What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-03-08 compared with 2020-03-10 · 605 added, 997 removed, 1419 unchanged (53% of the section changed)

39 unchanged sentences

following table sets forth information regarding our executive officers and the members of our board of directors.

Marvin Slosman

President, Chief Executive Officer and Director

Chief Financial Officer, Chief Administrative

Officer, Secretary and Treasurer

Michael Berman (1)(2)

Campbell Rogers, M.D.

Paul Stuka (1)(2)(3)

Chairman of the Board of Directors

Chief Executive Officer and Director

Financial Officer, Chief Administrative Officer, Secretary and Treasurer

Berman (1)(2)

Stuka (1)(2)(3)

of the Board of Directors

Kester (1)(3)

Member of our audit committee

Member of our nominating and corporate governance

Member of our compensation committee

of our audit committee

of our nominating and corporate governance committee

of our compensation committee

directors hold office until the earlier of their death, resignation or removal by stockholders or until their successors have

1 unchanged sentence

Our directors are divided into three classes.

Paul Stuka is our Class 1 director, with his term of office to expire

at our 2021 annual meeting of stockholders.

Paul Stuka and Gary Roubin are our Class 1 directors, with their

terms of office to expire at our 2021 annual meeting of stockholders.

Michael Berman and Campbell Rogers, M.D.

are our Class 2 directors, with their terms

of office to expire at our 2022 annual meeting of stockholders.

are our Class 2

directors, with their terms of office to expire at our 2022 annual meeting of stockholders.

Marvin Slosman and Thomas J.

Kester are our Class 3 directors,

with their terms of office to expire at our 2020 annual meeting of stockholders.

At each annual meeting of stockholders, directors

elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding

annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been

duly elected and qualified.

are our Class 3 directors, with their terms of office to expire at our 2023 annual meeting of stockholders.

At each annual meeting

of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire

at the third succeeding annual meeting of stockholders after their election, with each director to hold office until his or her

successor shall have been duly elected and qualified.

officers hold office until the earlier of their death, resignation or removal by our board of directors or until their successors

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from Harvard University.

has served as a director since October 13, 2020.

Roubin cofounded Essential Medical Inc., which has had success

in bringing a large bore vascular closure device to world markets and was recently acquired by Teleflex Inc.

From 2002 to 2003,

Roubin served as Chief Medical Officer of the Medicines Company during the release of its Angiomax product.

From 2003 to 2012,

Roubin served as Department Chairman and Chief of Service of the Lenox Hill Hospital Cardiac and Vascular program in New York.

From 1989 to 1997, he served as Chief of Interventional Cardiology at the University of Alabama at Birmingham, to which he joined

in 1989 as Professor of Medicine and Radiology and Director of the Cardiac Catheterization Laboratories and Interventional Cardiology

Section at the University Hospital.

Roubin played a pivotal role in the success of Mednova Inc., which was acquired

by Abbott Vascular, resulting in the introduction and marketing in the U.S.

of the top selling carotid embolic protection system

(NAV6) and stent system (XACT).

In 1987, he developed and placed the world’s first balloon expandable coronary stent.

Roubin joined Andreas Gruentzig at Emory University to continue his post-doctoral research.

He is also acknowledged

for the development of coronary stenting and the first FDA-approved coronary stent.

Roubin received his M.D.

from the University

of Queensland medical school and his Ph.D.

from Sydney University.

Slosman and Mr.

4 unchanged sentences

have no family relationships amongst our directors and executive officers.

16(a) Beneficial Ownership Reporting Compliance

16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers, and persons who own more than ten

percent of our common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes

in ownership of our common stock.

Directors, officers and persons who own more than ten percent of our common stock are required

by Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) forms they file.

our knowledge, based solely on a review of the copies of such reports furnished to us, during the twelve months ended December

31, 2019, each of our directors, officers and greater than ten percent stockholders complied with all Section 16(a) filing requirements

applicable to our directors, officers and greater than ten percent stockholders.

board of directors has established an audit committee, a nominating and corporate governance committee and a compensation committee,

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2020 and 2019.

Name and Principal

Other Compensation

Former President and

Executive Officer

Chief Financial Officer,

Secretary and Treasurer

Name and Principal Position

Marvin Slosman

President and Chief Executive Officer

265,004 (2)(5)

For awards of stock,

the aggregate grant date fair value is computed in accordance with FASB ASC Topic 718 For additional discussion of the grant

date fair value for Stock Awards, see Note 8 of the Financial Statements.

Barry’s

employment with the Company ceased as of December 31, 2019.

Barry served as our President and Chief Executive Officer.

Barry’s salary for 2019 includes (i)

$33,081 paid in lieu of accrued but unused vacation time through the calendar year 2018, which we agreed to pay in cash pursuant

to the A&R Employment Agreement, dated February 4, 2019 (See “—Agreements with Executive Officers—James

Barry, Ph.D.—

Employment Agreement in Effect Prior to Termination”), and (ii) $21,292 paid in lieu of accrued

but unused vacation time through the calendar year 2019 upon termination of Dr.

Barry’s employment.

Barry’s other compensation for 2019 consisted of severance payments and other benefits related to the separation agreement

of $541,629 (See “—Agreements with Executive Officers—James Barry, Ph.D.—

General Release and Severance

Agreement”) and benefits related to health insurance of $65,683.

Cash bonus awards

for the 2018 calendar year were approved by the compensation committee in January 2019.

Barry’s

other compensation for 2018 consisted of benefits related to health insurance.

Compensation amounts

received in non-U.S.

138,692 (3)(5)

Chief Financial Officer, Secretary and Treasurer

awards of stock, the aggregate grant date fair value is computed in accordance with FASB ASC Topic 718.

Fair value is based

on the Black-Scholes option pricing model using the fair value of the underlying shares at the measurement date.

April 21, 2020, Mr.

Slosman and Mr.

Shore each signed waivers in connection with the COVID-19 pandemic and certain cost-reduction

measures, whereby Mr.

Slosman’s monthly base salary was reduced from $33,333 to $16,666 and Mr.

Shore’s monthly

base salary was reduced from NIS 80,125 to NIS 40,063.

On June 10, 2020, following the closing of our underwritten public

offering in June 2020, each of Mr.

Slosman’s and Mr.

Shore’s monthly base salaries were reinstated to $33,333

and NIS 80,125, respectively, effective as of June 1, 2020.

bonus awards for the 2020 calendar year were approved by the compensation committee in January 2021.

Slosman’s other compensation for 2020 consisted of benefits related to health insurance.

amounts received in non-U.S.

currency have been converted into U.S.

dollars using the average exchange rate for the applicable period,

except for bonus amounts which have been converted into U.S.

dollars using 3.456 NIS per dollar which was the exchange rate

as of December 31, 2019.

dollars using the average exchange rate for the applicable

period, except for bonus amounts which have been converted into U.S.

dollars using 3.215 NIS per dollar which was the exchange

rate as of December 31, 2020.

The average exchange rate for the twelve month period ended December 31, 2020 and 2019 were

3.437 NIS per dollar and 3.564 NIS per dollar, respectively.

Cash bonus awards

for the 2019 calendar year were approved by the compensation committee in January 2020.

Shore’s

other compensation consisted solely of benefits in the twelve months ended December 31, 2019 and 2018.

In each of the periods

reported, Mr.

Shore’s benefits included our contributions to his severance, pension, vocational studies and disability

funds, an annual recreation payment, a company car or car allowance and cell phone, and a daily food allowance.

$30,000 was paid

on February 1, 2020, and the remaining $30,000 shall be paid on the first regularly scheduled payroll date following the date

on which we close a transaction with investors for at least $2 million.

Shore’s other compensation consisted solely of benefits in the twelve months ended December 31, 2020 and 2019.

of the periods reported, Mr.

Shore’s benefits included our contributions to his severance, pension, vocational studies

and disability funds, an annual recreation payment, a company car or car allowance and cell phone, and a daily food allowance.

shares of common stock issuable upon the exercise of Restricted Stock Units outside our 2013 Long-Term Incentive Plan.

with Executive Officers

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Shore’s base salary, including (i) 7.5% to the education fund and (ii) 15.83% to the manager’s insurance policy,

of which 8.33% will be allocated to severance pay, 5% to pension fund payments and 2.5% to disability pension payments.

termination of Mr.

of which 8.33% will be allocated to severance pay, 5.5% to pension fund payments and up to 2.5% to disability pension payments.

Upon the termination of Mr.

Shore’s employment for any reason other than for cause, Mr.

Shore will be entitled to receive the total

amount contributed to and accumulated in his manager insurance policy fund.

Agreement in Effect Prior to Termination

Barry’s employment ceased as of December 31, 2019.

On July 14, 2014, we entered into an employment agreement with James

Barry to serve as our executive vice president and chief operating officer, which was first amended on January 5, 2015, and further

amended on February 22, 2015, and March 28, 2016, and on June 6, 2016, our board of directors appointed Dr.

Barry as our president

and chief executive officer and further amended the employment agreement.

On September 5, 2017, we entered into the Fifth Amendment

Barry’s employment agreement (as amended by the Fifth Amendment, the “Prior Employment Agreement”), and

on February 4, 2019, we entered into an amended and restated employment agreement (the “A&R Employment Agreement”)

Barry, which amended, restated and superseded Dr.

Barry’s Prior Employment Agreement.

The A&R Employment Agreement

had an initial term that ends on December 31, 2020.

Effective December 31, 2019, The A&R Employment Agreement was terminated;

however, certain customary confidentiality, noncompete and nonsolicitation provisions will remain in full force and effect

the A&R Employment Agreement, Dr.

Barry was entitled to an annual base salary of $400,000, which could be reduced only as

part of an overall cost reduction program that affects all senior executives of the company and does not disproportionately affect

Barry, so long as such reductions do not reduce the base salary to less than 90% of the amount set forth above.

The base salary

was subject to an annual compensation review by our board of directors.

the Prior Employment Agreement, as amended, Dr.

Barry was entitled to an annual base salary of at least $365,000, which amount,

in the event of the closing of a transaction or series of related transactions with investors where we raise an aggregate of $7

million from such investors, would increase to $400,000.

Barry’s annual base salary was increased to $400,000, as the

March 2018 and the April 2018 offerings raised more than $7 million, effective as of April 1, 2018, payments beginning as of the

first November 2018 pay period.

Barry was also eligible to receive an annual bonus in the amount equal to 100% of his base salary upon the achievement of reasonable

target objectives and performance goals, to be determined by the Board in consultation with Dr.

addition, as provided by the A&R Employment Agreement, we agreed to pay for Dr.

Barry’s accrued but unused vacation

time through the calendar year 2018 on our next regular payroll date.

accordance with the A&R Employment Agreement, on February 4, 2019, we granted Dr.

Barry 40,000 shares of restricted stock,

made pursuant to a Restricted Stock Award Agreement.

The restricted stock was subject to a three-year vesting period subject to

Barry’s continued service us, with one-third (1/3rd) of such awards vesting on the first, second and third anniversary

of the grant date.

Additionally, upon achievement of certain criteria, Dr.

Barry was eligible to receive an equity bonus relating

to the number of shares of our common stock equal to 5% of our shares outstanding on the date of the grant (inclusive of, rather

than in addition to, the shares granted as part of the restricted stock grant made on February 4, 2019), subject to the board

of director’s approval, which would be comprised of as close as is practicable to 50% stock options and 50% shares of restricted

Barry was also eligible to receive additional stock-based compensation at the sole discretion of the Board.

during the term of the A&R Employment Agreement, Dr.

Barry’s employment were to be terminated upon his death or disability,

Barry for good reason, or by us without cause, Dr.

Barry would have been entitled to receive, in addition to other unpaid

amounts owed to him (e.g., for base salary and accrued vacation):

(i) the pro rata amount of any bonus for the fiscal year of

such termination (assuming full achievement of all applicable goals under the bonus plan) that he would have received had his

employment not been terminated;

(ii) a one-time lump sum severance payment equal to $850,000, provided that he executes a release

relating to employment matters and the circumstances surrounding his termination in favor of us, its subsidiaries and their officers,

directors and related parties and agents, in a form reasonably acceptable to us at the time of such termination;

(iii) vesting

of 100% of all unvested stock options, restricted stock shares, restricted stock units, stock appreciation rights or similar stock

based rights granted to Dr.

Barry, and lapse of any forfeiture included in such restricted or other stock grants;

(iv) an extension

of the term of any outstanding stock options or stock appreciation rights for two years from the date of termination;

fullest extent permitted by our then-current benefit plans, continuation of health, dental, vision and life insurance coverage

for up to 18 months unless Dr.

Barry secures coverage from a new employer;

and (vi) a cash payment of $25,000, which Dr.

may use for executive outplacement services or an education program.

The payment described in (ii) above would have been reduced

by any payments received by Dr.

Barry pursuant to any of our employee welfare benefit plans providing for payments in the event

of death or disability.

Barry had continued to be employed by us after the term of the Employment Agreement, unless otherwise

agreed by the parties in writing, and Dr.

Barry’s employment were to be terminated upon his death or disability, by Dr.

Barry for good reason, or by us without cause, Dr.

Barry would have been entitled to receive, in addition to other unpaid amounts

owed to him, the payments set forth in (i), (ii) and (iii) above.

If we had not extended the term of the A&R Employment Agreement

Barry’s employment were not extended beyond December 31, 2020, Dr.

Barry would have been entitled to the payments

and benefits set forth in (i)-(vi) above;

however, if we had offered to extend the A&R Employment Agreement beyond December

31, 2020 on terms no less favorable than the terms of the A&R Employment Agreement and Dr.

Barry did not agree to such extension,

the one-time lump sum severance payment set forth in (ii) above would have been in the amount of $600,000.

Barry had no specific right to terminate the A&R Employment Agreement or right to any severance payments or other benefits

solely because of a change in control.

However, if within 24 months following a change in control (the “Change in Control

Period”), (a) Dr.

Barry terminated his employment for good reason, or (b) we terminated his employment without cause, Dr.

Barry would have been entitled to the payments and benefits set forth in (i)-(vi) above.

Notwithstanding the foregoing, if we

terminated Dr.

Barry’s employment with us prior to the date on which a change in control occurs, and it were reasonably

demonstrated that Dr.

Barry’s (i) employment was terminated at the request of an unaffiliated third party who has taken

steps reasonably calculated to effect a change in control or (ii) termination of employment otherwise arose in connection with

or in anticipation of the change in control, then the “Change in Control Period”

would have meant the 24 month period

beginning on the date immediately prior to the date of Dr.

Barry’s termination of employment with the Company.

Release and Severance Agreement

December 9, 2019, we entered into a General Release and Severance Agreement, which was amended subsequently on December 31, 2019

(as amended, the “Separation Agreement”), with Dr.

Effective December 31, 2019 (the “Separation Date”),

Barry’s employment with us and any of our subsidiaries ceased, and Dr.

Barry resigned from all positions and offices.

Pursuant to the Separation Agreement, Dr.

Barry is entitled to receive a severance pay in an aggregate amount of $400,000, less

applicable taxes and other withholdings, payable as follows:

(a) $200,000 to be paid in equal installments in accordance with

our standard payroll practices during the period commencing on December 17, 2019, and ending on March 15, 2020, and (b) the remaining

$200,000 to be paid in equal installments in accordance with our standard payroll practices during the period commencing on July

1, 2020, or such earlier period for the purposes of Section 409A of the Internal Revenue Code (the “Payment Resumption Date”),

and ending on December 17, 2020;

provided, however, that if (1) a change in control occurs, (2) we raise at least $5 million of

gross proceeds in new capital investments on or after the Separation Date, or (3) any of the institution by or against the Company

of any insolvency, receivership or bankruptcy proceeding(s) or any other proceeding(s) for the settlement of our debts or the

assignment for the benefit of the our creditors or our dissolution or ceasing to do business, in any case, prior to the date that

the last payment has been made pursuant to this subsection (i), then any remaining amounts of severance to be paid to Dr.

on or before March 15, 2020 to be paid to him on our next regularly scheduled payroll date concurrent with or next following the

date on which the first event described in (1), (2) or (3) above occurs (the “Acceleration Date”) and, provided further,

that if the Acceleration Date occurs on or after March 16, 2020, but before the Payment Resumption Date, then any remaining amounts

to be paid to Dr.

Barry pursuant to this subsection shall be paid to him on our next regularly scheduled payroll date concurrent

with or next following the Payment Resumption Date.

Pursuant to the Separation Agreement, Dr.

Barry received an additional lump-sum

payment of $25,000 on the Company’s first regularly scheduled payroll date occurring in 2020, which amount is intended to

offset the costs of any executive outplacement services or similar educational programs which may be incurred by Dr.

or after the Separation Date, and was granted an equity award of 165,000 restricted stock units on December 16, 2019, subject

to the terms and conditions of the 2013 Long-Term Incentive Plan and its standard form of Restricted Stock Unit Award Agreement,

which was fully vested upon grant.

Barry is also entitled to receive an additional monthly stipend of $2,986, up to a maximum

of $53,748, payable as follows:

(x) $17,916 to be paid in three equal installments in January, February, and March of 2020, and

(y) an additional $2,986 will be paid in each month during the period commencing on the Payment Resumption Date and ending on

the eighteen month anniversary of the Separation Date.

to the Separation Agreement, Dr.

Barry agreed to a general release of claims in favor of the Company.

Shore will be entitled to receive

the total amount contributed to and accumulated in his manager insurance policy fund.

August 14, 2020, we entered into the fourth amendment to that certain Amended and Restated Employment Agreement dated as of May

5, 2014, as amended on January 5, 2015, July 25, 2016, and on March 25, 2019, in order to, among other things, (i) amend the term

Shore’s employment, so that the initial term of Mr.

Shore employment will end on July 31, 2022, which will automatically

be renewed for additional one-year periods on August 1, 2022 and on each August 1 thereafter;

(ii) increase Mr.

Shore’s

monthly base salary to NIS 86,000;

and (iii) amend certain terms related to termination of Mr.

Shore’s employment without

Cause (as defined therein)

of Control Agreements

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Market value of shares of stock that have not vested ($)

James Barry, Ph.D.(2)

These restricted

shares vest annually, with one-third vesting on each of February 4, 2020, February 4, 2021 and February 4, 2022.

Barry’s

employment with the Company ceased as of December 31, 2019.

Marvin Slosman (1)

1,175,287 (5)

Slosman was appointed as chief executive officer effective as of January 1, 2020

options vest annually, with one-third vesting on each of January 2, 2021, January 2, 2022 and January 2, 2023.

RSU’s vest annually, with one-third vesting on each of January 2, 2021, January 2, 2022 and January 2, 2023.

options vest annually, with one-third vesting on each of August 31, 2021, August 31, 2022 and August 31, 2023.

RSU’s vest annually, with one-third vesting on each of August 31, 2021, August 31, 2022 and August 31, 2023.

restricted shares vest annually, with one-half vesting on each of February 4, 2021 and February 4, 2022.

Restricted Stock vest annually, with one-third vesting on each of August 31, 2021, August 31, 2022 and August 31, 2023.

Exercises and Stock Vested

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to a total of 678,395 shares of common stock

of December 31, 2019, we had 443,450 shares of common stock available for future issuance under our 2013 Long-Term Incentive Plan.

August 31, 2020, our stockholders approved the sixth amendment to the InspireMD, Inc.

2013 Long-Term Incentive Plan to increase

the total number of shares of common stock issuable under the InspireMD, Inc.

2013 Long-Term Incentive Plan by 6,500,000 shares

to a total of 7,178,395 shares of common stock.

of December 31, 2020, we had 2,306,956 shares of common stock available for future issuance under our 2013 Long-Term Incentive

of March 8, 2021, we had 2,234,642 shares of common stock available for future issuance under our 2013 Long-Term Incentive Plan.

following table shows information concerning our directors, other than James Barry, Ph.D., who resigned from the Board, effective

December 31, 2019, during the twelve months ended December 31, 2019.

following table shows information concerning our directors during the twelve months ended December 31, 2020.

or Paid in Cash

Michael Berman

1 unchanged sentence

Thomas Kester

Gary Roubin, M.D.

the 2020 calendar year, our board approved the following compensation for our independent directors:

6 unchanged sentences

annual committee membership compensation of $4,000 for members of the audit committee and the compensation committee and $2,000

for members of the nominating and corporate governance committee and the research and development committee.

for members of the nominating and corporate governance committee and the research and development committee for members of the

nominating and corporate governance committee and the research and development committee.

Notwithstanding the foregoing, effective

April 1, 2020, the Board approved a 50% decrease in the annual cash compensation for non-employee directors from an aggregate

amount of $154,000 to $77,000, and on July 1, 2020, the Board reinstated the original annual cash compensation for non-employee

Directors’

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following table sets forth information with respect to the beneficial ownership of our common stock as of March 8, 2021 by:

each person known by us to beneficially own

more than 5.0% of our common stock;

each of our directors;

each of the named executive officers;

all of our directors and executive officers

person known by us to beneficially own more than 5.0% of our common stock;

of our directors;

of the named executive officers;

of our directors and executive officers as a group.

percentages of common stock beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission

governing the determination of beneficial ownership of securities.

Under the rules of the Securities and Exchange Commission,

a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power

to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the

disposition of the security.

(the “SEC”) governing the determination of beneficial ownership of securities.

Under the rules of the SEC, a person

is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or

to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition

of the security.

as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment

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Name of Beneficial Owner

Number of Shares Beneficially

Percentage Beneficially

Armistice Capital, LLC

9,677,415 (2)

FiveT Capital AG

7,258,050 (3)

Officers and Directors

Marvin Slosman

1,499,251 (5)

Michael Berman

1 unchanged sentence

Thomas Kester

James Barry, Ph.D.

Gary Roubin, M.D.

1,046,291 (10)

All directors and executive officers as a group (7 persons)

Represents ownership of less

than one percent.

Shares of common stock beneficially owned and

the respective percentages of beneficial ownership of common stock assumes the exercise of all options, warrants and other

securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable

within 60 days of March 9, 2020.

Shares issuable pursuant to the exercise of stock options and warrants exercisable within

60 days are deemed outstanding and held by the holder of such options or warrants for computing the percentage of outstanding

common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding

common stock beneficially owned by any other person.

Includes (i) options to purchase 21 shares of

common stock that are currently exercisable or exercisable within 60 days of March 9, 2020, (ii) warrants to purchase 93 shares

of common stock that are currently exercisable or exercisable within 60 days of March 9, 2020, (iii) 2,688 shares of common

stock and (iv) includes 478,500 shares of common stock issuable upon conversion of Series B Preferred Stock that are currently

convertible within 60 days of March 9, 2020.

Does not include 76,638 shares of common stock issuable upon conversion of Series

B Preferred Stock, which shares were excluded because the certificate of designation for the Series B Preferred Stock contain

provisions that block conversion if such conversion will result in the holder having beneficial ownership of more than 9.99%

of our common stock.

Consists of (i) 2,021 shares of common stock,

(ii) options to purchase 11 shares of common stock that are currently exercisable or exercisable within 60 days of March 9,

2020, (iii) 3,994 shares of restricted stock granted under the Israeli Appendix of the InspireMD, Inc.

2013 Long-Term Incentive

Plan and (iv) 11,595 shares of restricted stock granted to employees under the Israeli Appendix of the InspireMD, Inc.

ownership of less than one percent.

of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise

of all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently

exercisable or exercisable within 60 days of March 8, 2021.

Shares issuable pursuant to the exercise of stock options and

warrants exercisable within 60 days are deemed outstanding and held by the holder of such options or warrants for computing

the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing

the percentage of outstanding common stock beneficially owned by any other person.

of (i) 6,451,610 shares of common stock purchased in connection with the February 2021 Offering, and (ii) warrants to purchase

3,225,805 shares of common stock, at an exercise price of $0.682 per share, purchased in the February 2021 Offering.

not aware whether this stockholder has sold any of the foregoing securities it purchased in the February 2021

of (i) 4,838,700 shares of common stock purchased in the February 2021 Offering, and (ii) warrants to purchase 2,419,350 shares

of common stock, at an exercise price of $0.682 per share, purchased in the February 2021 Offering.

We are not aware whether

this stockholder has sold any of the foregoing securities it purchased in the February 2021 Offering.

of (i) 95,870 shares of common stock, (ii) 60,794 Restricted Stock Units granted outside the plan that are currently exercisable

or exercisable within 60 days of March 8, 2021, (iii) options to purchase 20,264 shares of common stock that are currently

exercisable or exercisable within 60 days of March 8, 2021, and (iv) 75,710 warrants to purchase shares of common stock that

are currently exercisable.

of (i) 4,021 shares of common stock, (ii) options to purchase 11 shares of common stock that are currently exercisable or

exercisable within 60 days of March 8, 2021, (iii) 680,828 shares of restricted stock granted under the Israeli Appendix of

the InspireMD, Inc.

2013 Long-Term Incentive Plan and (iv) 814,391 shares of restricted stock granted to employees under the

Israeli Appendix of the InspireMD, Inc.

2013 Long-Term Incentive Plan held in trust, and with respect to which Mr.

Shore was granted a proxy with the right to vote such

shares at his discretion.

Consists of (i) 2 shares of common stock, (ii)

options to purchase 14 shares of common stock that are currently exercisable or exercisable within 60 days of March 9, 2020.

Excludes 2,600 shares of restricted stock granted under the Israeli Appendix of InspireMD, Inc.

2013 Long-Term Incentive Plan

held in trust, with respect to which the trustee has a proxy with the right to vote such shares at his discretion.

Consists of (i) 2 shares of common stock, (ii)

2,600 shares of restricted stock granted under the InspireMD, Inc.

2013 Long-Term Incentive Plan, (iii) options to purchase

14 shares of common stock that are currently exercisable or exercisable within 60 days of March 9, 2020, and (iv) warrants

to purchase 1 shares of common stock that are currently exercisable or exercisable within 60 days of March 9, 2020.

Paul Stuka is the principal and managing member

of Osiris Investment Partners, L.P., and, as such, has beneficial ownership of (A) (i) 255 shares of common stock, (ii) warrants

to purchase 8 shares of common stock that are currently exercisable or exercisable within 60 days of March 9, 2020 in addition

to (B) personally holding (i) options to purchase 15 shares of common stock that are currently exercisable or exercisable

within 60 days of March 9, 2020, (ii) 3,900 shares of restricted stock granted under the InspireMD, Inc.

2013 Long-Term Incentive

Plan, (iii) warrants to purchase 7 shares of common stock that are currently exercisable or exercisable within 60 days of

March 9, 2020, and (iv) 501 shares of common stock.

Consists of 2,600 shares of restricted stock

granted under the InspireMD, Inc.

2013 Long-Term Incentive Plan, and (ii) options to purchase 8 shares of common stock that

are currently exercisable or exercisable within 60 days of March 9, 2020.

Slosman was appointed as chief executive

officer effective as of January 1, 2020.

In connection with his appointment, Mr.

Slosman was granted certain restricted stock

units and stock options, which have not vested.

Barry’s employment with the Company

ceased as of December 31, 2019.

granted a proxy with the right to vote such shares at his discretion.

of (i) 80,642 shares of common stock, (ii) 40,320 warrants to purchase shares of common stock that are currently exercisable,

and (iii) options to purchase 14 shares of common stock that are currently exercisable or exercisable within 60 days of March

Excludes 160,633 shares of common stock and restricted stock granted under the Israeli Appendix of InspireMD, Inc.

2013 Long-Term Incentive Plan held in trust, with respect to which the trustee has a proxy with the right to vote such shares

at his discretion.

of (i) 1,736 shares of common stock, (ii) 158,899 shares of restricted stock granted under the InspireMD, Inc.

2013 Long-Term

Incentive Plan, (iii) options to purchase 14 shares of common stock that are currently exercisable or exercisable within 60

days of March 8, 2021, and (iv) one warrant to purchase a share of common stock that is currently exercisable or exercisable

within 60 days of March 8, 2021.

Stuka is the principal and managing member of Osiris Investment Partners, L.P., and, as such, has beneficial ownership of

(A) (i) 264 shares of common stock, (ii) warrants to purchase 6 shares of common stock that are currently exercisable or exercisable

within 60 days of March 8, 2021 in addition to (B) personally holding (i) options to purchase 15 shares of common stock that

are currently exercisable or exercisable within 60 days of March 8, 2021, (ii) 240,250 shares of restricted stock granted

under the InspireMD, Inc.

2013 Long-Term Incentive Plan, (iii) warrants to purchase 7 shares of common stock that are currently

exercisable or exercisable within 60 days of March 8, 2021, and (iv) 3,092 shares of common stock.

of (i) 172,694 shares of common stock, (ii) 158,899 shares of restricted stock granted under the InspireMD, Inc.

2013 Long-Term

Incentive Plan, (iii) 60,480 warrants to purchase shares of common stock that are currently exercisable and (iv) options to

purchase 8 shares of common stock that are currently exercisable or exercisable within 60 days of March 8, 2021.

of (i) 464,153 shares of common stock, (ii) 238,950 shares of restricted stock granted under the InspireMD, Inc.

2013 Long-Term

Incentive Plan, and (iii) 343,188 warrants to purchase shares of common stock that are currently exercisable.

Compensation Plan Information

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Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Comprised of awards

made to individuals outside the InspireMD, Inc.

2011 UMBRELLA Option Plan and 2013 Long Term Incentive Plan, as described

Equity compensation

plans approved by

security holders

Equity compensation

plans not approved

by security holders

of awards made to individuals outside the InspireMD, Inc.

2011 UMBRELLA Option Plan and 2013 Long Term Incentive Plan, as

described below:

issued to former director:

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of the grant date, pursuant to the nonqualified stock option agreement, as amended on June 2, 2017.

January, 2020, we issued to Mr.

Marvin Slosman, our Chief Executive Officer, President and Director, 182,381 shares of restricted

stock and 60,794 shares of common stock, as inducement awards outside the Company’s 2013 Long-Term Incentive Plan.

October 6, 2020, we issued to Mr.

Patrick Jamnik, our Vice President of Business Development and Strategic Initiatives, options

to purchase 54,307 shares of our common stock, as inducement awards outside the Company’s 2013 Long-Term Incentive Plan.

November 3, 2020, we issued to Mr.

Andrea Tommasoli, our Senior Vice President of Global Sales and Marketing, options to purchase

90,511 shares of our common stock, as inducement awards outside the Company’s 2013 Long-Term Incentive Plan.]

Certain Relationships and Related Transactions, and Director Independence.

December 1, 2017, as part of a planned recapitalization, we sold 750 shares of Series D Preferred Stock to the Series D Investor,

Sabby Healthcare Master Fund, Ltd., who was then a beneficial owner of more than 5% of our common stock in a private placement

pursuant to a securities purchase agreement (the “Series D Purchase Agreement”), dated November 28, 2017, for aggregate

gross proceeds of $750,000.

The stated value of each share of Series D Preferred Stock was $1,000, and the Series D Preferred

Stock was initially convertible, at the option of the holder, into shares of our common stock (subject to the beneficial ownership

limitation set forth in the certificate of designation for the Series D Preferred Stock (“Series D Certificate of Designation”)),

at a conversion price of $350.00 per share, subject to adjustment as provided in the Series D Certificate of Designation.

to the Series D Purchase Agreement and the Series D Certificate of Designation, the purchasers of Series D Preferred Stock had

the option, subject to certain limitations, to exchange their Series D Preferred Stock into the securities issued in a subsequent

offering (the “Series D Exchange Right”) or into the securities we sell in an offering of our common stock or common

stock equivalents for gross proceeds of at least $8 million (a “Qualified Offering”) upon consummation of a Qualified

Offering on a $1.00 per stated value for $1.00 new subscription amount basis.

In addition, in accordance with the Series D Purchase

Agreement, the certificate of designation for the Series B Preferred Stock was amended to provide that each share of outstanding

Series B Preferred Stock would be automatically exchanged into the securities we sell in a Qualified Offering on a $1.00 per stated

value for $1.00 new subscription amount basis.

As a result of the issuance and sale of the Series D Preferred Stock, the conversion

price of our outstanding shares of Series B Preferred Stock was reduced to $350.00 pursuant to the anti-dilution adjustment provisions

of the Series B Preferred Stock.

There was no change to the conversion price of our outstanding Series C Preferred Stock as a

result of an amendment made to the terms of the Series C Preferred Stock exempting the issuance of the Series D Preferred Stock

from the anti-dilution adjustment provisions of the Series C Preferred Stock.

The conversion price for each of our Series B Preferred

Stock, our Series C Preferred Stock and our Series D Preferred was subsequently reduced to $150.00 per share in connection with

the underwritten public offering that closed on March 1, 2018, to $87.50 per share in connection with the underwritten public

offering that closed on April 2, 2018, to $15.00 per share in connection with the underwritten public offering that closed on

July 3, 2018, to $5.00 per share in connection with the underwritten public offering that closed on April 8, 2019, then to $1.80

per share in connection with the underwritten public offering that closed on September 24, 2019, as described below.

February 21, 2018, the Series D Purchase Agreement was amended to require us (i) to use 15% of the proceeds from any subsequent

offering of our securities that is not a Qualified Offering to redeem the outstanding shares of the Series C Preferred Stock held

by the Series D Investor at a per share purchase price equal to the stated value of the Series C Preferred Stock, and (ii) upon

closing of any subsequent offering that is a Qualified Offering, to exchange all remaining outstanding shares of Series C Preferred

Stock held by the Series D Investor for any securities issued in such Qualified Offering on a $1.00 per stated value for $1.00

new subscription amount basis (subject to the beneficial ownership limitation set forth in the certificate of designation for

the Series C Preferred Stock).

In the event that we fail, or are unable, to issue securities issued in the Qualified Offering

to the Series D Investor in exchange for such investor’s remaining Series C Preferred Stock due to limitations mandated

by the NYSE American, the SEC, or for any other reason, we were required to offer to purchase from such investor those shares

of Series C Preferred Stock not exchanged for the securities sold in the Qualified Offering at a per share purchase price equal

to the stated value of Series C Preferred Stock.

February 26, 2018, we and the Series D Investor entered into a waiver agreement which provided that (i) the Series D Exchange

Right would not be applicable to an offering of up to $7,000,000 which occurred no later than March 9, 2018, (ii) we shall reduce

the conversion price of the Series D Preferred Stock to the public offering price of our common stock in such offering, (iii)

instead of using 15% of the proceeds from such offering to redeem shares of Series C Preferred Stock held by the Series D Investor,

we shall use 15% of the proceeds from such offering to redeem a portion of the outstanding shares of Series D Preferred Stock

held by the Series D Investor at a per share purchase price equal to the stated value of the Series D Preferred Stock, and (iv)

we shall file a registration statement with the SEC under the Securities Act of 1933, as amended, in order to register the resale

of the shares of common stock issuable upon the conversion of the Series D Preferred Stock as soon as practicable following the

closing of such offering, but in no event later than seven days following such closing and to cause such registration statement

to become effective as soon as practical after its filing.

March 1, 2018, we closed an underwritten public offering of 20,000 shares of our common stock at a price to the public of $150.00

per share, thus triggering the rights under the above described February 26, 2018 agreement.

Upon closing of the offering, we

used $450,000 of the proceeds from the offering to redeem 450 shares of Series D Preferred Stock from the Series D Investor.

a result of such offering, the conversion price for each of our Series B Preferred Stock, our Series C Preferred Stock and our

Series D Preferred Stock was reduced to $150.00 per share.

March 28, 2018, we and the Series D Investor entered into the second waiver agreement which provided that (i) the Series D Exchange

Right would not be applicable to a subsequent financing consisting solely of shares of common stock, which shall be publicly registered

on Form S-3 for gross proceeds to us of up to $5,000,000, to be consummated by not later than April 3, 2018 (the “Planned

April 2018 Offering”), (ii) our obligation to use 15% of the proceeds from any subsequent offering of our securities that

is not a Qualified Offering to redeem the outstanding shares of the Series C Preferred Stock held by the Series D Investor would

not be applicable to the Planned April 2018 Offering, (iii) we shall reduce the conversion price of the Series D Preferred Stock

to the public offering price of our common stock sold in the Planned April 2018 Offering, and (iv) we shall use $300,000 of the

proceeds from the Planned April 2018 Offering to redeem outstanding shares of Series C Preferred Stock held by the Series D Investor

at a per share purchase price equal to the stated value of the Series C Preferred Stock.

April 2, 2018, we closed an underwritten public offering of 57,143 shares of our common stock at a price to the public of $87.50

per share, thus triggering the rights under the above described March 28, 2018 second waiver agreement.

Upon closing of the offering,

we used $300,000 of the proceeds from the offering to redeem 46,875 shares of our Series C Preferred Stock held by the Series

As a result of such offering, the conversion price for each of our Series B Preferred Stock, our Series C Preferred

Stock and our Series D Preferred Stock was reduced to $87.50 per share.

June 28, 2018, we and the Series D Investor entered into a letter agreement (the “Letter Agreement”) which further

amended the Series D Purchase Agreement to provide that, notwithstanding anything to the contrary in the prior agreements, in

the event we consummate a Qualified Offering in which the Series D Investor and its affiliates invest at least $3 million, (i)

instead of an automatic exchange of all outstanding shares of Series C Preferred Stock held by the Series D Investor into securities

issued in a Qualified Offering on a $1.00 per stated value for $1.00 new subscription amount basis, all outstanding shares of

Series C Preferred Stock held by the Series D Investor will be redeemed at a per share purchase price equal to the stated value

of the Series C Preferred Stock, and (ii) all outstanding shares of Series D Preferred Stock will be redeemed at a per share purchase

price equal to the stated value of the Series D Preferred Stock.

to the Letter Agreement, on July 3, 2018, upon closing of the July 2018 public offering, we used $2,264,269 of the et proceeds

of the July 2018 public offering to redeem 306,917 shares of Series C Preferred Stock and 300 shares of Series D Preferred Stock

held by the Series D Investor.

accordance with our audit committee charter, the audit committee is required to approve all related party transactions.

the audit committee will review any proposed transaction that has been identified as a related party transaction under Item 404

of Regulation S-K, which means a transaction, arrangement or relationship in which we and any related party are participants in

which the amount involved exceeds $120,000.

A related party includes (i) a director, director nominee or executive officer of

us, (ii) a security holder known to be an owner of more than 5% of our voting securities, (iii) an immediate family member of

the foregoing or (iv) a corporation or other entity in which any of the foregoing persons is an executive, principal or similar

control person or in which such person has a 5% or greater beneficial ownership interest.

of Regulation S-K.

A related party includes (i) a director, director nominee or executive officer of us, (ii) a security holder

known to be an owner of more than 5% of our voting securities, (iii) an immediate family member of the foregoing or (iv) a corporation

or other entity in which any of the foregoing persons is an executive, principal or similar control person or in which such person

has a 5% or greater beneficial ownership interest.

were no related party transactions that are required to be disclosed pursuant to Regulation S-K promulgated under the Securities

Act of 1933, as amended.

board of directors has determined that Dr.

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billed us audit-related fees in the aggregate amount of $53,900 and $60,000 for the year ended December 31, 2020 and 2019, respectively.

The fees for the year ended December 31, 2019 mostly related to our prospectus supplements filed with the Securities and Exchange

The fees for the year ended December 31, 2020 mostly related to registration statement on Form S-1 filed with the SEC in June

2020 and to our prospectus supplements filed with the Securities and Exchange Commission in July 2020.

fees for the year ended December 31, 2019 mostly related to our prospectus supplements filed with the Securities and Exchange

Commission in April 2019 and to our registration statement on Form S-1 filed with the Securities and Exchange Commission in August

and September of 2019.

fees for the year ended December 31, 2018 mostly related to our prospectus supplements and registration statements filed with

the Securities and Exchange Commission on March, April and July of 2018.

billed us tax fees in the aggregate amount of $39,209 and $38,675 for the year ended December 31, 2020 and 2019, respectively.

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Form 10-K Summary

to Exhibits [Subject to additional analysis/review]

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2015)

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Form of Series B Warrant Agent Agreement and Form of Series B Warrant (incorporated by reference to Exhibit 4.3 to Amendment No.3 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 6, 2017)

Description of Securities

Description of Securities (incorporated by reference to Exhibit 4.4 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2020)

Amended and Restated 2011 Umbrella Option Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on November 4, 2011)

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2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 29, 2016)

Director Offer Letter, between InspireMD, Inc.

Offer Letter, between InspireMD, Inc.

and Thomas J.

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First Amendment to Employment Agreement, dated December 31, 2019, by and between the Company and Marvin Slosman (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on January 6, 2020).

Nonqualified Stock Option Agreement, by and between the Company and Marvin Slosman

Restricted Stock Unit Award agreement, by and between the Company and Marvin Slosman

Nonqualified Stock Option Agreement, by and between the Company and Marvin Slosman (incorporated by reference to Exhibit 10.60 to the Annual Report on Form 10-K filed on March 10, 2020)

Restricted Stock Unit Award agreement, by and between the Company and Marvin Slosman (incorporated by reference to Exhibit 10.61 to the Annual Report on Form 10-K filed on March 10, 2020)

Form of Series F Warrant (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-1, Amendment No.

1, filed with the SEC on June 1, 2020 (File No.

333-238247)).

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-1, Amendment No.

1, filed with the SEC on June 1, 2020 (File No.

Form of Underwriter Warrant (incorporated by reference to Exhibit 1.1 to the Company’s Registration Statement on Form S-1, Amendment No.

1, filed with the SEC on June 1, 2020 (File No.

Sales Agreement, dated July 28, 2020 (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2020)

Form of Series G Warrant (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-1, Amendment No.

1, filed with the SEC on February 3, 2021 (File No.

Form of Underwriter Warrant (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-1, Amendment No.

1, filed with the SEC on February 3, 2021 (File No.

List of Subsidiaries (incorporated by reference to Exhibit 21.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on April 6, 2011)

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The following materials from the Company’s

Annual Report on Form 10-K for the twelve months ended December 31, 2019, formatted in XBRL (eXtensible Business Reporting

Language), (i) Consolidated Balance Sheets, (ii)Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive

Income, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statement of Stockholders’

Equity (Capital Deficiency)

and (vi) Notes to Consolidated Financial Statements

following materials from the Company’s Annual Report on Form 10-K for the twelve months ended December 31, 2019, formatted

in XBRL (eXtensible Business Reporting Language), (i) Consolidated Balance Sheets, (ii)Consolidated Statements of Income,

(iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statement

of Stockholders’

Equity (Capital Deficiency) and (vi) Notes to Consolidated Financial Statements

Filed herewith.

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to be signed on its behalf by the undersigned, thereunto duly authorized.

INSPIREMD, INC.

March 8, 2021

Marvin Slosman

President and Chief Executive Officer

and Chief Executive Officer

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

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Marvin Slosman

President, Chief Executive Officer and Director

March 9, 2020

Marvin Slosman

(principal executive officer)

Chief Executive Officer and Director

executive officer)

Financial Officer, Chief Administrative Officer,

Secretary and Treasurer

March 9, 2020

(principal financial and accounting officer)

Chairman of the Board of Directors

March 9, 2020

Michael Berman

March 9, 2020

financial and accounting officer)

of the Board of Directors

Michael Berman

March 9, 2020

Campbell Rogers, M.D.

March 9, 2020

Campbell Rogers, M.D.

FINANCIAL STATEMENTS

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and its subsidiaries (the “Company”) as

of December 31, 2019 and 2018, and the related consolidated statements of operations, changes in equity and cash flows for each

of the two years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for

each of the two years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the

United States of America.

Doubt About the Company’s Ability to Continue as a Going Concern

accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.

in Note 1b to the consolidated financial statements, the Company has suffered recurring losses from operations and cash outflows

from operating activities that raise substantial doubt about its ability to continue as a going concern.

Management’s plans

in regard to these matters are also described in Note 1b.

The consolidated financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

of December 31, 2020 and 2019, and the related consolidated statements of operations, changes in equity and cash flows for the

years then ended , including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the

Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in conformity

with accounting principles generally accepted in the United States of America.

in Accounting Principle

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We believe that our audits provide a reasonable basis for our opinion.

/s/ Kesselman

Public Accountants (lsr.)

member of PricewaterhouseCoopers LLP

Audit Matters

audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated

or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the

consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

We determined

there are no critical audit matters.

Kesselman&Kesselman

Public Accountants (Isr.)

member of PricewaterhouseCoopers International Limited

have served as the Company’s auditor since 2010.

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Prepaid expenses

Receivable for sale of Shares

TOTAL CURRENT ASSETS

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Accounts payable and accruals:

Contract liability

TOTAL CURRENT LIABILITIES

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Year Ended December 31,

REVENUES (2020 - net of settlement payment of $580, see note 6)

COST OF REVENUES

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LOSS FROM OPERATIONS

FINANCIAL EXPENSES, net:

Interest expenses

Other financial expenses (income)

Total financial expenses (income)

FINANCIAL EXPENSES

LOSS BEFORE TAX EXPENSES

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dollars in thousands, except share data)

Series B Convertible Preferred Stock

Series C Convertible Preferred Stock

Series D Preferred Stock

Preferred Stock

Additional paid-in

BALANCE AT JANUARY 1, 2018

BALANCE as of December 31, 2018

Issuance of common shares, warrants, pre-funded warrants and exercise of pre-funded warrants, net of $1,177 issuance costs

Redemption of Series D Preferred Stock

Conversion of Series B Convertible Preferred Stock to common shares

Classification of Series C Convertible Preferred Stock

Conversion of Series C Convertible Preferred Stock to common shares

Exercise of Unit Purchase Option

Accretion of redeemable preferred shares

Share-based compensation related to restricted stock and stock options award, net of forfeitures of 6 shares

BALANCE AT December 31, 2018

Represents an amount less than $1 thousand

accompanying notes are an integral part of the consolidated financial statements.

Share-based compensation related to restricted stock , restricted stock units and stock options award, net of forfeitures of 838 shares

BALANCE as of December 31, 2019

Represents an amount less than $1

STATEMENTS OF CHANGES IN EQUITY

dollars in thousands, except share data)

AT December 31, 2018

of common shares, warrants, pre-funded warrants and exercise of pre-funded warrants, net of $1,177 issuance costs

of Series C Convertible Preferred Stock to common shares

compensation related to restricted stock , restricted stock units and stock options award, net of forfeitures of 838 shares

AT December 31, 2019

Preferred Stock

Additional paid-in

BALANCE as of December 31, 2019

Exercise of pre-funded warrants

Settlement of restricted stock units in shares of common stock

Issuance of common shares, including at the market offering net of $1,110 issuance costs

Exercise of Warrants F

Exercise of Unit Purchase Option

Conversion of Series C Convertible Preferred Stock to common shares

Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 55,755 shares

BALANCE as of December 31, 2020

Represents an amount less than $1

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Depreciation and amortization

Loss from sale of property, plant and equipment

Change in liability for employees rights upon retirement

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Share-based compensation expenses

Loss (gains) on amounts funded in respect of employee rights upon retirement, net

Gains on amounts funded in respect of employee rights upon retirement, net

Changes in operating asset and liability items:

Increase in prepaid expenses

Increase in trade receivables

Decrease (increase) in trade receivables

Decrease (increase) in other receivables

Increase in inventory

(Decrease) increase in trade payables

(Decrease) increase in other payables and contract liability

Decrease in trade payables

Increase in other payables

Net cash used in operating activities

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Purchase of property, plant and equipment

Amounts funded (withdrawn) in respect of employee rights upon retirement, net

Proceeds from sale of property, plant and equipment

Amounts withdrawn in respect of employee rights upon retirement, net

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of shares and warrants and exercise of Pre-Funded Warrants and unit purchase option, net of $1,177 and $2,206 issuance costs, respectively

Redemption of series C and D preferred stock

Proceeds from issuance of shares and warrants and exercise of Pre-Funded

Warrants and unit purchase option, net of $1,110 and $1,177 issuance costs, respectively

Net cash provided by financing activities

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BALANCE OF CASH AND CASH EQUIVALENTS AT END OF YEAR

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Interest paid

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:

Classification of Redemption Obligation of Preferred Shares to Mezzanine and Embedded Derivative, see Note 8a

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:

Acquisition of right-of-use assets by means of lease liabilities

Receivable for Shares

accompanying notes are an integral part of the consolidated financial statements.

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Company markets its products through distributors in international markets, mainly in Europe.

Company has an accumulated deficit as of December 31, 2019, as well as a history of net losses and negative operating cash

flows in recent years.

The Company expects to continue incurring losses and negative cash flows from operations until its

products (primarily CGuard™

of the date of issuance of the consolidated financial statements, the Company has the ability to fund its planned operations

for at least the next 12 months.

However, the Company expects to continue incurring losses and negative cash flows from operations

until its products (primarily CGuard™

EPS) reach commercial profitability.

As a result of these expected losses and negative cash

flows from operations, along with the Company’s current cash position, the Company has sufficient resources to fund

operations until the end of May 2020.

Therefore, there is substantial doubt about the Company’s ability to continue

as a going concern.

These financial statements have been prepared assuming that the Company will continue as a going concern

and do not include any adjustments that might result from the outcome of this uncertainty.

Management’s

plans include the continued commercialization of the Company’s products and raising capital through the sale of additional

equity securities, debt or capital inflows from strategic partnerships.

There are no assurances however, that the Company

will be successful in obtaining the level of financing needed for its operations.

If the Company is unsuccessful in commercializing

its products and raising capital, it may need to reduce activities, curtail or cease operations.

Therefore, in order to fund the Company’s

operations until such time that the Company can generate substantial revenues, the Company may need to raise additional funds.

the year ended December 31, 2020, in an effort to contain and mitigate the spread of

COVID-19, many countries have imposed unprecedented restrictions on travel, quarantines

and other public health safety measures.

As of the beginning of the second quarter of

2020, we began to experience a significant COVID-19 related impact on our financial condition

and results of operations, which we primarily attribute to the postponement of CGuard

EPS procedures (non-emergency procedures), as hospitals shifted resources to patients

affected by COVID-19.

To the best of our knowledge, most European countries in which

we operate are reinstating elective procedures, but we do not know when the hospitals

will resume to normal pre-pandemic levels with such procedures in light of recent increases

in COVID-19 cases in the territories we sell into.

We anticipate that the continuation

of the pandemic and related restrictions and safety measures would likely result in a

continued fluctuations in sales of our products for the upcoming periods.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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GAAP requires management to make estimates using assumptions that

affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of

the financial statements and the reported amounts of sales and expenses during the reporting periods.

Actual results could

differ from those estimates.

affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial

statements and the reported amounts of sales and expenses during the reporting periods.

Actual results could differ from those

applicable to these consolidated financial statements, the most significant estimates and assumptions relate to inventory

valuations, classification and fair value of financial instruments, assessing the likelihood of exercise of options to extend

the lease term and legal contingencies.

valuations, assessing the likelihood of exercise of options to extend the lease term and legal contingencies.

currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is

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rates at transaction dates are used.

Depreciation and changes in inventories and other changes deriving from non-monetary items are based on historical exchange rates.

Depreciation and changes in inventories and other changes deriving from non-monetary

items are based on historical exchange rates.

of consolidation

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reasonably believes will be collected, which is netted against “Accounts receivable - Trade”.

are stated at the lower of cost (cost is determined on a “first-in, first-out”

Inventories are stated at the lower of cost (cost is determined on a “first-in, first-out”

basis) or net realizable value.

The Company’s inventories generally have a limited shelf life and are subject to impairment as they approach their expiration

The Company regularly evaluates the carrying value of its inventory and when, based on such evaluation, factors indicate

that impairment has occurred, the Company impairs the inventories’

The Company’s inventories generally have a limited shelf life and are subject to impairment as they approach their expiration dates.

The Company regularly evaluates the carrying value of its inventory and when, based on such evaluation, factors indicate that impairment has occurred, the Company impairs the inventories’

carrying value.

The fair value of the Company’s financial instruments

approximates their carrying values.”

February 2016, the FASB established ASC Topic 842, Leases (Topic 842), by issuing ASU No.

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the remaining lease payments under current leasing standards for existing operating leases.

The Company also recognized corresponding

ROU assets of approximately $1.2 million.

Lease terms may include options to extend or terminate the lease when the Company

is reasonably certain that the option will be exercised.

Lease expense is recognized on a straight-line basis over the lease

Our leases may include variable payments based on measures that include changes in price index which are expensed as

incurred and presented as operating expense on the condensed consolidated statements of operations in the same line item as

expense arising from fixed lease payments.

The Company also recognized

corresponding ROU assets of approximately $1.2 million.

Lease terms may include options to extend or terminate the lease when

the Company is reasonably certain that the extension option will be exercised or termination option will not be exercised.

For Operating Lease expense is recognized on a straight-line basis over the lease term.

Our leases may include variable

payments based on measures that include changes in price index which are expensed as incurred and presented as

operating expense on the condensed consolidated statements of operations in the same line item as expense arising from fixed

lease payments.

new standard also provides practical expedients for an entity’s ongoing accounting.

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2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Revenue recognition

contract with a customer exists only when:

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from sales of goods, including sales to distributors, is recognized when the customer obtains control of the product, once

the Company has a present right to payment and legal title, and risk and rewards of ownership are obtained by the customer.

the Company has a present right to payment and the customer has legal title, and risk and rewards of ownership are

obtained by the customer.

This occurs when products are shipped.

52 unchanged sentences

and diluted net loss per share is computed by dividing the net loss for the period attributable

to common stock (after adding the extinguishment and accretion of Series D and Series

C Convertible Preferred shares in 2018) by the weighted average number of shares of common

stock outstanding during the period, including 151,884 and 21,632 weighted average shares

of common stock issuable to holders of Series B Convertible Preferred Stock (since they

are convertible based on passage of time) and 72,493 and 15,885 weighted average shares

of common stock issuable to holders of unexercised Pre-Funded Warrants for the years

ended December 31, 2019 and 2018, respectively.

calculation of diluted net loss per share excludes potential share issuances of common stock upon the exercise of share

options, warrants, restricted stocks, restricted stock units, preferred stock and placement agent unit as their effect

is anti-dilutive.

to common stock by the weighted average number of shares of common stock outstanding

during the period, including 922,720 and 151,884 weighted average shares of common stock

issuable to holders of Series B Convertible Preferred Stock for the years

ended December 31, 2020 and 2019, respectively, (since they are convertible based on

passage of time) and 72,493 weighted average shares of common stock issuable to holders

of unexercised Pre-Funded Warrants for the year ended December 31, 2019.

total number of shares of common stock related to outstanding options, warrants, restricted stock, restricted stock units,

Series C Convertible Preferred Stock and placement agent units excluded from the calculations of diluted loss per share

were 32,493,268 and 4,707,230 for the years ended December 31, 2020 and 2019, respectively.

Company has one operating and reportable segment.

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Under the new guidance, on initial recognition

and at each reporting period, an entity is required to recognize an allowance that reflects its current estimate of credit losses

expected to be incurred over the life of the financial instrument based on historical experience, current conditions and reasonable

and supportable forecasts.

and at each reporting period, an entity is required to recognize an allowance that reflects its current estimate of credit

losses expected to be incurred over the life of the financial instrument based on historical experience, current conditions

and reasonable and supportable forecasts.

In November 2019, the FASB issued ASU No.

2019-10, Financial Instruments - Credit Losses (Topic 326),

Derivatives and Hedging (Topic 815), and Leases (Topic 842):

2019-10, Financial Instruments - Credit

Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates (“ASU 2019-10”).

The purpose of this

amendment is to create a two tier rollout of major updates, staggering the effective dates between larger public companies and

all other entities.

This granted certain classes of companies, including Smaller Reporting Companies (“SRCs”), additional

time to implement major FASB standards, including ASU 2016-13.

Larger public companies will have an effective date for fiscal

years beginning after December 15, 2019, including interim periods within those fiscal years.

All other entities are permitted

to defer adoption of ASU 2016-13, and its related amendments, until the earlier of fiscal periods beginning after December 15,

Under the current SEC definitions, the Company meets the definition of an SRC as of the ASU 2019-10 issuance date and is

adopting the deferral period for ASU 2016-13.

The guidance requires a modified retrospective transition approach through a cumulative-effect

adjustment to retained earnings as of the beginning of the period of adoption.

The Company is currently evaluating the impact

of the adoption of ASU 2016-13 on its consolidated financial statements, but does not believe the adoption of this standard will

have a material impact on its consolidated financial statements.

3 - FAIR VALUE MEASURMENT

following tables summarize the activity for those financial liabilities where fair value measurements are estimated utilizing

Level 3 inputs:

Derivative Liability

($ in thousands)

Balance as of January 1, 2018

Classification of Redemption Obligation of

preferred shares holder to Mezzanine

Conversion of Series C Convertible Preferred Stock

to common shares

Revaluation of embedded derivative- financial

Balance as of December 31, 2018

3 liabilities include Derivative Liability related to the Company Series C Convertible Preferred Stock, as described in Note 8.

The Company values the Level 3 Derivative Liability using multi-period Binomial model, whose inputs include probability of completing

fund raising and the related fund raise amounts, volatility of stock prices, stock prices, term to extinguish the Series C Convertible

Preferred shares held by the Series D investor (see defined in Note 8).

calculating the fair value of Derivative Liability related to the Series C Convertible Preferred Stock, the Company used the following

stock price of $4.20 for the transaction date, and Volatility of 140.95% -166.60% for the transaction date.

The purpose of this amendment is to create a two-tier rollout of major updates, staggering the effective dates between larger

public companies and all other entities.

This granted certain classes of companies, including Smaller Reporting Companies

(“SRCs”), additional time to implement major FASB standards, including ASU 2016-13.

Larger public companies will

have an effective date for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

All other entities are permitted to defer adoption of ASU 2016-13, and its related amendments, until the earlier of fiscal

periods beginning after December 15, 2022.

Under the current SEC definitions, the Company meets the definition of an SRC and

is adopting the deferral period for ASU 2016-13.

The guidance requires a modified retrospective transition approach through

a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.

The Company is currently

evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements but does not believe the adoption

of this standard will have a material impact on its consolidated financial statements.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

3 - PROPERTY, PLANT AND EQUIPMENT

Composition of assets, grouped by major classifications,

is as follows:

of assets, grouped by major classifications, is as follows:

($ in thousands)

5 unchanged sentences

Net carrying amount

Depreciation and

amortization expenses totaled approximately $158,000 and $139,000 for the years ended December 31, 2019 and 2018, respectively.

and amortization expenses totaled approximately $151,000 and $158,000 for the years ended December 31, 2020 and 2019, respectively.

4 - LIABILITY FOR EMPLOYEES RIGHT UPON RETIREMENT

11 unchanged sentences

for savings in connection with the payment of severance.

The severance pay expenses were approximately $197,000 and $186,000 for

the years ended December 31, 2019 and 2018, respectively.

The severance pay expenses were approximately $276,000 and $197,000

for the years ended December 31, 2020 and 2019, respectively.

contribution plan expenses were approximately $339,000 and $294,000 for the years ended December 31, 2020 and 2019, respectively.

1 unchanged sentence

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

6 - NET LOSS PER SHARE:

forth below is data taken into account in the computation of loss per share:

($ in thousands expect

share and share data)

Adjustments due to extinguishment and accretion of series D and series C preferred shares

Adjusted Loss

Weighted average of Ordinary Shares and Pre-Funded

Warrants outstanding during the period

Basic and diluted loss per share (dollars)

total number of shares of common stock related to outstanding options, warrants, restricted stock, restricted stock units, Series

C Convertible Preferred Stock, Series D Convertible Preferred Stock and placement agent units excluded from the calculations of

diluted loss per share were 4,707,230 and 880,913 for the years ended December 31, 2019 and 2018, respectively.

7 - COMMITMENTS AND CONTINGENT LIABILITIES

LEASE AGREEMENTS

The Company’s

Israeli subsidiary has a lease agreement for a facility in Israel, which expires on December 31, 2020 with an option to extend

the agreement for two additional years until December 31, 2022 under the terms stipulated in the agreement (the Option Period).

The Option Period was taken in consideration when calculating the operating lease right of use assets and liabilities since

it is reasonably certain that the company will exercise the option.

The Company leases

its motor vehicles under operating lease agreements.

Operating lease

cost for the year ended December 31, 2019 was comprised of the following:

Company’s Israeli subsidiary has a lease agreement for a facility in Israel, which expires on December 31, 2020 with

an option to extend the agreement for two additional years until December 31, 2022 under the terms stipulated in the agreement.

The company exercised the Option Period as estimated.

In addition, the Company amended the agreement mentioned above which

include a new option period for two additional years until December 31, 2024 under the terms stipulated in the agreement,

the Option Period was taken in consideration when calculating the operating lease right of use assets and liabilities.

In addition, the Company entered into another amendment to the lease agreement for a lease of additional space in the facility,

the additional space amendment was taken in consideration when calculating the operating lease right of use assets and

Company leases its motor vehicles under operating lease agreements.

lease cost for the year ended December 31, 2020 was comprised of the following:

Twelve months ended

Operating lease expense

Short-term lease expense

Variable lease expense

information related to leases are as follows:

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Less imputed interest

ASC 840 Disclosures

Company elected the modified retrospective transition method and included the following tables previously disclosed.

contractual obligations under the abovementioned operating lease agreements (not including the extension option) as of December

31, 2018 are as follows:

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

7 - COMMITMENTS AND CONTINGENT LIABILITIES (continued):

July 2019, a former distributor filed a suit seeking damages from the Company’s subsidiary for pre-paid goods subject to

the voluntary field action (from April 2014) amounting to €1,830,000 (which is approximately $2.0 million), or alternatively

€1,024,000 (which is approximately $1.1 million).

After considering the views of its legal counsel as well as other factors,

the Company’s management believes that there is a reasonably possible likelihood of a loss from any related future proceedings

would range from a minimal amount up to €1,830,000.

July 2016, a service provider filed a suit seeking damages from the Company’s subsidiary amounting to $1,967,822.

6 - COMMITMENTS AND CONTINGENT LIABILITIES :

In July 2016,

a service provider filed a suit seeking damages from the Company’s subsidiary amounting to $1,967,822.

The Company’s

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2019, the parties filed a stipulation of dismissal, dismissing all claims in this action.

On April 25, 2019, the court denied

as moot all pending motions.

On April 25, 2019, the court denied as

moot all pending motions.

The related increase in provision of $354,000 was recorded to “Research and development expense”

within the Consolidated Statements of Operations for the year ended December 31, 2019.

Share capital

within the Consolidated Statements of Operations for the year months ended December 31, 2019.

July 2019, a former distributor filed a suit seeking damages from the Company’s subsidiary for pre-paid goods subject to

the voluntary field action (from April 2014) amounting to €1,830,000 (which is approximately $2.0 million), or alternatively

€1,024,000 (which is approximately $1.1 million).

In January 2021, we executed a Mediation Agreement with the former

distributor, pursuant to which the former distributor agreed to release the Company from all claims stated in the Complaint in

exchange for a payment of $580,000.

Accordingly, the amount of $580,000 was recorded as a debit to revenue.

July 28, 2020, we entered into a settlement agreement and release with the prior underwriter, under which it provided us a final,

unconditional release from any further obligations arising out of or related to the engagement agreements, underwriting agreements

and placement agency agreements which we had been party to with it and with respect to any services which it had provided to us.

We, in turn, provided the prior underwriter a final, unconditional release from any further obligations arising out of or related

to the prior agreements and services.

consideration for the final release provided to us, we paid to the prior underwriter $400,000 in cash and reduced, to $0.495,

the exercise price per share of warrants to purchase 274,029 shares of our common stock that had been issued by us to the prior

underwriter in various offerings that took place between March 2018 and September 2019.

That reduced exercise price represents

the exercise price for the Series F Warrants that we issued in our June 2020 public offering.

The warrants that were repriced

had existing exercise prices per share ranging from $187.50 to $2.25 and a weighted average exercise price per share of $7.32.

All other terms of those warrants will remain unchanged.

The related increase in expenses of $400,000 was recorded to “General

and Administrative expense”

within the Consolidated Statements of Operations.

July 2020, a former senior employee of InspireMD GmbH filed a statement of claim at the Munich Labor Court, seeking confirmation

of the court that the notice of termination is not effective.

On November 10, 2020, we entered into a settlement agreement.

consideration for the final release, we paid the former senior employee 25,000 Eur (approximately $30,000) which was recorded

to “Selling and marketing expense”

within the Consolidated Statements of Operations.

Company’s common stock are listed on the NYSE American.

February 7, 2018, the Company filed with the Secretary of State of Delaware a Certificate of Amendment to the Company’s

Amended and Restated Certificate of Incorporation to effect a one-for-thirty-five reverse stock split of its common stock, par

value $0.0001 per share, effective as of February 7, 2018, which decreased the number of issued and outstanding shares of common

stock and restricted stock as of December 31, 2017 from 1.5 million shares to 30 thousand shares (adjusted to 2019 Reverse Split).

March 27, 2019, the Company filed with the Secretary of State of Delaware a Certificate of Amendment to the Company’s Amended

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EQUITY (continued):

of Share Capital as of December 31, 2019

2018, the Company made multiple transactions related to the capital structure.

Following either redemption or conversion of the

company’s preferred stock, as of December 31, 2019, the Company has 17,303 shares of Series B Convertible Preferred Stock

outstanding (convertible into 555,138 shares of common stock) out of 442,424 shares originally issued, 34,370 shares of Series

C Convertible Preferred Stock outstanding (convertible into 122,204 shares of common stock) out of 1,069,822 shares originally

issued and no Series D Convertible Preferred Stock outstanding.

The respective certificate of designation for our Series B Convertible

Preferred Stock and Series C Convertible Preferred Stock contains a full ratchet anti-dilution price protection to be triggered

upon issuance of equity or equity-linked securities at an effective common stock purchase price of less than the conversion price

in effect, so the number of shares of common stock issuable upon conversion of the Series B or C Convertible Preferred Stock could

increase if another equity financing is completed at a price lower than the current conversion price of $1.80 per share.

D Convertible Preferred Stock and amendments to existing preferred stock through December 31, 2017 in connection with the Series

D Private Placement

December 1, 2017, as part of a planned recapitalization, the Company sold shares of Series D Convertible Preferred Stock (“Series

D Preferred Stock”) to an institutional investor (“Series D Investor”) in a private placement pursuant to a

securities purchase agreement (the “SPA”), dated November 28, 2017, for aggregate gross proceeds of $750,000.

SPA contained a “most favored nation”

provision, which provided that, until the Company consummates a “Qualified

Offering”, in the event the Company undertakes, or enter into any agreement to undertake, the issuance and sale of common

stock and/or common stock equivalents to third party investors for cash (a “Subsequent Financing”), the Series D Investor

may elect, in its sole discretion, to exchange all or some of the Series D Preferred Stock then held by such investor for any

securities or units issued in such Subsequent Financing on a $1.00 per stated value for $1.00 new subscription amount basis (the

“Series D Exchange Right”).

The surrender of Series D Preferred Stock was to be in lieu of any cash subscription amount

required for the participation in such Subsequent Financing.

The Series D Investor also had the option to exchange their Series

D Preferred Stock into the securities issued in a Qualified Offering upon consummation of a Qualified Offering on a $1.00 per

stated value for $1.00 new subscription amount basis.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

Company also agreed to use 12.5% of the proceeds from any subsequent offering of the Company’s securities to redeem the

outstanding shares of Series B Convertible Preferred Stock owned by the Series D Investor until such time that the Company has

redeemed, in the aggregate, at least $1 million of Series B Convertible Preferred Stock, up to $1.5 million of stated value of

Series B Convertible Preferred Stock (“Redemption Obligation of Series B”).

addition, in accordance with the original SPA, the certificate of designation for the Series B Convertible Preferred Stock was

amended in December 2017 to provide for an automatic exchange of each share of Series B Convertible Preferred Stock upon the consummation

of a Qualified Offering subject to the beneficial ownership limitation.

the original SPA provided that, upon the consummation of a Qualified Offering, the shares of Series C Convertible Preferred Stock

owned by the Series D Investor would be automatically exchanged into the securities sold by the Company in a Qualified Offering

upon the terms set forth in the Agreement.

However, under the rules of the NYSE American, the Company was required to obtain shareholder

approval for the exchange by such purchaser of any securities in the Qualified Offering that represent 20% or more of the Company’s

total shares of common stock outstanding immediately prior to such offering.

of the date of the SPA, the Company analyzed the classification of the Redemption Obligation of Series B of the Company regarding

the Series B Convertible Preferred Stock as agreed upon in the SPA.

Based on ASC 480-10-S99 the Company determined that, as of

the date of the SPA, since the Redemption Obligation of Series B was outside of its control, the Series B Convertible Preferred

Stock was considered as contingently redeemable upon the occurrence of an event that is outside of its control and should be classified

as a mezzanine equity.

The Company determined that, as of the date of the SPA, Subsequent Financing and the related payment of

Redemption Obligation of Series B was considered to be outside of the Company’s control.

Accordingly, as of the date of

the SPA, the redemption amount net of the embedded derivative (as described below), which amounts to $934,000, was classified

as “Redeemable Preferred Shares”

in the Consolidated Balance Sheet.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

addition, as of the date of the SPA, the Company analyzed whether the conversion feature embedded in the shares of the Series

B Convertible Preferred Stock subject to the Redemption Obligation of Series B should be bifurcated.

As certain shares of the

Series B Convertible Preferred Stock was contingently redeemable as of the date of the SPA, the host contract was determined to

be akin to debt, and the other criteria under ASC 815-15-25-1 were met, an embedded derivative was separated from the host contract

and accounted for as a derivative instrument pursuant to Subtopic 815-10.

As of the date of the SPA, the embedded derivative was

valued at $66,000.

Agent Unit Purchase Option Exercise and Series B Convertible Preferred Stock Conversion

January and February 2018, the placement agent from the public offering that closed in July 2016 exercised its unit purchase option

to purchase 13,508 units and received 13,508 shares of Series B Preferred Stock and Series A warrants to purchase 31 shares of

common stock.

The placement agent subsequently converted its Series B Preferred Stock and received an aggregate of 2,229 shares

of common stock.

We received an aggregate of $557,205 from the placement agent for the exercise of the unit purchase option.

D Amendments and 2018 Equity Offerings

February 21, 2018, the SPA was amended (“February 2018 SPA amendment”) to require the Company (i) to use 15% of the

proceeds from any subsequent offering of the Company’s securities that is not a Qualified Offering to redeem the outstanding

shares of the Series C Convertible Preferred Stock held by the Series D Investor at a per share purchase price equal to the stated

value of the Series C Convertible Preferred Stock, and (ii) upon closing of any subsequent offering that is a Qualified Offering,

to exchange all remaining outstanding shares of Series C Convertible Preferred Stock held by the Series D Investor for any securities

issued in such Qualified Offering on a $1.00 per stated value for $1.00 new subscription amount basis (subject to the beneficial

ownership limitation set forth in the certificate of designation for the Series C Convertible Preferred Stock).

The February 2018

SPA amendment provided that in the event that the Company fails, or is unable, to issue securities issued in the Qualified Offering

to the Series D Investor in exchange for such investor’s remaining Series C Convertible Preferred Stock due to limitations

mandated by the NYSE American, the Securities and Exchange Commission, or for any other reason, the Company would be required

to offer to purchase from such investor those shares of Series C Convertible Preferred Stock not exchanged for the securities

sold in the Qualified Offering at a per share purchase price equal to the stated value of Series C Convertible Preferred Stock.

This requirement to purchase from the Series D Investor those shares of Series C Convertible Preferred Stock not exchanged for

the securities sold in the Qualified Offering at a per share purchase price equal to the stated value of Series C Convertible

Preferred Stock in case of a Qualified Offering, and the requirement to use 15% of the proceeds from any subsequent offering of

the Company’s securities that is not a Qualified Offering to redeem the outstanding shares of the Series C Convertible Preferred

Stock held by the Series D Investor at a per share purchase price equal to the stated value of the Series C Convertible Preferred

Stock are referred to as “Redemption Obligation of Series C.”

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

accounting purposes, as of the effective date of the February 2018 SPA amendment, the Company analyzed the classification of the

Series C Convertible Preferred Stock in light of the Redemption Obligation of Series C regarding such preferred stock held by

the Series D Investor, as agreed upon in the February 2018 SPA amendment.

Based on ASC 480-10-S99 the Company determined that

since the Redemption Obligation of Series C may occur upon contingent events, such as subsequent financing transactions not meeting

the threshold for a Qualified Offering, that are not solely within the Company’s control, as of the effective date of the

February 2018 SPA amendment the Series C Convertible Preferred Stock was considered as contingently redeemable and should be classified

outside of permanent equity, within mezzanine equity.

addition, as of the effective date of the February 2018 SPA amendment, the Company analyzed whether the conversion feature embedded

in the shares of the Series C Convertible Preferred Stock subject to the Redemption Obligation of Series C should be bifurcated.

As certain shares of the Series C Convertible Preferred Stock were contingently redeemable, as of the effective date of the February

2018 SPA amendment, the host contract was determined to be akin to debt, and the conversion feature not clearly and closely to

the debt host given the anti-dilution protection included in the terms of these Series C Convertible Preferred Stock.

Consequently,

an embedded derivative was separated from the host contract and accounted for as a derivative instrument pursuant to Subtopic

of the effective date of the February 2018 SPA amendment, the Company classified an amount of $3,200,000 from permanent equity

to “Redeemable Preferred Shares”

and “Derivative Liability”

in an amount of $2,580,000 and $620,000, respectively.

Company values Level 3 derivative liability using an internally developed valuation model, whose inputs include potential equity

transactions probability of completing successful fund raising during the relevant period and stock prices.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

February 26, 2018, the Company and the Series D Investor entered into a waiver agreement (the “Waiver Agreement”)

which provided that (i) the Series D Exchange Right, which was provided by the original SPA, would not be applicable to an offering

of up to $7,000,000 which occurred no later than March 9, 2018, (ii) the Company shall reduce the conversion price of the Series

D Preferred Stock to the public offering price of our common stock in such offering, and (iii) instead of using 15% of the proceeds

from such offering to redeem shares of Series C Convertible Preferred Stock held by the Series D Investor, which was provided

by the February 2018 SPA amendment, the Company was required to use 15% of the proceeds from such offering to redeem a portion

of the outstanding shares of Series D Preferred Stock held by the Series D Investor at a per share purchase price equal to the

stated value of the Series D Preferred Stock.

March 1, 2018, the Company closed an underwritten public offering of 20,000 shares (the “March 2018 Offering”) of

the Company’s common stock.

The offering price to the public of the shares sold at the March 2018 Offering was $150.00 per

The Company received gross proceeds of $3.0 million from the offering, before deducting underwriter commissions and discounts

and other fees and expenses payable by the Company.

In connection with the March 2018 Offering, the Company issued to the underwriter

warrants to purchase up to 1,200 shares of common stock, or 6% of the number of shares of common stock sold in the March 2018

Offering (the “March Underwriter Warrants”).

The March Underwriter Warrants are exercisable at any time and from time

to time, in whole or in part, following the date of issuance and ending February 27, 2023, at a price per share equal to $187.50

(125% of the offering price to the public per share).

to the SPA, as amended by February 2018 SPA amendment and the Waiver Agreement, following the closing of the offering on March

1, 2018, the Company used $450,000 (representing 15% of the gross proceeds from the March 2018 Offering) to purchase from the

Series D Investor 450 shares of the Series D Preferred Stock at a per share purchase price equal to the stated value of the Series

D Preferred Stock.

a result of the March 2018 Offering, the respective conversion price for each of the Series B Convertible Preferred Stock, the

Series C Convertible Preferred Stock and the Series D Preferred Stock was reduced to $150.00 per share, and the number of shares

of common stock issuable upon conversion of the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock

and the Series D Preferred Stock had increased as follows:

an aggregate of

3,807 additional shares of common stock upon conversion of the Series B Convertible Preferred Stock and as payment of the

dividends thereunder in common stock, based on 17,303 shares of Series B Convertible Preferred Stock outstanding as of March

an aggregate of

18,082 additional shares of common stock upon conversion of the Series C Convertible Preferred Stock, based on 741,651 shares

of Series C Convertible Preferred Stock outstanding as of March 1, 2018.

an aggregate of

2,857 additional shares of common stock upon conversion of the Series D Preferred Stock, based on 750 shares of Series D Preferred

Stock outstanding as of March 1, 2018.

accounting purposes, as of the closing of the March 2018 Offering, the Company analyzed whether the change in the conversion price

of the Series D Preferred Stock constitutes an extinguishment for accounting purposes, by comparing the fair value of the Series

D Preferred Stock immediately before and after such change in terms.

Since the fair value increased substantially, i.e by more

than 10%, the change in terms was accounted for as an extinguishment.

As a result, the difference between the fair value of the

Series D Preferred Stock immediately after the change in term (the reduction of the conversion price from $350.00 per share to

$150.00 per share, pursuant to the SPA, as amended by February 2018 SPA amendment and the Waiver Agreement) and the carrying amount

immediately before such change, in the amount of $49,000, was added to the basic loss per share attributable to the Company’s

common stockholders.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

March 28, 2018, the Company and the Series D Investor entered into the second waiver agreement (the “Second Waiver Agreement”)

which provided that (i) the Series D Exchange Right, which was provided by the original SPA, would not be applicable to a subsequent

financing consisting solely of shares of common stock, which shall be publicly registered on Form S-3 for gross proceeds to us

of up to $5,000,000, to be consummated by not later than April 3, 2018 (the “Planned April 2018 Offering”), (ii) the

Company’s obligation to use 15% of the proceeds from any subsequent offering of our securities that is not a Qualified Offering

to redeem the outstanding shares of the Series C Convertible Preferred Stock held by the Series D Investor, which was provided

by the February 2018 SPA amendment, would not be applicable to the Planned April 2018 Offering, (iii) the Company shall reduce

the conversion price of the Series D Preferred Stock to the public offering price of our common stock sold in the Planned April

2018 Offering, and (iv) the Company shall use $300,000 of the proceeds from the Planned April 2018 Offering to redeem outstanding

shares of Series C Convertible Preferred Stock held by the Series D Investor at a per share purchase price equal to the stated

value of the Series C Convertible Preferred Stock.

April 2, 2018, the Company closed an underwritten public offering of 57,143 shares (the “April 2018 Offering”) of

the Company’s common stock at the offering price to the public of $87.50 per share.

The Company received gross proceeds

of $5.0 million from the offering, before deducting underwriter discounts and commissions and other fees and expenses payable

by the Company.

connection with the April 2018 Offering, the Company issued to the underwriter warrants to purchase up to 3,429 shares of common

stock, or 6% of the number of shares of common stock sold in the April 2018 Offering (the “April Underwriter Warrants”).

The April Underwriter Warrants are exercisable at any time and from time to time, in whole or in part, following the date of issuance

and ending March 28, 2023, at a price per share equal to $109.38 (125% of the offering price to the public in the April 2018 Offering).

to the SPA, as amended by the February 2018 SPA amendment, the Waiver Agreement and the Second Waiver Agreement, following the

closing of the April 2018 Offering, the Company used $300,000 of the net proceeds of the offering to purchase from the Series

D Investor 46,875 shares of the Series C Convertible Preferred Stock at a per share purchase price equal to the stated value of

the Series C Convertible Preferred Stock.

a result of the April 2018 Offering, the conversion price of the outstanding shares of Series D Preferred Stock was reduced to

$87.50 pursuant to the Second Waiver Agreement, and the number of shares of common stock issuable upon conversion of the Series

D Preferred Stock increased by an aggregate of 1,429 additional shares of common stock, based on 300 shares of Series D Preferred

Stock outstanding as of April 2, 2018.

accounting purposes, as of the closing of the April 2018 Offering, the Company analyzed whether the change in the conversion price

of the Series D Preferred Stock constituted an extinguishment for accounting purposes, by comparing the fair value of the Series

D Preferred Stock immediately before and after such change in terms.

Since the fair value increased substantially, i.e by more

than 10%, the change in terms was accounted for as an extinguishment.

As a result, the difference between the fair value of the

Series D Preferred Stock immediately after the change in term (the further reduction of the conversion price from $150.00 per

share to $87.50 per share, pursuant to the SPA, as amended by February 2018 SPA amendment, the Waiver Agreement and the Second

Waiver Agreement) and the carrying amount immediately before such change, in the amount of $32,000, was subtracted from the basic

loss per share attributable to the Company’s common stockholders.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

of March 28, 2018, the date of the underwriting agreement for the April 2018 Offering, the respective conversion price of the

outstanding shares of Series B Convertible Preferred Stock and Series C Convertible Preferred Stock was reduced to $87.50 pursuant

to the anti-dilution adjustment provisions of the Series B Convertible Preferred Stock and of the Series C Convertible Preferred

Stock, and the number of shares of common stock issuable upon conversion of the Series B Convertible Preferred Stock and the Series

C Convertible Preferred Stock had increased as follows:

an aggregate of

4,759 additional shares of common stock upon conversion of the Series B Convertible Preferred Stock and as payment of the

dividends thereunder in common stock, based on 17,303 shares of Series B Convertible Preferred Stock outstanding as of March

an aggregate of

13,766 additional shares of common stock upon conversion of the Series C Convertible Preferred Stock, based on 451,695 shares

of Series C Convertible Preferred Stock outstanding as of March 28, 2018.

June 28, 2018, the Company and the Series D Investor entered into a letter agreement (the “Letter Agreement”) which

further amended the SPA to provide that, notwithstanding anything to the contrary in the prior agreements, in the event the Company

consummates a Qualified Offering in which the Series D Investor and its affiliates invest at least $3 million, (i) instead of

an automatic exchange of all outstanding shares of Series C Convertible Preferred Stock held by the Series D Investor into securities

issued in a Qualified Offering on a $1.00 per stated value for $1.00 new subscription amount basis, all outstanding shares of

Series C Convertible Preferred Stock held by the Series D Investor will be redeemed at a per share purchase price equal to the

stated value of the Series C Convertible Preferred Stock, and (ii) all outstanding shares of Series D Preferred Stock will be

redeemed at a per share purchase price equal to the stated value of the Series D Preferred Stock.

June 29, 2018, the Company entered into an underwriting agreement relating to an underwritten public offering (the “July

2018 Offering”) of (i) 217,029 common units (“Common Units”), with each Common Unit being comprised of one share

of the Company’s common stock and one Series D warrant (collectively, the “Series D Warrants”) to purchase one

share of common stock and (ii) 449,640 pre-funded units (“Pre-Funded Units”), with each Pre-Funded Unit being comprised

of one pre-funded warrant (collectively, the “Pre-Funded Warrants”) to purchase one share of common stock and one

Series D Warrant, which closed on July 3, 2018.

The offering price to the public was $15.00 per Common Unit and $14.50 per Pre-Funded

The Company also granted the Underwriter a 30-day option to purchase up to an additional 100,000 shares of common stock

at a purchase price of $14.50 per share and/or up to 100,000 additional Series D Warrants to purchase 100,000 shares of common

stock at a purchase price of $0.50 per Series D Warrant, less the underwriting discounts and commissions of $1.015 per share and

$0.035 per Series D Warrant.

The Underwriter exercised its option to purchase an additional 100,000 Series D Warrants to purchase

100,000 shares of common stock.

to the Letter Agreement, the Company had revised its estimate as of June 30, 2018, of the expected timing of redemption of Series

C Convertible Preferred stock to the estimated closing date of the July 2018 Offering (July 3, 2018).

As a result, the total of

$438,000 (accretion of the redeemable preferred shares) was recorded against Additional paid-in capital and added to basic loss

per share attributable to the Company’s common stockholders.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

Series D Warrants included in the Common Units and the Pre-Funded Units are immediately exercisable at a price of $15.00 per share

of common stock, subject to adjustment in certain circumstances, and expire five years from the date of issuance.

Pre-Funded Warrant contained in a Pre-Funded Unit is exercisable for 0.02 share of our common stock at an exercise price of $0.01

The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants

are exercised in full.

to the full ratchet anti-dilution adjustment provisions in the respective certificate of designation for the Company’s Series

B Convertible Preferred Stock and Series C Convertible Preferred Stock, the conversion price of the outstanding shares of the

Series B Convertible Preferred Stock and the Series C Convertible Preferred Stock was reduced to $15.00 per share, effective as

of the date of the underwriting agreement entered for the July 2018 Offering, and the number of shares of common stock issuable

upon conversion of the Series B Convertible Preferred Stock and the Series C Convertible Preferred Stock had increased as follows:

an aggregate of

55,197 additional shares of common stock upon conversion of the Series B Convertible Preferred Stock and as payment of the

dividends thereunder in common stock, based on 17,303 shares of Series B Convertible Preferred Stock outstanding as of June

an aggregate of

133,929 additional shares of common stock upon conversion of the Series C Convertible Preferred Stock, based on 378,840 shares

of Series C Convertible Preferred Stock outstanding as of June 29, 2018.

July 2, 2018, the Company filed with the office of the Secretary of State of the State of Delaware a Certificate of Amendment

to Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock which removed the

provision providing for an automatic exchange of all outstanding shares of Series B Convertible Preferred Stock into securities

issued in a Qualified Offering on a $1.00 per stated value for $1.00 new subscription amount basis upon a Qualified Offering.

Company received gross proceeds of $9.8 million from the July 2018 Offering, before deducting underwriter discounts and commissions

and other fees and expenses payable by the Company.

the purpose of calculating basic net loss per share, the additional shares of common stock that are issuable upon exercise of

the Pre-funded Warrants have been included since the shares are issuable for a negligible consideration, as determined by the

Company according to ASC 260-10-45-13, and have no vesting or other contingencies associated with them.

to the underwriting agreement relating to the July 2018 Offering, the Company, upon closing of the July 2018 Offering, issued

to the underwriter warrants to purchase up to 40,000 shares of common stock, or 6% of the aggregate number of shares of common

stock sold in the July 2018 Offering (including the number of shares of common stock issuable upon exercise of the Pre-Funded

Warrants sold in the July 2018 Offering).

The underwriter warrants are exercisable at any time and from time to time, in whole

or in part, following the date of issuance and ending July 3, 2023, at a price per share equal to $18.75 (125% of the offering

price to the public per Common Unit).

to the Letter Agreement, on July 3, 2018, upon closing of the July 2018 Offering, which was a Qualified Offering, the Company

used $2,264,269 of the net proceeds of the July 2018 Offering to redeem 306,917 shares of Series C Convertible Preferred Stock

and 300 shares of Series D Preferred Stock held by the Series D Investor.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

April 8, 2019, the Company closed an underwritten public offering of 486,957 shares of the Company’s common stock at the

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issuable upon conversion of the Series B Convertible Preferred Stock and the Series C Convertible Preferred Stock had increased

an aggregate of

133,233 additional shares of common stock issuable upon conversion of the Series B Convertible Preferred Stock, including

the payment of the cumulative dividends accrued thereunder in common stock, based on 17,303 shares of Series B Convertible

aggregate of 133,233 additional shares of common stock issuable upon conversion of the Series B Convertible Preferred Stock,

including the payment of the cumulative dividends accrued thereunder in common stock, based on 17,303 shares of Series B Convertible

Preferred Stock outstanding as of April 4, 2019.

of 50,708 additional shares of common stock issuable upon conversion of the Series C Convertible Preferred Stock, based on

59,423 shares of Series C Convertible Preferred Stock outstanding as of April 4, 2019.

September 19, 2019, the Company entered into an underwriting agreement relating to an underwritten public offering (the

“September 2019 Offering”) of (i) 539,000 common units (“2019 Common Units”), with each 2019 Common

Unit being comprised of one share of the Company’s common stock and one Series E warrant (collectively, the “Series

E Warrants”) to purchase one share of common stock and (ii) 2,238,777 pre-funded units (“2019 Pre-Funded Units”),

with each 2019 Pre-Funded Unit being comprised of one pre-funded warrant (collectively, the “2019 Pre-Funded Warrants”)

aggregate of 50,708 additional shares of common stock issuable upon conversion of the Series C Convertible Preferred Stock,

based on 59,423 shares of Series C Convertible Preferred Stock outstanding as of April 4, 2019.

September 19, 2019, the Company entered into an underwriting agreement relating to an

underwritten public offering (the “September 2019 Offering”) of (i) 539,000

common units (“2019 Common Units”), with each 2019 Common Unit being comprised

of one share of the Company’s common stock and one Series E warrant (collectively,

the “Series E Warrants”) to purchase one share of common stock and (ii) 2,238,777

pre-funded units (“2019 Pre-Funded Units”), with each 2019 Pre-Funded Unit

being comprised of one pre-funded warrant (collectively, the “2019 Pre-Funded Warrants”)

to purchase one share of common stock and one Series E Warrant, which closed on September

The offering price

to the public was $1.80 per 2019 Common Unit and $1.79 per 2019 Pre-Funded Unit.

In connection with this public offering,

on September 24, 2019, the underwriter partially exercised its over-allotment option and purchased an additional Series

E Warrants to purchase 194,444 shares of common stock at a purchase price of $0.01 per Series E Warrant.

The offering price to the public was $1.80 per 2019 Common Unit and $1.79 per

2019 Pre-Funded Unit.

In connection with this public offering, on September 24, 2019,

the underwriter partially exercised its over-allotment option and purchased an additional

Series E Warrants to purchase 194,444 shares of common stock at a purchase price of $0.01

per Series E Warrant.

Series E Warrants included in the 2019 Common Units and the 2019 Pre-Funded Units are immediately exercisable at a price

of $1.80 per share of common stock, subject to adjustment in certain circumstances, and expire five years from the date

2019 Pre-Funded Warrant contained in a 2019 Pre-Funded Unit is exercisable for one share of our common stock at an exercise

price of $0.01 per share.

The 2019 Pre-Funded Warrants are immediately exercisable and may be exercised at any time until

all of the 2019 Pre-Funded Warrants are exercised in full.

2019 Pre-Funded Warrant contained in a 2019 Pre-Funded Unit is exercisable for one share

of our common stock at an exercise price of $0.01 per share.

The 2019 Pre-Funded Warrants

are immediately exercisable and may be exercised at any time until all of the 2019 Pre-Funded

Warrants are exercised in full.

connection with the offering, the Company issued to the underwriter warrants to purchase up to 194,444 shares of common

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EQUITY (continued):

Company received gross proceeds of $5.0 million from the offering, before deducting underwriter discounts and commissions

and other fees and expenses payable by the Company.

Company received gross proceeds of $5.0 million from the offering, before deducting underwriter

discounts and commissions and other fees and expenses payable by the Company.

June 5, 2020, the Company closed an underwritten public offering of (i) 7,635,800 units (“Units”), with each

Unit being comprised of one share of the Company’s common stock, par value $0.0001 per share, and one Series F warrant

(a “Series F Warrant”) to purchase one share of common stock, and (ii) 14,586,400 pre-funded units (the “Pre-Funded

Units”), with each Pre-Funded Unit being comprised of one pre-funded warrant (a “Pre-Funded Warrant”)

to purchase one share of common stock and one Series F Warrant.

In connection with this public offering, the underwriter

exercised its over-allotment option in full and purchased an additional 3,333,300 shares of common stock and 3,333,300

Series F Warrants.

The offering price to the public was $0.45 per Unit and $0.449 per Pre-Funded Unit.

The net proceeds

to the Company from the offering and the exercise of the underwriter’s over-allotment option were approximately

$10.7 million, after deducting underwriting discounts and commissions and payment of other estimated expenses associated

with the offering, but excluding the proceeds, if any, from the exercise of Series F Warrants and the Pre-Funded Warrants

sold in the offering.

The pre-funded warrants exercisable at a price of $0.001 per share of common stock.

Series F Warrants included in the Common Units and the Pre-Funded Units are immediately exercisable at a price of $0.495

per share of common stock, subject to adjustment in certain circumstances, and expire June 2, 2025.

The shares of common

stock, or Pre-Funded Warrants in the case of the Pre-Funded Units, and the Series F Warrants were offered together, but

the securities contained in the Common Units and the Pre-Funded Units were issued separately.

the year ended December 31, 2020, 2,866,600 Series F Warrants were converted into 2,866,600 shares of common stock.

net proceeds to the Company from exercise of the Series F Warrants were approximately $1.4 million.

to the full ratchet anti-dilution adjustment provisions in the respective certificate of designation for the Company’s Series

B Convertible Preferred Stock and Series C Preferred Stock, the conversion price of the outstanding shares of the Series B Convertible

Preferred Stock and the Series C Preferred Stock was reduced to $0.45 per share, effective as of the date of the underwriting

agreement entered for the June 2020 Offering, and the number of shares of common stock issuable upon conversion of the Series

B Preferred Stock and the Series C Preferred Stock had increased as follows:

An aggregate of 1,665,414 additional shares of common stock upon conversion of the Series B Preferred Stock and as payment

of the dividends thereunder in common stock, based on 17,303 shares of Series B Preferred Stock outstanding as of June

An aggregate of 283,285 additional shares of common stock upon conversion of the Series C Preferred Stock, based on 26,558

shares of Series C Preferred Stock outstanding as of June 2, 2020.

the purpose of calculating basic net loss per share, the additional shares of common stock that are issuable upon exercise

1 unchanged sentence

by the Company according to ASC 260-10-45-13, and have no vesting or other contingencies associated with them.

has also concluded that the series F warrants are classified as equity, since the warrants meet all criteria for equity

classification.

the year ended December 31, 2020, the Company issued a total of 14,586,400 shares of common stock in connection with the

exercise of all outstanding Pre-Funded Warrants issued in June 2020.

In addition, the Company issued a total of 270,000

shares of its common stock in connection with the exercise of 270,000 Pre-Funded Warrants issued in September 2019.

of December 31, 2020, there are no outstanding Pre-Funded Warrants.

the year ended December 31, 2019, the Company issued a total of 2,000,811 shares of its common stock in connection with

2 unchanged sentences

cash proceeds equal to approximately $35,705 in connection with such exercises.

As of December 31, 2019, the outstanding

Pre-Funded Warrants are exercisable into 270,000 shares of common stock.

the year ended December 31, 2018, the Company issued a total of 417,606 shares of its common stock in connection with the exercise

of 20,880,250 Pre-Funded Warrants.

The Company received aggregate cash proceeds equal to approximately $208,803 in connection

with such exercises.

As of December 31, 2018, the outstanding Pre-Funded Warrants were exercisable into 32,034 shares of common

the year ended December 31, 2020, the Company sold 12,917,448 shares of its common stock pursuant to its at-the-market (ATM) issuance

sales agreement with A.G.P./Alliance Global Partners.

These sales resulted in net proceeds to the Company of approximately $4,447

to the full ratchet anti-dilution adjustment provisions in the respective certificate of designation for the Company’s Series

B Convertible Preferred Stock and Series C Preferred Stock, the conversion price of the outstanding shares of the Series B Convertible

Preferred Stock and the Series C Preferred Stock was reduced to $0.321 per share, triggered by the ATM Facility, effective as

of December 14, 2020 , and the number of shares of common stock issuable upon conversion of the Series B Preferred Stock and the

Series C Preferred Stock had increased as follows:

aggregate of 892,371 additional shares of common stock upon conversion of the Series B Preferred Stock and as payment of the

dividends thereunder in common stock, based on 17,303 shares of Series B Preferred Stock outstanding as of December 14, 2020.

aggregate of 13,392 additional shares of common stock upon conversion of the Series C Preferred Stock, based on 2,343 shares

of Series C Preferred Stock outstanding as of December 14, 2020.

of December 31, 2020, the Number of Preferred shares the amount each class is convertible into is below:

Number of Preferred Stock

Number of underlying Common stock

Series B Convertible Preferred Stock

Series C Convertible Preferred Stock

Including the shares of common stock the holders of Series B Convertible Preferred Stock are entitled to receive as cumulative

dividends at the rate per share of 15% per annum of the stated value for five years, payable in cash or common stock, at the Company’s

discretion, but excluding effect of future conversion price adjustment, if any.

of Preferred Stock

of underlying Common stock

B Convertible Preferred Stock*

C Convertible Preferred Stock

See “Note 11 - Subsequent events”

regarding conversion of all remaining Series B Convertible Preferred Stock into

common stock.

On July 7, 2016, we issued 442,424 shares of Series B Preferred Stock in a public offering.

Our Series B Preferred Stock has a

stated value of $33.00 which currently converted into 3,112,923 reflecting a conversion price equal to $ 0.321.

The holders of

Series B Preferred Stock are entitled to receive as cumulative dividends at the rate per share of 15% per annum of the stated

value for five years, payable in cash or common stock, at the Company’s discretion, but excluding effect of future conversion

price adjustment, if any.

On March 14, 2017, we issued 1,069,822 shares of Series C Preferred Stock in a public offering.

Our Series C Preferred Stock has

a stated value of $6.40 which currently converted into 46,714 reflecting a conversion price equal to $ 0.321.

of December 31, 2020, the Company has outstanding warrants to purchase an aggregate of 26,705,502 shares of common stock as follows:

4 unchanged sentences

Series E Warrants

April 2019 Underwriter Warrants

September 2019 Underwriter Warrants

Series F Warrants

Underwriter Warrants

Other warrants

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EQUITY (continued):

Share-Based Compensation

Pursuant to the

current Section 102 of the Israeli Tax Ordinance, which came into effect on January 1, 2003, options may be granted through

a trustee (i.e., Approved 102 Options) or not through a trustee (i.e., Unapproved 102 Options).

As a result of an election

made by the Company under Section 102 of the Income Tax Ordinance, the Company will not be allowed to claim as an expense

for tax purposes in Israel the amounts credited to the employee as capital gains to the grantees, although it will generally

be entitled to do so in respect of the salary income component (if any) of such awards when the related tax is paid by the

During the years

ended December 31, 2019 and 2018, the Company did not grant any stock options to the CEO, employees and directors.

During the year

ended December 31, 2019 and 2018, the Company granted to the then CEO, employees and directors 70,582 and 0 restricted stock,

respectively.

The fair value of these restricted stock granted in the year ended December 31, 2019 was approximately $668,000.

The 70,582 restricted stock granted during the year ended December 31, 2019 are subject to a three-year vesting period, with

to the current Section 102 of the Israeli Tax Ordinance, which came into effect on January 1, 2003, options may be granted

through a trustee (i.e., Approved 102 Options) or not through a trustee (i.e., Unapproved 102 Options).

As a result of an

election made by the Company under Section 102 of the Income Tax Ordinance, the Company will not be allowed to claim as an

expense for tax purposes in Israel the amounts credited to the employee as capital gains to the grantees, although it will

generally be entitled to do so in respect of the salary income component (if any) of such awards when the related tax is paid

by the employee.

the year ended December 31, 2020, the Company granted stock options to the CEO, employees and directors to purchase a total

of 1,379,856 shares of the Company’s common stock.

The options have exercise prices ranging from $0.33-$1.10 per share,

respectively, which were the fair market value of the company’s common stock on the date of each respective grant.

of December 31, 2020, the fair value of the above options, using the Black-Scholes pricing models, was approximately $509,000.

The options are subject to a three-year vesting period with one-third of such awards vesting each year.

the years ended December 31, 2020 and 2019, the Company granted to the then CEO, employees and directors 2,781,920 and 70,582

restricted stock, respectively.

The fair value of these restricted stock was approximately $1,051,604 and $668,000, respectively.

The restricted stock are subject to a three-year vesting period, with one-third of such awards vesting each year.

the years ended December 31, 2020 and 2019, the Company granted CEO and former CEO 1,357,668 and 165,000 Restricted Stock

Units, respectively.

The fair value of these restricted stock units was approximately $658,981 and $141,900, respectively.

The restricted stock units granted during the years ended December 31, 2020 are subject to a three-year vesting period, with

one-third of such awards vesting each year.

On December 16,

2019, the Company granted to the then CEO, in connection with his separation agreement, an equity award of 165,000 restricted

stock units, all of which were fully vested upon grant.

The fair value of these restricted stock units was approximately $141,900.

The following table

summarizes information about stock options granted to employees:

The restricted stock units granted during the year ended December 31, 2019 were

fully vested upon grant.

following table summarizes information about stock options granted to employees:

Year ended December 31

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EQUITY (continued):

The following table

summarizes information about stock options granted to non-employees:

following table summarizes information about stock options granted to non-employees:

Year ended December 31

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Exercisable at the end of the period

The following table

summarizes information about restricted stock granted to employees:

following table summarizes information about restricted stock granted to employees:

Year ended December 31

3 unchanged sentences

Outstanding - end of period

table above does not include the Restricted Stock Unit granted by the Company to the

then CEO, in connection with his separation agreement.

See Note 8b(4).

The following table

provides additional information about all options outstanding and exercisable:

following table summarizes information about Restricted Stock Unit granted to employees:

Year ended December 31

Number of restricted stock

Outstanding - beginning of period

Outstanding - end of period

following table provides additional information about all options outstanding and exercisable:

Outstanding as of December 31, 2020

1 unchanged sentence

Weighted average remaining contractual life (years)

Options exercisable

$175 and above

weighted average of the remaining contractual life of total vested and exercisable options as of December 31, 2020 was 4.66 years.

aggregate intrinsic value of the total exercisable warrants and options as of December 31, 2019 was approximately $2.

aggregate intrinsic value of the total exercisable options as of December 31, 2020 was approximately $1.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

EQUITY (continued):

weighted average fair value of options granted was $0.37 for the year ended December 31, 2020.

The weighted average fair value

of options granted was estimated using the Black-Scholes option-pricing model.

following table sets forth the assumptions that were used in determining the fair value of options granted to employees for

the year December 31, 2020:

Year ended December 31

Expected life

5.5-6.5 years

Risk-free interest rates

124.53%-136.66 %

Dividend yield

Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

6 unchanged sentences

The Company’s expected volatility is derived from its historical

As of December 31,

2019, the total unrecognized compensation cost on employee and non-employee stock options and restricted stock, related to

unvested stock-based compensation, amounted to approximately $126 thousand.

This cost is expected to be recognized over a

weighted-average period of approximately 0.91 years.

of December 31, 2020, the total unrecognized compensation cost on employee and non-employee stock options and restricted stock,

related to unvested stock-based compensation, amounted to approximately $1.7 million.

This cost is expected to be recognized

over a weighted-average period of approximately 0.95 years.

This expected cost does not include the impact of any future stock-based

compensation awards.

The following table

summarizes the allocation of total share-based compensation expense in the consolidated statements of operations:

ended December 31

following table summarizes the allocation of total share-based compensation expense in the consolidated statements of operations:

Year ended December 31

($ in thousands)

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8 - TAXES ON INCOME:

Tax laws applicable

to the Company and its subsidiaries

laws applicable to the Company and its subsidiaries

in the United States

6 unchanged sentences

trade tax rate of 17.15%.

under the Law for the Encouragement of Capital Investments, 1959 (the “Law”):

benefits under the Law for the Encouragement of Capital Investments, 1959 (the “Law”):

has been granted a “Beneficiary Enterprises”

12 unchanged sentences

The Company elected

the year 2007, as a year of election and 2011 as an additional year of election.

the year 2011 as a year of election.

TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

9 unchanged sentences

such income shall be taxable at the regular corporate tax rate.

Conditions for entitlement

to the benefits

for entitlement to the benefits

entitlement to the above benefits is conditional upon InspireMD Ltd.

7 unchanged sentences

Investments, 1959).

Carry forward

forward tax losses

of December 31, 2020, the Company had a net carry forward tax loss of approximately $44 million, of which approximately $35 million

7 unchanged sentences

have a two-year carryback and twenty-year carryforward period.

to COVID-19 CARES act of the U.S.

Treasury, the business tax provision temporarily removes the current law taxable income 80%

limitation to allow an NOL to fully offset income in tax years 2018, 2019 and 2020.

The provision also allows an NOL from

tax years beginning in 2018, 2019, or 2020 to be carried back for five years.

of December 31, 2020, InspireMD Ltd., an Israeli subsidiary, had a net carry forward tax loss of approximately $98 million.

Israeli tax laws, the carry forward tax losses can be utilized indefinitely.

Loss before income

before income taxes

components of loss before income taxes are as follows:

5 unchanged sentences

8 - TAXES ON INCOME (continued):

Current taxes

taxes on income

main reconciling items between the statutory tax rate of the Company and the effective tax rate are the change in subsidiary tax

8 unchanged sentences

Balance at the end of the year

Accounting for

Uncertain Tax position

for Uncertain Tax position

is a reconciliation of the total amounts of the Company’s uncertain tax positions during the year ended December 31, 2020

and 2019 were as follows:

Year ended December 31,

7 unchanged sentences

8 - TAXES ON INCOME (continued):

Deferred income

($ in thousands)

Allowance for doubtful accounts

Allowance for bonus

7 unchanged sentences

9 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION:

Accounts receivable:

changes in “Allowance for doubtful accounts”

during the years ended December 31, 2019 and 2018 are as follows:

Year ended December 31,

($ in thousands)

Balance at beginning of period

Additions during the period

Bad debt written-off during the period

Exchange rate differences

Balance at end of period

($ in thousands)

Finished goods

3 unchanged sentences

9 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (continued):

Accounts payable and accruals-other:

payable and accruals-other:

($ in thousands)

2 unchanged sentences

Accrued expenses

Provision for sales commissions

Accrual for settlement payment (see note 6)

Current Operating lease liabilities

4 unchanged sentences

($ in thousands)

Other (2020 - net of settlement payment of $580, see note 6)

Year ended December 31,

2 unchanged sentences

MGuard Prime™

principal customers:

EPS (2020 - net of settlement payment of $580, see note 6)

principal customers (2020 - before of settlement payment of $580 see note 6):

Year ended December 31,

1 unchanged sentence

11 - SUBSEQUENT EVENTS:

December 9, 2019, the Company entered into an Employment Agreement with a new chief executive officer and president.

of the new chief executive officer’s employment commenced on January 1, 2020.

Pursuant to his employment agreement, the

Company granted 182,381 restricted stock units and stock options to purchase 60,794 shares of common stock at $1.10 per share.

Subsequent to December 31, 2020 the Company had several stock transactions

as follows (U.S.

dollars in thousands, except share data):

BALANCE as of December 31, 2020

Issuance of shares to Chinese distributor

February 2021 public offering

Series F and Series G warrants exercise

Conversion of Series B Convertible Preferred Stock to common shares

On February 3, 2021, the Company entered into a Distribution Agreement with three China-based partners, pursuant to which the

Chinese partners will be responsible for conducting the necessary registration trials for commercial approval of the Company’s

products in China, followed by an eight-year exclusive distribution right to sell the Company’s products in China with the

term of the agreement continuing on a year-to-year basis unless terminated.

Under the Distribution Agreement, the China-based

partners will be subject to minimum purchase obligations.

The Distribution Agreement may be terminated for cause upon failure

to meet minimum purchase obligations, failure to obtain regulatory approvals or for other material breaches.

addition, and on the same day, the Company entered into an investment transaction with one of the Chinese parties to the Distribution

Agreement, , which included (i) a Securities Purchase Agreement, or the SPA, pursuant to which investor agreed to invest $900,000

in exchange for shares of the Company’s common stock at a purchase price of $0.6708 per share.

Subsequent to year-end, the Company sold an aggregate of 12,277,844

shares of common stock for aggregate gross proceeds of $5,659,000 under the ATM Sales Agreement.

In addition, in January 2021 we

received $323,000 for shares of common stock sold on December 2020 and recorded to "Receivable for sale of Shares"

current assets of the Consolidated Balance Sheet as of December 31, 2020.

On February 3, 2021, the Company entered into an underwriting agreement with A.G.P./Alliance Global Partners, relating to an underwritten

public offering (the “Offering”) of 29,032,258 units (“Units”), with each Unit being comprised of one

share of the Company’s common stock, par value $0.0001 per share, and one Series G warrant to purchase one-half of one share

of Common Stock.

The offering price to the public was $0.62 per Unit.

The Series G Warrants are immediately exercisable at a price

of $0.682 per share, subject to adjustment in certain circumstances, and expire five years from the date of issuance.

closed on February 8, 2021.

Company granted the Underwriter a 45-day option to purchase up to an additional 4,354,838 Units consisting of 4,354,838 shares

of Common Stock and Series G Warrants to purchase 2,177,419 shares of common stock in the Offering, which the Underwriter exercised

in full on February 4, 2021.

Company granted the Underwriter a compensation warrant to purchase up to 1,669,355 shares of Common Stock.

The Underwriter Warrants

have an exercise price of $0.682 per share and are exercisable immediately and for five years from the date of effectiveness of

the registration statement in connection with the Offering.

net proceeds to the Company from the Offering, after giving effect to the exercise of the Underwriter’s over-allotment option,

were approximately $18.9 million, after deducting underwriting discounts and commissions and payment of other estimated expenses

associated with the Offering, but excluding the proceeds, if any, from the exercise of Series G Warrants sold in the Offering.

to year-end, Series F and Series G warrants

to purchase shares of common stock were exercised by investors at an exercise price of $0.495 and $0.682 per share, resulting in

the issuance of 18,381,177 shares of common stock for proceeds of approximately $9,469,000.

On February 3, 2021, 17,303 shares of Series B Convertible Preferred Stock were converted into 3,112,923 shares of common stock.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures