10q10k10q10k.net

What changed in ESTABLISHMENT LABS HOLDINGS INC.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of ESTABLISHMENT LABS HOLDINGS INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+504 added−591 removedSource: 10-K (2025-02-28) vs 10-K (2024-03-04)

Top changes in ESTABLISHMENT LABS HOLDINGS INC.'s 2024 10-K

504 paragraphs added · 591 removed · 395 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

121 edited+47 added−42 removed139 unchanged
Biggest changeThe topology of SilkSurface/SmoothSilk is categorized in the smooth category, having a low roughness value of approximately 3.09 microns with thousands of contact features per square centimeter, which is significantly lower than the higher limit of the smooth surface clarification defined by ISO ( Our retrospective implant data shows that Motiva Implants have a lower rate of capsular contracture and seromas when compared to published data from competitors.
Biggest changeOur retrospective implant data shows that Motiva Implants have a lower rate of capsular contracture and seromas when compared to published data from competitors. We believe that these results are due in large part to the proprietary surface of our Motiva Implants.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling regulations and FDA prohibitions against the promotion of ‘‘off-label’’ uses of cleared or approved products, as well as other requirements related to promotional activities; • clearance or approval of product modifications to cleared or approved devices, where warranted; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDC Act that may present a risk to health; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device; and 24 Table of Contents • any post-market restrictions or conditions imposed by the FDA on a specific device.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling regulations and FDA prohibitions against the promotion of ‘‘off-label’’ uses of cleared or approved products, as well as other requirements related to promotional activities; • clearance or approval of product modifications to cleared or approved devices, where warranted; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDC Act that may present a risk to health; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device; and • any post-market restrictions or conditions imposed by the FDA on a specific device.
HIPAA standards apply to “Covered Entities,” which are health plans, health care clearing houses, and certain health care providers which conduct certain health care transactions electronically, and to “Business Associates,” persons or entities that perform a function or provide specified services on behalf of a Covered Entity that involves the creation, use, maintenance or transmission of protected health information.
HIPAA apply to “Covered Entities,” which are health plans, health care clearing houses, and certain health care providers which conduct certain health care transactions electronically, and to “Business Associates,” persons or entities that perform a function or provide specified services on behalf of a Covered Entity that involves the creation, use, maintenance or transmission of protected health information.
Our products incorporate first of-its-kind safety features including: (i) SmoothSilk / SilkSurface (an optimized biocompatible advanced smooth surface that is designed to reduce capsular contracture), (ii) Qid RFID technology (a non-invasive, readable serial number that enables product identification and enhances safety and patient peace of mind), (iii) BluSeal visual barrier layer (a proprietary indicator that allows for verification of complete barrier layer presence) and (iv) TrueMonobloc gel-shell-patch configuration (a highly durable, easy-to-insert performance shell, gel and patch system that allows for smaller incisions and smaller scars).
Our products incorporate first of-its-kind safety features including: (i) SmoothSilk / SilkSurface (an optimized biocompatible advanced smooth surface that is designed to reduce capsular contracture), (ii) Qid RFID technology and ZEN (a non-invasive, electronically readable serial number that enables product identification and enhances safety and patient peace of mind), (iii) BluSeal visual barrier layer (a proprietary indicator that allows for verification of complete barrier layer presence) and (iv) TrueMonobloc gel-shell-patch configuration (a highly durable, easy-to-insert performance shell, gel and patch system that allows for smaller incisions and smaller scars).
The three-year, by-patient, Kaplan-Meier risk rates of first occurrence of complications for patients (95% confidence interval) in the primary augmentation cohort were as follows: Primary Augmentation 3-year (N=451), 95% CI Capsular contracture (Baker Grade III/IV) 0.5% Rupture, suspected or confirmed; MRI cohort (1) 0.6% Breast pain 0.7% Infection 0.9% Implant removal, with or without replacement 1.6% Any reoperation (2) 6.1% Any complication (3) 8.4% Kaplan-Meier risk rates were the primary method of analysis for the above data.
The three-year, by-patient, Kaplan-Meier risk rates of first occurrence of complications for patients (95% confidence interval) in the primary augmentation cohort were as follows: Primary Augmentation 3-year (N=451), 95% CI Capsular contracture (Baker Grade III/IV) 0.5% Rupture, suspected or confirmed; MRI cohort (1) 0.6% Breast pain 0.9% Infection 0.9% Implant removal, with or without replacement 1.8% Any reoperation (2) 6.8% Any complication (3) 9.6% Kaplan-Meier risk rates were the primary method of analysis for the above data.
This facility has approximately 28,000 square feet of office space and production areas which are capable of producing over 400,000 implants a year, with state-of-the-art support systems for sustaining production, including an ice-bank system for cooling the controlled air in the clean room and support areas, water-lubricated air compressors for eliminating the presence of oil particulates, heat recovery systems for energy saving, and an energy micro-grid comprised of solar panels and energy-storage batteries.
The older facility has approximately 28,000 square feet of office space and production areas which are capable of producing over 400,000 implants a year, with state-of-the-art support systems for sustaining production, including an ice-bank system for cooling the controlled air in the clean room and support areas, water-lubricated air compressors for eliminating the presence of oil particulates, heat recovery systems for energy saving, and an energy micro-grid comprised of solar panels and energy-storage batteries.
Many of the legacy breast implant options have relatively high complication rates, and we believe many do not mimic natural breast tissue. 10-year primary augmentations The table below reports key adverse event information from published data from their 10-year prospective Core clinical trials conducted by the only three companies currently approved to market silicone breast implants in the United States.
Many of the legacy breast implant options have relatively high complication rates, and we believe many do not mimic natural breast tissue. 10-year primary augmentations The table below reports key adverse event information from published data from 10-year prospective Core clinical trials conducted by the only three competitor companies currently approved to market silicone breast implants in the United States.
Independent Clinical Experience An independent study by Sforza et al., published in the peer-reviewed Aesthetic Surgery Journal in 2017, conducted at a single center, the Hospital Group Ltd.’s Dolan Park Clinic, or Dolan Park, in Bromsgrove, England, 16 Table of Contents between April 2013 and April 2016, reported 5,813 consecutive cases of breast augmentation with Motiva Implants.
Independent Clinical Experience An independent study by Sforza et al., published in the peer-reviewed Aesthetic Surgery Journal in 2017, conducted at a single center, the Hospital Group Ltd.’s Dolan Park Clinic, or Dolan Park, in Bromsgrove, England, between April 2013 and April 2016, reported 5,813 consecutive cases of breast augmentation with Motiva 14 Table of Contents Implants.
The table below shows the rates of rupture, capsular contracture and reoperation for adverse events of our Motiva Implants from the data gathered through December 2023. In contrast to the above competitor data, our data is self-reported rather than collected at mandatory follow-ups and was generated solely for our post-market surveillance instead of in connection with an FDA PMA study.
The table below shows the rates of rupture, capsular contracture and reoperation for adverse events of our Motiva Implants from the data gathered through December 2024. In contrast to the above competitor data, our data is self-reported rather than collected at mandatory follow-ups and was generated solely for our post-market surveillance instead of in connection with an FDA PMA study.
Such legislative changes in the United States include the Patient Protection and Affordable Care Act (PPACA), which intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and 27 Table of Contents health insurance industries, and impose additional health policy reforms.
Such legislative changes in the United States include the Patient Protection and Affordable Care Act (PPACA), which intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and 26 Table of Contents health insurance industries, and impose additional health policy reforms.
Our owned and licensed pending applications, if granted, likely would expire between September 2033 and December 2043. In addition to pursuing patents on our products, we have taken steps to protect our intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, corporate partners, and, when needed, our advisors.
Our owned and licensed pending applications, if granted, likely would expire between September 2033 and December 2044. In addition to pursuing patents on our products, we have taken steps to protect our intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, corporate partners, and, when needed, our advisors.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in sanctions including (but not limited to) Warning Letters, fines, injunctions, consent decrees and civil penalties, customer notifications or repair, replacement, refunds, recall, detention or seizure of our products, operating restrictions, partial suspension or total shutdown of production, refusal to grant export approval, or criminal prosecution.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which 23 Table of Contents may result in sanctions including (but not limited to) Warning Letters, fines, injunctions, consent decrees and civil penalties, customer notifications or repair, replacement, refunds, recall, detention or seizure of our products, operating restrictions, partial suspension or total shutdown of production, refusal to grant export approval, or criminal prosecution.
To obtain 510(k) clearance, the submitted 510(k) notice must demonstrate that the proposed device is “substantially equivalent” to a predicate device already on the market; a predicate device is a legally marketed device that is not subject to PMA approval. The FDA’s 510(k) clearance process usually takes from six to twelve months, but it can take longer.
To obtain 510(k) clearance, the submitted 510(k) notice must demonstrate that the proposed device is “substantially equivalent” to a predicate device already on the market; a predicate device is a legally marketed device that is not subject to PMA approval. The FDA’s 510(k) clearance process usually takes from three to twelve months, but it can take longer.
The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of share-based and cash-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of share-based and cash-based compensation awards, in order to increase shareholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
Numerous national and local agencies enforce the anti-fraud and abuse laws. In addition, private insurers may also bring private actions. In some circumstances, private whistleblowers are authorized to bring fraud suits on behalf of the government against providers and are entitled to receive a portion of any final recovery.
Numerous national and local agencies enforce the anti-fraud and abuse laws. In addition, private insurers may also bring private actions. In some circumstances, private whistleblowers are authorized to bring fraud suits on behalf of the government and are entitled to receive a portion of any final recovery.
ProgressiveGel Family The proprietary silicone chemistries that comprise our ProgressiveGel family allow for a high degree of cohesiveness and strength but add characteristics such as softness and high ductility that enable movement dynamics more like that of natural breast tissue.
ProgressiveGel Family The proprietary silicone chemistries that comprise our ProgressiveGel family allow for a high degree of viscoelasticity and strength but add characteristics such as softness and high ductility that enable movement dynamics more like that of natural breast tissue.
While our instruments are cleared as class II devices, breast implants are currently classified as Class III devices requiring an approved PMA for commercial distribution. 510(k) Clearance Pathway Manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDC Act requesting permission to commercially distribute the device (generally known as 510(k) clearance).
While our instruments are 20 Table of Contents cleared as class II devices, breast implants are currently classified as Class III devices requiring an approved PMA for commercial distribution. 510(k) Clearance Pathway Manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDC Act requesting permission to commercially distribute the device (generally known as 510(k) clearance).
The FDA administers requirements covering the design, development, testing (non-clinical and clinical research), safety, effectiveness, manufacturing, labeling, packaging, promotion, advertising, distribution, recordkeeping, import/export and postmarket surveillance of medical devices in order to ensure that devices distributed in the U.S. are safe and effective for their intended uses and otherwise meet the requirements of the FDC Act.
The FDA administers requirements covering the design, development, testing (non-clinical and clinical research), safety, effectiveness, manufacturing, labeling, packaging, promotion, advertising, distribution, recordkeeping, import/export and post-market surveillance of medical devices in order to ensure that devices distributed in the U.S. are safe and effective for their intended uses and otherwise meet the requirements of the FDC Act.
We believe the primary competitive factors in our current and future markets include: ▪ safety and outcomes data generated in clinical studies; ▪ regulatory approvals; ▪ technological characteristics of products; ▪ complementary platforms of non-implant products, such as facial fillers and fat grafting technologies; ▪ product price; ▪ customer service; and 21 Table of Contents ▪ support by key opinion leaders.
We believe the primary competitive factors in our current and future markets include: • safety and outcomes data generated in clinical studies; • regulatory approvals; • technological characteristics of products; • complementary platforms of non-implant products, such as facial fillers and fat grafting technologies; • product price; • customer service; and • support by key opinion leaders.
Furthermore, our fill material with the ProgressiveGel platform of silicone gel rheologies consists of highly purified biocompatible gels with specific visco-elastic properties that we believe enables Motiva Implants to respond to the patient’s motion in ways that more closely mimic the appearance, feel and movement of natural breast tissue.
Furthermore, our fill material with the ProgressiveGel platform of silicone gel rheologies consists of highly purified biocompatible gels with specific viscoelastic properties that we believe enables Motiva Implants to respond to the patient’s motion in ways that more closely mimic the appearance, feel and movement of natural breast tissue.
While we have no specific acquisitions or planned licensing agreements currently ongoing, we may engage in these, or other strategic transactions, with the goal of augmenting our existing product portfolio and global footprint. ▪ Continue a high level of engagement with key opinion leaders.
While we have no specific acquisitions or planned licensing agreements currently ongoing, we may engage in these, or other strategic transactions, with the goal of augmenting our existing product portfolio and global footprint. 7 Table of Contents • Continue a high level of engagement with key opinion leaders.
In support of our inclusive culture, we offer competitive compensation and benefits, including stock awards and strive to recruit a diverse talent pool across all levels of the organization.
In support of our inclusive culture, we offer competitive compensation and benefits, including stock awards and strive to recruit a robust talent pool across all levels of the organization.
The study, which had a two-year follow-up compliance rate of 90%, found no reports of capsular contracture (Baker Grade III/IV), ruptures (suspected or confirmed), bleeding, hematoma, or seroma requiring intervention in the study. Based on our market research, we believe Mia Femtech will continue to attract new consumers and expand the market for breast aesthetic procedures.
The study, which had a three-year follow-up compliance rate of 93%, found no reports of capsular contracture (Baker Grade III/IV), ruptures (suspected or confirmed), bleeding, hematoma, or seroma requiring intervention in the study. Based on our market research, we believe Mia Femtech will continue to attract new consumers and expand the market for breast aesthetic procedures.
Our latest generation of Motiva Implants utilizes our proprietary Gravity Sensitive Ergonomix design, with a round base implant that responds to gravity by shifting its maximum point of projection, offering the more “natural” projection of a shaped implant without the malposition and rotation issues frequently associated with shaped implants.
Our latest generation of Motiva Implants utilizes our proprietary Gravity Sensitive Ergonomix design, with a round base implant that responds to gravity by shifting its maximum point of projection, offering the more “natural” projection of a shaped implant without the malposition and rotation issues frequently 8 Table of Contents associated with shaped implants.
Our catalog includes over 1,000 product variations, with round, oval and anatomical shapes, two different surfaces, SmoothSilk and 9 Table of Contents VelvetSurface, and volumes ranging from 95cc to 1060cc, resulting in a wider range of options than those offered by our major competitors.
Our catalog includes over 1,000 product variations, with round, oval and anatomical shapes, two different surfaces, SmoothSilk and VelvetSurface, and volumes ranging from 95cc to 1060cc, resulting in a wider range of options than those offered by our major competitors.
In particular, if our products are approved in the United States and become eligible for federal government reimbursement, our business activities could be subject to scrutiny and enforcement under one or more U.S. federal or state health care fraud and abuse laws and regulations, including: • The federal Anti-Kickback Law, which prohibits, among other things, knowingly or willingly offering, paying, soliciting or receiving remuneration, directly or indirectly, in cash or in kind, to induce or reward the purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any health care items or service for which payment may be made, in whole or in part, by federal healthcare programs such as Medicare and Medicaid. • The federal civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly concealing or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government. • The fraud provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which impose criminal liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors, and prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items or services. • Analogous state and local laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require medical technology companies to comply with the device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; and state laws and local ordinances that require identification or licensing of sales representatives.
In particular, if our products become eligible for reimbursement by federal health care programs (directly or indirectly) in the United States, our business activities could be subject to scrutiny and enforcement under one or more U.S. federal or state health care fraud and abuse laws and regulations, including: 24 Table of Contents • The federal Anti-Kickback Law, which prohibits, among other things, knowingly or willingly offering, paying, soliciting or receiving remuneration, directly or indirectly, in cash or in kind, for the referral of an individual for the furnishing of an item or service, or to induce or reward the purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any health care items or service for which payment may be made, in whole or in part, by federal healthcare programs such as Medicare and Medicaid. • The federal civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly concealing or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government. • The fraud provisions of HIPAA, which impose criminal liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors, and prohibit knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items or services. • Analogous state and local laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require medical technology companies to comply with the device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; and state laws and local ordinances that require identification or licensing of sales representatives.
We believe that the cohesive properties reduce the likelihood of silicone gel leakage in the event of a rupture in the shell. The strength of the gel is believed to contribute to a reduced frequency of gel fracture, a condition which leads to deformed implant shape and stress on the implant’s shell.
We believe that the cohesive properties reduce the likelihood of silicone gel leakage in the event of a rupture in the shell. The strength of the gel is believed to contribute to a 9 Table of Contents reduced frequency of gel fracture, a condition which leads to deformed implant shape and stress on the implant’s shell.
Our sustainability framework lays the foundation to ensure this commitment is present in everything we do. It describes our pillars, statements, priorities, and guidelines that enable our journey toward 29 Table of Contents sustainability. All these efforts are founded on our four material categories: women’s health and well-being, environment, people, and governance.
Our sustainability framework lays the foundation to ensure this commitment is present in everything we do. It describes our pillars, statements, priorities, and guidelines that enable our journey toward sustainability. All these efforts are founded on our four material categories: women’s health and well-being, environment, people, and governance.
To reduce the risks associated with these various laws and governmental regulations, we have implemented a compliance plan. Although compliance programs can mitigate the risk of investigation and 26 Table of Contents prosecution for violations of these laws, the risks cannot be entirely eliminated.
To reduce the risks associated with these various laws and governmental regulations, we have implemented a compliance plan. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated.
We cannot assure you that we do not currently infringe, or that we will not in the future infringe, upon any third-party patents or other proprietary rights. Research and Development Our goal is to continue to improve our existing products, as well as develop new products and new surgical techniques.
We cannot assure you that we do not currently infringe, or that we will not in the future infringe, upon any third-party patents or other proprietary rights. 17 Table of Contents Research and Development Our goal is to continue to improve our existing products, as well as develop new products and new surgical techniques.
Sustainability is key to our existence and future. As a global medical technology company, we seek to create positive and long-term social, environmental, and economic impact with our products, experiences, activities, and corporate efforts. Accordingly, our global sustainability commitment leads us to increase our contribution toward long-term sustainability.
Sustainability is key to our existence and future. As a global medical technology company, we seek to create positive and long-term social, environmental, and economic impact with our products, experiences, activities, and corporate efforts. Accordingly, our global sustainability commitment leads us to increase our contribution toward 28 Table of Contents long-term sustainability.
Additional information on our environmental efforts can be found in the 2022 Annual Review, which is available at establishmentlabs.com/wp-content/uploads/2023/07/ESTA-Annual-review-2022-1.pdf. We are defined by our commitment to women’s health and well-being. We believe offering innovative options that empower women in their breast health and wellness journey is the right path to building a new industry.
Additional information on our environmental efforts can be found in our 2023 Annual Review, which is available at https://establishmentlabs.com/wp-content/uploads/2024/07/Sustainability-Annual-Review-2023.pdf. We are defined by our commitment to women’s health and well-being. We believe offering innovative options that empower women in their breast health and wellness journey is the right path to building a new industry.
We promote Motiva Implants, in part, via an extensive and robust calendar of physician education events led by key opinion leaders in the field of aesthetic and reconstructive surgery. In 2023 and 2022, we conducted 192 and 201 events, respectively, through our medical educational platform.
We promote Motiva Implants, in part, via an extensive and robust calendar of physician education events led by key opinion leaders in the field of aesthetic and reconstructive surgery. In 2024 and 2023, we conducted 239 and 192 events, respectively, through our medical educational platform.
We have implemented policies, procedures, and internal controls that are designed to comply with these laws and regulations. Human Capital As of December 31, 2023, we had 908 employees. None of our employees are represented by a labor union or covered by collective bargaining agreements except for employees in Brazil and Argentina.
We have implemented policies, procedures, and internal controls that are designed to comply with these laws and regulations. Human Capital As of December 31, 2024, we had 1,018 employees. None of our employees are represented by a labor union or covered by collective bargaining agreements except for employees in Brazil and Argentina.
Our primary competitors utilize the “salt-loss” technique or “polyurethane foam imprint” technique. The “salt-loss” technique blows crystals of salt or sugar onto the uncured silicone shell in order to produce surface texture and the “polyurethane foam imprint” technique uses a foreign material to press against the last uncured silicone layer to produce surface features.
The “salt-loss” technique blows crystals of salt or sugar onto the uncured silicone shell in order to produce surface texture and the “polyurethane foam imprint” technique uses a foreign material to press against the last uncured silicone layer to produce surface features.
Motiva Implants are currently the only breast 12 Table of Contents implants on the international market with Qid Safety Technology; however, we believe there is an opportunity to sell these microtransponders to other medical device companies in the space.
Motiva Implants are currently the only breast implants on the international market with Qid Safety Technology; however, we believe there is an opportunity to sell these microtransponders to other medical device companies in the space.
The Health Insurance Portability and Accountability Act of 1996, or HIPAA, established comprehensive U.S. federal protection for the privacy and security of protected health information.
The Health Insurance Portability and Accountability Act of 1996 and its implementing regulations, or HIPAA, established comprehensive U.S. federal protection for the privacy and security of protected health information.
In the future, we expect our social media and online patient and physician education to have important strategic synergies with our designed surgeries, which are promoted globally. 7 Table of Contents ▪ Seek out and pursue strategic acquisitions.
In the future, we expect our social media and online patient and physician education to have important strategic synergies with our designed surgeries, which are promoted globally. • Seek out and pursue strategic acquisitions.
There were no reported cases of double capsule formation or breast-implant associated anaplastic large-cell lymphoma, or BIA- ALCL, in this data set, and there were 48 cases of early seroma and 4 case of late seroma.
There were no reported cases of double capsule formation or breast-implant associated anaplastic large-cell lymphoma, or BIA- ALCL, in this data set, and there were 81 cases of early seroma and 13 case of late seroma reported.
In particular, we obtain NuSil brand medical-grade silicone from Avantor (previously NuSil Technology LLC), which is a sole-source supplier of such products to the majority of the silicone breast implant industry.
In particular, we obtain NuSil brand medical-grade silicone from Avantor, Inc. (formerly NuSil Technology LLC), or Avantor, which is a sole-source supplier of such products to the majority of the silicone breast implant industry.
This table represents preliminary data available as of April 2023 and does not necessarily reflect final clinical results nor demonstrate the investigational device’s safety and effectiveness for the United States trial.
This table represents preliminary data available as of October 2024 and does not necessarily reflect final clinical results nor demonstrate the investigational device’s safety and effectiveness for the United States trial.
If we fail to comply with these privacy laws, or if significant changes in the 25 Table of Contents laws restrict our ability to obtain tissue samples and associated patient information, this could significantly impact our business and our future business plans.
All of these laws may impact our business. If we fail to comply with these privacy laws, or if significant changes in the laws restrict our ability to obtain tissue samples and associated patient information, this could significantly impact our business and our future business plans.
We maintain a Quality Management System database to track and report complaints received from patients or physicians. From October 2010 through December 2023, a total of 4,457 complaints have been reported, investigated and processed, representing approximately 0.1% of the total Motiva Implants sold through December 2023.
We maintain a Quality Management System database to track and report complaints received from patients or physicians. From October 2010 through December 2024, a total of 5,901 complaints have been reported, investigated and processed, representing approximately 0.1% of the total Motiva Implants sold through December 2024.
In May 2019, both of our facilities in Coyol Free Zone received the Carbon Neutral certification from the Costa Rican Ministry of Environment, Energy, and Telecommunications, based on the implementation of efficiency-aimed actions such as the reduction of energy consumption through the acquisition of more efficient equipment; the combined use of solar panels, ice banks, and battery storage units; and the avoidance of fossil fuels for our operations.
Both of our facilities in Coyol Free Zone are Carbon Neutral certified by the Costa Rican Ministry of Environment, Energy, and Telecommunications, based on the implementation of efficiency-aimed actions such as the reduction of energy consumption through the acquisition of more efficient equipment; the combined use of solar panels, ice banks, and battery storage units; and the avoidance of fossil fuels for our operations.
In addition, in October 2023, we completed and announced the results of the two-year 100-patient clinical study for Mia Femtech, our patented technologies that can increase breast shape by 1 to 2 cups in a 15-minute procedure without the need for general anesthesia.
In October 2024, we completed and announced the results of the three-year 100-patient clinical study for Mia Femtech, our patented technology that can increase breast shape by 1 to 2 cups in a 15-minute procedure without the need for general anesthesia.
We also collaborate actively with respected and influential key opinion leader surgeons to identify and develop new clinical applications for our existing products, as well as new product and strategic opportunities. 8 Table of Contents Our Products and Technologies The key characteristics of our primary products are described in the table below: Product Motiva Round Motiva Ergonomix Motiva Ergonomix2 Motiva Flora Tissue Expander Description Round soft silicone-gel filled breast implants Gravity sensitive round soft silicone-gel-filled breast implants Gravity sensitive soft silicone-gel-filled breast implants with improved mechanical properties Breast tissue expander, used to gradually expand a patient’s breast tissue prior to the placement of a long-term breast implant Product Catalog Available in 160 round catalogs, including four projection heights Available in 160 round catalogs, including four projection heights Available in more than 160 round catalogs, including four projection heights; Available in 60 catalogs for Diamond implants Available in 15 catalogs, with three different heights Key Features • SilkSurface/SmoothSilk shell surface • ProgressiveGel PLUS Silicone gel fill • TrueMonobloc construction • BluSeal shell barrier layer • Qid Safety Technology RFID microtransponder ▪ SilkSurface/SmoothSilk shell surface ▪ ProgressiveGel Ultima, Silicone gel fill ▪ TrueMonobloc construction ▪ BluSeal shell barrier ▪ Qid Safety Technology RFID microtransponder ▪ Ergonomy and more natural look ▪ SilkSurface/SmoothSilk shell surface • ProgressiveGel Ultima, Silicone gel fill ▪ TrueMonobloc+ construction ▪ BluSeal+ shell barrier • Qid Safety Technology RFID microtransponder ▪ Motiva SuperSilicones ▪ SilkSurface/SmoothSilk shell surface ▪ Anatomical design ▪ Compatible with MRI and CT scans ▪ Injection site located with RF technology, using the Motiva Port Locator ▪ Orientation line observable on X-Ray ▪ Fixation suture tabs Sales Territories 86 countries Motiva Implants The Motiva breast implants are a Class III Medical Device indicated for breast augmentation and breast reconstruction, including revision surgeries to correct or improve the result of a previous breast implant surgery.
Our Products and Technologies The key characteristics of our primary products are described in the table below: Product Motiva Round Motiva Ergonomix Motiva Ergonomix2 Motiva Flora Tissue Expander Description Round soft silicone-gel filled breast implants Gravity sensitive round soft silicone-gel-filled breast implants Gravity sensitive soft silicone-gel-filled breast implants with improved mechanical properties Breast tissue expander, used to gradually expand a patient’s breast tissue prior to the placement of a long-term breast implant Product Catalog Available in 160 round catalogs, including four projection heights Available in 160 round catalogs, including four projection heights Available in more than 160 round catalogs, including four projection heights; Available in 60 catalogs for Diamond implants Available in 15 catalogs, with three different heights Key Features • SilkSurface/SmoothSilk shell surface • ProgressiveGel PLUS Silicone gel fill • TrueMonobloc construction • BluSeal shell barrier layer • Qid Safety Technology RFID microtransponder ▪ SilkSurface/SmoothSilk shell surface ▪ ProgressiveGel Ultima, Silicone gel fill ▪ TrueMonobloc construction ▪ BluSeal shell barrier ▪ Qid Safety Technology RFID microtransponder ▪ Ergonomy and more natural look ▪ SilkSurface/SmoothSilk shell surface • ProgressiveGel Ultima, Silicone gel fill ▪ TrueMonobloc+ construction ▪ BluSeal+ shell barrier • ZEN RFID microtransponder ▪ Motiva SuperSilicones ▪ SilkSurface/SmoothSilk shell surface ▪ Anatomical design ▪ Compatible with MRI and CT scans ▪ Injection site located with RF technology, using the Motiva Port Locator ▪ Orientation line observable on X-Ray ▪ Fixation suture tabs Sales Territories 94 countries Motiva Implants The Motiva breast implants are a Class III Medical Device indicated for breast augmentation and breast reconstruction, including revision surgeries to correct or improve the result of a previous breast implant surgery.
To date, our Motiva Implants are registered to be sold in 86 countries, including, most recently, in China. We currently sell our products via exclusive distributors or our direct sales force and have introduced five generations of Motiva Implants.
To date, our Motiva Implants are registered to be sold in 94 countries, including, most recently, in the United States. We currently sell our products via exclusive distributors or our direct sales force and have introduced five generations of Motiva Implants.
The timeline for the introduction of new medical devices is heavily impacted by these various regulations on a country-by-country basis, which may become longer and more costly over time. 28 Table of Contents Anti-Corruption Laws We are subject to applicable anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K.
The timeline for the introduction of new medical devices is heavily impacted by these various regulations on a country-by-country basis, which may become longer and more costly over time. Anti-Corruption Laws We are subject to applicable anti-corruption laws, such as the U.S.
Moreover, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.
Moreover, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development. In the EU, pricing and reimbursement schemes vary widely from country to country.
For more information, please refer to Section 1A “Risk Factors”. Working towards a more sustainable future by reducing our environmental footprint is important to us. In July 2019, we have been certified as Carbon Neutral by the Costa Rican Ministry of Environment, Energy, and Telecommunications, or MINAE.
For more information, please refer to Section 1A “Risk Factors”. Working towards a more sustainable future by reducing our environmental footprint is important to us. Our manufacturing facilities are certified as Carbon Neutral by the Costa Rican Ministry of Environment, Energy, and Telecommunications, or MINAE.
In addition, we own or have rights to 126 issued, one allowed and 93 pending foreign 18 Table of Contents applications and one pending Patent Cooperation Treaty, or PCT, applications. Our owned and licensed patents are expected to expire at various times between February 2025 and February 2039.
In addition, we own or have rights to 161 issued, one allowed and 72 pending foreign applications and one pending Patent Cooperation Treaty, or PCT, applications. Our owned and licensed patents are expected to expire at various times between February 2025 and February 2039.
If our products are approved in the United States and become eligible for federal government reimbursement, we will also become subject to the Physician Payment Sunshine Act and its amendments and implementing regulations, which require annual reporting of payments and transfers of value to physicians, teaching hospitals and other “covered recipients”, along with physician ownership information.
If our products that are approved in the United States become eligible for direct or indirect reimbursement by federal health care programs like Medicare or Medicaid, we will also become subject to the Physician Payment Sunshine Act and its amendments and implementing regulations, which require annual reporting of payments and transfers of value to physicians, teaching hospitals and other “covered recipients”, along with physician ownership information.
Bribery Act, and similar anti-corruption laws in the countries in which we distribute our products.
Foreign Corrupt Practices Act and the UK Bribery Act, and similar anti-corruption laws in the countries in which we distribute our products.
Fraud and Abuse Laws As participants in national and local health care programs, we may be subject to anti-fraud and abuse laws in various countries. Many of these anti-fraud laws are broad in scope and impose significant penalties for violation.
Fraud and Abuse Laws As participants in the health care industry, we are subject to anti-fraud and abuse laws in various countries. Many of these anti-fraud laws are broad in scope and impose significant penalties for violation.
As of December 31, 2023, we own or have rights to 30 issued, two allowed and 14 pending patents in the United States related to various aspects of our Motiva Implants (such as implant barrier layers, surface texture technology, minimally invasive implant delivery systems, and our Qid Safety Technology radio frequency identification devices).
As of December 31, 2024, we own or have rights to 33 issued, one allowed and 15 pending patents in the United States related to various aspects of our Motiva Implants (such as implant barrier layers, surface texture technology, minimally invasive implant delivery systems, minimally invasive and tissue preservation procedures and systems and our Qid Safety Technology or ZEN radio frequency identification devices).
All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s IDE regulations, including regulations related to informed consent, Institutional Review Board, or IRB, review and approval, Good Clinical Practices, or GCPs, and labeling of investigational devices.
All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s IDE regulations, including regulations related to informed consent, Institutional Review Board, or IRB, review and approval, Good Clinical Practices, or GCPs, and labeling of investigational devices. Our clinical study sites are additionally subject to possible inspection by the FDA.
There are also additional national, state, and provincial privacy laws that impose restrictions on the access, use, and disclosure of personal information, including data that is not protected health information, or are otherwise more stringent than HIPAA. All of these laws may impact our business.
There are also additional federal and state privacy laws that impose restrictions on the access, use, and disclosure of personal information, including data that is not protected health information, or are otherwise more stringent than HIPAA.
Manufacturing and Suppliers Facilities We manufacture our products in ISO-13485-certified manufacturing facilities located in the Coyol Free Zone office park in Costa Rica, a park populated by a number of international medical device companies and granted tax-advantaged status by the government of Costa Rica.
This allows us to adapt to specific needs or new developments in our field. Manufacturing and Suppliers Facilities We manufacture our products in ISO-13485-certified manufacturing facilities located in the Coyol Free Zone office park in Costa Rica, a park populated by a number of international medical device companies and granted tax-advantaged status by the government of Costa Rica.
The Motiva Flora Tissue Expander is the first MRI Conditional expander and is the only tissue expander in the market with an integrated RFID port with no magnets, allowing for use of the expander safely alongside MRI (1.5 and 3 Tesla) scanning. The Motiva Flora received CE mark in June 2020 and has been registered in 57 countries.
The Motiva Flora Tissue Expander is the first MRI Conditional expander and is the only tissue expander in the market with an integrated RFID port with no magnets, allowing for use of the expander safely alongside MRI (1.5 and 3 Tesla) scanning.
Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. One third-party payor’s decision to cover a product does not ensure that other payors will also provide coverage for the product.
Third-party payors include federal and state government authorities, managed care providers, private health insurers and other organizations. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. One third-party payor’s decision to cover a product does not ensure that other payors will also provide coverage for the product.
We launched Motiva Implants commercially in October 2010, and to date we have sold approximately 3.3 million units in various countries outside the United States. Motiva Implants incorporate several proprietary features that we believe contribute to their favorable safety profile, natural appearance and feel.
We launched Motiva Implants commercially in October 2010, and to date we have sold close to 4 million units. Motiva Implants incorporate several proprietary features that we believe contribute to their favorable safety profile, natural appearance and feel.
The market, currently valued at $0.6 billion in 2022, is projected to exceed $1 billion by 2030. This growth is expected to be driven by factors like technological advancements, increased awareness, and a rising number of breast cancer cases worldwide.
The market, valued at $0.7 billion in 2024, is projected to exceed $1 billion by 2030. This growth is expected to be driven by factors like technological advancements, increased awareness, higher disposable income of women, growing medical tourism and a rising number of breast cancer cases worldwide.
Related to our devices specifically, the FDA’s guidance document “Saline, Silicone Gel, and Alternative Breast Implants” currently recommends that a core study, which can be a single, open label, multi-center study, be conducted with ten years or more of prospective patient follow-up.
Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. 21 Table of Contents Related to our devices specifically, the FDA’s guidance document “Saline, Silicone Gel, and Alternative Breast Implants” currently recommends that a core study, which can be a single, open label, multi-center study, be conducted with ten years or more of prospective patient follow-up.
This allows our Motiva Implants to provide the more natural aesthetics of “shaped” or “teardrop” implants without the risk of associated drawbacks such as breast deformation from rotation and unnaturally hard tactile feel.
This allows our Motiva Implants to provide the more natural aesthetics of “shaped” or “teardrop” implants without the risk of associated drawbacks such as breast deformation from rotation and unnaturally hard tactile feel. The images below illustrate the implants’ ability to change shape depending on the patient’s positioning.
A surgical technique that we have developed, which we call Minimally Invasive Aesthetics, or Mia Femtech, utilizes our next-generation Ergonomix2 Diamond implant to take advantage of these physical properties to enable a less-invasive procedure for the patient. The following image shows that TrueMonobloc enables significant manipulation of a Motiva Implant without separation of gel from shell.
A surgical technique that we have developed, which we call Minimally Invasive Aesthetics, or Mia Femtech, utilizes our next-generation Ergonomix2 Diamond implant to take advantage of these physical properties to enable a less-invasive procedure for the patient.
Intellectual Property Our success depends at least in part upon our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including patents, trade secrets and trademarks, as well as customary contractual protections.
We employ a multi-faceted marketing strategy that includes social media engagement, conferences, advertisements and education. Intellectual Property Our success depends at least in part upon our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including patents, trade secrets and trademarks, as well as customary contractual protections.
The microtransponder contains only a unique 15-digit code that identifies the product and does not contain any patient information. This microtransponder can be read with a simple pass from our non-invasive and inexpensive reading device, the Qid Safety Technology Reader, and the serial number corresponds with related information in our MotivaImagine database such as implant type, size and other characteristics.
This microtransponder can be read with a simple pass from our non-invasive and inexpensive reading device, the Qid Safety Technology Reader, and the serial number corresponds with related information in our MotivaImagine database such as implant type, size and other characteristics.
As we expand the geographic market for our products, we may be subject to similar national or local laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to health care professionals.
We are also subject to similar national or local laws and regulations, including, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to health care professionals.
Our BluSeal indicator technology also provides the plastic surgeon with the ability to verify whether the barrier layer has coverage defects or other imperfections before implantation that might lead to post- 13 Table of Contents implantation shell rupture or gel bleed.
This patented manufacturing innovation is intended to highlight any imperfections in the barrier layer coverage with a distinct color. Our BluSeal indicator technology also provides the plastic surgeon with the ability to verify whether the barrier layer has coverage defects or other imperfections before implantation that might lead to post- 11 Table of Contents implantation shell rupture or gel bleed.
All of these patients were located outside the United States. Motiva Implants Number of Implants Sold N= 3,277,844 Implants (1) Rupture Capsular Contracture Reoperation for Adverse Events Reoperation (All Causes) N/A (2) (1) Data is internally tracked on an individual implant basis rather than by patient. (2) Complaint database does not capture reoperations for reasons not related to safety.
All of these patients in the study were located outside the United States. Motiva Implants Number of Implants Sold N= 3,911,861 Implants (1) Rupture Capsular Contracture Reoperation for Adverse Events Reoperation (All Causes) N/A (2) (1) Data is internally tracked on an individual implant basis rather than by patient.
Our products are commercially available in 86 countries through exclusive distributors, except in Brazil, Argentina and several European countries where we sell through our direct sales force. As of December 31, 2023, our sales organization included 133 employees and contractors.
Our products are commercially available in 94 16 Table of Contents countries through exclusive distributors, except in the United States, Brazil, Argentina and several European countries where we sell through our direct sales force. As of December 31, 2024, our sales organization included 282 employees and contractors.
Our clinical study sites are additionally subject to possible inspection by the FDA. 23 Table of Contents If the device presents a “significant risk,” to human health, as defined by the FDA, the device sponsor must submit an IDE application to the FDA, which must be approved prior to commencing human clinical trials.
If the device presents a “significant risk,” to human health, as defined by the FDA, the device sponsor must submit an IDE application to the FDA, which must be approved prior to commencing human clinical trials.
In November 2022, Motiva Implants and the Motiva Flora tissue expander have been approved for use in Japan by the Pharmaceuticals and Medical Devices Agency (PMDA). These products have also received reimbursement for post-mastectomy reconstruction under the Japanese National Health System. In November 2023,Motiva Implants received National Medical Products Administration (NMPA) approval in China.
We received regulatory clearance in Brazil in March 2017 and launched our Motiva Implants commercially in July 2017. In November 2022, Motiva Implants and the Motiva Flora tissue expander have been approved for use in Japan by the Pharmaceuticals and Medical Devices Agency (PMDA). These products have also received reimbursement for post-mastectomy reconstruction under the Japanese National Health System.
We have and will continue to work with several institutions in our effort to advance implant technology, and generate additional scientific data to support the improved safety outcomes associated with our products, including: ▪ Massachusetts Institute of Technology ▪ Medical University of Innsbruck ▪ Department of Bioengineering at Rice University ▪ John Hopkins Department of Biomedical Engineering ▪ Plastic and Reconstructive Research Center at the University of Manchester ▪ Center for Biofilm Engineering of Montana State University ▪ College of Engineering at UC Santa Barbara ▪ The Chair of Plastic Surgery at the School of Medicine and Psychology of Sapienza University of Rome We have incurred, and expect to continue to incur, significant R&D expenses.
We have and will continue to work with several institutions in our effort to advance implant technology, and generate additional scientific data to support the improved safety outcomes associated with our products, including: • Massachusetts Institute of Technology • Medical University of Innsbruck • Department of Bioengineering at Rice University • University of Cape Town Faculty of Health Sciences • University Hospital Ghent Department of Plastic Surgery • The Chair of Plastic Surgery at the School of Medicine and Psychology of Sapienza University of Rome We have incurred, and expect to continue to incur, significant R&D expenses.
The images below illustrate the implants’ ability to change shape depending on the patient’s positioning. 11 Table of Contents TrueMonobloc Our TrueMonobloc technology, which is incorporated into all generations of Motiva Implants currently sold, combines proprietary chemistry with our proprietary manufacturing techniques to create a shell, gel and other components that are tightly bound to one another.
TrueMonobloc Our TrueMonobloc technology, which is incorporated into all generations of Motiva Implants currently sold, combines proprietary chemistry with our proprietary manufacturing techniques to create a shell, gel and other components that are tightly bound to one another.
The process of obtaining PMA approval is much more costly, lengthy, and uncertain than the 510(k) process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the application must be supported by extensive data, including data from preclinical studies and human clinical trials.
In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the application must be supported by extensive data, including data from preclinical studies and human clinical trials.
In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval.
In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients.
The extent of the surface roughness as examined for the silicone implant shells for SmoothSilk resulted in the lowest friction coefficient and fewest wear debris particles in the size range favored by the macrophages.
The extent of the surface roughness as examined for the silicone implant shells for SmoothSilk resulted in the lowest friction coefficient and fewest wear debris particles in the size range favored by the macrophages. This highlights the optimal ranges of the SmoothSilk design to reduce frictional shared stress and wear debris during the tribological interactions.
All these components are also critical to maintain integrity of the product throughout its shelf-life and all these suppliers must be qualified and materials must be validated prior to being approved for manufacturing activities. Most suppliers are evaluated annually, and we carry second source supplier activities to ensure business continuity and quality and costs improvement.
All these components are also critical to maintain integrity of the product throughout its shelf-life and all these suppliers must be qualified and materials must be validated prior to being approved for manufacturing activities.
Breast Reconstruction The American Society of Plastic Surgeons noted in their Procedural Statistics Release that 151,641 breast reconstructions were performed in 2022 in the United States. According to Fairfield Market Research 2023 report, the global breast reconstruction market is expected to grow at a CAGR of 7.2% from 2023 to 2030.
Breast Reconstruction The American Society of Plastic Surgeons noted in their Procedural Statistics Release that 157,740 breast reconstructions were performed in 2023 in the United States. According to P&S Intelligence, the global breast reconstruction market is expected to grow at a CAGR of 6.4% from 2024 to 2030.

… 130 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

179 edited+36 added−105 removed322 unchanged
Biggest changeDoing business in Costa Rica and other countries outside the United States involves a number of other risks, including: • compliance with the free zone regime regulations under which the manufacturing sites operate; • different regulatory requirements for device approvals in international markets; • multiple, conflicting and changing laws and regulations such as tariffs and tax laws, export and import restrictions, employment laws, environmental laws, regulatory requirements and other governmental approvals, permits and licenses; • potential failure by us or our distributors to obtain and/or maintain regulatory approvals for the sale or use of our products in various countries; • difficulties in managing global operations; • logistics and regulations associated with shipping products, including infrastructure conditions and transportation delays; • limits on our ability to penetrate international markets if our distributors do not execute successfully; • governmental price controls, differing reimbursement regimes and other market regulations; • financial risks, such as longer payment cycles, difficulty enforcing contracts and collecting accounts receivable, and exposure to currency exchange rate fluctuations; • reduced protection for intellectual property rights, or lack of them in certain jurisdictions, forcing more reliance on our trade secrets, if available; • economic weakness, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; • the British exit from the EU, including with respect to its effect on the value of the British pound relative to other currencies; • failure to comply with the Foreign Corrupt Practices Act, including its books and records provisions and its anti-bribery provisions, by maintaining accurate information and control over sales activities and distributors’ activities; • failure to comply with restrictions on the ability of companies to do business in foreign countries, including restrictions on foreign ownership of telecommunications providers imposed by the U.S.
Biggest changeDoing business in Costa Rica and other countries outside the United States involves a number of other risks, including: • multiple, conflicting and changing laws and regulations such as tariffs and tax laws, export and import restrictions, employment laws, environmental laws, regulatory requirements, price controls, reimbursement schemes and other governmental approvals, permits and licenses; • difficulties in managing global operations; • logistics and regulations associated with shipping products, including interruptions resulting from natural or other disasters including earthquakes, volcanic activity, hurricanes, floods and fires, and transportation delays; • limits on our ability to penetrate international markets if our distributors do not execute successfully; • financial risks, such as longer payment cycles, difficulty enforcing contracts and collecting accounts receivable, and exposure to currency exchange rate fluctuations; • reduced protection for intellectual property rights, or lack of them in certain jurisdictions, forcing more reliance on our trade secrets, if available; • economic weakness, currency fluctuations, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; • failure to comply with the Foreign Corrupt Practices Act, including its books and records provisions and its anti-bribery provisions, by maintaining accurate information and control over sales activities and distributors’ activities; • failure to comply with restrictions on the ability of companies to do business in foreign countries, including restrictions on foreign ownership of telecommunications providers imposed by the U.S.
If our available cash resources and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to sell equity or convertible debt securities, enter into a credit facility or another form of third-party funding, or seek other debt financing.
If our available cash resources and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to sell equity or convertible debt securities, enter into a credit facility or another form of third-party funding, or seek other debt financing.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for any planned products we may develop; • injury to our reputation and significant negative media attention; • withdrawal of patients from clinical studies or cancellation of studies; • significant costs to defend the related litigation and distraction to our management team; • substantial monetary awards to plaintiffs; • loss of revenue; and • the inability to commercialize any products that we may develop.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for our products or any planned products we may develop; • injury to our reputation and significant negative media attention; • withdrawal of patients from clinical studies or cancellation of studies; • significant costs to defend the related litigation and distraction to our management team; • substantial monetary awards to plaintiffs; • loss of revenue; and • the inability to commercialize any products that we may develop.
In October 2023, the EU Council announced that three jurisdictions have been removed from the list of non-cooperative tax jurisdiction, one of which was Costa Rica. This follows the reforms made to the Costa Rica’s Income Tax Law, amending aspects of the foreign-source income exemption regime.
In October 2023, the EU Council announced that three jurisdictions have been removed from the list of non-cooperative tax jurisdiction, one of which was Costa Rica. This follows the reforms made to Costa Rica’s Income Tax Law, amending aspects of the foreign-source income exemption regime.
The full extent to which any pandemic, epidemic, or public health crisis may, directly or indirectly, impact our business, results of operations and financial condition, including our sales, expenses, supply chain integrity, manufacturing capability, research and development activities, and employee-related compensation, is highly uncertain and will depend on future developments that are also highly uncertain and cannot be predicted with reasonable accuracy at this time, including, without limitation: • the contagiousness or virulence of the virus, disease or other condition giving rise to the pandemic, epidemic or public health crisis; 49 Table of Contents • the scope and length of any governmental or other restrictions implemented to reduce the spread of virus, disease or other condition giving rise to the pandemic, epidemic or public health crisis or other actions required or recommended to contain or treat infected individuals; • the deferral of procedures using our products or other adverse impact on patients’ willingness to undergo procedures in which our products could be used during or following any pandemic, epidemic or other public health crisis; • volatility in the global capital markets, impacting access to and cost of capital; • disruptions in the manufacture and distribution of our products and in our supply chain; • delays in clinical trials; • disruptions or restrictions on the ability of many of our employees, and of third parties on which we rely, to work effectively, including “stay-at-home” orders and similar government actions; • temporary closures of our facilities and of the facilities of our customers and suppliers; and • other direct and indirect economic impacts, both domestically and abroad, of a pandemic, epidemic, or public health crisis as a result of any or all of the foregoing, including actions taken by local, state, national and international governmental agencies, whether such impact affects customers, suppliers, or markets generally.
The full extent to which any pandemic, epidemic, or public health crisis may, directly or indirectly, impact our business, results of operations and financial condition, including our sales, expenses, supply chain integrity, manufacturing capability, research and development activities, and employee-related compensation, is highly uncertain and will depend on future developments that are also highly uncertain and cannot be predicted with reasonable accuracy at this time, including, without limitation: • the contagiousness or virulence of the virus, disease or other condition giving rise to the pandemic, epidemic or public health crisis; • the scope and length of any governmental or other restrictions implemented to reduce the spread of virus, disease or other condition giving rise to the pandemic, epidemic or public health crisis or other actions required or recommended to contain or treat infected individuals; • the deferral of procedures using our products or other adverse impact on patients’ willingness to undergo procedures in which our products could be used during or following any pandemic, epidemic or other public health crisis; • volatility in the global capital markets, impacting access to and cost of capital; • disruptions in the manufacture and distribution of our products and in our supply chain; • delays in clinical trials; 44 Table of Contents • disruptions or restrictions on the ability of many of our employees, and of third parties on which we rely, to work effectively, including “stay-at-home” orders and similar government actions; • temporary closures of our facilities and of the facilities of our customers and suppliers; and • other direct and indirect economic impacts, both domestically and abroad, of a pandemic, epidemic, or public health crisis as a result of any or all of the foregoing, including actions taken by local, state, national and international governmental agencies, whether such impact affects customers, suppliers, or markets generally.
In addition, our relationship with Avantor involves other risks, including but not limited to the following: • it may not be able, or willing, to manufacture silicone raw materials with our agreed-upon specifications; • it may not be able, or willing, to manufacture our needed raw materials in compliance with regulatory requirements, or our its manufacturing facilities may not be able to maintain compliance with regulatory requirements; • it may not be able to supply sufficient quantities of each raw material quickly enough for us to respond to rapid increases in demand; • it may unintentionally convey information to our competitors that is helpful in understanding our proprietary compositions and other trade secrets of our manufacturing processes; • we may be subject to price fluctuations if we fail to meet certain minimum order requirements, or if our existing contract expires or is renegotiated; • it may lose access to critical services and components, resulting in interruption in manufacture or shipment of medical-grade silicone; • its facilities may be affected by earthquakes, wildfires, mud slides or other natural disasters, which could delay or impede production of our raw materials; • we may be required to obtain regulatory approvals related to any change in our supply chain; • Avantor may wish to discontinue supply of products to us due to its existing relationships with our competitors; • Avantor may stop supply and claim ownership of intellectual property on materials associated with future products; 47 Table of Contents • Avantor or its parent entity may encounter financial or other hardships unrelated to our demand for products, which could negatively impact their ability to fulfill our orders and support our regulatory approvals; and • disputes may arise over the terms of the Master Supply Agreement, by and between the Company and Avantor, dated May 13, 2022.
In addition, our relationship with Avantor involves other risks, including but not limited to the following: • it may not be able, or willing, to manufacture silicone raw materials with our agreed-upon specifications; • it may not be able, or willing, to manufacture our needed raw materials in compliance with regulatory requirements, or our its manufacturing facilities may not be able to maintain compliance with regulatory requirements; • it may not be able to supply sufficient quantities of each raw material quickly enough for us to respond to rapid increases in demand; • it may unintentionally convey information to our competitors that is helpful in understanding our proprietary compositions and other trade secrets of our manufacturing processes; • we may be subject to price fluctuations if we fail to meet certain minimum order requirements, or if our existing contract expires or is renegotiated; • it may lose access to critical services and components, resulting in interruption in manufacture or shipment of medical-grade silicone; • its facilities may be affected by earthquakes, wildfires, mud slides or other natural disasters, which could delay or impede production of our raw materials; • we may be required to obtain regulatory approvals related to any change in our supply chain; • Avantor may wish to discontinue supply of products to us due to its existing relationships with our competitors; • Avantor may stop supply and claim ownership of intellectual property on materials associated with future products; • Avantor or its parent entity may encounter financial or other hardships unrelated to our demand for products, which could negatively impact their ability to fulfill our orders and support our regulatory approvals; and 42 Table of Contents • disputes may arise over the terms of the Master Supply Agreement, by and between the Company and Avantor, dated May 13, 2022.
Despite the implementation of security measures, our information systems, or those used by third parties which we rely on, are vulnerable to a variety of cybersecurity incidents and cybersecurity threats, as well as other forms of attack or damage, including damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures, security breaches, data corruption, and cyberattacks.
Despite the implementation of security measures, our information systems, or those used by third parties which we rely on, are vulnerable to a variety of cybersecurity incidents and cybersecurity threats, as well as other forms of attack or damage, including damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures, security incidents, data corruption, and cyberattacks.
Some of these risks include: • failure to complete sterilization on time or in compliance with the required regulatory standards; • transportation and import and export risk, particularly given the global nature of our supply and distribution chains; • delays in analytical results or failure of analytical techniques that we depend on for quality control and release of products; • natural or other disasters, labor disputes, financial distress, lack of raw material supply, issues with facilities and equipment or other forms of disruption to business operations affecting our manufacturer or its suppliers; 48 Table of Contents • latent defects that may become apparent after products have been released and that may result in a recall of such products; • contamination of our raw materials or manufactured products; and • inclusion of vendors of raw materials not in compliance with ISO-13485 requirements.
Some of these risks include: • failure to complete sterilization on time or in compliance with the required regulatory standards; • transportation and import and export risk, particularly given the global nature of our supply and distribution chains; 43 Table of Contents • delays in analytical results or failure of analytical techniques that we depend on for quality control and release of products; • natural or other disasters, labor disputes, financial distress, lack of raw material supply, issues with facilities and equipment or other forms of disruption to business operations affecting our manufacturer or its suppliers; • latent defects that may become apparent after products have been released and that may result in a recall of such products; • contamination of our raw materials or manufactured products; and • inclusion of vendors of raw materials not in compliance with ISO-13485 requirements.
If Motiva Implants or any planned products fail to demonstrate safety and effectiveness in preclinical and clinical studies, if there is a change in the FDA’s approval policies or new or amended regulations governing the clearance and approval process for our products, or if our products do not gain regulatory approval or clearance, our business and results of operations will be harmed.
If Motiva Implants or any planned products fail to demonstrate safety and effectiveness in preclinical and clinical studies, if there is a change in the approval policies or new or amended regulations governing the clearance and approval process for our products, or if our products do not gain regulatory approval or clearance, our business and results of operations will be harmed.
The market price for our shares may be influenced by many factors, including the following: • our ability to successfully commercialize, and realize revenues from sales of, Motiva Implants; ▪ the success of competitive products or technologies; ▪ results of clinical studies of Motiva Implants or planned products or those of our competitors; • regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; • introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; 64 Table of Contents • actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing processes or sales and marketing terms; • variations in our financial results or those of companies that are perceived to be similar to us; • the success of our efforts to acquire or in-license additional products or planned products; • developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; • developments concerning our ability to bring our manufacturing processes to scale in a cost-effective manner; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; • our ability or inability to raise additional capital and the terms on which we raise it; • the recruitment or departure of key personnel; • changes in the structure of health care payment systems; • negative shifts in the economy effecting the number of aesthetic breast procedures; • market conditions in the pharmaceutical and biotechnology sectors; • actual or anticipated changes in earnings estimates or changes in securities analyst recommendations regarding our common shares, other comparable companies or our industry generally; • trading volume of our common shares; • sales of our common shares by us or our shareholders; • short selling activities; • the impact of pandemics, epidemics or other public health crises; • general economic, industry and market conditions; and • the other risks described in this “Risk Factors” section.
The market price for our shares may be influenced by many factors, including the following: • our ability to successfully commercialize, and realize revenues from sales of, Motiva Implants; • the success of competitive products or technologies; • results of clinical studies of Motiva Implants or planned products or those of our competitors; • regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; • introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; 58 Table of Contents • actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing processes or sales and marketing terms; • variations in our financial results or those of companies that are perceived to be similar to us; • the success of our efforts to acquire or in-license additional products or planned products; • developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; • developments concerning our ability to bring our manufacturing processes to scale in a cost-effective manner; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; • our ability or inability to raise additional capital and the terms on which we raise it; • the recruitment or departure of key personnel; • changes in the structure of health care payment systems; • negative shifts in the economy affecting the number of aesthetic breast procedures; • market conditions in the pharmaceutical and biotechnology sectors; • actual or anticipated changes in earnings estimates or changes in securities analyst recommendations regarding our common shares, other comparable companies or our industry generally; • trading volume of our common shares; • sales of our common shares by us or our shareholders; • short selling activities; • the impact of pandemics, epidemics or other public health crises; • general economic, industry and market conditions; and • the other risks described in this “Risk Factors” section.
Contesting such an assessment may be lengthy and costly and if we were unsuccessful in disputing the assessment, the implications could increase our anticipated effective tax rate, where applicable. In addition, we may be subject to additional tax liabilities, which could materially and adversely affect our business, financial condition and results of operations.
Contesting such an assessment can be lengthy and costly, and if we were unsuccessful in disputing the assessment, the implications could materially increase our anticipated effective tax rate, where applicable. In addition, we may be subject to additional tax liabilities, which could materially and adversely affect our business, financial condition and results of operations.
Our Qid Safety Technology microtransponders are manufactured by contract manufacturers with final testing and packaging at a manufacturing supplier facility in Regensburg, Germany, with additional inspection of the units at our facilities in Coyol, Costa Rica, prior to approval for inclusion in Motiva Implants.
Our Qid Safety Technology microtransponders are manufactured by contract manufacturers with final testing and packaging at a manufacturing supplier facility in Regensburg, Germany, with additional inspection of the units at our facilities in Costa Rica, prior to approval for inclusion in Motiva Implants.
Our relationship with customers and third party payors will be subject to applicable anti-kickback, fraud and abuse, and other health care laws and regulations, which could expose us to criminal sanctions, civil penalties, damages, reputational harm and diminished profits and future earnings.
Our relationship with customers, patients and third party payors will be subject to applicable anti-kickback, fraud and abuse, and other health care laws and regulations, which could expose us to criminal sanctions, civil penalties, damages, reputational harm and diminished profits and future earnings.
We identified a material weakness in our internal control over financial reporting as of December 31, 2023, 2022, and 2021, and may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our consolidated financial statements.
We identified a material weakness in our internal control over financial reporting as of December 31, 2023, and 2022, and may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our consolidated financial statements.
Our information systems, or those used by third parties which we rely on, may fail, be impacted by cybersecurity incidents, suffer other security breaches or be vulnerable to other forms of attack or damage. The operation of our business depends on our information systems and, in some cases, the information systems used by third parties.
Our information systems, or those used by third parties which we rely on, may fail, be impacted by cybersecurity incidents, suffer other security incidents or be vulnerable to other forms of attack or damage. The operation of our business depends on our information systems and, in some cases, the information systems used by third parties.
Pricing pressure from customers and our competitors may impact our ability to sell our products at prices necessary to support our current business strategies and future expansion. The industry environment for silicone implants and complementary products in certain international markets is price sensitive.
Pricing pressure from customers and our competitors may impact our ability to sell our products at prices necessary to support our current business strategies and future expansion. The industry environment for silicone implants and complementary products in certain markets is price sensitive.
In addition, in an infringement proceeding, a court may decide that a patent we are asserting is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that the patents we are asserting do not cover the technology in question.
In an infringement proceeding, a court may decide that a patent we are asserting is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that the patents we are asserting do not cover the technology in question.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of the patents we rely on or narrow the scope of our patent protection. The laws of other countries may not protect our rights to the same extent as the laws of the U.S.
In addition, changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of the patents we rely on or narrow the scope of our patent protection. The laws of other countries may not protect our rights to the same extent as the laws of the U.S.
Interference or derivation proceedings provoked by third parties or brought by the U.S. Patent and Trademark Office, or USPTO, or any other patent authority may be necessary to determine the priority of inventions or other matters of inventorship with respect to patents and patent applications.
Interference or derivation proceedings provoked by third parties or brought by the U.S. Patent and Trademark Office, or USPTO, or any other patent authority may also be necessary to determine the priority of inventions or other matters of inventorship with respect to patents and patent applications.
These data protection and privacy-related laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. There are a number of state, federal and international laws protecting the privacy and security of health information and personal data.
Data protection and privacy-related laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. There are a number of state, federal and international laws protecting the privacy and security of health information and personal data.
In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the health care system in ways that could affect our future revenue and future profitability and the future revenue and future profitability of our potential customers.
Further, in the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the health care system in ways that could affect our future revenue and future profitability and the future revenue and future profitability of our potential customers.
Any change in the FDA’s approval policies or new or amended regulations governing the clearance and approval processes could increase the costs of obtaining approval/clearance of a product or result in delays in, or failure to receive or maintain clearance or approval for our products.
Any change in the approval policies or new or amended regulations governing the clearance and approval processes could increase the costs of obtaining approval/clearance of a product or result in delays in, or failure to receive or maintain clearance or approval for our products.
The GDPR regulates the processing of personal data and places certain obligations on the processing of such personal data including ensuring the lawfulness of processing personal data (including obtaining valid consent of the individuals to whom the personal data relates, where applicable), the processing details disclosed to the individuals, the adequacy, relevance and necessity of the personal data collected, the retention of personal data collected, the sharing of personal data with third parties, the transfer of personal data out of the European Economic Area/UK to third countries including the US, contracting requirements (such as with clinical trial sites and vendors), the use of personal data in accordance with individual rights, the security of personal data and security breach/incident notifications.
It regulates the processing of personal data and places certain obligations on the processing of such personal data including ensuring the lawfulness of processing personal data (including obtaining valid consent of the individuals to whom the personal data relates, where applicable), the processing details disclosed to the individuals, the adequacy, relevance and necessity of the personal data collected, the retention of personal data collected, the sharing of personal data with third parties, the transfer of personal data out of the European Economic Area/UK to third countries including the US, contracting requirements (such as with clinical trial sites and vendors), the use of personal data in accordance with individual rights, the security of personal data and security breach/incident notifications.
For example, during various times in the recent past, the U.S. government has shut down and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical activities.
For example, during various times in the past, the U.S. government has shut down and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical activities.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs and devices to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
A non-U.S. corporation will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes, in any taxable year in which either (1) at least 75% of its gross income is passive income; or 63 Table of Contents (2) at least 50% of the average quarterly value of its total gross assets is attributable to assets that produce “passive income” or are held for the production of passive income.
A non-U.S. corporation will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes, in any taxable year in which either (1) at least 75% of its gross income is passive income; or (2) at least 50% of the average quarterly value of its total gross assets is attributable to assets that produce 57 Table of Contents “passive income” or are held for the production of passive income.
Among others, these provisions include the following: • while we are commencing a phased-in process to declassify our Board of Directors, our Board of Directors is divided into three classes with staggered three-year terms and will not be fully declassified until our 2026 annual meeting of shareholders, which may delay or prevent a change of our management or a change in control; • our Board of Directors has the right to elect directors to fill a vacancy created by the expansion of our Board of Directors or the resignation, death or removal of a director, which will prevent shareholders from being able to fill vacancies on our Board of Directors; • our shareholders are not able to act by written consent, and, as a result, a holder, or holders, controlling a majority of our shares are not able to take certain actions other than at annual shareholders’ meetings or special shareholders’ meetings; 67 Table of Contents • our amended and restated memorandum and articles of association do not allow cumulative voting in the election of directors, which limits the ability of minority shareholders to elect director candidates; • our shareholders are required to provide advance notice and additional disclosures in order to nominate individuals for election to our Board of Directors or to propose matters that can be acted upon at a shareholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and • our Board of Directors is able to issue, without shareholder approval, preferred shares with voting or other rights or preferences that could impede the success of any attempt to acquire us.
Among others, these provisions include the following: • while we are commencing a phased-in process to declassify our Board of Directors, our Board of Directors is divided into three classes with staggered three-year terms and will not be fully declassified until our 2026 annual meeting of shareholders, which may delay or prevent a change of our management or a change in control; • our Board of Directors has the right to elect directors to fill a vacancy created by the expansion of our Board of Directors or the resignation, death or removal of a director, which will prevent shareholders from being able to fill vacancies on our Board of Directors; • our shareholders are not able to act by written consent, and, as a result, a holder, or holders, controlling a majority of our shares are not able to take certain actions other than at annual shareholders’ meetings or special shareholders’ meetings; • our amended and restated memorandum and articles of association do not allow cumulative voting in the election of directors, which limits the ability of minority shareholders to elect director candidates; • our shareholders are required to provide advance notice and additional disclosures in order to nominate individuals for election to our Board of Directors or to propose matters that can be acted upon at a 61 Table of Contents shareholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and • our Board of Directors is able to issue, without shareholder approval, preferred shares with voting or other rights or preferences that could impede the success of any attempt to acquire us.
The marketing, sale and use of Motiva Implants and our planned products could lead to the filing of product liability claims against us if someone alleges that our products failed to perform as designed or caused significant adverse events in patients. We may also be subject to liability for a misunderstanding of, or inappropriate reliance upon, the information we provide.
The marketing, sale and use of Motiva Implants and our other products could lead to the filing of product liability claims against us if someone alleges that our products failed to perform as designed or caused significant adverse events in patients. We may also be subject to liability for a misunderstanding of, or inappropriate reliance upon, the information we provide.
In order to achieve and sustain profitability, our revenues from these products will need to grow beyond the levels we have achieved in the past.
In order to achieve and sustain profitability, our revenues from our products will need to grow beyond the levels we have achieved in the past.
In addition, we may not be able to develop insights into trends that could emerge and negatively affect our business and may fail to respond effectively to those trends. As a result of these or other risks, we may not be able to execute key components of our business strategy, and our business, financial condition and operating results may suffer.
In addition, we may not be able to develop insights into trends that could emerge and negatively affect our business and may fail to respond effectively to those trends. As a result of this or other risks, we may not be able to execute key components of our business strategy, and our business, financial condition and operating results may suffer.
The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Medical data is considered sensitive data that merits stronger safeguards.
The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Health information is considered sensitive data that merits stronger safeguards.
In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions that may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved or cleared products on a timely basis.
In addition, the FDA or other regulatory authority may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions that may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved or cleared products on a timely basis.
See, for example, the risk factor titled “Rights of shareholders under British Virgin Islands law differ from those under U.S. law, and, accordingly, you may have fewer protections as a shareholder.” 68 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
See, for example, the risk factor titled “Rights of shareholders under British Virgin Islands law differ from those under U.S. law, and, accordingly, you may have fewer protections as a shareholder.” 62 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We do not expect to be profitable in 2024, and in future years we expect to incur significant research and development expenses related to, among other things, the IDE clinical study of Motiva Implants in the United States. Investment in medical device product development, particularly clinical studies, is highly speculative.
We do not expect to be profitable in 2025, and in future years we expect to incur significant research and development expenses related to, among other things, the IDE clinical study of Motiva Implants in the United States. Investment in medical device product development, particularly clinical studies, is highly speculative.
This means that even if shareholders were to sue us successfully, they may not be able to recover anything to make up for the losses suffered. British Virgin Islands law differs from the laws in effect in the United States, and U.S. investors may have difficulty enforcing civil liabilities against us, our directors or members of senior management.
This means that even if shareholders were to sue us successfully, they may not be able to recover anything to make up for the losses suffered. 60 Table of Contents British Virgin Islands law differs from the laws in effect in the United States, and U.S. investors may have difficulty enforcing civil liabilities against us, our directors or members of senior management.
We have established a direct sales force for our business in Brazil, and we have implemented a direct sales strategy in several European countries. We have hired and will need to retain and motivate a significant number of sales and marketing personnel in order to support our anticipated growth in these countries.
We have established a direct sales force for our business in Brazil and United States, and we have implemented a direct sales strategy in several European countries. We have hired and will need to retain and motivate a significant number of sales and marketing personnel in order to support our anticipated growth in these countries.
The responses of potential patients, physicians, the news media, legislative and regulatory bodies and others to information about complications or alleged complications of our products or our competitors’ products, or products liability litigation against us or our competitors, could materially reduce market acceptance and patient demand for our products, or could, even in the absence of a change in demand, negatively impact our business and reputation and negatively impact our 40 Table of Contents financial condition, results of operations or the market price of our common shares.
The responses of potential patients, physicians, the news media, legislative and regulatory bodies and others to information about complications or alleged complications of our products or our competitors’ products, or products liability litigation against us or our competitors, could materially reduce market acceptance and patient demand for our products, or could, even in the absence of a change in demand, negatively impact our business and reputation and negatively impact our financial condition, results of operations or the market price of our common shares.
Modifications to any of our products once they are commercialized may require new regulatory approvals or clearances, including 510(k) clearances or approval of PMA supplements, or require us to recall or cease marketing the modified systems until these clearances or approvals are obtained.
Modifications to any of our products once they are commercialized from time to time require new regulatory approvals or clearances, including 510(k) clearances or approval of PMA supplements, or may require us to recall or cease marketing the modified systems until these clearances or approvals are obtained.
Increased competition may result 43 Table of Contents in price reductions, reduced margins and our inability to gain or hold market share, which could have an adverse effect on our financial condition and results of operations.
Increased competition may result 38 Table of Contents in price reductions, reduced margins and our inability to gain or hold market share, which could have an adverse effect on our financial condition and results of operations.
Even if we receive regulatory approval for a planned product, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
Even if we receive regulatory approval for a planned product, we will be subject to ongoing regulatory obligations and continued regulatory review. Compliance with ongoing regulatory obligations and continued regulatory review may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment and, in the ordinary 62 Table of Contents course of business, there are many transactions and calculations where the ultimate tax determination is complex and uncertain.
The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is complex 56 Table of Contents and uncertain.
It is also possible that other federal, state, or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.
It is also possible that other federal, state, or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other 51 Table of Contents statutory authorities, such as laws prohibiting false claims for reimbursement.
Further, in our operations as a public company, future federal government shutdowns or delays in annual appropriations could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
Further, in our operations as a public company, future federal government shutdowns, delays in annual appropriations or budget freezes could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
Although we try to ensure that our employees, advisors and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we, or these employees, have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer.
Although we try to ensure that our employees, advisors and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that 46 Table of Contents we, or these employees, have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer.
Where we determine that modifications to our products require a new PMA approval, we may not be able to obtain those additional approvals for the modifications or additional indications in a timely manner, or at all.
Where we determine that modifications to our products require a new PMA approval or approval of a PMA supplement, we may not be able to obtain those additional approvals for the modifications or additional indications in a timely manner, or at all.
Obtaining certification can be a time-consuming process, and delays in obtaining required future clearances or approvals would adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our future growth.
Obtaining new approvals can be a time-consuming process, and delays in obtaining required future approvals would adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our future growth.
Significant uncertainty exists as to the coverage and reimbursement status of any newly approved product. Decisions regarding the extent of coverage and amount of 61 Table of Contents reimbursement to be provided are made on a plan-by-plan basis. One third-party payor’s decision to cover a product does not ensure that other payors will also provide coverage for the product.
Significant uncertainty exists as to the coverage and reimbursement status of any newly approved product. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. One third-party payor’s decision to cover a product does not ensure that other payors will also provide coverage for the product.
The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In many cases, an inadvertent lapse can be cured 52 Table of Contents by payment of a late fee or by other means in accordance with the applicable rules.
The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules.
In addition, any such cybersecurity incident, security breach, 53 Table of Contents or other attack or damage could harm our reputation, erode customer confidence in the effectiveness of our security measures, and negatively impact our ability to attract new customers. Our failure to adequately protect personal information in compliance with evolving legal requirements could harm our business.
In addition, any such cybersecurity incident, security breach, or other attack or damage could harm our reputation, erode customer confidence in the effectiveness of our security measures, and negatively impact our ability to attract new customers. Our failure to adequately protect personal information in compliance with evolving legal requirements could harm our business.
Moreover, the 46 Table of Contents International Council for Harmonization, or ICH, and the FDA require us to comply with standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical studies to ensure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of patients in clinical studies are protected.
Moreover, the International Council for Harmonization, or ICH, and the FDA require us to comply with standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical studies to ensure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of patients in clinical studies are protected.
On December 31, 2021, it was determined that our primary user access controls (i.e. provisioning, de-provisioning, and quarterly user access review) to ensure appropriate segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate Company personnel were not operating effectively.
On December 31, 2021, it was determined that our primary user access controls (i.e. provisioning, de-provisioning, and quarterly user access review) to ensure appropriate segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate Company personnel 59 Table of Contents were not operating effectively.
For example, metal implant such as screws or artificial joints, produce an artifact when magnetic resonance imaging, or MRI, is used to image the area in which the object resides.
For example, metal implants such as screws or artificial joints produce an artifact when magnetic resonance imaging, or MRI, is used to image the area in which the object resides.
Non-compliance with the GDPR can trigger steep fines for the most serious breaches of up to €20 million or 4% of total worldwide annual revenues, whichever is higher.
Non-compliance with the EU/UK GDPR can trigger steep fines for the most serious breaches of up to €20 million or 4% of total worldwide annual revenues, whichever is higher.
The number of preclinical studies and clinical studies that will be required for FDA approval varies depending on the planned product, the indication that the planned product is designed to address and the regulations applicable to any particular planned product.
The number of preclinical studies and clinical studies that will be required for approval varies depending on the jurisdiction, the planned product, the indication that the planned product is designed to address and the regulations applicable to any particular planned product.
If 57 Table of Contents we fail to comply with our medical device reporting obligations, the FDA could issue warning letters or untitled letters, take administrative actions, commence criminal prosecution, impose civil monetary penalties, demand or initiate a product recall, seize our products, or delay the clearance of our future products.
If we fail to comply with our medical device reporting obligations, the FDA could issue warning letters or untitled letters, take administrative actions, commence criminal prosecution, impose civil monetary penalties, demand or initiate a product recall, seize our products, or delay the clearance of our future products.
For those products sold in the EEA, we must notify our EU notified body if significant changes are made to the products or if there are substantial changes to our quality assurance systems affecting those products.
For those products sold in the EEA, we must notify our EU Notified Body if significant changes are made to the products or if there are substantial changes to our quality management systems affecting those products.
In addition, even when HIPAA does not apply, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTCA, 15 U.S.C § 45(a).
In addition, even when HIPAA does not apply, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTCA, 15 U.S.C § 45(a).
Based on the project composition of our income and valuation of our assets, we do not believe we were a PFIC in 2023 and 2022 , and we do not expect to become one in the future.
Based on the project composition of our income and valuation of our assets, we do not believe we were a PFIC in 2024 and 2023, and we do not expect to become one in the future.
The FDA could also reclassify some or all of our products that are currently classified as Class II to Class III requiring additional controls, clinical studies and submission and approval of a PMA for us to market and sell those products.
In the United States, the FDA could also reclassify some or all of our products that are currently classified as Class II to Class III requiring additional controls, clinical studies and submission and approval of a PMA for us to market and sell those products.
The British Virgin Islands courts are also unlikely to recognize or enforce judgments of courts in the United States based on certain liability provisions of U.S. securities law, or to impose liabilities based on certain liability provisions of the U.S. securities laws that are penal in nature, in original actions brought in the 66 Table of Contents British Virgin Islands.
The British Virgin Islands courts are also unlikely to recognize or enforce judgments of courts in the United States based on certain liability provisions of U.S. securities law, or to impose liabilities based on certain liability provisions of the U.S. securities laws that are penal in nature, in original actions brought in the British Virgin Islands.
These provisions could also limit the price that investors might be willing to pay in the future for our common shares, thereby depressing the market price of our common shares.
These provisions could also limit the price that investors might be willing to pay in the future for our common shares, thereby reducing the market price of our common shares.
During the fourth quarter of 2023, we completed our testing of the operating effectiveness of the 65 Table of Contents implemented controls and found them to be effective. As a result, we have concluded the material weakness identified as of December 31, 2021 has been remediated as of December, 31 2023.
During the fourth quarter of 2023, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective. As a result, we have concluded the material weakness identified as of December 31, 2021 has been remediated as of December 31, 2023.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical studies in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our planned products and will not be able to, or may be delayed in our efforts to, successfully commercialize our planned products.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical studies in accordance with regulatory 41 Table of Contents requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our planned products and will not be able to, or may be delayed in our efforts to, successfully commercialize our planned products.
Publications of discoveries in the scientific literature often lag behind the actual 50 Table of Contents discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.
As part of our effort to educate and train plastic surgeons through our medical educational platform, we completed 192 and 201 medical training sessions worldwide during 2023 and 2022, respectively. If we are unable to offer, or if we experience a delay in offering, medical training sessions, we may experience reduced or slower than expected adoption of our products.
As part of our effort to educate and train plastic surgeons through our medical educational platform, we completed 239 and 192 medical training sessions worldwide during 2024 and 2023, respectively. If we are unable to offer, or if we experience a delay in offering, medical training sessions, we may experience reduced or slower than expected adoption of our products.
In addition, the job market in Costa Rica and other locations in which we operate has recently become more 42 Table of Contents competitive and we are competing for talent with major multinational corporations which have significantly more resources than us, and we may find new difficulties in retaining our most talented employees.
In addition, the job market in Costa Rica and other locations in which we operate has recently become more competitive and we are competing for talent with major multinational corporations which have significantly more resources than us, and we may find new difficulties in retaining our most talented employees.
In addition, we rely on collaborators, consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our collaborators, consultants and advisors are generally employed by employers other than us and may have commitments under agreements with other entities that may limit their availability to us.
In addition, we rely on collaborators, consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our collaborators, consultants 37 Table of Contents and advisors are generally employed by employers other than us and may have commitments under agreements with other entities that may limit their availability to us.
Our Qid Safety Technology microtransponder embedded in certain Motiva Implants contains metal and causes an artifact that can affect breast cancer screening using MRI, and this artifact is not present in other imaging modalities such as breast ultrasound and film or digital mammography.
Our Qid Safety Technology microtransponder embedded in certain Motiva Implants contains metal and causes an artifact that can affect breast cancer screening using MRI, and this artifact is not present in other imaging modalities such as 30 Table of Contents breast ultrasound and film or digital mammography.
If physicians and/or patients do not perceive our products to be competitive in features and safety when compared to other products in the market, or if demand for our Motiva Implants or for breast implants in general decreases, we may fail to achieve sales levels that provide for future profitability.
If physicians and/or patients do not perceive our products to be competitive in 31 Table of Contents features and safety when compared to other products in the market, or if demand for our Motiva Implants or for breast implants in general decreases, we may fail to achieve sales levels that provide for future profitability.
Unless it is necessary for us to make reductions to our workforce as a cost management strategy, over the next several years, we expect to experience growth in the number of our employees and the scope of our operations, principally in the areas of manufacturing and sales and marketing, and particularly as we prepare our operations in the anticipation of obtaining approval from the FDA to commercialize our Motiva Implants in the United States.
Unless it is necessary for us to make reductions to our workforce as a cost management strategy, over the next several years, we expect to experience growth in the number of our employees and the scope of our operations, principally in the areas of manufacturing and sales and marketing, and particularly as we continue to expand our operations in the wake of obtaining approval from the FDA to commercialize our Motiva Implants in the United States.
In certain large markets, we engage in direct sales efforts. We may fail to maintain and develop our direct sales force, and our revenues and financial outcomes could suffer as a result. Furthermore, our direct sales personnel may not effectively sell our products.
In certain markets, we engage or anticipate engaging in direct sales efforts. We may fail to maintain and develop our direct sales force, and our revenues and financial outcomes could suffer as a result. Furthermore, our direct sales personnel may not effectively sell our products.
If this supplier were to increase prices for these raw materials over time or experience interruptions in their ability to supply us with this raw material, our business, financial condition and results of operations could be adversely affected.” In addition, the suppliers of certain packaging components and the surgical tools that we sell with Motiva Implants, including the cannulas, retractors, and insertion sleeves, are all purchased by us from single-source suppliers.
As has occurred in the past, if this supplier were to increase prices for this raw material over time or experience interruptions in its ability to supply us with this raw material, our business, financial condition and results of operations could be adversely affected.” In addition, the suppliers of certain packaging components and the surgical tools that we sell with Motiva Implants, including the cannulas, retractors, and insertion sleeves, are all purchased by us from single-source suppliers.
An adverse determination in any such proceeding could reduce the scope of, or invalidate, important patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.
An adverse result in any litigation or other legal proceeding could reduce the scope of, or invalidate, important patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.
It entails substantial upfront capital expenditures and significant risk that any potential planned product will fail to demonstrate adequate accuracy or clinical utility. We may not be profitable for some time. As of December 31, 2023, we had an accumulated deficit of $360.1 million.
It entails substantial upfront capital expenditures and significant risk that any potential planned product will fail to demonstrate adequate accuracy or clinical utility. We may not be profitable for some time. As of December 31, 2024, we had an accumulated deficit of $444.7 million.
Our future arrangements with third-party payors and health care providers may expose us to broadly applicable fraud and abuse and other health care laws and regulations that may constrain the business or the financial relationships and engagement we enter into to market, sell, promote and distribute our products for which we obtain clearance in the U.S.
Our arrangements with third-party payors, patients and health care providers may expose us to broadly applicable fraud and abuse and other health care laws and regulations that may constrain the business or the financial relationships and engagement we enter into to market, sell, promote and distribute our products in the U.S.
Our leading competitors are large, multi-national companies with significant resources and capabilities.
Our leading competitors are large, multi-national companies with significant resources and capabilities. Sientra, Inc.
If Avantor becomes unable or unwilling to supply sufficient quantities of medical-grade silicone of the specifications required for our products, we may not be able to replace this supply source quickly, or at all.
If Avantor becomes unable or unwilling to supply sufficient quantities of medical-grade silicone of the specifications required for our products, or if Avantor increases prices further in the future, we may not be able to replace this supply source quickly, or at all.
Similarly, they may become unable or unwilling to manufacture our needed raw materials in compliance with regulatory requirements, or their manufacturing facilities may not be able to maintain compliance with regulatory requirements.
Similarly, it may become unable or unwilling to manufacture our needed raw materials in compliance with regulatory requirements, or its manufacturing facilities may not be able to maintain compliance with regulatory requirements.
Three of these companies, Sientra, Inc., Mentor Worldwide LLC (a division of Johnson & Johnson), and Allergan plc (recently acquired by AbbVie Inc.), have conducted large prospective clinical studies that started in the United States in 2002, 2000 and 1998, respectively, and they use this data extensively to promote their products.
(recently acquired by Tiger Aesthetics Medical), Mentor Worldwide LLC (a division of Johnson & Johnson) and Allergan plc ( acquired by AbbVie Inc.) have conducted large prospective clinical studies that started in the United States in 2002, 2000 and 1998, respectively, and they use this data extensively to promote their products.
In that event, our reputation could be damaged and adoption of the products could be impaired. In addition, the off-label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and could divert our management’s attention, result in substantial damage awards against us, and harm our reputation.
In addition, the off-label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and could divert our management’s attention, result in substantial damage awards against us, and harm our reputation.

… 240 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+1 added−2 removed5 unchanged
Biggest changeThrough these processes and the other processes described above, including our incident response plan, our management is informed about cybersecurity threats and incidents affecting us. Our company has implemented robust processes to assess, identify, and manage material cybersecurity risks effectively.
Biggest changeAs a result, we have implemented a multi-layered cybersecurity program that includes administrative, physical, and technical measures to protect our information systems. Through these processes and the other processes described above, including our incident response plan, our management is informed about cybersecurity threats and incidents affecting us.
However, we cannot guarantee that our efforts will be successful in preventing all cybersecurity incidents. We are not aware of any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
We are not aware of any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition. We can give no assurance that we have detected or protected against all cybersecurity threats or incidents.
We can give no assurance that we have detected or protected against all cybersecurity threats or incidents. We are subject to a variety of cybersecurity risks, which could have a material adverse effect on our business, financial condition, and results of operations. See the “Risks Related to 69 Table of Contents Intellectual Property and Data Security” section of Item 1A.
We are subject to a variety of cybersecurity risks, which could have a material adverse effect on our business, financial condition, and results of operations. See the “Risks Related to Intellectual Property and Data Security” section of Item 1A. Risk Factors for additional discussion on risks affecting our information systems. 63 Table of Contents
These processes are an integral component of our overall risk management system, ensuring that cybersecurity concerns are comprehensively addressed within our broader risk management framework. Risk assessment, identification, and management processes are seamlessly integrated into our overall risk management system. The processes for assessing, identifying, and managing cybersecurity risks are aligned with our strategic objectives and business goals.
Our company has implemented robust processes to assess, identify, and manage material cybersecurity risks effectively. These processes are an integral component of our overall risk management system, ensuring that cybersecurity concerns are comprehensively addressed within our broader risk management framework. Risk assessment, identification, and management processes are seamlessly integrated into our overall risk management system.
We foster cross-functional collaboration and communication to facilitate the integration of cybersecurity risk management into various business functions and processes. We also review our cybersecurity practices, their effectiveness, and the cybersecurity practices of the third-parties we rely on, on an ongoing basis and make changes as necessary to address new risks.
We also review our cybersecurity practices, their effectiveness, and the cybersecurity practices of the third-parties we rely on, on an ongoing basis and make changes as necessary to address new risks. However, we cannot guarantee that our efforts will be successful in preventing all cybersecurity incidents.
Removed
As a result, we have implemented a multi-layered cybersecurity program that includes measures to protect our information systems, including firewalls, network access controls, intrusion detection systems, phishing campaigns, security awareness training and monitoring, network operation center, security operation center, and data encryption, and to monitor our information systems to detect potential cybersecurity incidents, including through the use of automated detection software.
Added
The processes for assessing, identifying, and managing cybersecurity risks are aligned with our strategic objectives and business goals. We foster cross-functional collaboration and communication to facilitate the integration of cybersecurity risk management into various business functions and processes.
Removed
Risk Factors for additional discussion on risks affecting our information systems.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed0 unchanged
Biggest changeITEM 2. PROPERTIES Our principal executive offices are located in Alajuela, Costa Rica, where we occupy approximately 36,000 square feet of office, laboratory and manufacturing space. I We are in the process of expanding our manufacturing facilities and corporate offices in the Coyol Free Zone in Costa Rica.
Biggest changeITEM 2. PROPERTIES Our main executive facilities, which include over 200,000 square feet of office, laboratory, and manufacturing space, are situated in Alajuela, Costa Rica.
We also have office or warehouse space in Wommelgem, Belgium; Sao Paulo and Rio de Janeiro, Brazil; Stockholm, Sweden; Barcelona, Spain; Rome, Italy; Addison, Texas, USA; Santa Barbara, CA, USA; London, England; Haar, Germany, Cavaillon, France and Buenos Aires, Argentina pursuant to a variety of leases that expire in 2024 through 2029.
We also lease office or warehouse spaces in numerous locations worldwide such as Wommelgem, Belgium; Sao Paulo and Rio de Janeiro, Brazil; Stockholm, Sweden; Barcelona, Spain; Rome, Italy; Addison and Austin, Texas, USA; Santa Barbara, California, USA; London, England; Haar, Germany; Cavaillon, France; and Buenos Aires, Argentina, with leases expiring from 2025 to 2031.
Removed
Construction began in 2021 and we exercised the option to purchase the land and cold shell building in 2022. The project includes approximately 170,000 square feet of facility space. In July 2023, we announced the grand opening of the first phase of the Sulàyöm Innovation Campus. We currently expect to commence manufacturing from the new facility in fiscal 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−1 removed2 unchanged
Biggest changeThis performance graph shall not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to liabilities under that section and shall not be deemed to be incorporated by reference into any filing of the registrant. under the Securities Act, except as shall be expressly set forth by specific reference in such filing. ITEM 6.
Biggest changeThe Nasdaq Stock Market LLC is not responsible for any errors or omissions in such information. 64 Table of Contents This performance graph shall not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to liabilities under that section and shall not be deemed to be incorporated by reference into any filing of the registrant. under the Securities Act, except as shall be expressly set forth by specific reference in such filing.
Dividends We have not paid any cash dividends on our common shares since inception and do not anticipate paying cash dividends in the foreseeable future. Purchases of Equity Securities by the Issuer or Affiliated Purchasers There were no repurchases of shares of common shares made during the three months ended December 31, 2023.
Dividends We have not paid any cash dividends on our common shares since inception and do not anticipate paying cash dividends in the foreseeable future. Purchases of Equity Securities by the Issuer or Affiliated Purchasers There were no repurchases of shares of common shares made during the three months ended December 31, 2024.
Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock from December 31, 2018 through 2023, with the cumulative total return of (a) the NASDAQ Health Care Index and (b) the NASDAQ Composite Index, over the same period.
Stock Performance Graph The graph set forth below compares the cumulative total shareholder return on our common stock from December 31, 2019 through 2024, with the cumulative total return of (a) the NASDAQ Health Care Index and (b) the NASDAQ Composite Index, over the same period.
This graph assumes an investment of $100 on December 31, 2018 in each of our common stock, the NASDAQ Health Care Index and the NASDAQ Composite Index and assumes the reinvestment of dividends, if any. 70 Table of Contents The comparisons shown in the graph below are based upon historical data.
This graph assumes an investment of $100 at the close of trading on December 31, 2019 in each of our common stock, the NASDAQ Health Care Index and the NASDAQ Composite Index and assumes the reinvestment of dividends, if any. The comparisons shown in the graph below are based upon historical data.
Holders There were 31 shareholders of record of our common shares as of March 1, 2024. Certain shares are held in “street” name and, accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number . Sales of Unregistered Securities None.
Holders There were 21 shareholders of record of our common shares as of February 27, 2025. Certain shares are held in “street” name and, accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. Sales of Unregistered Securities None.
Removed
The Nasdaq Stock Market LLC is not responsible for any errors or omissions in such information.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+25 added−45 removed24 unchanged
Biggest changeNet Cash Provided by Financing Activities Net cash provided by financing activities of $86.2 million for the year ended December 31, 2023 primarily consisted of $84.5 million of proceeds received for the issuance of common shares, net of underwriters’ discount and issuance costs, from our public offering in April 2023 and $2.2 million in proceeds received for stock option exercises, partially offset by $0.5 million paid to satisfy tax withholding obligations upon the vesting of restricted stock.
Biggest changeNet Cash Provided by Financing Activities Net cash provided by financing activities of $125.9 million for the year ended December 31, 2024 primarily consisted of $99.5 million of proceeds received for the issuance of common shares, net of underwriters’ discount and issuance costs, from our public offering in April 2023, $24.5 million of borrowings under the Tranche C Term Loan of the Credit Agreement and $2.5 million in proceeds received for stock option exercises, partially offset by $0.5 million paid to satisfy tax withholding obligations upon the vesting of restricted stock. 72 Table of Contents Net cash provided by financing activities of $86.2 million for the year ended December 31, 2023 primarily consisted of $84.5 million of proceeds received for the issuance of common shares, net of underwriters’ discount and issuance costs, from our public offering in April 2023 and $2.2 million in proceeds received for stock option exercises, partially offset by $0.5 million paid to satisfy tax withholding obligations upon the vesting of restricted stock.
Indebtedness On April 26, 2022, or the Closing Date, we entered into the new Credit Agreement, pursuant to which the lenders agreed to make term loans to the Company in an aggregate principal amount of up to $225 million, which we collectively refer to as the Term Loans, with the first tranche of $150 million advanced on the Closing Date.
Indebtedness On April 26, 2022, or the Closing Date, we entered into the new Credit Agreement, pursuant to which the lenders agreed to make term loans in an aggregate principal amount of up to $225 million, which we collectively refer to as the Term Loans, with the first tranche of $150 million advanced on the Closing Date.
If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. There were no impairment charges, or changes in estimated useful lives recorded d uring the years ended December 31, 2023 and 2022.
If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. There were no impairment charges, or changes in estimated useful lives recorded d uring the years ended December 31, 2024 and 2023.
The increase in R&D expense was primarily due to a $6.9 million increase in personnel cost, partially offset by a $0.6 million decrease in regulatory affairs costs and a $0.1 million decrease in expenditures related to our IDE clinical trial in the United States.
The decrease in R&D expense was primarily due to a $6.0 million decrease in personnel cost and a $1.0 million decrease in expenditures related to our IDE clinical trial in the United States, partially offset by a $0.2 million increase in regulatory affairs costs.
The Company’s distributors are obligated to pay within specified terms regardless of when, or if, they sell the products. The Company’s contracts with distributors typically do not contain right of return or price protection and have no post-delivery obligations.
Our distributors are obligated to pay within specified terms regardless of when, or if, they sell the products. Our contracts with distributors typically do not contain right of return or price protection and have no post-delivery obligations.
Comparison of the Year Ended December 31, 2022 and 2021 The discussion related to our results of operations and changes in financial condition for 2022 compared to 2021 is incorporated by reference to Part II, Item 7.
Comparison of the Year Ended December 31, 2023 and 2022 The discussion related to our results of operations and changes in financial condition for 2023 compared to 2022 is incorporated by reference to Part II, Item 7.
Our estimates are based on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual 80 Table of Contents results may differ from these estimates.
Our estimates are based on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results may differ from these estimates.
For these products, revenue is recognized at the time the Company is notified by the consignee that the product has been implanted, not when the consigned products are delivered to the consignee’s warehouse. The Company has a limited warranty for the shelf life of breast implants, which is five years from the time of manufacture.
For these products, revenue is recognized at the time we are notified by the consignee that the product has been implanted, not when the consigned products are delivered to the consignee’s warehouse. We have a limited warranty for the shelf life of breast implants, which is five years from the time of manufacture.
If we are unable to raise additional capital when desired, or on terms acceptable to us, our business, results of operations, and financial condition would be adversely affected. 78 Table of Contents Cash Flows The discussion related to our cash flows for 2022 is incorporated by reference to Part II, Item 7.
If we are unable to raise additional capital when desired, or on terms acceptable to us, our business, results of operations, and financial condition would be adversely affected. 71 Table of Contents Cash Flows The discussion related to our cash flows for 2023 is incorporated by reference to Part II, Item 7.
The calculation of share-based compensation expense requires the Company to make assumptions and judgments about the variables used in the Black-Scholes model, including the expected term, expected volatility of the underlying common shares, risk-free interest rate and dividends. See Note 9 “Share-Based Compensation” for additional information.
The calculation of share-based compensation expense requires us to make assumptions and judgments about the variables used in the Black-Scholes model, including the expected term, expected volatility of the underlying common shares, risk-free interest rate and dividends. See Note 10 “Share-Based Compensation” for additional information.
Foreign Currency The financial statements of the Company’s foreign subsidiaries whose functional currencies are the local currencies are translated into U.S. dollars for consolidation as follows: assets and liabilities at the exchange rate as of the balance sheet date, stockholders’ equity at the historical rates of exchange, and income and expense amounts at the average exchange rate for the period.
Foreign Currency The financial statements of our foreign subsidiaries whose functional currencies are the local currencies are translated into U.S. dollars for consolidation as follows: assets and liabilities at the exchange rate as of the balance sheet date, shareholders’ equity at the historical rates of exchange, and income and expense amounts at the average exchange rate for the period.
Net Cash Used in Investing Activities Net cash used in investing activities of $24.5 million for the year ended December 31, 2023 primarily consisted of $15.3 million of cash paid for capital expenditures on construction in progress related to our new manufacturing facility in the Coyol Free Zone in Costa Rica, $7.9 million in purchases of property and equipment related to the new manufacturing facility and $1.3 million in purchases of intangibles.
Net Cash Used in Investing Activities Net cash used in investing activities of $15.6 million for the year ended December 31, 2024 primarily consisted of $7.0 million in purchases of intangibles, $6.1 million in purchases of property and equipment related to the new manufacturing facility and $2.4 million of cash paid for capital expenditures on construction in progress related to our new manufacturing facility in the Coyol Free Zone in Costa Rica Net cash used in investing activities of $24.5 million for the year ended December 31, 2023 primarily consisted of $15.3 million of cash paid for capital expenditures on construction in progress related to our new manufacturing facility in the Coyol Free Zone in Costa Rica, $7.9 million in purchases of property and equipment related to the new manufacturing facility and $1.3 million in purchases of intangibles.
In cases where there are circumstances that may impair a specific customer’s ability to meet its financial obligations, an allowance is recorded against amounts due, which reduces the net recognized receivable to the amount reasonably believed to be collectible.
In cases where there are circumstances that may impair a specific customer’s ability to meet its financial obligations, an allowance is recorded against amounts due, which reduces the net recognized receivable 74 Table of Contents to the amount reasonably believed to be collectible.
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. There were no material uncertain tax positions as of December 31, 2023 and 2022.
Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. There were no material uncertain tax positions as of December 31, 2024 and 2023.
The Company records uncertain tax positions based on a two-step process whereby (1) a determination is made as to whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold the Company recognizes the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.
We record uncertain tax positions based on a two-step process whereby (1) a determination is made as to whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.
The Company allows for the return of product from direct customers in certain regions in limited instances within fifteen days after the original sale and records estimated sales returns as a reduction of sales in the same period revenue is recognized.
We allow for the return of product from direct customers in certain regions in limited instances within fifteen days after the original sale and records estimated sales returns as a reduction of sales in the same period revenue is recognized.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 1, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 4, 2024.
The Company recognizes revenue related to the sales of products to distributors at the time of shipment of the product, which represents the point in time when the distributor has taken ownership and assumed the risk of loss and the required revenue recognition criteria are satisfied.
We recognize revenue related to the sales of products to distributors at the time of shipment of the product, which represents the point in time when the distributor has taken ownership and assumed the risk of loss and the required revenue recognition criteria are satisfied.
For all arrangements, any revenue that has been deferred and is expected to be recognized beyond one year is classified as long-term deferred revenue and included in “Other liabilities, long-term” on the consolidated balance sheets. Research and Development Costs related to research and development, or R&D, activities are expensed as incurred.
For all arrangements, any revenue that has been deferred and is expected to be recognized beyond one year is classified as long-term deferred revenue and included in “Other liabilities, long-term” on the consolidated balance sheets (see Note 3 “Balance Sheet Accounts”). Research and Development Costs related to research and development, or R&D, activities are expensed as incurred.
The fair value of options to purchase shares granted to employees is estimated on the grant date using the Black-Scholes option valuation model.
The fair value of 75 Table of Contents options to purchase shares granted to employees is estimated on the grant date using the Black-Scholes option valuation model.
In estimating future tax consequences, expected future events, enactments or changes in the tax law or rates are considered. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount expected to be realized. The Company operates in various tax jurisdictions and is subject to audit by various tax authorities.
In estimating future tax consequences, expected future events, enactments or changes in the tax law or rates are considered. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount expected to be realized. We operate in various tax jurisdictions and are subject to audit by various tax authorities.
Sales of our Motiva breast implants accounted for over 95% of our revenues for the year ended December 31, 2023, and we expect our revenues to continue to be driven primarily by sales of these products.
Sales of our Motiva breast implants accounted for over 96% of our revenues for the year ended December 31, 2024, and we expect our revenues to continue to be driven primarily by sales of these products.
Interest Expense Interest expense consists primarily of cash and non-cash interest related to outstanding debt and amortization of debt discounts. As of December 31, 2023, we had $192.6 million in outstanding principal under our term loan, including interest accrued into the principal balance. See Note 5 “Debt” for additional information.
Interest Expense Interest expense consists primarily of cash and non-cash interest related to outstanding debt and amortization of debt discounts. As of December 31, 2024, we had $221.4 million in outstanding principal under our term loan, including interest accrued into the principal balance. See Note 6 “Debt” for additional information.
Our future capital requirements will depend on many factors, including: ▪ the degree and rate of market adoption of our products; ▪ the cost and timing of our regulatory activities, especially the IDE clinical trial, and the timing of regulatory approval for our Motiva Implants in the United States; ▪ the emergence of new competing technologies and products; ▪ the costs of R&D activities we undertake to develop and expand our products; ▪ the costs of commercialization activities, including sales, marketing and manufacturing; ▪ the level of working capital required to support our growth; and ▪ our need for additional personnel, information technology or other operating infrastructure to support our growth and operations as a public company.
Our future capital requirements will depend on many factors, including: • the degree and rate of market adoption of our products; • the cost and timing of our regulatory activities; • the emergence of new competing technologies and products; • the costs of R&D activities we undertake to develop and expand our products; • the costs of commercialization activities, including sales, marketing and manufacturing; • the level of working capital required to support our growth; and • our need for additional personnel, information technology or other operating infrastructure to support our growth and operations as a public company.
The Company recognizes revenue when title to the product and risk of loss transfer to customers, provided there are no remaining performance obligations required of the Company or any written matters requiring customer acceptance.
We recognize revenue when title to the product and risk of loss transfer to customers, provided there are no remaining performance obligations required of us or any written matters requiring customer acceptance.
Additionally, the Company has received payments from customers in direct markets prior to surgical implantation and recognizes deferred revenue at the time the Company is notified by the customer that the product has been implanted.
Additionally, we have received payments from customers in direct markets prior to surgical implantation and recognizes deferred revenue at the time we are notified by the customer that the product has been implanted.
In evaluating the Company’s ability to collect outstanding receivable balances, the Company considers various factors including the age of the balance, the creditworthiness of the customer, which is assessed based on ongoing credit evaluations and payment history, and the customer’s current financial condition.
In evaluating our ability to collect outstanding receivable balances, we consider various factors including the age of the balance, the creditworthiness of the customer, which is assessed based on ongoing credit evaluations and payment history, and the customer’s current financial condition.
SG&A expenses also includes costs attributable to freight, marketing, sales support, travel, legal services, financial audit fees, insurance costs, and consulting services.
SG&A expenses also includes costs attributable 67 Table of Contents to freight, marketing, sales support, travel, legal services, financial audit fees, insurance costs, and consulting services.
Income Taxes The Company records income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns.
Income Taxes We record income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or income tax returns.
However, we expect our SG&A expenses to decrease as a percentage of our revenue over the long term, although our SG&A expenses may fluctuate from period to period due to the timing of expenses related to our sales and marketing campaigns.
However, we expect our SG&A expenses to decrease as a percentage of our revenue over the long term, although our SG&A expenses may fluctuate from period to period due to the timing of expenses related to our sales and marketing campaigns, as well as expansion into new markets and geographies.
As of December 31, 2023, around $30 million has been spent on the trial. We also have other products under development for which we may be required to conduct clinical trials in future periods in order to receive regulatory approval to market these products.
As of December 31, 2024, approximately $32.2 million has been spent on the trial to date. We also have other products under development for which we may be required to conduct clinical trials in future periods in order to receive regulatory approval to market these products.
For the year ended December 31, 2023, foreign currency transaction gain amounted to $1.8 million as compared to a foreign currency transaction loss of $3.0 million for the year ended December 31, 2022. 82 Table of Contents Share-Based Compensation The Company measures and recognizes compensation expense for all share-based awards in accordance with the provisions of ASC 718, Stock Compensation .
For the year ended December 31, 2024, foreign currency transaction loss amounted to $8.8 million as compared to a foreign currency transaction gain of $1.8 million for the year ended December 31, 2023. Share-Based Compensation We measures and recognizes compensation expense for all share-based awards in accordance with the provisions of ASC 718, Stock Compensation .
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 1, 2023. Liquidity and Capital Resources As of December 31, 2023, we had an accumulated deficit of $360.1 million.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 4, 2024. 70 Table of Contents Liquidity and Capital Resources As of December 31, 2024, we had an accumulated deficit of $444.7 million.
Estimated warranty obligations are recorded at the time of sale. The Company also offers a warranty to patients in the event of rupture and a replacement program for capsular contracture events, provided certain registration requirements are met. Revenue for extended warranties is recognized ratably over the term of the agreement.
Estimated warranty obligations are recorded at the time of sale. We also offer a warranty to patients in the event of rupture and a replacement program for capsular contracture events, provided certain registration requirements are met. Revenue for extended warranties is recognized ratably over the term of the agreement. To date, these warranty and program costs have been de minimis.
Part of the first tranche was used to repay the outstanding principal and interest under the Madryn Credit Agreement in full, including the early repayment penalty of $6.5 million. In December 2022, $25 million was advanced under the second tranche.
Part of the first tranche was used to repay the outstanding principal and interest under our previous credit agreement with Madryn Health Partners, LP in full, including the early repayment penalty of $6.5 million. In December 2022, $25 million was advanced under the second tranche. In October 2024, $25 million was advanced under the third tranche.
The Term Loans will mature on the 5-year anniversary of the Closing Date and accrue interest at a rate equal to 9% per annum.
The Term Loans will mature on the 5-year anniversary of the Closing Date and accrue interest at a rate equal to 9% per annum for the first two tranches and 10% for the third and fourth tranches.
The following table sets forth the primary sources and uses of cash for each of the years presented below: 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ (88,513) $ (52,166) Investing activities (24,547) (34,791) Financing activities 86,227 100,255 Effect of exchange rate changes on cash 513 (358) Net (decrease) increase in cash $ (26,320) $ 12,940 Net Cash Used in Operating Activities Net cash used in operating activities of $88.5 million for the year ended December 31, 2023 was primarily comprised of a net loss of $78.5 million, changes in operating assets and liabilities of $34.1 million, $4.2 million of unrealized foreign currency gain and $3.6 million of interest capitalized for construction in progress, partially offset by $14.4 million of share-based compensation expense, $13.3 million of non-cash interest expense due to accretion of debt discounts, $4.2 million of non-cash depreciation and amortization expense, a $1.4 million change in provision for inventory obsolescence, a $1.2 million change in allowance for doubtful accounts and $0.7 million of non-cash amortization expense of right-to-use assets.
The following table sets forth the primary sources and uses of cash for each of the years presented below: Year Ended December 31, 2024 2023 (in thousands) Net cash provided by (used in): Operating activities $ (58,516) $ (88,513) Investing activities (15,611) (24,547) Financing activities 125,895 86,227 Effect of exchange rate changes on cash (1,456) 513 Net (decrease) increase in cash $ 50,312 $ (26,320) Net Cash Used in Operating Activities Net cash used in operating activities of $58.5 million for the year ended December 31, 2024 was primarily comprised of a net loss of $84.6 million, changes in operating assets and liabilities of $15.5 million, a $2.2 million change in provision for deferred income taxes and $0.6 million of interest capitalized for construction in progress, partially offset by $14.4 million of share-based compensation expense, $6.8 million of non-cash depreciation and amortization expense, $6.4 million of non-cash interest expense due to accretion of debt discounts, $6.0 million of non-cash loss on contract termination, $5.3 million of unrealized foreign currency loss, a $1.8 million change in provision for inventory obsolescence, a $1.7 million change in allowance for doubtful accounts, $1.0 million of stock compensation in lieu of cash fees and $0.7 million of non-cash amortization expense of right-to-use assets.
Financial Highlights Our revenue for the years ended December 31, 2023 and 2022 was $165.2 million and $161.7 million, respectively, an increase of $3.5 million, or 2.2%. Net losses were $78.5 million for the year ended December 31, 2023 as compared to $75.2 million for the year ended December 31, 2022.
Financial Highlights Our revenue for the years ended December 31, 2024 and 2023 was $166.0 million and $165.2 million, respectively, an increase of $0.8 million, or 0.5%. Net losses were $84.6 million for the year ended December 31, 2024 as compared to $78.5 million for the year ended December 31, 2023.
As of December 31, 2023, $192.6 million was outstanding under the Credit Agreement representing the initial principal of $150 million for the Tranche A Term Loan and $25 million for the Tranche B Term Loan and $17.6 million of interest accrued into the principal balance.
As of December 31, 2024, $221.4 million was outstanding under the Credit Agreement representing the initial principal of $150 million for the Tranche A Term Loan, $25 million for the Tranche B Term Loan, $25 million for the Tranche C Term Loan and $17.6 million of interest accrued into the principal balance. See Note 6 “Debt” for additional information.
The increase was primarily due to the foreign currency fluctuations of the Brazilian real and the euro as compared to the U.S. dollar, resulting in a foreign currency transaction gain of $1.8 million, for the year ended December 31, 2023, compared to a loss of $3.0 million for the year ended December 31, 2022.
The decrease was primarily due to $6.0 million in contract termination costs incurred in the fourth quarter of fiscal 2024 and to the foreign currency fluctuations of the Brazilian real and the euro as compared to the U.S. dollar, resulting in a foreign currency transaction loss of $8.8 million, for the year ended December 31, 2024, compared to a gain of $1.8 million for the year ended December 31, 2023.
We expect our SG&A expenses to continue to increase in absolute dollars for the foreseeable future as our business grows and we continue to invest in our sales, marketing, medical education, training and general 73 Table of Contents administration resources to build our corporate infrastructure.
We expect our SG&A expenses to remain significant in absolute dollars as our business grows and we continue to invest in our sales, marketing, medical education, training and general administration resources to build our corporate infrastructure.
ASC 606 requires the Company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services.
The Company recognizes revenue in accordance with 73 Table of Contents Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers . ASC 606 requires the Company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services.
On January 9, 2024, we entered into a securities purchase agreement with select institutional accredited investors to sell, at price of $25.00 per share, 1,101,565 common shares and pre-funded warrants for purchase of 898,435 common shares. The pre-funded warrants may be exercisable immediately at a price of $0.001 per share.
In January 2024, we entered into a securities purchase agreement with select institutional accredited investors pursuant to which we agreed to sell to the investors in a private placement 1,101,565 common shares and pre-funded warrants to purchase up to 898,435 common shares. The pre-funded warrants are exercisable immediately, at a price of $0.001 per share, until exercised in full.
In addition, in October 2023, we completed and announced the results of the two-year 100-patient clinical study for Mia Femtech, our patented technologies that can increase breast shape by 1 to 2 cups in a 15-minute procedure without the need for general anesthesia.
Chacón-Quirós will continue as a member of the Board and as an advisor with the Company. In October 2024, we completed and announced the results of the three-year 100-patient clinical study for Mia Femtech, our patented technology that can increase breast shape by 1 to 2 cups in a 15-minute procedure without the need for general anesthesia.
Our gross margin may fluctuate from period to period depending, in part, on the efficiency and utilization of our manufacturing facilities, targeted pricing programs, and sales volume based on geography, customer and product type.
We calculate gross margin as revenue less cost of revenue for a given period divided by revenue. Our gross margin may fluctuate from period to period depending, in part, on the efficiency and utilization of our manufacturing facilities, fluctuations of foreign currency exchange rates, targeted pricing programs and sales volume based on geography, customer and product type.
Operating Expenses 2023 2022 (in thousands) Operating expenses: Sales, general and administrative $ 145,575 $ 125,984 Research and development 26,428 20,269 Total operating expenses $ 172,003 $ 146,253 Sales, General and Administrative Expense SG&A expense increased $19.6 million, or 15.6%, to $145.6 million for the year ended December 31, 2023, compared to $126.0 million for the year ended December 31, 2022.
Operating Expenses Year Ended December 31, 2024 2023 (in thousands) Operating expenses: Sales, general and administrative $ 139,806 $ 145,575 Research and development 19,706 26,428 Total operating expenses $ 159,512 $ 172,003 Sales, General and Administrative Expense SG&A expense decreased $5.8 million, or 4.0%, to $139.8 million for the year ended December 31, 2024, compared to $145.6 million for the year ended December 31, 2023.
As of December 31, 2023 an allowance of $0.3 million was recorded for product returns. As of December 31, 2022, the allowance for product returns was de minimis. A portion of the Company’s revenue is generated from the sale of consigned inventory maintained at physician, hospital, and clinic locations.
As of December 31, 2024 and 2023, an allowance of $0.4 million and $0.3 million was recorded for product returns, respectively. Taxes collected from customers for remittance to governmental authorities are excluded from net sales. A portion of the our revenue is generated from the sale of consigned inventory maintained at physician, hospital, and clinic locations.
Net cash used in operating activities of $52.2 million for the year ended December 31, 2022 was primarily comprised of a net loss of $75.2 million, a $19.0 million loss on extinguishment of debt, $13.4 million of share-based compensation expense, $8.1 million of non-cash interest expense due to accretion of debt discounts and interest subsumed into the principal of the new Credit Agreement, $3.9 million of non-cash depreciation expense, $1.7 million of unrealized foreign currency loss, and a $1.6 million change in provision for inventory obsolescence, partially offset by a $1.9 million gain from write-off of liability and a $0.7 million change in fair value of derivatives, as well as changes in operating assets and liabilities of $21.5 million.
Net cash used in operating activities of $88.5 million for the year ended December 31, 2023 was primarily comprised of a net loss of $78.5 million, changes in operating assets and liabilities of $34.1 million, $4.2 million of unrealized foreign currency gain and $3.6 million of interest capitalized for construction in progress, partially offset by $14.4 million of share-based compensation expense, $13.3 million of non-cash interest expense due to accretion of debt discounts, $4.2 million of non-cash depreciation and amortization expense, a $1.4 million change in provision for inventory obsolescence, a $1.2 million change in allowance for doubtful accounts and $0.7 million of non-cash amortization expense of right-to-use assets.
In November 2023, we received National Medical Products Administration, or NMPA, approval in China for Motiva Implants, 510(k) clearance from the FDA for the Motiva Flora SmoothSilk Tissue Expander in the United States, and CE mark approval under the European Medical Device Regulation for the Motiva Injector, the Motiva Inflatable Balloon and the Motiva Channel Dissector.
These events followed our receipt of National Medical Products Administration, or NMPA, approval in China for Motiva Implants and our 510(k) clearance from the FDA for the Motiva Flora SmoothSilk Tissue Expander in the United States, both in November 2023.
When such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset group’s carrying value.
Long-Lived Assets We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. When such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset group’s carrying value.
We believe that the critical accounting policies discussed below are essential to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s estimates and judgments.
We believe that the critical accounting policies discussed below are essential to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s estimates and judgments. Revenue Recognition We recognize revenue related to sales of products to distributors or directly to customers in markets where it has regulatory approval, net of discounts and allowances.
Consolidated Results of Operations The following table sets forth our results of operations for the years presented, in dollars: 2023 2022 (in thousands) Revenue $ 165,151 $ 161,700 Cost of revenue 58,174 55,105 Gross profit 106,977 106,595 Operating expenses: Sales, general and administrative 145,575 125,984 Research and development 26,428 20,269 Total operating expenses 172,003 146,253 Loss from operations (65,026) (39,658) Interest expense (15,393) (11,760) Change in fair value of derivative instruments — 703 Loss on extinguishment of debt — (19,019) Other income (expense), net 1,836 (3,090) Loss before income taxes (78,583) (72,824) Provision for income taxes 81 (2,385) Net loss $ (78,502) $ (75,209) 75 Table of Contents Comparison of the Year Ended December 31, 2023 and 2022 2023 2022 (in thousands) Revenue $ 165,151 $ 161,700 Cost of revenue 58,174 55,105 Gross profit $ 106,977 $ 106,595 Gross margin 64.8 % 65.9 % Revenue Revenue increased $3.5 million, or 2.2%, to $165.2 million for the year ended December 31, 2023, as compared to $161.7 million for the year ended December 31, 2022.
Consolidated Results of Operations The following table sets forth our results of operations for the years presented, in dollars: Year Ended December 31, 2024 2023 (in thousands) Revenue $ 166,025 $ 165,151 Cost of revenue 56,500 58,174 Gross profit 109,525 106,977 Operating expenses: Sales, general and administrative 139,806 145,575 Research and development 19,706 26,428 Total operating expenses 159,512 172,003 Loss from operations (49,987) (65,026) Interest expense (20,829) (15,393) Other income (expense), net (13,812) 1,836 Loss before income taxes (84,628) (78,583) Benefit for income taxes 32 81 Net loss $ (84,596) $ (78,502) Comparison of the Year Ended December 31, 2024 and 2023 Year Ended December 31, 2024 2023 (in thousands) Revenue $ 166,025 $ 165,151 Cost of revenue 56,500 58,174 Gross profit $ 109,525 $ 106,977 Gross margin 66.0 % 64.8 % Revenue Revenue increased $0.8 million, or 0.5%, to $166.0 million for the year ended December 31, 2024, as compared to $165.2 million for the year ended December 31, 2023.
R&D costs primarily include personnel costs, materials, clinical expenses, regulatory expenses, product development, consulting services, and outside research activities, all of which are directly related to research and development activities.
R&D costs primarily include personnel costs, materials, clinical expenses, regulatory expenses, product development, consulting services, and outside research activities, all of which are directly related to research and development activities. We estimate IDE clinical trial expenses based on the services performed, pursuant to contracts with research institutions and clinical research organizations that conduct and manage clinical trials on its behalf.
We estimate a total of $51.7 million in costs for this initial phase of our expansion project, of which the majority has been incurred to date. Additional phases of the project may be executed, at our option, to further expand manufacturing capacity at the new facility. We expect to commence manufacturing from the new facility in 2024.
We incurred approximately $56.0 million in costs for this phase of the project over the time frame of 2020 to 2024. Additional phases of the project may be executed, at our option, to further expand manufacturing capacity at the new facility.
As of December 31, 2023, we had an accumulated deficit of $360.1 million. Our cash balance as of December 31, 2023 was $40.0 million. Recent Developments In January 2024, we announced the commercial launch of Motiva Implants in China and the completion of the first procedure with the Motiva Flora SmoothSilk Tissue Expander in the United States.
In January 2024, we announced the commercial launch of Motiva Implants in China and the completion of the first procedure with the Motiva Flora SmoothSilk Tissue Expander in the United States.
The Company has received payments from distributors to provide distribution exclusivity within a geographic area and recognizes deferred revenue on a ratable basis over the term of such contractual distribution relationship.
We will continue to evaluate the warranty reserve policies for adequacy considering claims history. Deferred revenue primarily consists of payments received in advance of meeting revenue recognition criteria. We have received payments from distributors to provide distribution exclusivity within a geographic area and recognizes deferred revenue on a ratable basis over the term of such contractual distribution relationship.
Components of Results of Operations Revenue We commenced sales of our Motiva Implants in October 2010 and these products have historically accounted for the majority of our revenues.
Net proceeds to us from the offering, after deducting offering expenses, were approximately $49.7 million. See Note 8 “Shareholders’ Equity” for additional information. Components of Results of Operations Revenue We commenced sales of our Motiva Implants in October 2010 and these products have historically accounted for the majority of our revenues.
We believe the proprietary technologies that differentiate 71 Table of Contents our Motiva Implants enable improved safety and aesthetic outcomes and drive our revenue growth. We have developed other complementary products and services, which are aimed at further enhancing patient outcomes.
We believe the proprietary technologies that differentiate our Motiva Implants enable improved safety and aesthetic outcomes and drive our revenue growth.
Cost of Revenue and Gross Margin Cost of revenue increased $3.1 million, or 5.6%, to $58.2 million for the year ended December 31, 2023, compared to $55.1 million for the year ended December 31, 2022. The increase in cost of revenue is in line with the increase in revenue except as described below.
Cost of Revenue and Gross Margin Cost of revenue decreased $1.7 million, or 2.9%, to $56.5 million for the year ended December 31, 2024, compared to $58.2 million for the year ended December 31, 2023.
We have devoted a majority of our resources since inception to developing our Motiva Implants, which we began selling in October 2010. We have incurred net losses in each year since inception, and we have financed our operations primarily through equity financings and debt financings.
We have incurred net losses in each year since inception, and we have financed our operations primarily through equity financings and debt financings. In September 2024, we received FDA approval to sell Motiva Implants in the United States.
A third facility in Costa Rica is under construction and is currently expected to commence manufacturing in fiscal 2024. Cost of revenue is primarily the cost of silicone but also includes other raw materials, packaging, components, quality assurance, labor costs, as well as manufacturing and overhead expenses.
Cost of revenue is primarily the cost of silicone but also includes other raw materials, packaging, components, quality assurance, labor costs, as well as manufacturing and overhead expenses. Cost of revenue also includes depreciation expense for production equipment and amortization of certain intangible assets.
The Company continually monitors customer payments and maintains an allowance for estimated losses resulting from customers’ inability to make required payments.
Accounts Receivable and Allowance for Credit Losses Accounts receivable is stated at invoice value less estimated allowances for returns and credit losses. We continually monitor customer payments and maintains an allowance for estimated losses resulting from customers’ inability to make required payments.
Interest Expense Interest expense increased $3.6 million, or 30.5%, to $15.4 million for the year ended December 31, 2023, as compared to $11.8 million for the year ended December 31, 2022. The increase was primarily due to the new Credit Agreement entered into in April 2022 and the second tranche advanced pursuant to the Credit Agreement in December 2022.
Interest Expense Interest expense increased $5.4 million, or 35.1%, to $20.8 million for the year ended December 31, 2024, as compared to $15.4 million for the year ended December 31, 2023. The increase was primarily due to an increase in debt principal.
Due to our history of losses, with the exception of Belgium and JAMM Technologies, Inc., we maintain a full valuation allowance for deferred tax assets including net operating loss carry-forwards, R&D tax credits and other book versus tax differences.
Income Tax Expense Income tax expense consists primarily of income taxes in foreign jurisdictions in which we conduct business. Due to its history of losses, Motiva USA LLC, our U.S. subsidiary, maintains a full valuation allowance for deferred tax assets including net operating loss carry-forwards, R&D tax credits, capitalized R&D and other book versus tax differences.
Material Cash Requirements The following table provides a summary of our material cash requirements from known contractual and other obligations, including commitments for capital expenditures, as of December 31, 2023: 2024 2025 2026 2027 2028 Thereafter Total (in thousands) Debt obligations - principal (1) $ — $ — $ — $ 196,399 $ — $ — $ 196,399 Debt obligations - Interest payments (1) 14,142 17,921 17,921 5,696 — — 55,680 Future minimum lease payments (2) 998 912 833 724 506 295 4,268 License and software commitments (3) 2,363 1,999 1,501 1,031 601 — 7,495 Short-term borrowing (4) 1,100 — — — — — 1,100 $ 18,603 $ 20,832 $ 20,255 $ 203,850 $ 1,107 $ 295 $ 264,942 (1) Contractual obligations related to the Credit Agreement.
Material Cash Requirements The following table provides a summary of our material cash requirements from known contractual and other obligations, including commitments for capital expenditures, as of December 31, 2024: 2025 2026 2027 2028 2029 Thereafter Total (in thousands) Debt obligations - principal (1) $ — $ — $ 221,367 $ — $ — $ — $ 221,367 Debt obligations - Interest payments (1) 20,453 20,453 6,500 — — — 47,406 Future minimum lease payments (2) 2,024 1,923 1,653 836 432 99 6,967 License and software commitments (3) 1,853 1,479 1,031 601 — — 4,964 Short-term borrowing (4) 1,722 — — — — — 1,722 Total material cash requirements $ 26,052 $ 23,855 $ 230,551 $ 1,437 $ 432 $ 99 $ 282,426 (1) Contractual obligations related to the Credit Agreement.
The increase was primarily due to a $8.2 million increase in sales and marketing expenses, a $4.3 million increase in personnel and related costs due to increased headcount during the first three quarters of the year, a $3.0 million increase in freight associated with higher revenues, a $2.1 million increase in costs in facilities from our expanding operations, a $2.0 million increase in software implementation costs, a $0.9 million increase in consulting fees in part due to added costs for compliance with Section 404(b) of the Sarbanes-Oxley Act and a $0.3 million increase in depreciation and amortization costs, partially offset by a $1.8 million decrease in sales commissions.
The decrease was primarily due to a $6.2 million decrease in in consulting fees, a $4.1 million decrease in sales and marketing expenses and a $3.6 million decrease in freight costs, partially offset by a $2.1 million increase in depreciation and amortization costs, a $1.5 million increase in personnel and related costs, a $1.3 million increase in insurance expenses, and a $1.1 million increase in software implementation costs.
In February 2024, we amended the Credit Agreement, modifying the access conditions, commitment termination dates and interest rates for the two remaining available tranches. See Note 5 “Debt” and Note 15 “ Subsequent Events” for additional information.
The Second Amendment modified the access conditions, commitment termination dates and interest rates for the two remaining available tranches, Tranche C Term Loans and Tranche D Term Loans. See Note 6 “Debt” for additional information.
Our contracts with distributors do not typically contain right of return or price protection and have no post-delivery obligations. We expect our revenue to increase as we enter new markets, expand awareness of our products in existing markets, and grow our distributor network and direct sales force.
Our contracts with distributors do not typically contain right of return or price protection and have no post-delivery obligations. We expect our revenue to fluctuate from quarter to quarter due to a variety of factors, including seasonal fluctuations in demand for Motiva Implants and foreign currency fluctuations.
The interest payments were projected as of December 31, 2023 assuming we will choose to PIK interest into principal though April 2024. See below under “Indebtedness” and Note 5 “Debt” for additional details. (2) Contractual obligations related to the minimum lease payments and interest on our operating leases. See Note 6 “Leases” for additional details.
See below under “Indebtedness” and Note 6 “Debt” for additional details. (2) Contractual obligations related to the minimum lease payments and interest on our operating leases. See Note 7 “Leases” for additional details. (3) Contractual obligations related to our current contracts for software solutions and support. (4) Contractual obligations related to a short-term loan for our business insurance premiums.
In July 2023, we announced the grand opening of the first phase of the Sulàyöm Innovation Campus, which includes approximately 100,000 square feet of facility space intended to increase our manufacturing capacity by approximately 730,000 units per year.
In June 2024, we finalized the construction of our manufacturing and corporate offices in the Coyol Free Zone, or CFZ, in Costa Rica, which includes approximately 100,000 square feet of facility space intended to increase our manufacturing capacity by approximately 730,000 units per year. The facility has obtained necessary regulatory approvals to commence manufacturing.
In the fourth quarter of 2021, we initiated a modular PMA submission process with the FDA and submitted the first of four modules. The second, third and fourth modules were submitted to the FDA in May 2022, August 2022 and February 2023, respectively. The IDE clinical trial is expected to cost between $30.0 million and $40.0 million over ten years.
We received an approval of an IDE from the FDA in March 2018 to initiate a clinical trial and enrolled the first patient in April 2018. The IDE clinical trial is expected to cost between $30.0 million and $40.0 million over the duration of the clinical trial period of ten years.
The overall increase in revenue year-to-date as compared to 2022 was driven by an increase in demand during the first half of the year, and our efforts to expand direct sales in multiple geographies. • Outlook: Demand for our products is dependent on the relative strength of the global and regional medical device markets, which are sensitive to general macroeconomic conditions.
We were able to achieve higher selling prices in the United States which had a positive impact on gross margins the fourth quarter of 2024. • Outlook: Demand for our products is dependent on the relative strength of the global and regional medical device markets, which are sensitive to general macroeconomic conditions.
Our focus will be on investing in our primary growth initiatives, which include the launch of our product in the U.S., development of the Chinese market and promoting Mia Femtech. For additional information on the various risks and other uncertain macroeconomic conditions on our business, financial condition and results of operations, please see Part I, Item 1A.
Therefore, we expect an uptick in overall operating expenses in fiscal 2025 relative to fiscal 2024. 68 Table of Contents For additional information on the various risks and other uncertain macroeconomic conditions on our business, financial condition and results of operations, please see Part I, Item 1A. “Risk Factors” of this report.
The aggregate gross proceeds from the offering, before deducting offering expenses, were approximately $50.0 million. Our short-term liquidity requirements consist primarily of operating expenses and interest payments on the Credit Agreement.
In 2023, we completed an underwritten public offering of common shares, resulting in net proceeds to us after deducting underwriting discounts and offering expenses of approximately $84.6 million. See Note 8 “Shareholders’ Equity” for additional information. Our short-term liquidity requirements consist primarily of operating expenses and interest payments on the Credit Agreement.
In April 2022, we entered into a credit agreement, or the Credit Agreement, for term loans to the Company in an aggregate principal amount of up to $225 million, with Oaktree Fund Administration, LLC, as administrative agent. The first and second tranche were advanced in the amount of $150 million and $25 million in April and December 2022, respectively.
See Note 6 “Debt” for additional information. In February 2024, we entered into a Second Amendment to the Credit Agreement, which provides for term loans in an aggregate principal amount of up to $225 million.
The Company estimates IDE clinical trial expenses based on the services performed, pursuant to contracts with research institutions and clinical research organizations that conduct and manage clinical trials on its behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of patient enrollment and activity expended in each period.
In accruing service fees, we estimate the time period over which services will be performed and the level of patient enrollment and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we will adjust the accrual accordingly.
The Company regularly reviews inventory quantities considering actual losses, projected future demand, and remaining shelf life to record a provision for excess and slow-moving inventory. Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable.
We regularly reviews inventory quantities considering actual losses, projected future demand, and remaining shelf life to record a provision for excess and slow-moving inventory. Provision for inventory obsolescence of $4.2 million and $3.9 million has been recorded as of December 31, 2024 and 2023 , respectively.
In the fourth quarter of 2023, we implemented measures targeting a decrease in operating expenses, including headcount reduction to lower global personnel costs. 76 Table of Contents Research and Development Expense R&D expense increased $6.1 million, or 30.0%, to $26.4 million for the year ended December 31, 2023, compared to $20.3 million for the year ended December 31, 2022.
Research and Development Expense R&D expense decreased $6.7 million, or 25.4%, to $19.7 million for the year ended December 31, 2024, compared to $26.4 million for the year ended December 31, 2023.
The single-center, Institutional Review Board approved study began in December 2020 and involved participation of fifteen board-certified plastic surgeons from Costa Rica, Sweden, England, Brazil, Austria, Italy, Belgium, and the United States. We have launched Mia Femtech globally through partnerships with clinics in Japan, Spain, Switzerland, Sweden, Germany, France, Costa Rica, Turkey and the Middle East.
The single-center, Institutional Review Board approved study began in December 2020 and involved the participation of fifteen board-certified plastic surgeons in multiple geographies. We currently offer Mia Femtech in multiple countries across the world with plastic surgeons fully certified to provide the Mia experience. In September 2024, we received PMA approval from the FDA for our Motiva Implants.
Removed
We also entered into a securities purchase agreement, pursuant to which we sold an aggregate of two million common shares and pre-funded warrants for gross proceeds of approximately $50 million. See Note 15 “Subsequent Events” for additional information.

… 69 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed4 unchanged
Biggest changeAn index of those financial statements is included in Part IV, Item 15 below. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 83 Table of Contents
Biggest changeAn index of those financial statements is included in Part IV, Item 15 below. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
For the year ended December 31, 2023, foreign currency transaction gain amounted to $1.8 million primarily related to the remeasurement of transactions denominated in the U.S. dollar into the Brazilian real and the euro as part of the financial reporting consolidation process under GAAP. We have not engaged in any foreign currency hedging activities.
For the year ended December 31, 2024, foreign currency transaction loss amounted to $8.8 million primarily related to the remeasurement of transactions denominated in the U.S. dollar into the Brazilian real and the euro as part of the financial reporting consolidation process under GAAP. We have not engaged in any foreign currency hedging activities.
During the year ended December 31, 2023, the effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts as of December 31, 2023 would have had an impact of approximately 1.9% on revenues and would have impacted our net loss by a commensurate amount.
During the year ended December 31, 2024, the effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts as of December 31, 2024 would have had an impact of approximately 2.4% on revenues and would have impacted our net loss by a commensurate amount.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We had cash of $40.0 million and $66.4 million as of December 31, 2023 and 2022, respectively. We manage our cash portfolio for operating and working capital purposes.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We had cash of $90.3 million and $40.0 million as of December 31, 2024 and 2023, respectively. We manage our cash portfolio for operating and working capital purposes.

Other ESTA 10-K year-over-year comparisons