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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Unless the context otherwise requires, references herein to “we,” “us,” “our” or “group” are to EDAP TMS S.A. and its consolidated subsidiaries and references herein to the “Company,” “EDAP” or “EDAP TMS” are to EDAP TMS S.A.

We prepare our consolidated financial statements in conformity with United States generally accepted accounting principles (‘‘(“U.S. GAAP’’GAAP”). In this annual report, references to ‘‘euro’’“euro” or ‘‘€’’“€” are to the legal currency of the countries of the European Monetary Union, including the Republic of France, and references to ‘‘dollars,’’ ‘‘U.S. dollars’’“dollars,” “U.S. dollars” or ‘‘$’’“$” are to the legal currency of the United States of America. Solely for the convenience of the reader, this annual report contains translations of certain euro amounts into dollars at specified rates. These translations should not be construed as representations that the euro amounts actually represent such dollar amounts or could be converted into dollars at those rates. See Item 11, ‘‘Quantitative and Qualitative Disclosures about Market Risk’’ for a discussion of the effects of fluctuations in currency exchange rates on the Company.

The following are registered trademarks of the Company in the United States: EDAP^®, Ablatherm^®, Ablasonic^®, Ablapak^®, and Focal.One^®. This annual report also makes references to trade names and trademarks of companies other than the Company.

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CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This annual report includes certain forward-looking statements within the meaning of applicable federal securities laws, including Section 27A of the U.S. Securities Act of 1933 (the “Securities Act”) or Section 21E of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”), which may be identified by words such as ‘‘believe,’’ ‘‘plan,’’ ‘‘intend,’’“believe,” “can,” “contemplate,” “could,” “plan,” “intend,” “is designed to,” “may,” “might,” “potential,” “objective,” “target,” “project,” “predict,” “forecast,” “ambition,” “aim”, “guideline,” “should,” ‘‘estimate,’’ ‘‘expect’’“will,” “estimate,” “expect” and ‘‘anticipate’’“anticipate,” or the negative of these and similar expressions, which reflect our views about future events and financial performance. Forward-looking statements involve inherent known and unknown risks and uncertainties including matters not yet known to us or not currently considered material by us. Actual events or results may differ materially from those expressed or implied in such forward-looking statements as a result of various factors that may be beyond our control. Factors that could affect future results or cause actual events or results to differ materially from those expressed or implied in forward-looking statements include, but are not limited to:

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You should also consider the information contained in Item 3, ‘‘“Key Information—Risk Factors’’” and Item 5, ‘‘“Operating and Financial Review and Prospects,’’” or further discussion of the risks and uncertainties that may cause such differences to occur. Forward-

Risks Related to our Product Candidates and the Industry in which we Operate

Risks Related to our Organization and Operations

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Risks Related to Intellectual Property Rights

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Risks Relating to our Status as a Foreign Private Issuer or a French Company

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Risks Related to Ownership of our Ordinary Shares and the ADSs

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General Risk Factors

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Risks Relating to Our Business, Financial Position and Capital Needs

Worldwide contagious, epidemic diseases may impact our international activities andThe worldwide inflationary environment could have a material adverse effect on our business, results of operations and financial condition.

Epidemic, contagiousCurrent geopolitical instability including the conflict in Ukraine and even pandemic diseases, such as the current COVID-19 virus,related sanctions and the conflict in Israel, and other factors including, but not limited to, global supply chain constraints, key components sourcing issues, increase in prices and disruptions of energy supply, and labor shortages, have led to higher worldwide inflation, which is expectedlikely, in turn, to impactlead to an increase in costs and may cause additional changes in tax and governmental policies. We may be unable to raise the developmentprices of our business worldwide. Since the occurrence in 2020 of the COVID-19 virus which represented a new challenge to us, we have taken steps to require the majority of our employees to work remotely, maintain minimum supply chain and development activity and curtail most business travels. These measures are still in place as of the date of filing. During 2020, we also (i) implemented partial unemployment, (ii) temporarily closed certain sites and (iii) used certain mechanisms to limit the impact on cash flow (such as deferral of social security or tax payments, deferral of lease payments). The pandemic has resulted in further postponement and/or cancelation of the sale and installation of new devices and disposablesservices in a higher inflationary environment and keep up with the rate of inflation. Such inflationary pressures may materially impact our business. We may not be able to adjust pricing, reduce our costs or implement counter measures quickly enough to offset cost increases. Our customers (i.e., hospitals and clinics) are also experiencing financial and operational pressures directly related to this inflationary environment, which may impact their ability or clinics as investment decisions are putwillingness to spend on hold or their resources are refocused on COVID-19. These occurrences could also prevent us from servicing our installed base of devicescapital equipment and wethis may have experienced cancellations of treatments in certain circumstances, which had somean adverse impact on our recurring business.business, financial condition, results of operations, or cash flows.

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Our future revenue and income growth depends, among other things, on implementing our business strategy, which largely depends on the success of our HIFU technology, and our capacity to scale our operations to manage and sustain our future growth.    

Our business strategy depends on the success of our High Intensity Focused Ultrasound (“HIFU”) technology for future revenue growth and net profit generation. We mayare dependent on the successful development and commercialization of other product lines, such as devices based on HIFU but not limited to the Focal One System, to generate significant additional revenues and to achieve and sustain profitability in the future. To implement our business strategy, we need to (among other things) develop new applications for our HIFU technology, to improve our products and service offerings, and to educate physicians and patients about the clinical and cost benefits of our products, all of which we believe could increase acceptance of our products. Our focus is to primarily expand our HIFU business in the U.S. as HIFU is FDA approved for ablation of prostate tissue and reimbursed at an acceptable level. Although we are particularly dependent on the success of our HIFU technology to grow our business through our HIFU division, other revenues, generated by our Extracorporeal ShockWave Lithotripsy (“ESWL”) division and our Distribution (“Distribution”) division directly linked to the distribution of other complementary products on behalf of third-party medical companies, continue to experience further postponements, cancellation of sales or significant reduction in the demand for our products, as hospitals and clinics are diverting their priorities towards handling the COVID-19 crisis. In addition, the pandemic could also result in the postponement of clinical trials using our devices and may continuecontribute to impact the performance of clinical trials and recruitment of patients. Such outbreak of a contagious disease has also negatively affected hospital admission rates and disrupted our global business,revenue growth. While we anticipate potential renewals of distribution agreements with third parties, we have no assurance that our existing agreements will be renewed and any termination of distribution commitments from such medical third parties could have a material

adverse effect on our business, financial condition or results of operations. See Item 4, “Information on the Company—Distribution Division—Distribution Division Sales and itDistribution of Products.”

In addition, there can be no assurance that we will be able to manage our future growth efficiently or profitably and actual revenue, operating margins and net income, or revenue, margin and net income growth, may continuebe less than expected. If we are unable to negatively impactscale our activities, includingproduction capabilities efficiently or maintain pricing, we may fail to achieve expected operating margins, which would have a material and adverse effect on our operating results. Growth may also stress our ability to manufactureadequately manage our operations, quality of products, safety, and distribute our devices, for example dueregulatory compliance. Failure to potential quarantine measures. Although we are constantly monitoringimplement necessary procedures, equipment, or processes or to hire the impact across our businesses of the coronavirus pandemic which already caused disruption of our activitiesnecessary personnel in 2020, the severity of the operationala timely and financial impact will depend on how longeffective manner could result in higher costs or an inability to meet market demand and widespread the disruption lasts. Furthermore, worldwide economies and capital markets have been negatively impacted by the COVID-19 pandemic, and the impact may cause an extended local and/or global economic recession. Such economic disruption could have a material adverse effectimpact on our business, as clinics and hospitals curtail and reduce capital and overall expenditures. Finally, we cannot predict the impact that COVID-19 will have on our customers, suppliers and other business partners, and the financial conditions of these actors; however, any material effect on these parties could adversely impact us. The impact of COVID-19 may also exacerbate other risks discussed in this section, any of which could have a material effect on us. As of the date of filing of this report, the global economy remains heavily impacted by the outbreak of the coronavirus and the extent to which the COVID-19 pandemic may materially adversely affect the Company’s financial condition, liquidity, or results of operations, financial condition, and prospects. Additionally, our future growth will increase the demands placed on our third-party suppliers, and there is uncertain. We believeno guarantee that the recently emerged variants of the COVID-19 are not likelyour suppliers will be able to modify the risks as described above.

We have a history of operating lossessupport our anticipated growth. If growth significantly changes, it can negatively impact our cash reserves, and although we achieved profitabilitymay be required to obtain additional financing, which may increase indebtedness or result in 2019, it is uncertain whetherdilution to shareholders. Further, there can be no assurance that we can maintain profitability in the future.would be able to obtain additional financing on acceptable terms, if at all.

Although we achieved operational profitability in 2019 and 2020, we have incurred operating losses in 2020, 20182021, 2022 and 2017 and in each previous fiscal year prior to 2015, since 1998.2023. We expect that our marketing, selling and research and development expenses will increase as we attempt to further develop and commercialize our HIFU devices. Wedevices and particularly with the acceleration of our U.S. HIFU expansion plan. In this respect, we may not however, generate a sufficient level of revenue to offset these expenses and may not be able to adjust spending in a timely manner to respond to any unanticipated decline in revenue. We cannot guarantee that we will realize sufficient revenue to sustainachieve profitability in the future. See Item 5, ‘‘“Operating and Financial Review and Prospects.’’”

Our cash flow is highly dependent on cyclical demand for our products.

Our cash flow has historically been subject to significant fluctuations over the course of any given fiscal year due to cyclical demand for medical devices, in particular with hospital budgets being mostly spent at year-end, and the resulting annual and quarterly fluctuations in trade and other receivables and inventories. This has in the past resulted in significant variations in working capital requirements and operating cash flows. Since we anticipate relying on cash flow from operating activities to meet our liquidity requirements, a decrease in the demand for our products, or the inability of our customers or distributors to meet their financial obligations to us, would reduce the funds available to us. In the future, our liquidity may be constrained, and our cash flows may be uncertain, negative or significantly different from period to period. Our cash flow is affected by increased expenses in clinical trials, sales efforts and other market costs related to implementing our expanded U.S. and global strategy which require significant additional resources. However, there is no assurance that this will result in an increase in the demand for our products and services.

Our results of operations have fluctuated significantly from quarter to quarter in the past and may continue to do so in the future, revenue growthas we experience long and income depend, among other things, on the success of our HIFU technology.

We depend on the success of our HIFU technology for future revenue growthvariable product sales cycles which are long and net income. In particular, weseasonal and are partly dependent on access to sufficient financing.

Our results of operations have fluctuated in the successful developmentpast and commercialization of other product lines, such as medical devices based on HIFUare expected to continue to fluctuate significantly from quarter to quarter depending upon numerous factors, including, but not limited to, the Focal One, to generate significant additional revenues, achieve,timing and sustain profitabilityresults of clinical trials, changes in healthcare reimbursement policies, cyclicality of demand for our products, changes in pricing policies by us or our competitors, new product announcements by us or our competitors, customer order deferrals in anticipation of new or enhanced products offered by us or our competitors, product quality problems and exchange rate fluctuations. Furthermore, because our main products have relatively high unit prices, the future.amount and timing of individual orders can have a substantial effect on our results of operations in any given quarter.

Although we are particularly dependent on the successThe sales cycle of our HIFU technologyproducts is lengthy as our products are high value capital items for our customers to grow our business through our   HIFU (“HIFU”) division, other revenues, generated by our Extracorporeal ShockWave Lithotripsy (“ESWL”) divisionpurchase and our Distribution (“Distribution”) divisionoften requires the approval of multiple levels of management or Boards of hospitals, purchasing groups and, in some cases, government authorities. In addition, some sales are subject to a public tender offer process with  many approvals which could be lengthy to obtain, and, as a result, hospitals may delay their purchase orders according to their timelines and budget allocations. It is difficult to predict the exact timing for closing product sales directly linked to the distributionlength of other complementary productscapital expenditure cycles.

In addition, our customers may rely on behalfthe credit market to secure dedicated lease financing to purchase or lease our equipment. Due to the limited availability of third party medical companies,lending, we may be unable to access sufficient lease financing to support these transactions. Without lease financing, we may be unable to continue the development of our RPP model or we may need to increase significantlyfund such activity out of our existing working capital. Similarly, some of our clients rely on lease financing to finance their purchases of equipment. Limited availability of lease financing facilities may also affect their purchasing decisions and contributemay adversely impact our equipment sales. In addition, the current macro-economic environment with elevated or increasing interest rates as compared to prior years, may make lease financing less attractive and more difficult to implement for our customers.

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Risks Related to our revenue growth. WhileProduct Candidates and the Industry in which we believe thatOperate

If we do not successfully optimize and operate our Distribution division cansales, marketing, and potential future distribution channels or we do not effectively expand and update our infrastructure, our operating results may be negatively impacted.

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If we do not adequately predict market demand or otherwise optimize and operate our sales, marketing and potential future distribution channels successfully, pursue the marketing of its worldwide distribution platform, any termination of distribution commitments from such medical third partiesit could have a material adverse effect onresult in excess or insufficient inventory or fulfillment capacity, increased costs, or immediate shortages in product or component supply, or harm our business financial condition or results of operations. See Item 4, “Information on the Company—Distribution Division—Distribution Division Sales and Distribution of Products.”

We utilize distributors for our sales abroad, which subjectsin other ways. In addition, if we do not maintain adequate infrastructure to enable us to, a number of risks thatamong other things, manage our purchasing and inventory levels, it could harmnegatively impact our business.cash flow and operating results.

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We have developed strategic relationships with a number of distributors for sales and service ofMoreover, our devices in certain foreign countries where we are not directly represented by a subsidiary. If these relationships are terminated and not replaced, our revenues and/or ability to market or service our devices in the related territories could be adversely affected. Our distributors’ actions may affectfuture success will depend largely on our ability to effectively marketcontinue to hire, train, retain and motivate skilled sales representatives or distributors with significant technical and clinical knowledge about our devicesproducts. New hires require training, supervision and take time to achieve full productivity. If we fail to train and supervise new hires adequately, or if we experience a high turnover in our sales force or trained professionals in the future, we cannot be certain foreign countries if, for example, a distributor holds the regulatory authorizations in such countriesthat we will maintain or increase our sales. If we are unable to expand our sales and causes, by action or inaction, the suspension of such regulatory authorizations or sanctions for non-compliance. It may be difficult, expensive, and time consuming for us to re-establish reputation, market access or regulatory compliance in such case. Moreover, our distributors must be in compliance with anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act, and other local laws prohibiting corrupt payments to governmental officials or to customers andmarketing capabilities, we may not be able to traceeffectively commercialize our HIFU devices or be kept informedour other products and service offerings in development, which would adversely affect our business, results of such corruption. In addition, we may be named as a defendant in lawsuits against our distributors related to sales or service of our devices performed by these distributors. See our risk factor below: “We face a significant risk of exposure to product liability claims in the event that the use of our products results in personal injury or death.”operations, and financial condition.

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New device developments and introductions may adversely impact our financial results.

From time to time, we develop and introduce new devices with enhanced features and extended or additional capabilities, targeting new clinical applications or improving existing approaches. The success of new device introductions depends on a number of factors including, but not limited to, timely and successful research and development, receipt of regulatory clearances or approvals, pricing, competition, market and consumer acceptance, manufacturing and supply costs, and the risk that new devices may have quality or other defects.

suspend production or close the current and future production facilities, which would disrupt our manufacturing processes. Accordingly, failure to comply with these regulations could have a material adverse effect on our business, financial condition and results of operations.

In the European Union, the regulation of medical devices is being updated by the European Medical Device Regulation (“MDR”) effective as of May 26, 2021, following the expiration of the four-year transition period, imposing stricter requirements on the conformity assessment and the commercialization of our products. A transition period to conform to MDR requirement has been adopted based on MDR classification of devices with a latest application date of December 31, 2028. The extension of the period during which the devices can be placed on the market is subject to certain conditions. To benefit from the new provisions, the manufacturer must have implemented and must maintain a Quality Management System that complies with the MDR requirements before May 26, 2024. An MDR compliance action plan is currently being performedhas been put in place in preparation of MDR enforcement within the expected timelines. We are implementing regulatoryoperational actions to ensure our devices may be distributed on the European and international market after May 2021.and conform to MDR requirements, where applicable. However, the uncertainty of continuing healthcare changes, regulations, and our ability to maintain MDR compliance of our products may negatively affect our business.

Even if regulatory approval to market a product is granted, it may include limitations on the indicated uses for which the product may be marketed. Failure to comply with regulatory requirements can result in fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecutions. Regulatory policy may change, and additional government regulations may be established that could prevent or delay regulatory approval of our products. Any delay, failure to receive regulatory approval or the loss of previously received approvals could have a material adverse effect on our business, financial condition and results of operations. For more information on the regulation of our business, see Item 4, ‘‘“Information on the Company—Government Regulation’’” and “Information on the Company—HIFU Division—HIFU Division Clinical and Regulatory Status.”

Moreover, we may also be required to abandon previous strategies for regulatory approval or clearance, despite having made significant financial and time investments, or refocus our efforts on alternative regulatory strategies, resulting in increased costs and efforts of management, without any guarantee of success, which could materially adversely affect our business, financial condition and results of operations.

Our manufacturing operations must comply with regulations established by regulatory agencies in the United States, the European Union and other countries, and in particular with the Current Good Manufacturing Practices (‘‘CGMP’’) and other standards for quality assurance and manufacturing process control under applicable regulatory authorities. Since such standards may change, we may not, at all times, comply with all applicable standards and, as a result would be unable to manufacture our products for commercial sale or for clinical trial supply. Our manufacturing facilities are subject to inspection by regulatory authorities at any time. If any inspection by the regulatory authorities reveals deficiencies in manufacturing, we could be required to take immediate remedial actions, suspend production or close the current and future production facilities, which would disrupt our manufacturing processes. Accordingly, failure to comply with these regulations could have a material adverse effect on our business, financial condition and results of operations.

Finally, changes to regulatory policies or the adoption of additional statutes or regulations that affect our business could impose substantial additional costs or otherwise have a material adverse effect on our business, financial condition and results of operations.

The commercial success of our products depends on whether procedures performed by those products are eligible for reimbursement approved by national health authorities and third-party payers.

Our success depends, among other things, on the extent to which reimbursement can be obtained from healthcare payers for procedures performed with our products. In the United States, we are dependent upon favorable coverage and benefit decisions by Centers for Medicare and Medicaid Services (CMS)(“CMS”) for Medicare reimbursement, state Medicaid agencies, individual managed care organizations, private insurers and other payers. With the support of the American Urological Association and the American Association of Clinical Urologists, the American Medical Association (AMA)(“AMA”) established a new Category 1 CPT code for the ablation of malignant prostate tissue with HIFU technology, effective January 1, 2021. In late 2020,2022, CMS published its final rules for the calendar year 2023 for ambulatory payment classification (APC)(“APC”) procedures and physician fee schedule, which established reimbursement rates that recognize both facility or hospital payment and physician professional service payments for HIFU procedures. CMS final rule included a reimbursement level close to surgery, effective on January 1, 2023. The 2024 final rule maintained APC 6 payment level. For private insurers, policy coverage decisions supporting coverage and reimbursement related to HIFU procedures are limited given that HIFU is a new technology. To further support and raise awareness as to the use of HIFU as an alternative to more traditional treatments, we engaged Medical Technology Partners (MTP) and Argenta Advisors, two leading reimbursement consultancies, to assist in navigating reimbursement analysis and strategies, including technology feasibility and assessment needs, payor advisory panels, outcome studies and understanding manufacturer billing education resources. With expanded third party coverage decisions, our Focal One HIFU procedure will have broader market access in the United States. However, public or private payors may decide to limit coverage or reimbursement of HIFU technologies that are available to individuals, including potentially modifying existing guidance to further limit available coverage. Changes to coverage decisions, which may be revised from time to time, could negatively impact reimbursement for procedures performed using our devices and may result in a material adverse effect on our business, financial conditionscondition and results of operations. Outside the United States, and in particular in the European Union and Japan, third-party reimbursement is generally conditioned upon decisions by national health authorities and

and cryotherapy. See Item 4, ‘‘“Information on the Company—HIFU Division— HIFU CompetitionCompetition.’’ and” In our ESWL division, we are also facing competition from lower priced laser systems. Item 4, ‘‘“Information on the Company—ESWL Division.’’”

Many of our competitors have significantly greater financial, technical, research, marketing, sales, distribution and other resources than we have and may have more experience in developing, manufacturing, marketing and supporting new medical devices. In addition, our future success will depend in large part on our ability to maintain a leading position in technological innovation, and we

We utilize distributors for our sales abroad, which subjects us to a number of risks that could harm our business.

We have developed strategic relationships with a number of distributors for sales and service of our devices in certain foreign countries where we are not directly represented by a subsidiary. If these relationships are terminated and not replaced, our revenues and/or ability to market or service our devices in the related territories could be adversely affected. Our distributors’ actions may affect our ability to effectively market our devices in certain foreign countries if, for example, a distributor holds the regulatory authorizations in such countries and causes, by action or inaction, the suspension of such regulatory authorizations or sanctions for non-compliance. It may be difficult, expensive, and time consuming for us to re-establish reputation, market access or regulatory compliance in such cases. Moreover, our distributors must be in compliance with anti-corruption laws and applicable sanctions, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the European Union, His Majesty’s Treasury, or other governmental or supranational entities, and other local laws prohibiting corrupt payments to governmental officials or to customers and we may not be able to trace or be kept informed of such corruption. In addition, we may be named as a defendant in lawsuits against our distributors related to sales or service of our devices performed by these distributors. See our risk factor below: “—We face a significant risk of exposure to product liability claims in the event that the use of our products results in personal injury or death.”

We are a relatively small company with a limited number of products and staff. Sales fluctuations and employee turnover may adversely affect our business.

We are a relatively small company. Consequently, compared to larger companies, sales fluctuations could have a greater impact on our revenue and profitability on a quarter-to-quarter and year-to-year basis and delays in customer orders could cause our operating results to vary significantly from quarter-to-quarter and year-to-year. In addition, as a small company we have limited staff and are heavily reliant on certain key personnel to operate our business. If a key employee were to leave our company it could have a material impact on our business and the results of operations as we might not have sufficient depth in our staffing to fill the role that was previously being performed. A delay in filling the vacated position could put a strain on existing personnel or result in a failure to satisfy our contractual obligations or to effectively implement our internal controls, and materially harm our business. 

The loss of key members of our executive management team could adversely affect our business.

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Our success in implementing our business strategy depends largely on the skills, experience and performance of key members of our executive management team and others in key management positions. The collective efforts of each of these people, and others collaborating with them as a team, are critical to us. As a result of the difficulty in locating qualified personnel and new management, the loss or incapacity of existing members of our executive management team could adversely affect our operations. If we were to lose one or more of these key employees, we could experience difficulties in finding qualified successors, competing effectively, developing our technologies and implementing our business strategy.

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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, or conflict of interest, or be subject to other agreements with other entities that may limit their availability to us.

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We may have difficulties in attracting and recruiting highly qualified experts in software, design and development of high technology devices such as our HIFU and ESWL productsdevices.

Our devices require highly qualified individuals as well aswith a high-level of expertise and experience in design, software, mechanics and electronics. We are highly dependent on our ability to attract and retain qualified personnel and engineers to develop our devices. In addition, the learning curve required to master our systems is lengthy and, if we do not find qualified experts and engineers, we may not be able to meet our development schedule and obtain market approval in due time, which in time may delay market introduction of new products. Failure to recruit and attract experts in a timely manner may have a material adverse effect on our development, business, financial condition and results of operations.

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We have identified a material weakness in our internal control over financial reporting with respect to our U.S. subsidiary and if we fail to remediate this material weakness or if we experience additional material weaknesses in the future or otherwise fail to achieve an effective system of internal controls, we may not be able to report our financial results accurately or timely. In addition, the trading price of our securities may be adversely affected.

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As a publicly traded company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002. We have incurred, and expect to continue to incur, significant continuing costs, including accounting fees and staffing costs, to maintain compliance with the internal control requirements of the Sarbanes-Oxley Act of 2002. As described in Item 15, we have identified one material weakness with respect to internal controls in our U.S. subsidiary, Edap Technomed Inc: an ineffective design and implementation of the subsidiary’s control over the recording of third-party vendor invoices. This was due to insufficient resources in the finance department of the subsidiary and IT environment limitations. Our management has concluded that, as a result, our internal control over financial reporting was not effective as of December 31, 2023. Nevertheless, we have concluded that this material weakness did not result in a material misstatement of the consolidated financial statements for the year ended December 31, 2023, or require a restatement of consolidated financial statements with respect to any prior period previously reported by the Company.

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Although we have initiated remediation actions to address this material weakness, as a small company, we may have insufficient personnel to allow us to segregate duties, and consistently execute the Company’s internal controls.

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Furthermore, the ongoing requirements of the Sarbanes-Oxley Act may place a strain on our systems and resources. Our management is required to evaluate the effectiveness of our internal control over financial reporting as of each year-end, and we are required to disclose management’s assessment of the effectiveness of our internal control over financial reporting, including any material weakness in our internal control over financial reporting.

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Our internal control over financial reporting has been designed to provide our management and Board of Directors with reasonable assurance regarding the preparation and fair presentation of our consolidated financial statements. On an on-going basis, we are reviewing, documenting and testing our internal control procedures. To maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, and as our business develops, additional resources and management oversight may be required.

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In an effort to remediate the material weakness that was identified as of December 31, 2023, and to enhance our overall control environment, we hired new resources in 2023 and plan to hire additional resources in 2024. We are also working at deploying another IT system in our U.S. subsidiary and already hired an IT VP Manager to supervise such deployment. We believe this will allow us to remediate this material weakness in the short term. See Item 15, “Controls and Procedures.”

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Any failure to complete our assessment of our internal control over financial reporting, to remediate any material weaknesses that we have identified or may identify in the future, and any failure to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any failure to maintain adequate internal controls over financial reporting and provide accurate financial statements may subject us to litigation, render future financings more difficult or expensive, and could cause the trading price of our securities to decrease substantially. Inferior controls and procedures could cause investors to lose confidence in our reported financial information, which may give rise to securities claims and have a negative effect on the value of our securities. Any such failure could also adversely affect the results of the periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we have identified or may identify in the future, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404 of the Sarbanes-Oxley Act of 2002.

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We are exposed to risks related to cybersecurity threats and incidents.

In the conduct of our business, we collect, use, transmit and store data on information technology systems. This data includes confidential information belonging to us, our customers and other business partners, as well as personally identifiable information of individuals. We also store data related to our clinical trials on our information technology systems. We also rely in part on the reliability of certain tested third parties’ cybersecurity measures, including firewalls, virus solutions and backup solutions. Cybersecurity incidents, such as breaches of data security, disruptions of information technology systems and cyber threats, may result in business disruption, the misappropriation, corruption or loss of confidential information and critical data (ours or that of third parties), reputational damage, litigation with third parties, diminution in the value of our investment in research and development, data privacy issues and increased cybersecurity protection and remediation costs. Like many companies, we may experience certain of these incidents given that the

external cyber-attack threat continues to grow in part due to a perceived increased vulnerability associated with partly remote working conditions. While we have protocols in place to protect against such threats , we may fail to identify all threats like fraudulent payment requests that we may receive in the future and may inadvertently provide payment in connection with such requests, which may have a material adverse effect on our business, financial condition or results of operations.

We devote significant resources to network security, data encryption and other measures to protect our systems and data from unauthorized access or misuse, including meeting certain information security standards that may be required by our customers, all of which increases cybersecurity protection costs. As these threats and incidents, and government and regulatory oversight of associated risks, continue to grow, we may be required to expend additional resources to enhance or expand upon the security measures we currently maintain. Nevertheless, with the current ongoing conflict between Russia and Ukraine and the related political uncertainty, there is an increased possibility that cybersecurity incidents or cyberattacks may occur and impact our results of operations.

There can be no assurance that our efforts or those of our third-party service providers to implement adequate security and control measures would be sufficient to protect against breakdowns, service disruption, data deterioration or loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyber-attack, security breach, industrial espionage attacks or insider threat attacks which could result in financial, legal, business or reputational harm. Future cybersecurity breaches or incidents or further increases in cybersecurity protection costs may have a material adverse effect on our business, financial condition or results of operations.

The expansion of social media platforms and new technologies present risks and challenges for our business and reputation.

We increasingly rely on social media and new technologies to communicate about our products and technologies. The use of these media requires specific attention. Unauthorized communications, such as press releases or posts on social media, purported to be issued by the Company, may contain information that is false or otherwise damaging and could have an adverse impact on our stock price. Negative or inaccurate posts or comments about the Company, our business, directors or officers on any social networking website could seriously damage our reputation. In addition, our employees and partners may use social media and mobile technologies inappropriately, which may give rise to liability for the Company, or which could lead to breaches of data security, loss of trade secrets or other intellectual property or public disclosure of sensitive information, including information about our employees, clinical trials or customers. Such uses of social media, mobile technologies, or information technology more generally could have a material adverse effect on our reputation, business, financial condition and results of operations.

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Risks Related to Intellectual Property Rights

Intellectual property rights are essential to protect our medical devices, and any dispute with respect to these rights could be costly and have an uncertain outcome.outcome and may prevent or delay our development and commercialization efforts.

Our success depends in large part on our ability to develop proprietary products and technologies and to establish and protect the related intellectual property rights, without infringing the intellectual property rights of third parties. We or our licensors may be subject to claims that former employees, collaborators or other third parties have an interest in our owned or in-licensed patents, trade secrets or other intellectual property as an inventor or co-inventor. The validity and scope of claims covered in medical technology patents involve complex legal and factual questions and, therefore, the outcome of such claims may be highly uncertain. The medical device industry has been characterized by extensive patents and other intellectual property rights litigation. We may receive letters from third parties drawing our attention to their patent rights, or patent grant contestations may be filed. Third parties also may challenge our patents before administrative bodies in the United States or abroad. Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation or cancellation of or amendment to our patents in such a way that they no longer cover our product candidates and existing products or provide any competitive advantage. For example, a patent

do not infringe such patents, which may not be possible or may require substantial monetary expenditures and time. We could also be required to pay damages, which could be significant, including treble damages and attorneys’ fees if we are found to have willfully infringed such patents. We could also be required to obtain a license to such patents to continue the development and commercialization of the infringing product or technology. However, such a license may not be available on commercially reasonable terms or at all, including because certain of these patents may be held by or exclusively licensed to our competitors. Even if such a license were available, it may require substantial payments or cross-licenses under our intellectual property rights, and it may only be available on a nonexclusive basis, in which case third parties, including our competitors, could use the same licensed intellectual property to compete with us. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operation and prospects.

Our products, including our HIFU devices, may be subject to litigation involving claims of patent infringement or violation of other intellectual property rights of third parties. The defense and prosecution of intellectual property suits, patent opposition proceedings and related legal and administrative proceedings are both costly and time consuming and may result in a significant diversion of effort and resources by our technical and management personnel. An adverse determination in any such litigation or proceeding to which we become a party could subject us to significant liability to third parties, require us to seek licenses from third parties and pay ongoing royalties, require us to redesign certain products or subject us to injunctions preventing the manufacture, use or sale of the affected products. In addition to being costly, drawn-out litigation to defend or prosecute intellectual property rights could cause our customers or potential customers to defer or limit their purchase or use of our products until the litigation is resolved. See Item 4, ‘‘“Information on the Company—HIFU Division—HIFU Division Patents and Intellectual Property’’” and Item 4, ‘‘“Information on the Company—ESWL Division—ESWL Division Patents and Intellectual Property.’’”

We own or co-own patents covering several of our technologies and have additional patent applications pending in the United States, the European Union, Japan and elsewhere. The process of seeking patent protection can be long and expensive and there can be no assurance that our patent applications will result in the issuance of patents. We also cannot assure investors that our current or future patents are or will be sufficient to provide meaningful protection or commercial advantage to us. Our patents or patent applications could be challenged, invalidated or circumvented in the future. Failure to maintain or obtain necessary patents, licenses or other intellectual property rights from third parties on acceptable terms or the invalidation or cancellation of material patents could have a material adverse effect on our business, financial condition or results of operations. Litigation may be necessary to enforce patents issued to us or to determine the enforceability, scope and validity of the proprietary rights of others. Our competitors, many of which have substantial resources and have made substantial investments in competing technologies, may apply for and obtain patents that will interfere with our ability to make, use or sell certain products, including our HIFU devices and/or our ESWL medical equipment, either in the United States or in foreign markets.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a utility patent is generally 20 years from its earliest U.S. non-provisional filing date. While extensions may be available, the life of a patent, and the protection it affords, is limited, and certain of our patents may also expire and fall into the public domain, as has already occurred with certain patents in the HIFU division’s patent portfolio. See Item 4, “Information on the Company—HIFU Division—HIFU Division Patents and Intellectual Property.”

As is common in the life sciences and medical industry, we engage the services of consultants and independent contractors to assist us in the development of our products. We also rely on trade secrets and proprietary know-how, which we seek to protect through non-disclosure agreements with employees, consultants and other parties. It is possible, however, that those non-disclosure agreements will be breached, that we will not have adequate remedies for any such breach, or that our trade secrets will become known to, or independently developed by, competitors. We also rely on copyright protection. Litigation may be necessary to protect trade secrets, know-how or know-howcopyrights owned by us. In addition, effective copyright and trade secret protection may be unavailable or limited in certain countries.

The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and result of operations.

U.S. laws relating to the patentability of certain inventions in the life sciences and medical technology industry are uncertain and rapidly changing, which may adversely impact our existing patents or our ability to obtain patents in the future.

Changes in either the patent laws or interpretation of the patent laws in the United States or in other jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. For instance, under the Leahy-Smith America Invents Act (the “America Invents Act”), enacted in September 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application is entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. These changes include allowing third-party submission of prior art to the United States Patent and Trademark Office (“USPTO”) during patent prosecution and additional procedures to challenge the validity of a patent through USPTO administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings.

Various courts, including the U.S. Supreme Court, have rendered decisions that impact the scope of patentability of certain inventions or discoveries relating to life sciences and medical technology. Specifically, these decisions stand for the proposition that patent claims that recite laws of nature, natural phenomena, and abstract ideas are not themselves patentable unless those patent claims have sufficient additional features that provide practical assurance that the processes are genuine inventive applications of those laws, phenomena, and abstract ideas. What constitutes a “sufficient” additional feature is somewhat uncertain. Furthermore, in view of these decisions, since December 2014, the USPTO has published and continues to publish revised guidelines for patent examiners to apply when examining process claims for patent eligibility.

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In addition, U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to some degree of uncertainty with regard to the Company’s ability to obtain patents in the future, this combination of events has created a degree of uncertainty with respect to the value of patents, once obtained. Depending on relevant laws enacted by the U.S. Congress, and decisions by the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that may have a material adverse effect on our ability to obtain new patents and to defend and enforce our existing patents and patents that we might obtain in the future.

Our patent portfolio may be negatively impacted by current uncertainties in the state of the law, new court rulings or changes in guidance or procedures issued by the USPTO or other similar patent offices around the world. From time to time, the U.S. Supreme Court, other federal courts, the U.S. Congress or the USPTO may change the standards of patentability, scope and validity of patents within the life sciences and medical technology and any such changes, or any similar adverse changes in the patent laws of other jurisdictions, could have a negative impact on our business, financial condition, prospects and results of operations.

We may not be able to protect or enforce our intellectual property rights throughout the world. 

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Filing, prosecuting and defending patents and trademarks on all of our current or our planned products throughout the world would be prohibitively expensive to us. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as in the U.S. or France. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to the healthcare sector, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our patents or other intellectual property. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

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Our use of “open source” software could negatively affect our ability to sell our products and subject us to possible litigation.

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Our products incorporate so-called “open source” software, and we may incorporate additional open source software in the future. Open source software is generally licensed by its authors or other third parties under open source licenses. If we failAccording to comply withcertain of these licenses, we may be subject to certain conditions, including requirements that we offer our products that incorporate the open source software for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and/or that we license such modifications or derivative works under the terms of the particular open source license. If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our products that contained the open source software and required to comply with the foregoing conditions, which could disrupt the distribution and sale of our products.

We face a significant risk of exposureRisks Related to product liability claims in the event that the use of our products results in personal injury or death.

Our products are designed to be used in the treatment of severe afflictions and conditions. Despite the use of our products, patients may suffer personal injury or death, and we may,Status as a result, face significant product liability claims. We maintain separate product liability insurance policies for the United StatesForeign Private Issuer or a French Company

Our French and Canadainternational operations expose us to additional costs, legal and for the other markets inregulatory risks, which we sell our products. Product liability insurance is expensive and there can be no assurance that it will continue to be available on commercially reasonable terms or at all. In addition, our insurance may not cover certain product liability claims or our liability for any claims may exceed our coverage

with the applicable provisions of the French law known as the Sapin II law, and the related implementing decrees, and notably the requirements of Article 8 of the law, which requires the establishment of a whistle-blowing policy.  EDAP employees can raise any issue by reporting on our hotline at alerteprofessionnelle@edap-tms.com. These numerous and sometimes conflicting laws and regulations include, among others, data privacy requirements, labor relations laws, tax laws, anti-competition regulations, “Know Your Customer” requirements, import and trade restrictions, export requirements.

We are also subject to healthcare laws and regulations pertaining to physician payment transparency, privacy, and data protection regulations. These regulations include, but are not limited to (i) the U.S. federal Health Insurance Portability and Accountability Act (“HIPAA”) of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; (ii) the U.S. federal Physician Payment Sunshine Act (the “Sunshine Act”), which requires manufacturers of medical devices for which payment is available under Medicare, Medicaid, to report annually to the CMS information related to payments or other “transfers of value” made to physicians, (iii) two main sets of laws enacted in France about transparency requirements: “The French Anti-Gift Law” –updated in 2020-2020 and 2022- which regulates the provision of gifts, discounts and other incentives to physicians and the “Bertrand law” which imposes disclosure obligations on companies relating to benefits and remunerations granted to, and agreements concluded with, physicians and (iv) the provisions of the French Public Health Code relating to the processing and/or hosting of health-related personal data. Any failure to comply with these regulations may have a material adverse effect on our business, financial condition and results of operations.

Furthermore, in addition to HIPAA we are subject to other data privacy and protection laws and regulations that apply to the collection, transmission, storage and use of personally identifying information, which among other things, impose certain requirements relating to the privacy, security and transmission of personal information. The legislative and regulatory landscape for privacy and data protection continues to evolve in jurisdictions worldwide, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business. There are numerous European, French, U.S. federal and U.S. state laws and regulations related to the privacy and security of personal information. For example, in the European Union, the collection and use of personal data is governed by the provisions of the General Data Protection Regulation (“GDPR”) which took effect in May 2018. The GDPR significantly increases the level of data protection and imposes a greater compliance burden on companies. In particular, it treats clinical data as personal data, requiring us or our subcontractors to implement more extensive procedures in the collection and processing of clinical trial data. Furthermore, the GDPR significantly increases the level of sanctions for non-compliance. The European Union data protection authorities have the power to impose administrative fines of up to a maximum of €20 million or 4% of the Company’sour consolidated revenues for the preceding financialfiscal year, whichever is higher. The GDPR is also supplemented by the provisions of the French data protection act (law n°78 17(Law No. 78-17 of  January 6, January 1978), in particular in respect of the processing of personal data in the field of healthcare.  We believe that the GDPR did not have a material impact on our business or the way our technologies operate. However, due to the small size of the Company, we may not be able to adequately document all data collection, to obtain related consents in due time, to adequately protect personal data or to react in due time to address an individual request linked to the GDPR.

Given the high level of complexity of these laws, and the fact that we do business in regions where regulatory compliance is less robust, including in Russia and parts of Asia, there is a risk that we may inadvertently breach some provisions, for example, through fraudulent or negligent behavior of individual employees or business partners, our failure to comply with certain formal documentation requirements, or otherwise. See “— General Risk Factors—“Our results of operations and financial condition could be adversely affected by the adverse economic, geopolitical and financial environment, and the impact of climate change.”Our success depends, in part, on our ability to anticipate these risks and manage these challenges. We have a decentralized international sales organization, and this structure makesmay make it more difficult for us to ensure that our international selling operations comply with our global policies and procedures.

the exchange rates of the principal foreign currencies in which our receivables are denominated (in particular, the U.S. dollar and the Japanese yen), but there can be no assurance that such hedging activities will limit the effect of movements in exchange rates on our results of operations. As of December 31, 2020,2023, we had no outstanding hedging instruments. In addition, since any dividends that we may declare will be denominated in euro, exchange rate fluctuations will affect the U.S. dollar equivalent of any dividends received by holders of ADSs. For more information concerning our exchange rate exposure, see Item 11, “Quantitative and Qualitative Disclosures about Market Risk.”

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Our resultsby-laws and French corporate law contain provisions that may delay or discourage a takeover attempt.

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Provisions contained in our bylaws and French corporate law could make it more difficult for a third party to acquire our company, even if doing so might be beneficial to its shareholders. In addition, provisions of operations have fluctuated significantlyits bylaws impose various procedural and other requirements, which could make it more difficult for shareholders to affect certain corporate actions. These provisions include the following:

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The rights of shareholders in companies subject to French corporate law differ in material respects from quarter to quarterthe rights of shareholders of corporations incorporated in the pastUnited States.

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We are a French company with limited liability. Our corporate affairs are governed by our by-laws and may continue to do soby the laws governing companies incorporated in France. The rights of shareholders and the responsibilities of members of our Board are in many ways different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. For example, in the future, as we experience longperformance of its duties, our Board of Directors is required by French law to consider the interests of our company, our shareholders, our employees and variable product sales cycles whichother stakeholders, rather than solely our shareholders and/or creditors. It is possible that some of these parties will have interests that are long and seasonal and are partly dependent on access to sufficient lease financing

Our results of operations have fluctuateddifferent from, or in the past and are expected to continue to fluctuate significantly from quarter to quarter depending upon numerous factors, including, but not limitedaddition to, the timing and results of clinical trials, changes in healthcare reimbursement policies, cyclicality of demand for our products, changes in pricing policies by us or our competitors, new product announcements by us or our competitors, customer order deferrals in anticipation of new or enhanced products offered by us or our competitors, product quality problems and exchange rate fluctuations. Furthermore, because our main products have relatively high unit prices, the amount and timing of individual orders can have a substantial effect on our results of operations in any given quarter.

The sales cycleinterests of our products is lengthy as our products are high value capital items for our customers that purchase generally requires the approval of management or Boards of hospitals, purchasing groups and government authorities if applicable. In addition, some sales are subject to public tender offer processes and approvals which could happen to be lengthy and as a result, hospitals may delay their purchase orders according to their timelines and budget allocation. It is difficult to predict the exact timing for closing product sales directly linked to the length of capital expenditure cycles. Historically, our sales of products have tended to be stronger during the fourth quarter of each fiscal year.

In addition, we rely on the credit market to secure dedicated lease financings to fund the development of our Revenue-Per-Procedure (“RPP”) business model related to the sale of treatments’ procedures. Due to the limited availability of lending, we may be unable to access sufficient lease financing. Without lease financing, we may be unable to continue the development of our RPP model or we may need to fund such activity out of our existing working capital. Similarly, some of our clients rely on lease financing to finance their purchases of equipment. Limited availability of lease financing facilities may also affect their purchasing decisions and may adversely impact our equipment sales.

We had in the past identified material weaknesses in our internal controls over financial reporting, which are now fully remediated; however, we may, in the future, identify additional material weaknesses and if we fail to remediate adequately these material weaknesses and achieve an effective system of internal controls, we may not be able to report our financial results accurately. In addition, the trading price of our securities may be adversely affected by a related negative market reaction.

As a publicly traded company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002. We have incurred, and expect to continue to incur, significant continuing costs, including accounting fees and staffing costs, to maintain compliance with the internal control requirements of the Sarbanes-Oxley Act of 2002. As of December 31, 2020, based on its assessment of our internal control, management concluded that our internal control over financial reporting was effective and that the material weakness reported in our annual report for the year ended December 31, 2019, was fully remediated. During the course of 2020, the Company implemented a formal “Ticketing tool” in order to strengthen the change management process and documentation. Theshareholders.

Company also strengthened its IT teamFrench law may limit the amount of dividends we are able to ensure a better segregation of duties upon IT changes implementation. The Company therefore consider that this material weakness has been remediated as of December 31, 2020.distribute, and we do not intend to pay cash dividends for the foreseeable future.

We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, and future agreements and financing instruments, business prospects and such other factors as our Board of Directors deems relevant.

Further, under French law, the determination of whether we have been sufficiently profitable to pay dividends is made based on our statutory financial statements prepared and presented in accordance with  applicable French regulations. Therefore, we may be more restricted in our ability to declare dividends than companies not based in France.

We may lose our foreign private issuer status in the future, identify new material weaknesseswhich could result in our internal controlsignificant additional costs and expenses.

While we may notcurrently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be ablemade with respect to fully remediate these material weaknesses. Furthermore,us on June 30, 2024, which would require us to comply with all of the ongoingperiodic disclosure and current reporting requirements of the Sarbanes-OxleyExchange Act may place a strain on our systems and resources. Our management is requiredapplicable to evaluate the effectiveness of our internal control over financial reportingU.S. domestic issuers as of each year-end, andJanuary 1, 2025. We could lose our foreign private issuer status in the future if we are requiredfail to disclose management’s assessmentmeet the requirements necessary to maintain our foreign private issuer status as of the effectiveness of our internal control over financial reporting, including any material weakness in our internal control over financial reporting.

Our internal control over financial reporting has been designed to provide our management and Board of Directors with reasonable assurance regarding the preparation and fair presentation of our consolidated financial statements. On an on-going basis, we are reviewing, documenting and testing our internal control procedures.relevant determination date. In order to maintain and improve the effectivenessour current status as a foreign private issuer, either (a) a majority of our disclosure controlsordinary shares or ADSs must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors may not be U.S. citizens or residents, (ii) more than 50% of our assets cannot be located in the United States and procedures and internal control over financial(iii) our business must not be administered principally inside the United States. If we lost this status, we would be required to comply with the Exchange Act reporting and asother requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers and have shorter deadlines, including with respect to annual and quarterly reports. In particular, Form 10-Q requires quarterly financial statements subject to auditor review. As of December 31, 2023, approximately 70% of our business develops, additional resourcesoutstanding ordinary shares were held by U.S. residents and management oversightthe other criteria may be required.

Any failure to complete our assessment of our internal control over financial reporting, to remediate any material weaknesses that we have identified or may identifytriggered in the future any failure to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatementsreflect changes in our financial statements. Any failurebusiness.

The regulatory and compliance obligations and costs to maintain adequate internal controls over financial reportingus under U.S. securities laws as a U.S. domestic issuer may be significantly more than obligations and provide accurate financialcosts we currently incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements may subject uson U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to litigation, render future financings more difficult or expensive, and could cause the trading pricea foreign private issuer. We would be required under current SEC rules to modify certain of our commonpolicies to comply with corporate governance practices associated with U.S. domestic issuers. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to decrease substantially. Inferior controlsforeign private issuers such as the ones described above and procedures could cause investorsexemptions from procedural requirements related to lose confidence in our reported financial information, which may give rise to a class action and have a negative effectthe solicitation of proxies.

Judgments of U.S. courts, including those predicated on the trading price of our common stock. Any such failure could also adversely affect the resultscivil liability provisions of the periodic management evaluationsfederal securities laws of our internal controls and,the United States, may not be enforceable in French courts.

An investor in the case of a failure to remediate any material weaknesses that we have identified orUnited States may identify in the future, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404 of the Sarbanes-Oxley Act.find it difficult to:

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Risks Relating to Ownership of Securitiesour Ordinary Shares and the ADSs

Our securities may be affected by volume fluctuations, and may fluctuate significantly in price, causing youinvestors to lose some or all of yourtheir investment.

Our ADSs, each of which represents one ordinary share, are currently traded on The NASDAQNasdaq Global Market. The average daily trading volume of our ADSs in 20202023 was 107,764,approximately 96,000, the high and low bid price of our ADSs for the last two financialfiscal years ended on December 31, 20202023, and December 31, 2019,2022, was $5.28$12.65 and $1.46,$11.53, and $5.42$3.60 and $1.78,$5.54, respectively. Our ADSs have experienced, and are likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our ADSs without regard to our operating performance. For example, the average daily trading volume of our ADSs in December 20192022 was 120,648

101,126 as opposed to 126,839217,979 for the same period of 2020.2023. The price of our securities and our ADSs in particular, may fluctuate as a result of a variety of factors, including changes in our business, operations and prospects, and factors beyond our control, including regulatory considerations, results of clinical trials of our products or those of our competitors, developments in patents and other proprietary rights, general market and economic conditions and results of operations being below analysts’ or investors’ expectations. Any downward pressure on the price of ADSs caused by the sale of ADS’s could also encourage short sales of our ADS by third parties. In a short sale, a prospective seller borrows shares from a shareholder or broker and sells the borrowed shares. The prospective seller hopes that the share price will decline, at which time the seller can purchase shares at a lower price for delivery back to the lender. The seller profits when the share price declines because it is purchasing shares at a price lower than the sale price of the borrowed shares. Such sales could place downward pressure on the price of our ADSs by increasing the number of ADSs being sold, which could further contribute to any decline in the market price of our ADSs.

These broad market and industry factors may adversely affect the market price of our ADSs, regardless of our operating performance. If youinvestors invest in our ADSs, youinvestors could lose some or all of yourtheir investment.

In addition, following periods of volatility in the market price of a company’s securities often trigger securities class action litigation has often been instituted.litigation. Any additional litigation, if instituted, causes and could cause us to incur substantial costs and our management resources are and could be diverted to defending such litigation, which could adversely affect our financial condition or results of operations.

interests will be diluted. We are under no obligation to file any registration statement in connection with any issuance of new shares or other securities.

For holders of ADSs, the Depositary may make these rights or other distributions available to holders after we instruct it to do so and provide it with evidence that it is legal to do so. If we fail to do this and the Depositary determines that it is impractical to sell the rights, it may allow these rights to lapse. In that case, the holders of ADSs will receive no value for them.

Holders of our ADSs may be exposed to increased transaction costs as a result of proposed European financial transaction taxes.

On February 14, 2013, the EU Commission adopted a proposal for a Council Directive (the "Draft Directive") on a common financial transaction tax (the "FTT"). According to the Draft Directive, the FTT should have been implemented and should have entered into effect in 10 EU Member States (Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Spain, Slovakia, and Slovenia, each a “Participating Member State”). In March of 2016, Estonia indicated its withdrawal from enhanced cooperation. In February 2021, the Portuguese Presidency of the Council proposed an inclusive discussion among all Member States on tax design issues of the FTT at the EU level.

Pursuant to the Draft Directive, the FTT was to be payable on financial transactions provided at least one party to the financial transaction was established or deemed established in a Participating Member State and there was a financial institution established or deemed established in a Participating Member State which was a party to the financial transaction, or was acting in the name of a party to the transaction. Under the Draft Directive, the FTT should not have applied, however, to (inter alia) primary market transactions referred to in Article 5(c) of Regulation (EC) No 1287/2006, including the activity of underwriting and subsequent allocation of financial instruments in the framework of their issue. The rates of the FTT were to be fixed by each Participating Member State but for transactions involving financial instruments other than derivatives would have amounted to at least 0.1% of the taxable amount. The taxable amount for such transactions would have been generally determined by reference to the consideration paid or owed in return for the transfer. The FTT would have been payable by each financial institution established or deemed established in a Participating Member State which was either a party to the financial transaction, or acting in the name of a party to the transaction or where the transaction had been carried out on its account. Where the FTT due had not been paid within the applicable time limits, each party to a financial transaction, including persons other than financial institutions, would have become jointly and severally liable for the payment of the FTT due.

The Draft Directive has not been adopted. The FTT proposal is still subject to negotiation between the Participating Member States and therefore may be changed at any time. In this respect, a new FTT proposal was submitted in December 2019. Under this new proposal, the FTT would be imposed at a 0.2% rate on the purchase of shares in domestically listed companies with a market capitalization in excess of €1.0 billion, and would also apply to depositary receipts issued domestically and abroad and which are backed by shares in these companies.

Moreover, once a final agreement on such FTT proposal will be reached (the "FTT Directive"), it will need to be implemented into the respective domestic laws of the Participating Member States and the domestic provisions implementing the FTT Directive might deviate from the FTT Directive itself. See Item 10, "Additional Information—Certain Income Tax Considerations."

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We may also be unable to meet the future criteria used by rating agencies in their environmental, social and financial condition.”governance (“ESG”) assessments process, leading to a downgrading in our rating. Financial investments in companies which perform well in ESG assessments are increasingly popular, and major institutional investors have made known their interest in investing in such companies. Depending on ESG assessments and on the rapidly changing views on acceptable levels of action across a range of ESG topics from investors, we may be unable to meet society’s or investors’ expectations on these matters, which may cause reputational harm, or disappoint the expectations of our stakeholders, and we may face increased compliance or other costs and demand for securities issued by us and our ability to participate in the debt and equity markets may decrease.

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We may issue additional securities that may be dilutive to our existing shareholders, in view of funding our new developments and accelerating our business expansion.

Our operations have consumed substantial amounts of cash since inception. We expect to use our cash resources to develop and further commercialize our products, develop new products, and for working capital and general corporate purposes. We may require additional capital to further develop and commercialize our products and to develop new products. In addition, our operating plans may change because of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned.

On June 28, 2019,30, 2021, our shareholders adopted resolutions allowing the Board of Directors to issue 2,000,000 new shares under the form of subscription options and 200,000 free shares to motivate and reward the teams dedicated to successfully implementing our worldwide activities, particularly in the United States. Based on the June 30, 2021, resolutions, a total of 1,357,000 subscription options were granted in 2021, 2022 and 2023, under certain conditions, to the  employees. Based on the June 30, 2021 resolutions, a total of 101,500 free shares were granted in 2021 and 2022, under certain conditions, to the employees. On June 30, 2022, our shareholders also adopted a resolution allowing the Board of Directors to issue 600,000 free shares to incentivize worldwide teams in charge of our operations. This new resolution superseded the June 2021 resolution authorizing the issuance of 200,000 free shares, cancelling the unused portion of the 2021 resolution. Based on the June 30, 2022 resolution, as of December 31, 2023, a total of 491,500 free shares were granted, under certain conditions, to the employees. As of December 31, 2023 we have 108,500 free shares and 643,000 subscription options remaining under our existing resolutions. Under French law, only our employees with an employment contract and corporate officers, such as the Chief Executive Officer and the Chairman of the Board of Directors (mandataires sociaux) may receive free shares. Non-executive directors may not receive free shares.

On June 30, 2023, our shareholders renewed and extended resolutions allowing the Board of Directors to issue new shares in an aggregate maximum amount of 10 million shares in order to meet any fundraising opportunities that may be necessary to finance the Company’s development, which can be usedour further developments and to finance the acceleration of the roll out ofaddress any potential strategic opportunities for our HIFU activities in the United States, given the CPT Code Category 1 approval for HIFU technology that was confirmed for execution in January 2021. On June 30, 2020, some of these financing resolutions were extended as they came to expiration. On June 28, 2019, our shareholders also adopted a resolution allowing the Board of Directors to issue 1 million new shares under the form of subscription options to motivate and reward the management teams dedicated to successfully implementing our U.S. and worldwide expansion plans.long-term growth. As of December 31, 2020,2023 no additional shares werehave been issued nor options allocated as authorized under the above Plan.related to this resolution.

We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. The issuance of additional ordinary shares, including any additional ordinary shares issuable pursuant to the exercise of preferential subscription rights that may not be available to all of our shareholders, would reduce the proportionate ownership and voting power of the then-existing shareholders. Moreover, the availability of additional capital, whether debt or equity from private capital sources (including banks) or the public capital markets, fluctuates as our financial condition and industry or market conditions in general change. There may be times when the private capital markets and the public debt or equity markets lack sufficient liquidity or when our securities cannot be sold at attractive prices, in which case we would not be able to access capital from these sources on favorable terms, if at all. We can give no assurance as to the terms or availability of additional capital.

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We are subjectmay acquire other companies or technologies, which could fail to different corporate disclosure standards that may limit the information availableresult in a commercial product or net sales, divert our management’s attention, result in additional dilution to holders of our ADSs.stockholders and otherwise disrupt our operations and harm our operating results.

As a foreign private issuer, we are not required to comply with the notice and disclosure requirements under the Exchange Act relating to the solicitation of proxies for shareholder meetings. Although we are subject to the periodic reporting requirements of the Exchange Act, the periodic disclosure required of foreign private issuers under the Exchange Act is more limited than the periodic disclosure required of U.S. issuers. Therefore, there

We may be less publicly available information about us than is regularly published by or about other public companies in the United States.future seek to acquire or invest in businesses, applications, or technologies that we believe could complement or expand our portfolio, enhance our technical capabilities or otherwise offer growth opportunities. However, we cannot assure that we would be able to successfully complete any acquisition we choose to pursue, or that we would be able to successfully integrate any acquired business, product or technology in a cost-effective and non-disruptive manner. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various costs and expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated. We may not be able to identify desirable acquisition targets or be successful in entering into an agreement with any target or obtain the expected benefits of any acquisition or investment.

JudgmentsTo date, the growth of U.S. courts, including those predicated on the civil liability provisions of the federal securities laws of the United States,our operations has been largely organic, and we have limited experience in acquiring other businesses or technologies. We may not be enforceableable to successfully integrate any acquired personnel, operations and technologies, or effectively manage the combined business following an acquisition. Acquisitions could also result in French courts.

An investor indilutive issuances of equity securities, the United States may find it difficult to:

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We may in the future be the target of securities class action or other litigation, which could be costly and time consuming to defend.

In the past, securities class action litigation has often been brought against companies following a decline in the market price of itstheir securities. This risk is especially relevant for us because innovative life sciences and medical device companies have experienced significant stock price volatility in recent years.

Any litigation, if instituted, could cause us to incur substantial costs and our management resources may be diverted to defending such litigation, which could adversely affect our financial condition or results of operations.

We are exposed to risks related to cybersecurity threats and incidents.

In the conduct of our business, we collect, use, transmit and store data on information technology systems. This data includes confidential information belonging to us, our customers and other business partners, as well as personally identifiable information of individuals. We also store data related to our clinical trials on our information technology systems. We also rely in part on the reliability of certain tested third parties’ cybersecurity measures, including firewalls, virus solutions and backup solutions. Cybersecurity incidents, such as breaches of data security, disruptions of information technology systems and cyber threats, may result in business disruption, the misappropriation, corruption or loss of confidential information and critical data (ours or that of third parties), reputational damage, litigation with third parties, diminution in the value of our investment in research and development, data privacy issues and increased cybersecurity protection and remediation costs. Like many companies, we may experience certain of these incidents given that the external cyber-attack threat continues to grow in part due to a perceived increased vulnerability associated with current remote working conditions. As of the date of this annual report, we have received fraudulent invoices, purportedly from our suppliers, submitted to us using fraudulent email addresses and have made payments in connection with two such fraudulent invoices. While we have protocols in place to protect against such fraudulent transfers, we may fail to identify fraudulent payment requests that we may receive in the future and may inadvertently provide payment in connection with such requests, which may have a material adverse effect on our business, financial condition or results of operations.

We devote significant resources to network security, data encryption and other measures to protect our systems and data from unauthorized access or misuse, including meeting certain information security standards that may be required by our customers, all of which increases cybersecurity protection costs. As these threats and incidents, and government and regulatory oversight of associated risks, continue to grow, we may be required to expend additional resources to enhance or expand upon the security measures we currently maintain.

There can be no assurance that our efforts or those of our third-party service providers to implement adequate security and control measures would be sufficient to protect against breakdowns, service disruption, data deterioration or loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyber-attack, security breach, industrial espionage attacks or insider threat attacks which could result in financial, legal, business or reputational harm. Future cybersecurity breaches or incidents or further increases in cybersecurity protection costs may have a material adverse effect on our business, financial condition or results of operations.​

The expansion of social media platforms and new technologies present risks and challenges for our business and reputation.​

We increasingly rely on social media and new technologies to communicate about our products and technologies. The use of these media requires specific attention. Unauthorized communications, such as press releases or posts on social media, purported to be issued by the Company, may contain information that is false or otherwise damaging and could have an adverse impact on our stock price. Negative or inaccurate posts or comments about the Company, our business, directors or officers on any social networking website could seriously damage our reputation. In addition, our employees and partners may use social media and mobile technologies inappropriately, which may give rise to liability for the Company, or which could lead to breaches of data security, loss of trade secrets

In September 2022, we completed a successful public offering of common stock in the form of ADSs that raised gross proceeds of $23,000,003 or €23,913,314. We intend to use the majority of this funding to further expand and continue executing our U.S. Focal One growth initiatives while, in parallel, exploring new indications and other market development opportunities.

On May 1, 2023, Ryan Rhodes succeeded Marc Oczachowski as Chief Executive Officer of the Company to lead the Company’s global strategy and accelerate the Company’s development.

On January 1, 2024, Ken Mobeck was appointed as Global Chief Financial Officer and François Dietsch was appointed as Global Chief Accounting Officer, to pursue ongoing alignment in our organization and enable the Company to remain focused on executing our current growth strategy while also increasing our visibility among U.S. investors.

Reimbursement Update and Clinical Indication Expansion

On November 1, 2022, the U.S. CMS released its final outpatient prospective payment system (“OPPS”) reimbursement rule for calendar year 2023, which became effective on January 1, 2023. The final rule increased the reimbursement level of Focal One Robotic HIFU to an Ambulatory Payment Classification (APC) level 6, similar to surgery, as compared to APC level 5 which was previously in place. This represented a 90% increase in reimbursement. On November 1, 2023, the U.S. CMS released its final OPPS reimbursement rule for calendar year 2024 maintaining the reimbursement level for HIFU as an APC Level 6 procedure.

In November 2022, following the completion of a Phase II study evaluating Focal One HIFU as a potential treatment for deep infiltrating endometriosis, we received approval from French authorities to initiate a Phase III randomized, controlled clinical trial evaluating Focal One HIFU as a potential treatment option for such pathology. This study will enroll 60 patients across nine centers in France, with 30 patients randomized to each group. The primary efficacy endpoint is acute pelvic pain evolution three months post procedure. At the conclusion of the study, patients in the simulated treatment group who received no treatment will be foundgiven the option to be treated with HIFU. As of December 31, 2023, 57 patients have been included in Item 5, ‘‘Operating and Financial Review and Prospects’’.the follow-up study.

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Business Overview & Strategy

EDAP TMS S.A. is a holding company and is responsible for providing common services to its subsidiaries, including preparation and consolidation of the Company’s financial statements, for the group, complying with the requirements of various regulatory agencies and maintaining the listing of its publicly held securities and, in conjunction with its Board of Directors, directing the overall strategy of our group.the Company.

HIFU Division

The HIFU division is engaged in the development, manufacturing and marketing of Focal One robotic medical devicessystems based on HIFU technology for the minimally invasive treatment of urological and other clinical indications. Our HIFU business is cyclical and generally linked to lengthy hospital decisiondecisions and investment processes. Hence, our quarterly revenues are often impacted and fluctuate according to these parameters, generally resulting in a higher purchasing activity in the last quarter of the year. The HIFU division contributed €11.4€20.6 million to our consolidated net sales during the fiscal year ended December 31, 2020.2023.

HIFU Division Business Overview

As of December 31, 2023, the HIFU division had an active installed base of 107 Focal One systems, including 52 in the U.S.

The HIFU technology developed by this division currently develops, manufactures and markets robotic devices for the minimally invasive ablation of certain types of localized tumors using HIFU technology. HIFU technology uses a high-intensity convergent ultrasound beam generated by high power transducers to produce heat. HIFU technology is intended to allow the surgeon to destroy a well-defined area of diseased tissue, without damaging surrounding tissue and organs, thereby eliminatingorgans. This treatment option eliminates the need for incisions, transfusions and general anesthesia and associatedovernight hospital stay while minimizing complications. The HIFU division markets three HIFU devices: the Ablatherm, the Ablatherm Fusion and the Focal One. The Ablatherm and Ablatherm Fusion are directed at prostate tissue ablation in the treatment of localized organ-confined prostate cancer, referred to as T1-T2 stage.  The Focal One high-end device is aRobotic HIFU fully robotic device for prostate tissue ablation dedicated to the focal therapy of localized prostate cancer of T1-T2 stage, thereby destroying targeted cancer cells only. The robotic features of our HIFU devices make the treatment procedure safer for the patient and less operator dependent. All three devicessystem can also be used for patients who are not candidates for conventional surgery or who have failed a radiotherapy treatment.treatment regimen.

In addition to selling HIFU devices,systems, the HIFU division also records revenues driven from HIFU treatments performance (“HIFU Treatment Driven Revenues”) which include net sales of (i) disposables, (ii) equipment leases (iii)  revenue-per-procedureRevenue-Per-Procedure (“RPP”) and (iv) treatment related services. Weequipment service contracts.

In certain regions of the world, we offer a HIFU mobile treatment option, which provides access to our Focal One HIFU devicessystems without requiring hospitals and clinics to make an up-front investment in the equipment. Instead, hospitals and clinics perform treatments using these devicessystems and remunerate us on aan RPP basis (i.e., based on the basis of the number of individual treatments provided). With this model, once the treatment is established in the medical community, a permanent installation may become more attractive, leading to the sale of the device in some of the larger locations.Focal One system.

In addition, the HIFU division also generates revenues from net sales of maintenance services associated to our installed HIFU devices. As of December 31, 2020, the HIFU division had an active installed base of 122 HIFU devices of which 61 Focal One machines.HIFU systems.

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HIFU Products

Currently, we commercializehave commercialized Focal One, an image guided, robotic HIFU system dedicated to delivering focal therapy for the management of prostate cancer. Focal One combines three productsessential components to efficiently perform a focal treatment of localized prostate cancer: (i) high-quality imaging to localize tumors with the use of imported MRI imaging information combined with real-time ultrasound imaging, (ii) high precision of HIFU treatment focused on the identified target areas and (iii) the ability to provide immediate feedback on the delivery of treatment utilizing the HIFU technology. Cell destruction by HIFU is accomplished by a combination of thermal and cavitation effects caused by focused application of piezoelectric-generated high-intensity ultrasound; HIFU procedures are performed under general or spinal anesthesia.contrast-enhanced ultrasound imaging.

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On June 7, 2018, based on Ablatherm clearance and European pre-market and post-market clinical data, we obtained FDA 510(k) clearance for our Focal One device.system.

are to receive aboutapproximately €1.2 million over the period as a non-refundable grant. As of December 31, 2020,2023, we had received refundablea non-refundable grant of a total of €0.6€1.0 million.

As part of the PERFUSE project,Project, several studies have already beenwere initiated and sponsored by academic partner HCL - Edouard Herriot Hospital. In September 2018, we launched a Phase II multi-centric study was launched to evaluate the efficacy and safety of HIFU focal therapy in patients with intermediate-risk single-lobed prostate cancer (the “FOCALE” study). 170172 patients are to bewere included in the FOCALE study. As of January 2021, 141 patients have already beenstudy over 14 centers. The last patient was included in this study within 13 French active centers.May 2021. Inclusions are now closed, patient follow-up is on-going and last patient follow-up visit is scheduled for October 2025. In October 2018, we initiated a Phase III, multi-centric, randomized study was initiated aiming at evaluating the efficacy of focal HIFU versus active surveillance hence reducing the need for radical treatment for low-risk prostate cancer patients (the “HIFUSA” study). 146 patients are to be included in the study. As of January 2021, 58December 31, 2023, 106 patients have been included within 1114 French active centers. In February 2020, French regulatory authorities authorized the initiationPatient inclusion is now closed. Patient follow-up is on-going and last patient follow-up visit is scheduled for October 2026.

The majority of a Phase I study aiming at evaluating the use of HIFU guided by a new imaging modality (“PSMA-PET-MRI”) to evaluate prostate cancer recurrence after radiotherapy (the “PMSA” study). 40 patients are to be included in the study. The first patient was included in this study in July 2020.

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HIFU Clinical Publications

To date, clinical results related to our Robotic HIFU devicessystems have been published in renowned peer-reviewed journals.

In October 2016, clinical results were published in the European Urology journal (Rischmann et al.). They validated a new focal HIFU strategy in the treatment of prostateProstate cancer localized in a single lobe of the prostate (hemi-ablation treatment). The goal of focal treatment as opposed to “radical” treatment is to reduce the complications associated with standard treatments, particularly the risks of incontinence and impotence.

In December 2016, Professor Roland van Velthoven from Institut Bordet Oncology Center, Brussels, Belgium published in the Journal of Endourology a matched pair analysis of HIFU Hemi-ablation vs robotic assisted laparoscopic prostatectomy. In this study, 55 patients with prostate cancer localized in a single lobe of the prostate were treated using Ablatherm-HIFU and their outcomes were compared 1:1 with patients having similar clinical criteria but who underwent robotic-assisted laparoscopic prostatectomy.

In 2017, Crouzet et al. from Edouard Herriot Hospital, Lyon, France, reported in the British Journal of Urology (BJU), oncological outcomes of salvage HIFU for locally recurrent prostate cancer after External Beam Radiotherapy (“EBRT”). This retrospective study comprises 418 patients from nine centers with local recurrent cancer after EBRT treated with HIFU from 1995 to 2009. The publication is the largest series of salvage treatment confirming very positive oncological outcomes.

More recently, Ganzer & al., Germany, evaluated focal HIFU Hemi-ablation in a prospective trial. Their data were published in the Journal of Urology in April 2018. In their conclusion, they reported that focal therapy Hemi-ablation is safe with acceptable oncologic outcome.

In November 2019, Philip CA et al, from Croix Rousse Hospital, Lyon, France, published in Ultrasound Obstet Gynecology journal, the results of the treatment of 20 patients with deep rectal endometriosis using Focal One HIFU. This EDAP sponsored study

treatment was avoided in 81% of patients. Early follow-up biopsies are crucial to change or continue the treatment modality at the right time, while the use of MRI and PSA in detecting PCa recurrence is uncertain.”

In November 2023, Mala KS, et al., from Berlin Charité University Medicine, Germany, published in the Journal of the Clinical Medicine their results on their retrospective study on 57 patients with localized PCa using HIFU with Focal One. HIFU treatment was performed as focal, partial, or hemi ablative, depending on the prior histopathology. Out of 26 men that received biopsy eight (15.8%) had in-field reoccurrence. The rate of post-HIFU complications was low, at 19.3%. Continence was preserved and erectile function was comparatively better than with radical prostatectomy. The study concluded that HIFU as a therapy option for nonmetastatic, significant prostate cancer is effective in the short term for carefully selected patients and shows a low risk of adverse events and side effects.

In November 2023, Rischman P. et al. published in the Progrès en Urologie, their results on salvage HIFU for local recurrence after first-line radiotherapy in 531 patients. This HIFI-2 study was developed as part of the “Forfait Innovation” program to evaluate the efficacy and safety of HIFU in the salvage treatment of localized PCa after failure of first-line radiotherapy (RT). This is a prospective, multicenter, open-label study within the framework of the Forfait Innovation program, promoted by the AFU. Thirty months after post-RT salvage HIFU, 72% of patients were spared Hormonal Treatment. Pre-therapy PSA and Gleason score data suggest a better outcome (up to 85% HT-free survival at 30 months) when, in the presence of biological recurrence after radiotherapy, a recommendation is made for earlier management.

Endometriosis publications

In September 2020, Philip CA et al, from Croix Rousse Hospital, Lyon, France, published in Ultrasound Obstetric Gynecology journal, the results of the treatment of 20 patients with deep recto vaginal endometriosis using Focal One HIFU. This EDAP-sponsored study is the first one on the use of HIFU in this indication. The authors reported very promising results with low morbidity and significant efficiency on intestinal and gynecological symptoms as well as in the quality of life.

Pancreas publications

In December 2021, Cilleros et al. from EDAP and Labtau, INSERM and Centre Leon Bérard, Lyon, published in the journal Cancers positive pre-clinical results using intraoperative HIFU ablation of the pancreas in view of assessing the feasibility HIFU in the pancreas under Doppler guidance to treat the pancreatic parenchyma and tissues surrounding the superior mesenteric vessels in vivo in an animal model.  

HIFU Division Market Potential

Prostate cancer is currently the first (in terms of new cases diagnosed)newly diagnosed cases) and second (in terms of number of deaths) as the most common form of cancer amongamongt men in many populations. In the United States, the American Cancer Society estimates the number of new prostate cancers to be diagnosed for 20212024 to be approximately 248,530,299,010, of which approximately 70% are diagnosed with localized stage prostate cancer. Additionally, the HIFU division believes,estimates, based on figures provided by the World Health Organization that the worldwide incidence of localized prostate cancer is approximately twice this U.S. figure. A more effective diagnostic method for prostate cancer, the PSA test, has increased public awareness of the disease in developed countries since its introduction. PSA levels jump sharply when cancer is present. Prostate cancer is an age-related disease, and its incidence in developed countries is expected to increase as the population ages.

Management believes thatAccording to the Focused Ultrasound Society, HIFU therapy could be expandedhas the potential to othertransform the treatment of a variety of serious medical conditions. All indicators point toward the evolution of this platform technology into a robust medical field, including numerous medical conditions, such as rectal endometriosis, liver and pancreatic cancers but also to certain localized thyroid, breast, bladder, kidney, brain tumors.including cardiovascular, neurological, urological or women’s health. We decided to focus on developing HIFU for certain types of pathologies. However, thetargeted medical conditions. The expansion of the use of HIFU to other areas of treatment will require a significant investment in research and development, an investment that we intend to accelerate as acceptance of HIFU as a treatment for localized prostate cancer is gaining grounds in the medical community.

For example, in 2019, as we decided to expandThe endorectal approach currently delivered by the development of HIFU beyond prostate cancer, we successfully finalized a clinical Phase I study using Focal One Robotic HIFU to address certain types of deep endometriosis located in the low rectum.system, could benefit patients with rectal endometriosis. The study results are promising and show a decrease of symptoms in the treated patients. In 2020, we initiated a Phase II multi-centric study to investigate further the use of HIFU in this pathology. As per the European Society of Human Reproduction and Embryology estimates that endometriosis  is estimated to affectaffects approximately one in 1010% of women of reproductive age.

In addition, in view Among them, 5-12% are affected by digestive endometriosis, of addressing liver cancer usingwhich  90% suffer from infiltration of the rectum. As such, we estimate that 1% of the women of reproductive age could possibly benefit from a minimally invasive HIFU technology, we decided to pursue the developmenttreatment.

HIFU Reimbursement statusStatus

In the United States, following the AMA’s recognition ofAmerican Medical Association’s (“AMA”) decision to establish a new Category 1 CPT code for the ablation of malignant prostate tissue with transrectal HIFU technology, CMS finalized payment rules for hospitals, facilities, and physicians that facilitates coverage and reimbursement, for the ablation of malignant prostate tissue with HIFU technology, effective January 1, 2021. U.S. private insurers are continuing to evaluate and advance coverage and payment policies

Other companies are working with HIFU for the minimally invasive treatment of tumors. See Item 3, “Risk Factors—Competition in the markets in which we operate is intense and is expected to increase in the future, and there is a substantial risk our products or service offerings could become obsolete or uncompetitive.”

Certain existing and potential competitors of our HIFU division may have substantially greatermore financial resources to invest in research and development, sales, and marketing, and personnel resources than us and may have more experience in developing, manufacturing marketing and supporting new products. We believe that an important factor in the potential future market for HIFU treatments will be the ability to make the substantial investments in research and development required to advance the technology beyond the treatment of prostate cancer. These future investments are wholly dependent on the successful acceptance of the devicesystem for the treatment of prostate cancer.

Other companies working with HIFU technology for the minimally invasive treatment of tumors include SonaCare Medical,Sonablate Corporation, a U.S. company that markets a device called the Sonablate^® system for the ablation of prostatic tissue. Sonablate was cleared byreceived de novo clearance from the FDA for

ESWL Division Products

The ESWL division offers the Sonolith i-move extracorporeal shockwave lithotripter to small and mid-size hospitals. The ESWL division also sells disposable parts for lithotripters and electrodes of the Sonolith line, which need to be replaced approximately every ten treatments.

The Sonolith i-move relies on the electroconductive technology for shockwave generation. The electroconductive technology, which is derived from the electrohydraulic technology on which the first ESWL lithotripters were based, permits improved focusing of the shockwave, reduces the variability in the shockwave pressure and allows a better transfer of energy to the calculus. These features result in a faster, more effective treatment as compared to electrohydraulic lithotripters.

The ESWL division’s customers are located worldwide and have historically been principally large hospitals, urology clinics and research institutions. To increase its penetration of the market segment of smaller hospitals and outpatient clinics, the ESWL division developed the Sonolith i-move, a compact electroconductive lithotripter designed for smaller clinics. The Sonolith i-move offers a wide range of configurations to suit various budgets and various local market needs. Our Sonolith range has also been very successful thanks to its innovativeThis technology incorporates the Visio-Track ultrasound stone localization:localization system: a unique three-dimensional virtual system that uses infrared stereovision proprietary and patented technology to guide the treatment robotically.

The ESWL division also sells disposable accessories for lithotripters and electrodes for the Sonolith line, which need to be replaced approximately every ten treatments.

ESWL Division Patents and Intellectual Property

As of December 31, 2020,2023, the ESWL division’s patent portfolio containedincludes six granted owned and or co-owned patents consisting of one granted patent in the United States, four granted patents in the European Union and one granted patent in Japan.

These patents belong to fivefour groups of patents covering technologies relating to ESWL systems and associated software capabilities. The ESWL division’s patents cover both piezoelectric and electroconductive technologies associated towith the ESWL generator, localization systems and devicesystem design. The ESWL division’s ongoing R&D objectives in ESWL are to further increase the clinical efficacy, the cost-effectiveness and the ease of use of its products to make them accessible to wider patient and user populations.

ESWL Division Regulatory Status

The Sonolith i-move is cleared and available for commercial distribution in the European Union, Saudi Arabia, Colombia, South Korea, Costa Rica, Egypt, the United States,Ecuador, Indonesia, Japan, Malaysia, Philippines,Mexico, Myanmar, Peru, Russia, Saudi Arabia, Serbia, South Korea, Sudan, Switzerland, Taiwan, United Kingdom, Russia, Serbia, Switzerland, Taiwan, UkraineUnited States and Vietnam.

The ESWL division continues to provide disposables, replacement parts and services for the current installed base of Sonolith Praktis, Sonolith VisioVision and Sonolith i-sys even though we have discontinued the manufacturemanufacturing of these machines.machines several years ago.

ESWL Division Market Potential

We estimate that roughly 12% of the world population suffers from kidney or ureteric stones during their lifetime. Although urinary calculi may be eliminated naturally by the body, natural elimination is frequently accompanied by considerable pain and very often by serious complications, such as obstruction and infection of the urinary tract.

Since its introduction in clinical practice more than 35 years ago, ESWL has become the standard treatment for urinary calculi. ESWL consists of fragmenting calculi within the body using extracorporeal shockwaves without any surgery. We believe that the market for lithotripters includes both buyers looking for a sophisticated, higher-priced machine (generally hospitals and larger urology clinics) and buyers looking for simpler and less expensive machines (typically smaller clinics). The market for lithotripters is mature and has become primarily a replacement and service and maintenance market in most of the world. We believe that companies with a large installed base of ESWL lithotripters willcan be most successful in the replacement market. Consequently, wemaintaining a recurring revenue stream from maintenance contracts, parts and consumables. We intend to capitalize on our share of the installed base of ESWL lithotripters to maintain our position in the replacement marketsystems for those machines.this recurring revenue.  Several geographical opportunities remain in under-equipped countries orand in some countries where the national health system strategy is being reviewedunder review for capital equipment at hospitals and clinics equipment.clinics. ESWL is today inproducts are currently facing competition with less costlyfrom lower priced stone laser devices. Consequently, in order tosystems. To remain competitive, EDAPover the past few years we have integrated stone laser products into its ESWLour stone management product range.portfolio in select markets.

We expect the ESWL division to continue to contribute to the financial results with revenues from consumables and maintenance contracts despite the mature nature of the market, due to revenues from consumables, maintenance contracts and demand for replacement machines.this market. See Item 5, ‘‘“Operating and Financial Review and Prospects’’.”

The ESWL division’s customers are located worldwide and have historically been mainly public and private hospitals and urology clinics. We believe that the division’s customer base provides it with excellent access to the urological community and enables it to introducecontinue marketing its ESWL products under satisfactory conditions.

No single customer of the ESWL division represents a significant portion of the division’s installed base. The ESWL division’s marketing efforts include the organization of training programs for urologists worldwide.

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Distribution Division

The Distribution division is engaged in the marketing, distribution and servicing of products complementary to the rest of our global activityproduct portfolio such as lasers, micro-ultrasound systems, lasers and other medical products from third parties.party manufacturers. The Distribution division contributed €17.3€29.9 million to our consolidated net sales during the fiscal year ended December 31, 2020.2023.

Distribution Division Business Strategy

The Distribution division’s business strategy is to generate revenues from the marketing and distribution of medical devices for the minimally invasive diagnosis or treatment of urological disorders and other various clinical indications. These products include but are not limited to: micro-ultrasound devices such as the ExactVu product29 MHz Micro-ultrasound system and lasers.advanced surgical lasers from various companies. The Distribution division also generates revenues from the leasing of devices,system leases, as well as from the sale of disposables, spare parts and maintenance contracts for equipment sold under the Distribution division.

We have engaged in exclusive distribution agreements with third parties to distribute and service their products in certain territories, under specific conditions.

The Distribution division strategy is also to distributeincludes the distribution of products that bring synergies and complementarityare complementary to our existing home growninternally developed technologies. In May 2020, we signed an exclusive worldwide distribution agreement with Exact Imaging Inc. a Canadian company and developer of high resolutionhigh-resolution micro-ultrasound imaging technologies. In December 2023, we renewed this agreement.  Under the terms of the agreement, we will market Exact Imaging’sthe ExactVu micro-ultrasound diagnostic devicessystems alongside our Focal One. In that respect, ExactVu micro-ultrasoundMicro-ultrasound technology complements ourthe Focal One Robotic HIFU technology. ExactVu offers all of the stepsadvanced technology for performing biopsies and procedures that need to be done prior to a treatment fordiagnosing prostate cancer. By distributingmarketing the two technologies, EDAP offers the urologisturologists a complete solution for focal prostate cancer management, with full autonomy and capabilities from diagnosticdiagnosis to treatment. This type of complete care is also extremely attractive to patients with prostate cancer as it represents a non-invasive way of managing their disease by using diagnostics to eliminate unnecessary biopsy procedures and allows for a very precise non- invasive HIFU ablation of the suspicious and diagnosed region of the prostate.

Distribution Division Products

The Distribution division currently distributes Holmium lasers (HoLEP) produced by the Israeli company Lumenis Ltd, under an exclusive agreement limited to the French territory. HoLEP Moses Lumenis laser is a groundbreaking, patent-protected pulse delivery technology that remarkably improves energy transmission, resulting in more efficient lithotripsy and BPH treatments compared to the regular Holmium pulse1. The Distribution division also exclusively markets lasers manufactured by Italian company Quanta System Spa in Japan, in certain countries in South-East Asia. Distribution agreements are under renewal in Japan and South-East Asia territories. The Distribution division also exclusively markets Quanta lasers in certain Middle East territories including Kuwait, Oman, Saudi Arabia, Jordan and Bahrain.

consumables. We believe the terms of the lease reflect commercial practice andcurrent market rates. We are not aware of any environmental issues that could affect utilization of the facility.

In addition, we lease office and/or warehouse facilities in Kuala Lumpur (Malaysia), Flensburg (Germany), Austin, Texas and Los Altos, California (U.S.), Moscow (Russia), Seoul (South Korea), Fukuoka, Osaka, Sapporo and Tokyo (Japan) and Dubai (United Arab Emirates). Our representative office in Moscow (Russia) was closed in early 2023.

Government Regulation

Government regulation in our major markets, in particularparticularly the United States, the European Union and Japan, is a significant factor in the development and marketing of our products and in our ongoing research and development activities. Our products and operations are subject to regulation by the FDA and countries where we market our products.  We must meet the requirements governing the design, manufacture, sourcing, testing, certification, packaging, installation, use, and disposal (including recycling) of our products. See Item 3, “Risk Factors—Risks Related to Government Regulations.”

Regulation in the United States

We and ourOur products are regulated in the United States by the FDA under a number ofseveral statutes including the Federal Food, Drug and Cosmetic Act (‘‘FDC Act’’)(FDC Act). Pursuant to the FDC Act, the FDA regulates the preclinical and clinical testing, manufacturing, labeling, distribution, sale, marketing, advertising and promotion of medical devices in the United States. Medical devices are classified in the United States into one of three classes - Class I, II or III - based on the basis of the controls reasonably necessary to ensure their safety and effectiveness. Class I devices are those whose safety and effectiveness can be ensured through general controls, such as establishment and registration, medical device listing, FDA-mandated CGMP and labeling. Most Class I devices are exempt from premarket notification (510(k)). Class II devices are those whose safety and effectiveness can reasonably be ensured through the use ofusing general controls and ‘‘special controls,’’“special controls”, such as special labeling requirements, mandatory performance standards, and post-market surveillance. Class II medical devices typically require 510(k) submission and clearance. The FDAclearance based on a demonstration of substantial equivalence to an identified predicate device. A successful 510(k) may also require the submission of clinical data as part of the 510(k) for some Class II devices. The FDA introduced the de novo 510(k) process forFor novel devices that present low to moderate risk but where there is no suitable predicate device to support a standard 510(k) submission.submission, the FDA has what is known as the De Novo process. Class III devices are those that require submission of a pre-market approval (“PMA”)(PMA) application by the FDA to ensure their safety and effectiveness. The PMA process is expensive and often lengthy, typically requiring several years, and may not necessarily result in approval. The manufacturer or the distributor of the device must obtain an IDE approval from the FDA before commencing human clinical trials in the United States in support of the PMA. Some newer PMA devices must also go before a clinical review panelan advisory committee before FDA approval. Our lithotripsy range of Sonolith i-move products is now classified by the FDA as Class II devices. Our Ablatherm and Focal One HIFU devices are also classified as Class II.

The FDC Act also regulates quality and manufacturing procedures by requiring us to demonstrate and maintain compliance with current Quality System Regulations (QSR). OurWe believe our manufacturing facilities are in compliance withfollow the requirements of the QSR. There are also certain requirements of state, local and foreign governments which must be complied with in the manufacturing and marketing of our products. We believe that the manufacturing and quality control procedures we employ meet the requirements of these regulations.

Advertising and promotional activities in the United States are subject to regulation by the FDA and in certain instances, by the U.S. Federal Trade Commission.

Regulation in the European Union

In the European Union, we annually perform ISO 13485: 2016 and MDSAP (Australia, Brazil, Canada, Japan, U.S.) certification audits, showing that we comply with standards for quality assurance, manufacturing and design control.

In 2017, the European Union enacted the new Medical Device Regulation (“MDR”). Manufacturers with currently approved medical devices in their portfolio have had an initial transition time of three years, i.e. until May 26, 2020, to meet new MDR requirements. The transition period was extended to four years, i.e. until May 26, 2021, due to COVID-19 pandemic context. An amendment to modify the transitional provisions has been adopted. The schedule is defined based on the MDR classification of devices with a updated application date of December 31, 2028. The extension of the period during which the devices can be placed on the market is subject to certain terms and conditions. To benefit from the new provisions, the manufacturer must implement and maintain a Quality Management System that complies with MDR requirements before May 26, 2024. This MDR introduces substantial changes to the way medical device manufacturers bring their devices to the European market and how they maintain compliance throughout the product’s life cycle. This MDR will replace the EU’s current Medical Device Directive (93/42/EEC) (“MDD”)(MDD). We are currently updating our organization and quality system as well as our product development to be able to handle the MDR enforcement within the expected timelines for our

existing devices ranges and the devices under development. We have implemented regulatory actions to ensure our devices maycan be marketed in the European and international markets after May 2021.to conform to this MDR, if applicable.

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Diversity and Inclusion

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We believe that a culture of diversity and inclusion enables us to create, develop, and fully leverage the strengths of our workforce to achieve our business objectives. We strive to provide equal opportunity to all applicants and employees, including those from diverse backgrounds. We believe that bringing together different perspectives and experiences is fundamental to our future growth and success.

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Training and Development

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We provide internal training and development programs to employees globally. Such programs include leadership development, office safety, ethics, and various skill-based training programs.

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Health and Safety

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Protecting the health, safety, and well-being of our employees around the world is a top priority. Throughout the COVID-19 pandemic, we enhanced our focus on the health and safety of our employees by implementing and enforcing certain COVID-related safety protocols. We provided employees with protective equipment, required the wearing of masks, increased cleaning procedures, provided cleaning supplies, implemented remote work where possible, enhanced our IT systems to facilitate remote work, and improved our cybersecurity protocols. While a number of these protocols were lessened or eliminated upon the waning of the COVID-19 pandemic, we continue to look for opportunities to provide a safer, healthier, work environment for our employees.

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Item 4A. Unresolved Staff Comments

None.

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Item 5. Operating and Financial Review and Prospects

The following discussion of our results of operations and liquidity and capital resources for the fiscal years ended December 31, 2020, 20192023 and 20182022 is based on, and should be read in conjunction with, our consolidated financial statements and the notes thereto included in Item 18, "“Financial Statements."” The consolidated financial statements have been prepared in accordance with U.S. GAAP.

The following discussion contains certain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those contained in such forward-looking statements. See ‘‘Cautionary“Cautionary Statement on Forward-Looking Information’’Information” at the beginning of this annual report.

Critical Accounting PoliciesEstimates

The discussionManagement has not identified any estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and analysis of ourhave had or are reasonably likely to have a material impact on the financial condition andor results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, accounts receivable, bad debts, inventories, warranty obligations, employee stock-option plans, goodwill impairment, provisions for retirement indemnities, litigation and deferred tax assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe our more significant judgments and estimates used in the preparation of our consolidated financial statements are made in connection with the following critical accounting policies.

Revenue Recognition

The Company adopted ASC Topic 606, Revenue from Contracts with Customers, on January 1, 2018.

a medical device may, depending on its terms, result in significant fluctuations in the average unit sale price of the product for a given period, which may not be indicative of a market trend.

Sales of RPP and leases mainly include the revenues recording in the HIFU division from the sale of Ablatherm and Focal One treatment procedures and from the leasing of Ablatherm and Focal One devices. We provide Ablatherm and Focal One devices or treatment probes. We provide Focal One systems to clinics and hospitals for free for a limited period, rather than selling the devices.systems. These hospitals and clinics perform treatments using the devicessystems and usually pay us based on the number of individual treatments provided. With this business model, the hospital or clinic does not make an initial investment until the increase in patient demand justifies the purchase of a HIFU device. Consequently, we are able to make Ablatherm or Focal One treatments available to a larger number of hospitals and clinics, which we believe should serve to create more long-term interest in the product. Compared to the sale of devices,systems, this business model initially generates a smaller, although more predictable stream of revenue and, if successful, should lead to more purchases of Ablatherm and Focal One devicessystems by hospitals and clinics in the long term.

Regarding sales of lithotripters as recorded in our ESWL division, we believe that the market for ESWL lithotripters is now mature and has become primarily a replacement and maintenance market, with intense competition. As a result, we expect total market volumes for our ESWL Divisiondivision to remain stable in the foreseeable future. In addition, following the discontinuation of our Sonolith i-sys lithotripter in 2020 and of our developments in lithotripsy, including the development of our Endo-UP platform, our ESWL revenues will be mainly stemming from sales of Sonolith i-move lithotripters as well as revenues from sales of maintenance contracts and spare parts.

Revenues recorded in our Distribution division include sales of complementary products such as lasers, micro-ultrasound systems and other products from third parties, including the associated disposables and maintenance contracts.

Sales of spare parts and services include revenues arising from maintenance services furnished by us for the installed base of ESWL lithotripters, HIFU devicessystems and complementary products from third parties.

We derive a significant portion of both net sales of medical devices and disposables and net sales of spare parts and services from our operations in Asia, through our wholly-ownedwholly-owned subsidiaries or representative offices in Japan (Edap Technomed Co. Ltd), Malaysia (Edap Technomed Sdh Bhd) and South Korea (Edap Technomed Korea). Net sales derived from our operations in Asia represented 38%30% of our total consolidated net sales in 2020.2023. Net sales of goods in Asia represented 43%33% of such sales in 20202023 and consisted mainly of sales of urology devices and disposables. Net sales of spare parts, supplies and services in Asia represented 39%33% of such sales in 20202023 and related primarily to ESWL lithotripters, reflectinglithotripters. We also derive a significant portion of net sales of medical devices and disposables from our operations in the fact that 51% ofU.S., through our wholly owned subsidiary (Edap Technomed. Inc). Net sales derived from our operations in the installed baseU.S. represented 28% of our ESWL lithotripters that we actively maintain or otherwise serve is locatedtotal consolidated net sales in Asia.2023. Net sales of goods in the U.S. represented 29% of such sales in 2023 and consisted mainly of sales of urology devices and disposables. See Note 18 of our consolidated financial statements. We sell our products in many parts of the world and, as a result, our business is affected by fluctuations in currency exchange rates. We are exposed to foreign currency exchange rate risk because the mix of currencies in which our costs are denominated is different from the mix of currencies in

Beginning in 2021,2024, management expects the budget for research and development expenses to increase at 11.5%to 11.9% of total revenues, which we expect will allow us to maintain our strategy to launch new clinical studies (thus strengthening our clinical credibility), to continue to focus our efforts on obtaining regulatory approvals in Japan in particular, and to build reimbursement coverage in key countries and particularly in the U.S., to continue to develop our HIFU product range and to fund projects to expand the use of HIFU beyond the treatment of prostate cancer.

Consolidated selling and marketing expenses amounted to €9.3€22.6 million in 2020, €10.92023 and €16.4 million in 2019 and €10.6 million in 2018. Selling and marketing expenses included net impact of allowances for doubtful accounts of €0.1 million in 2020, €0.1 million in 2019 and €0.4 million in 2018.2022. The €1.6€6.2 million or 14.5% decrease38.1% increase in selling and marketing expenses from 20192022 to 20202023 was primarily a result of the decrease in global sales and marketing activity in a COVID-19 context (cancelationimplementation of congresses, limitation of business trips, etc.). Management expects marketing and sales efforts to get back to higher levels as soon as the sanitary situation returns to normal andHIFU expansion plan in the future to consolidateU.S. which includes the HIFU technology’s status as a standardimpact of care for prostate pathologies,share-based compensation plans of €1.8 million in 2023 and to sustain the Company’s worldwide market position€1.0 million in urology.2022. Beginning in 2021,2024, management expects selling and marketing expenses to increase in connection with the acceleration of HIFU adoption in the U.S.

The novel COVID-19 virus​

Consolidated general and administrative expenses increased €7.5 million or 104.6% to €14.6 million in 2023, reflecting the impact of the HIFU expansion plan in the U.S., which has profoundly impactedincludes the whole worldwide economyimpact of share-based compensation plans for €2.9 million in 2020 represents a new challenge for us all. We continue to closely monitor the situation2023 and have implemented numerous precautions and protective measures to safeguard our employees and to ensure an uninterrupted supply of our devices and disposables, including requiring the majority of our employees to work remotely, adjusting supply chain activity and curtailing all business travel. In the near term, we expect this situation to continue to cause decreased activity in our recurring usual business activity with some cancellations of ESWL and HIFU treatments. We also anticipate that device sales projects may be postponed on a near-term basis as hospital purchase and investment decisions are put on hold. However, our sales cycles are long and we have in inventory several devices and accessories that are ready to be shipped when order activity resumes. The Company therefore believes to be well positioned to resume delivery activities as soon as that becomes possible. Importantly, in this unique and unknown global crisis, EDAP has a solid cash position, which is expected to minimize disruptionnon-recurring expenses linked to the extent possible. See Item 3. ‘‘Risk Factors”leadership succession plan for €3.4 million in 2023, which includes the impact of share-based compensation plan for €1.3 million.  Beginning in 2024, management expects general and “—Liquidity and Capital Resources.’’administrative expenses to increase in connection with the development of the U.S. subsidiary.

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Fiscal Year Ended December 31, 20202023 Compared to Fiscal Year Ended December 31, 20192022

We report our segment information on a “net contribution” basis. See Note 29 to our consolidated financial statements.

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Total revenues

Our total revenues decreased 7.2%increased 9.6% from €44.9€55.1 million in 20192022 to €41.7€60.4 million in 2020.2023.

HIFU division.

The HIFU division’s total revenues decreasedincreased by 19.1%31.7% from €14.1€15.6 million in 20192022 to €11.4€20.6 million in 2020,2023, reflecting the impact of the ongoing COVID-19 pandemic on both procedure volumes and equipment sales.

The HIFU division’s net sales of medical devices decreased 22.7% to €4.5 million in 2020, with two Ablatherm units and ten Focal One units sold, as compared to €5.9 million, with two Ablatherm units and eleven Focal One units sold in 2019.

Treatment-driven revenue, which includes net sales of RPP & leases, net sales of disposables and treatments related services, decreased by 20.1% to €5.6 million in 2020.

Net sales of HIFU maintenance services increased from €1.2 million in 2019 to €1.3 million in 2020 thanks to the increase of the installed base under contract after the warranty period.

Other HIFU-related revenues decreased to €12 thousand in 2020 from €52 thousand in 2019 and were comprised of license-based revenues from Theraclion and training to customers.

ESWL division.

The ESWL division’s total revenues decreased 9.2% from €14.2 million in 2019 to €12.9 million in 2020, primarily due to the impact of the COVID-19 pandemic on both procedure volumes and equipment sales.

The ESWL division’s net sales of medical devices decreased 4.9% from €5.4 million in 2019 to €5.2 million in 2020 with 33 ESWL devices sold in 2020 compared to 28 ESWL units sold in 2019 due to a change in the mix of products.

Net sales of ESWL-related consumables, spare parts, supplies, RPP, leasing and services decreased 11.9% from €8.7 million in 2019 to €7.7 million in 2020.

Distribution division.

The Distribution division’s total revenues increased 4.6% from €16.6 million in 2019 to €17.3 million in 2020, primarily due tomainly the development of Exact Imagingequipment sales and in spite of the adverse impact of the sanitary crisis on the company’s activities.

The Distribution division’s net sales of medical devices slightly decreased 2.8% from €10.9 million in 2019 to €10.6 million in 2020.

Net sales of Distribution-related consumables, spare parts, supplies, RPP, leasing and services increased 18.7% from €5.7 million in 2019 to €6.8 million in 2020 due to the increase of the installed base under contract after the warranty period.

Cost of sales.

Cost of sales increased 7.4%16.5% from €22.3€30.9 million in 20182022 to €23.9€36.0 million in 2019,2023, and represented 53.3%59.6% as a percentage of net sales in 2019, down2023, up from 56.9%56.1% as a percentage of net sales in 2018.2022. This improvement is driveneffect was primarily by the increasedue to distribution product mix, global inflationary price pressure on components which increased manufacturing costs, and continued investments in the percentage ofour U.S. service and clinical application organizations to support HIFU and long-term revenue to overall revenue (since HIFU activity has better margin than the former UDS division that combined both ESWL and Distribution); and the effect of the increase of net sales on the fixed costs.growth.

Operating expenses.

Operating expenses increased 3.1%55.4%, or €0.6€15.8 million, from €18.2€28.5 million in 20182022 to €18.8€44.2 million in 2019.2023.

Marketing and sales expenses increased €0.3€6.2 million, or 2.8% at €10.938.1% to €22.6 million in 2023, reflecting the sales and marketing efforts on expandingimpact of the business.HIFU expansion plan in the U.S., which includes the impact of share-based compensation plans for €0.8 million in 2023.

Research and development expenses decreased 8.8%increased 41.5% at €3.7€7.0 million in 20192023 from €4.1€4.9 million in 2018, which included regulatory2022. R&D expenses for the Focal One clearance in the U.S., and are net of R&D grants and tax credits of €1.0€0.6 million in 20192023 and €0.8 million 2018.in 2022. This increase was mainly driven by the increase in research and development activities associated with our HIFU development programs and clinical studies.

General and administrative expenses increased 17.6%€7.5 million or 104.6% to €4.2€14.6 million in 2019, mainly due2023, reflecting the impact of the HIFU expansion plan in the U.S., which includes the impact of share-based compensation plans for €2.9 million in 2023 and non-recurring expenses linked to the higher levelleadership succession plan for €3.4 million in 2023, which includes the impact of activity and the implementation of the SAP program.share-based compensation plan for €1.3 million.

Operating profit (loss).

As a result of the factors discussed above, particularly the expansion of our activities in the U.S. to accelerate HIFU adoption, we recorded a consolidated operating incomeloss of €2.2€19.8 million in 2019,2023, as compared to a consolidated operating loss of €1.3€4.3 million in 2018.2022.

We realized an operating profitloss in the HIFU division of €0.5€14.8 million in 2019,2023, as compared with an operating loss of €2.3€4.9 million in 2018,2022, an operating profitloss in the ESWL division of €1.1€0.2 million in 2019,2023, as compared to an operating profit of €1.8€0.9 million in 2018,2022, and an operating profitloss in the Distribution division of €1.1€0.2 million in 2019,2023, as compared to an operating profit of €0.5€2.0 million in 2018.2022.

Financial (expense) income, net.

Net financial expenseincome was €0.1€1.1 million in 2019,2023, compared with a net financial income of €0.8€0.2 million in 2018, including a €0.9 million2022.

The financial income due to fair value adjustments of warrants. There were no more outstanding warrants at the end of 2018 and 2019.was mainly generated by short-term deposits.

Foreign currency exchange gain (loss), net.

In 2019,2023, we recorded a net foreign currency exchange incomeloss of €0.1€1.8 million, mainly due to the variation of the Euro against the U.S. Dollar, and the Japanese Yen, compared to an incomea gain of €0.5€1.9 million in 2018.2022.

Income taxes.

Income tax was an expense of €0.7€0.6 million in 2019,2023, compared to an expense of 0.40.8 million in 2018, reflecting the growth of the Income before taxes2022.

Net income / (loss).

As a result of the above, we realized a consolidated net incomeloss of €1.5€21.2 million in 20192023 compared with a consolidated net loss of €0.3€2.9 million in 2018.2022.

For comparison between the fiscal year ended December 31, 2022 and the fiscal year ended December 31, 2021, please refer to our report on Form 20-F filed with the SEC on April 7, 2023.

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Effect of Inflation

Management believes thatIn 2022 and 2023, geopolitical instability and other factors have led to higher worldwide inflation leading to a global increase in costs. We are constantly addressing this cost increase by mitigating the impact of inflation was not materialon our margins, in particular by adjusting our prices, reducing our costs or implementing counter measures to our net sales or loss from operations inensure the three years ended December 31, 2020.minimum residual impact.

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Liquidity and Capital Resources

Our cash flow has historically been subject to significant fluctuations over the course of any given financial year due to cyclical demand for medical devices. Cyclical demand has historically resulted in significant annual and quarterly fluctuations in trade and other

to meet our liquidity requirements, a decrease in the demand for our products, or the inability of our customers to meet their financial obligations to us due to operating difficulties or adverse market conditions, would reduce the availability of funds to us. As our expansion plans in the United States are implemented, we anticipate additional capital resources may be needed to implement our strategy.