CARES Act, for tax years beginning before January 1, 2021. A full valuation allowance was created against the Company’s subsidiary in the U.S against the deferred tax assets. Management currently believes that it is more likely than not that the deferred taxes generated in U.S will not be realized in the foreseeable future.
|
||
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, 2023 and 2022 were as follows:
|
December 31
|
||||||||
2023
|
2022
|
|||||||
Deferred tax assets in respect of:
|
||||||||
Subsidiaries carryforward losses
|
|
|
||||||
Other temporary differences
|
|
|
||||||
Share-based compensation
|
|
|
||||||
Deferred tax asset in respect to other comprehensive loss
|
|
|
||||||
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.
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized in the foreseeable future. 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.
|
F-30
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
d. |
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
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Income before taxes on income
|
|
|
|
|||||||||
Theoretical tax expenses at the statutory rate of InMode Ltd.
|
|
%
|
|
%
|
|
%
|
||||||
|
|
|
||||||||||
Increase (decrease) in taxes on income due to:
|
||||||||||||
Benefits to the Benefited Enterprise
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Different effective tax rates applicable to the Subsidiaries
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Valuation allowance
|
|
|
|
|||||||||
Uncertain tax positions
|
|
|
|
|||||||||
Non-deductible expenses and other permanent differences, mainly share based compensation expenses
|
|
|
|
|||||||||
Amendment to the Investments Law payment - see also note 13a(2)(b)
|
|
|
|
|||||||||
Settlements with the Israeli tax authority net of decrease of related uncertain tax provision
|
|
|
|
|||||||||
|
|
|
e. |
Tax assessments
In February 2022, the Israeli Company settled the 2017-2020 income tax assessment with the Israeli tax authority, paying $
In December 2022 the Company reached an agreement with the Israeli Tax Authority under which the Company paid on January 2023 NIS
As of December 31, 2023, 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 2018 are considered final. Another Israeli subsidiary was established in 2022 and therefore does not have any tax year that considered final.
As of December 31, 2023, all tax assessments on the Company’s subsidiary in the United States, through tax year 2019, are considered final.
The other Subsidiaries' open tax years range from 2018-2023.
|
F-31
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
f. |
Income before income taxes is composed of the following:
|
|
Year ended December 31
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
InMode Ltd. and Israeli subsidiaries
|
|
|
|
|||||||||
Subsidiaries outside of Israel
|
|
|
|
|||||||||
|
|
|
g. |
Tax expenses (tax benefit):
|
Year ended December 31
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Current:
|
||||||||||||
Israel
|
|
|
|
|||||||||
Subsidiaries
|
|
|
(
|
)
|
||||||||
|
|
|
||||||||||
Deferred:
|
||||||||||||
Israel
|
(
|
)
|
|
(
|
)
|
|||||||
Subsidiaries
|
|
|
|
|||||||||
(
|
)
|
|
(
|
)
|
||||||||
Total taxes on income
|
|
|
|
h. |
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
|
||||||||
2023
|
2022
|
|||||||
Balance at January 1
|
|
|
||||||
Decrease in uncertain tax positions for the previous years
|
|
(
|
)
|
|||||
Increase in uncertain tax positions for the current year, net
|
|
|
||||||
Balance at December 31
|
|
|
The Company does not expect uncertain tax positions to change significantly over the next 12 months.
|
F-32
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
NOTE 14 - ENTITY-WIDE DISCLOSURE:
a. |
Revenue
|
1) |
Revenues by geographic area were as follows:
|
Year ended December 31
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
United States
|
|
|
|
|||||||||
Europe
|
|
|
|
|||||||||
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.
|
2) |
Revenues based on products' category were as follows:
|
Year ended December 31
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
Capital Equipment revenues
|
|
|
|
|||||||||
Consumables and service revenues
|
|
|
|
|||||||||
|
|
|
3) |
Revenues based on products' technology were as follows:
|
Year ended December 31
|
||||||||||||
2023
|
2022
|
2021
|
||||||||||
%
|
||||||||||||
Minimal-Invasive
|
|
|
|
|||||||||
Hands-Free
|
|
|
|
|||||||||
Non-Invasive
|
|
|
|
|||||||||
|
|
|
4) |
The changes in contract liabilities are as follows:
|
Year ended December 31
|
||||||||
2023 |
2022
|
|||||||
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, 2023, non-current deferred revenue is estimated to be recognized as following:
|
F-33
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
b. |
Long-Lived Assets
|
December 31
|
||||||||
2023
|
2022
|
|||||||
Israel
|
|
|
||||||
United States
|
|
|
||||||
Other
|
|
|
||||||
|
|
|||||||
Other long-term assets*
|
|
|
||||||
|
|
*Consists of non-current accounts receivable, net and other investments
|
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 Chairman of the Board and 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 Home Skinovations Ltd. of $
In addition, the balance of the
In February 2022 the Company have entered into an Asset Purchase Agreement with Home Skinovations, whereby Home Skinovations Ltd. sold and assigned to the Company all of Home Skinovations Ltd.’s right, title and interest in and to Home Skinovations Ltd.’s Spa segment assets (including molds, tooling, inventory and trademarks) and further granted the Company an exclusive license to certain IP rights of Home Skinovations Ltd., all the foregoing in consideration for an aggregate amount of $
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 $(
|
1) |
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. The Company recorded expenses related to those services in the amount of $
During 2023 Dr. Stephen Mulholland ceased to be a related party.
|
F-34
INMODE LTD. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(U.S. dollars in thousands, except for share and per amounts) |
NOTE 15 - RELATED PARTIES (continued):
2) |
The Company receives certain investment portfolio management services from Himalaya Family Office Consulting Ltd., with respect to part of its investment portfolio. The Chairman of the Board and 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 $
In addition, the balance of the
|
F-35