Edap TMS (FOCL) risk factors, FY2025 10-K

Risks Related to Our Business, Financial Position and Capital Needs

1. 01If we are unable to obtain additional financing when needed, our ability to continue as a company could be adversely affected
2. 02Our 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
3. 03Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations
4. 04Our operating cash flow is highly dependent on cyclical demand for our products
5. 05Our results of operations have fluctuated significantly from quarter to quarter in the past and may continue to do so in the future as we experience long and variable product sales cycles, which are long and seasonal and are partly dependent on access to sufficient financing

Risks Related to our Indebtedness

1. 06We have incurred substantial debt, which could impair our flexibility and access to capital and adversely affect our financial position, and our business would be adversely affected if we are unable to service our debt obligations and are subject to default
2. 07Our ability to access future funds under the Credit Facility is subject to conditions that may not be satisfied
3. 08Exercise of the warrants issued to EIB may dilute the ownership interest of our shareholders or may otherwise depress the market price of our ADSs

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

1. 09If we do not successfully optimize our sales, marketing, and potential future distribution channels or do not effectively expand and update our infrastructure, or maintain high product quality and reliability, our operating results may be negatively impacted
2. 10New device developments and introductions may adversely impact our financial results
3. 11Potential issues in the adoption and use of AI in our product offerings may result in reputational harm or liability
4. 12We operate in a highly regulated industry and our future success depends on obtaining and maintaining government regulatory approval of our products, which we may not receive or be able to maintain or which may be delayed for a significant period of time
5. 13Our clinical trials related to products using HIFU technology may not be successful, and we may not be able to obtain regulatory approvals necessary for commercialization of all of our HIFU products
6. 14The commercial success of our products depends on whether procedures performed using those products are eligible for reimbursement approved by national health authorities and third-party payers
7. 15HIFU technology may not be widely adopted by the medical community and may never become a standard of care, and we may be unable to generate sufficient revenue to sustain our business
8. 16Competition 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

Risks Related to our Organization and Operations

1. 17We may experience revenue disruption due to our strategic shift to focus on HIFU activities and away from legacy non-HIFU activities
2. 18We 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 and our insurance coverage may be inadequate
3. 19We depend on a single site to manufacture our products, and any interruption of operations could have a material adverse effect on our business
4. 20For certain components or services, we depend on a small number of suppliers who, due to events beyond our control may fail to deliver sufficient supplies to us or may increase the cost of items supplied, which would interrupt our production processes or negatively impact our results of operations
5. 21We utilize distributors for our sales abroad, which subjects us to a number of risks that could harm our business
6. 22We are a relatively small company with a limited number of products and staff. Sales fluctuations and employee turnover may adversely affect our business
7. 23The loss of key members of our executive management team could adversely affect our business
8. 24We may have difficulties in attracting and recruiting highly qualified experts in hardware, software, AI, design and development of high technology devices
9. 25We are exposed to risks related to cybersecurity threats and incidents
10. 26The expansion of social media platforms and new technologies present risks and challenges for our business and reputation

Risks Related to Intellectual Property Rights

1. 27Our success largely depends on our ability to establish and protect the intellectual property rights related to our medical devices, and any dispute with respect to these rights could be costly and have an uncertain outcome and may prevent or delay our development and commercialization efforts
2. 28advantage. The outcome of future such challenges is unpredictable, and the loss of patent protection could have a material adverse impact on our business, financial condition and results of operations
3. 29We may encounter disruption in our Intellectual Property protection due to expiring patents and lack of updated filings
4. 30U.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
5. 31We may not be able to protect or enforce our intellectual property rights throughout the world
6. 32Our use of “open-source” software could negatively affect our ability to sell our products and subject us to possible litigation

Risks Related to Being a French Company

1. 33Our French and international operations expose us to additional costs, legal and regulatory risks, which could have a material adverse effect on our business, financial condition and results of operations
2. 34We sell our products in many parts of the world and, as a result, our business is affected by fluctuations in currency exchange rates
3. 35Our by-laws and French corporate law contain provisions that may delay or discourage a takeover attempt
4. 36The rights of shareholders in companies subject to French corporate law differ in material respects from the rights of shareholders of corporations incorporated in the United States
5. 37French law may limit the amount of dividends we are able to distribute, and we do not intend to pay cash dividends for the foreseeable future
6. 38We became a U.S. Domestic Issuer and a smaller reporting company on January 1, 2026, which will likely result in significant additional costs and expenses
7. 39Judgments of U.S. courts, including those predicated on the civil liability provisions of the federal securities laws of the United States, may not be enforceable in French courts

Risks Related to Ownership of our Ordinary Shares and the ADSs

1. 40Our securities may be affected by volume fluctuations, and may fluctuate significantly in price, causing investors to lose some or all of their investment
2. 41Holders of ADSs have fewer rights than shareholders and must act through the Depositary to exercise those rights
3. 42If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our market or business, our ADS price and trading volume could decline
4. 43Preferential subscription rights may not be available for U.S. persons
5. 44Our results of operations and financial condition could be adversely affected by the adverse economic changes, political, social and geopolitical developments, financial changes, and the impact of climate change
6. 45Global potential inflation may have a material adverse effect on our business, results of operations and financial condition
7. 46We may issue additional securities that may be dilutive to our existing shareholders, in view of funding our new developments and accelerating our business expansion
8. 47In the past, securities class action litigation has often been brought against companies following a decline in the market price of their 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