InspireMD, Inc. 10-Q

Item 1. Financial Statements INSPIREMD, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE QUARTER ENDED SEPTEMBER 30, 2022 TABLE OF CONTENTS Page CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets F-2 - F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Changes in Equity F-5 - F-8 Consolidated Statements of Cash Flows F-9 Notes to the Consolidated Financial Statements F-10 - F-16 F- 1 INSPIREMD, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. dollars in thousands) September 30, December 31, 2022 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,934 $ 12,004 Short-term bank deposits 17,111 22,036 Accounts receivable: Trade, net 1,166 1,224 Other 207 165 Prepaid expenses 860 522 Inventory 1,414 1,143 TOTAL CURRENT ASSETS 24,692 37,094 NON-CURRENT ASSETS: Property, plant and equipment, net 876 632 Operating lease right of use assets 1,635 1,081 Fund in respect of employee rights upon retirement 858 905 TOTAL NON-CURRENT ASSETS 3,369 2,618 TOTAL ASSETS 28,061 $ 39,712 F- 2 INSPIREMD, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. dollars in thousands other than share and per share data) September 30, December 31, 2022 2021 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable and accruals: Trade 404 893 Other 3,557 3,454 TOTAL CURRENT LIABILITIES 3,961 4,347 LONG-TERM LIABILITIES- Operating lease liabilities 1,261 781 Liability for employees’ rights upon retirement 969 1,052 - TOTAL LONG-TERM LIABILITIES 2,230 1,833 COMMITMENTS AND CONTINGENT LIABILITIES - - TOTAL LIABILITIES 6,191 6,180 EQUITY: Common stock, par value $ 0.0001 per share; 150,000,000 shares authorized at September 30, 2022 and December 31, 2021; 8,335,606 and 8,296,256 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 1 1 Preferred C shares, par value $ 0.0001 per share; 1,172,000 shares authorized at September 30, 2022 and December 31, 2021; 1,718 shares issued and outstanding at September 30, 2022 and December 31, 2021 - * - * Additional paid-in capital 218,609 216,625 Accumulated deficit ( 196,740 ) ( 183,094 ) Total equity 21,870 33,532 Total liabilities and equity $ 28,061 $ 39,712 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the consolidated financial statements. F- 3 INSPIREMD, INC. (Unaudited) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except per share data) 2022 2021 2022 2021 Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 REVENUES $ 1,431 $ 1,071 $ 4,145 $ 3,115 COST OF REVENUES 1,065 979 3,226 2,655 GROSS PROFIT 366 92 919 460 OPERATING EXPENSES: Research and development 2,061 1,495 5,797 3,624 Selling and marketing 845 802 2,577 2,146 General and administrative 2,070 1,826 6,322 5,475 Total operating expenses 4,976 4,123 14,696 11,245 LOSS FROM OPERATIONS ( 4,610 ) ( 4,031 ) ( 13,777 ) ( 10,785 ) FINANCIAL INCOME (EXPENSES), net: 81 ( 40 ) 131 ( 36 ) LOSS BEFORE TAX EXPENSES $ ( 4,529 ) $ ( 4,071 ) $ ( 13,646 ) $ ( 10,821 ) NET LOSS $ ( 4,529 ) $ ( 4,071 ) $ ( 13,646 ) $ ( 10,821 ) NET LOSS PER SHARE - basic and diluted $ ( 0.58 ) $ ( 0.53 ) $ ( 1.75 ) $ ( 1.50 ) WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING NET LOSS PER SHARE - basic and diluted 7,838,506 7,739,463 7,816,974 7,194,379 The accompanying notes are an integral part of the consolidated financial statements. F- 4 INSPIREMD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (U.S. dollars in thousands, except share data) Shares Amount Shares Amount Shares Amount capital deficit equity Common stock Series B Convertible Preferred Stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total Shares Amount Shares Amount Shares Amount capital deficit equity BALANCE AT January 1, 2021 3,284,322 - * 17,303 - * 2,343 - * $ 180,339 $ ( 168,176 ) $ 12,163 Net loss ( 10,821 ) ( 10,821 ) Issuance of common stock, including at the market offering net of $ 2,024 issuance costs 3,133,775 1 - - - - 25,241 - 25,242 Exercise of Warrants F 1,093,536 - * - - - - 8,120 - 8,120 Exercise of Warrants G 131,876 - * - - - - 1,349 - 1,349 Conversion of Series B Convertible Preferred Stock to common stock 207,528 - * ( 17,303 ) - * - - - * - - * Conversion of Series C Convertible Preferred Stock to common stock 831 - * - - ( 625 ) - * - * - - * Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 19,036 shares 3,166 - * - - - - 1,010 - 1,010 Round up of shares due to reverse stock split effectuated on April 26, 2021 45,277 - * - - - - - - - * BALANCE AT September 30, 2021 7,900,311 1 - - * 1,718 - * $ 216,059 $ ( 178,997 ) $ 37,063 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the consolidated financial statements. F- 5 INSPIREMD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (U.S. dollars in thousands, except share data) Shares Amount Shares Amount Shares Amount capital deficit equity Common stock Series B Convertible Preferred Stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total Shares Amount Shares Amount Shares Amount capital deficit equity BALANCE AT July 1, 2021 7,914,339 1 - - 1,718 - * $ 215,755 $ ( 174,926 ) $ 40,830 Net loss ( 4,071 ) ( 4,071 ) Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 13,077 shares ( 11,917 ) - * - - - - 304 - 304 Round up of shares due to reverse stock split effectuated on April 26, 2021 ( 2,111 ) - * - - - - - - - * BALANCE AT September 30, 2021 7,900,311 1 - - 1,718 - * $ 216,059 $ ( 178,997 ) $ 37,063 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the consolidated financial statements. F- 6 INSPIREMD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (U.S. dollars in thousands, except share data) Shares Amount Shares Amount capital deficit equity Common stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total Shares Amount Shares Amount capital deficit equity BALANCE AT January 1, 2022 8,296,256 1 - 1,718 - * 216,625 ( 183,094 ) 33,532 Net loss - - ( 13,646 ) ( 13,646 ) Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 6,144 shares 39,350 - 1,984 1,984 BALANCE AT September 30, 2022 8,335,606 1 - 1,718 - * 218,609 ( 196,740 ) 21,870 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the consolidated financial statements. F- 7 INSPIREMD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (U.S. dollars in thousands, except share data) Shares Amount Shares Amount capital deficit equity Common stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total Shares Amount Shares Amount capital deficit equity BALANCE AT July 1, 2022 8,323,200 1 - 1,718 - * 217,952 ( 192,211 ) 25,742 Net loss - - ( 4,529 ) ( 4,529 ) Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 1,581 shares 12,406 - 657 657 Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures 657 657 BALANCE AT September 30, 2022 8,335,606 1 - 1,718 - * 218,609 ( 196,740 ) 21,870 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the consolidated financial statements. F- 8 INSPIREMD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (U.S. dollars in thousands) 2022 2021 Nine months ended September 30 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 13,646 ) $ ( 10,821 ) Adjustments required to reconcile net loss to net cash used in operating activities: Depreciation 134 121 Loss from sale of property, plant and equipment - 1 Loss on amounts funded in respect of employee rights upon retirement 114 - Change in liability for employees’ rights upon retirement ( 83 ) 82 Other financial expense 138 13 Change in operating right of use asset and operating leasing liability ( 78 ) ( 58 ) Share-based compensation expenses 1,984 1,010 Increase in interest receivable on short term deposits ( 75 ) ( 12 ) Changes in operating asset and liability items: Increase in prepaid expenses ( 198 ) ( 439 ) Decrease (increase) in trade receivables 58 ( 495 ) Decrease (increase) in other receivables ( 42 ) 5 Decrease (increase) in inventory ( 271 ) 280 Increase (decrease) in trade payables ( 489 ) 320 Increase (decrease) in other payables 107 ( 316 ) Net cash used in operating activities ( 12,347 ) ( 10,309 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment ( 378 ) ( 237 ) Proceeds from withdrawal of (invest in) short-term deposits 5,000 ( 24,000 ) Amounts funded in respect of employee rights upon retirement ( 67 ) ( 61 ) Net cash provided by (used in) investing activities 4,555 ( 24,298 ) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance costs of At The Market offering ( 140 ) - Proceeds from issuance of shares and warrants and exercise of Pre-Funded Warrants and unit purchase option, net of $ 2,024 issuance costs - 35,034 Net cash provided by (used in) financing activities ( 140 ) 35,034 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 138 ) ( 13 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 8,070 ) 414 BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 12,004 12,645 BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 3,934 $ 13,059 SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: Acquisition of right-of-use assets by means of lease liabilities 835 91 The accompanying notes are an integral part of the consolidated financial statements. F- 9 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF BUSINESS a. General InspireMD, Inc., a Delaware corporation (the “Company”), together with its subsidiaries, is a medical device Company focusing on the development and commercialization of its proprietary MicroNet™ stent platform technology for the treatment of complex vascular and coronary disease. MicroNet, a micron mesh sleeve, is wrapped over a stent to provide embolic protection in stenting procedures. The Company’s carotid product (CGuard™ EPS) combines MicroNet and a self-expandable nitinol stent in a single device to treat carotid artery disease. The Company’s MGuard™ Prime™ embolic protection system (“MGuard Prime EPS”) was marketed for use in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions, or bypass surgery. MGuard Prime EPS combines MicroNet with a bare-metal cobalt-chromium based stent. MGuard Prime EPS received CE mark approval in the European Union in October 2010 for improving luminal diameter and providing embolic protection. Over the past years, there has been a shift in industry preferences away from bare-metal stents, such as MGuard Prime EPS in ST-Elevation Myocardial Infarction (“STEMI”) patients. As a result of declining sales of the MGuard Prime EPS, which the Company believes is largely driven by the predominant industry preferences favoring drug-eluting, or drug-coated, stents, during the second quarter of 2022, the Company ceased sales of the Company’s MGuard Prime EPS following a phase out period. The Company markets its products through distributors in international markets, mainly in Europe. b. Liquidity The Company has an accumulated deficit as of September 30, 2022, 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 product, 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 September 2023 . 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. See also note 1b regarding the new European Medical Device Regulation. Management’s plans include the continued commercialization of the Company’s product 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. F- 10 c. Failure to satisfy regulatory requirements of the new European Medical Device Regulation by November 12, 2022 could prevent the Company from marketing CGuard EPS in in countries requiring the CE Mark. For the European Union nations, medical devices must obtain a CE mark before they may be placed on the market. In order to obtain and maintain the CE mark, the Company must comply with EU law on medical devices, which, until May 26, 2021 was governed by the Medical Device Directive 93/42/EEC (“MDD”), by presenting comprehensive technical files for its products demonstrating safety and efficacy of the product to be placed on the market and passing initial and annual quality management system audit as per ISO 13485 standard by a European Notified Body. The Company has obtained ISO 13485 quality system certification and CGuard EPS that the Company currently distributes into the European Union, displays the required CE mark. In order to maintain certification, the Company is required to pass an annual surveillance audit conducted by Notified Body auditors. The European Union replaced the MDD with the new European Medical Device Regulation, or MDR (MDR 2017/745). The MDR entered into force after a transitional period of three years and a one year extension of that transition period due to the COVID-19 pandemic on May 26, 2021 and which changes several aspects of the regulatory framework in the European Union. Manufacturers had the duration of the transition period to update their technical documentation and processes to meet the new requirements in order to obtain a CE Mark. After May 26, 2021, medical devices can generally still be placed on the market under the provision of the MDD until May 26, 2024; provided the CE Mark was issued prior to this date and the manufacturer continues to comply with this directive. By May 26, 2024, all medical devices entering the EU will need to have a CE Mark under the MDR, even if they have been on the market previously under the MDD. In the Company’s’ particular case, CGuard EPS can continue to be marketed under the MDD until November 12, 2022. Specifically, the EU MDR requires changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety information for Class III products, Unique Device Identification (“UDI”) for all products, submission of core data elements to a European UDI database prior to placement of a device on the market, and multiple other labeling changes. Currently the Company is under technical documentation review by the Notified Body auditor to meet the MDR requirements for recertification having completed the quality management system Notified Body audit in October 2021. The Notified Body is currently experiencing chronic delays in processing MDR audits and reviews and the Company does not expect to satisfy MDR requirements by November 12, 2022. While the Company continues to seek to expedite the review process, if the CE mark lapses, the Company will not be able to promote and sell CGuard EPS into countries requiring the CE mark until the Company receives recertification. No assurance can be provided as to the length of time it will take to obtain recertification, If the Company is unable to promote and sell CGuard EPS into countries requiring the CE mark for a prolonged period, this is expected to have a material adverse effect on our business, financial condition, results of operations or cash flows. d. COVID-19 Pandemic The COVID-19 global pandemic has led governments and authorities around the globe to take various precautionary measures in order to limit the spread of COVID-19, including government-imposed quarantines, lockdowns, and other public health safety measures. The Company experienced a significant COVID-19 related impact on the Company’s financial condition and results of operations, primarily during the year ended December 31, 2020, which the Company primarily attribute to the postponement of CGuard EPS procedures (non-emergency procedures), as hospitals have shifted resources to patients affected by COVID-19. New COVID-19 variants, and potentially increasing infection rates make the current COVID-related environment highly volatile and uncertain and the Company anticipates that the continuation of the pandemic and related restrictions and safety measures will likely result in continued fluctuations in sales of the Company’s products, potentially enrollments in the Company’s studies as well as potential disruptions to the Company’s supply chain for the upcoming periods. F- 11 e. Risks Related to the Geopolitical and Military Tensions Between Russia and Ukraine in Europe In February 2022, Russia launched a military invasion into Ukraine. The Company derived approximately 10.5% of total sales in Russia, Ukraine and Belarus in 2021 while during the nine and three months ended September 30, 2022 the Company’s sales to Russia, Ukraine and Belarus were 12.1% and 22.2% respectively. The escalation of geopolitical instability in Russia and Ukraine as well as currency fluctuations in the Russian Ruble could negatively impact the Company’s operations, sales, and future growth prospects in that region. As a result of the crisis in Ukraine, the United States and the EU have implemented sanctions against certain Russian individuals and entities and have made it more difficult for us to collect on outstanding accounts receivable from customers in this region. The Company’s global operations expose us to risks that could adversely affect the Company’s business, financial condition, results of operations, cash flows or the market price of the Company’s securities, including the potential for increased tensions between the United States and Russia resulting from the current situation involving Russia and Ukraine, tariffs, economic sanctions and import-export restrictions imposed by either nation, and retaliatory actions by the other nation, as well as the potential negative impact on the Company’s business and sales in Russia, Ukraine and Belarus. Current geopolitical instability in Russia and Ukraine and related sanctions by the U.S. government against certain companies and individuals may hinder the Company’s ability to conduct business with potential or existing customers and vendors in these countries. The U.S. government has imposed sanctions through several executive orders restricting U.S. companies from conducting business with specified Russian and Ukrainian individuals and companies. While the Company believes that the executive orders currently do not preclude the Company from conducting business with the Company’s current customers or vendors in Russia, Ukraine and Belarus, the sanctions imposed by the U.S. government may be expanded in the future to restrict the Company from engaging with them. If the Company is unable to conduct business with new or existing customers or vendors or pursue business opportunities in Russia, Ukraine or Belarus, the Company’s business, including revenue, profitability and cash flows, and operations could be adversely affected. The Company cannot provide assurance that current sanctions or potential future changes in sanctions will not have a material impact on the Company’s operations in Russia, Ukraine and Belarus or on the Company’s financial results. NOTE 2 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements for the year ended December 31, 2021. In the opinion of the Company, all adjustments considered necessary for a fair statement of the results of the interim periods reported herein have been included (consisting only of normal recurring adjustments). These consolidated financial statements and notes thereto are unaudited and should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021, as found in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 7, 2022. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of results that could be expected for the entire fiscal year. F- 12 NOTE 3 - EQUITY : a. As of September 30, 2022, there were 1,718 shares of Series C Preferred Stock outstanding, convertible into an aggregate of 2,280 shares of the Company’s common stock. As of September 30, 2022, the Company has outstanding warrants to purchase an aggregate of 1,793,815 shares of common stock as follows: SCHEDULE OF ISSUANCE OF WARRANTS TO PURCHASE COMMON STOCK Number of underlying Common stock Exercise price Series E Warrants 198,159 $ 27.000 Series F Warrants 433,878 $ 7.425 Series G Warrants 1,092,344 $ 10.230 Underwriter Warrants 18,277 $ 7.425 Other warrants 51,157 225 and above Total Warrants 1,793,815 $ As of September 30, 2022, the Company had 155,000,000 authorized shares of capital stock, par value $ 0.0001 per share, of which 150,000,000 are shares of common stock and 5,000,000 are shares of “blank check” preferred stock. b. During the nine months ended September 30, 2022, the Company granted to employees and consultants’ options to purchase a total of 154,508 shares of the Company’s common stock. The options have an exercise price ranging from $ 2.61 - $ 2.97 per share, which was the fair market value of the Company’s common stock on the date of the grant. 98,838 options are subject to a three -year vesting period, with one-third of such awards vesting each year and 55,670 options with performance conditions, mainly related to clinical activities . In calculating the fair value of the above options, the Company used the following assumptions: dividend yield of 0 % and expected term of 5.125 - 6.5 years; expected volatility ranging from 127.43 %- 130.93 %; and risk-free interest rate ranging from 1.79 %- 2.88 %. The fair value of the above options, using the Black-Scholes option-pricing model, was approximately $ 360,356 . c . During the nine months ended September 30, 2022, the Company granted 13,987 restricted shares of the Company’s common stock to employees. The shares are subject to a three -year vesting period, with one-third of such awards vesting each year. The fair value of the above restricted shares was approximately $ 25,736 . NOTE 4 – RELATED PARTIES TRANSACTIONS During the nine and three months ended September 30, 2022, a consulting Company whose founder and CEO is a member of the Company’s board of directors, provided certain marketing services in the amount of $ 9,276 and $ 500 , respectively. F- 13 NOTE 5- NET LOSS PER SHARE : Basic and diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share excludes potential share issuances of common stock upon the exercise of share options, warrants, unvested restricted stock and unvested restricted stock units as the effect is anti-dilutive. The total number of shares of common stock related to outstanding options, warrants, unvested restricted stock, unvested restricted stock units and Series C Preferred Stock excluded from the calculations of diluted loss per share were 2,932,284 for the nine and three month periods ended September 30, 2022. The total number of shares of common stock related to outstanding options, warrants, restricted stock, restricted stock units and Series C Preferred Stock excluded from the calculations of diluted loss per share were 2,163,741 for the nine and three month periods ended September 30, 2021. NOTE 6 – LEASE AGREEMENTS 1) The Company’s Israeli subsidiary has a lease agreement for a facility in Israel, which expires on December 31, 2022 with an option to extend the agreement for two additional years until December 31, 2024 under the terms stipulated in the agreement., On May 25, 2022 the Company amended the agreement mentioned above and extended it until December 31, 2026 as well as leasing of additional space in the facility, the additional space amendment was taken in consideration when calculating the operating lease right of use assets and liabilities. 2) Operating lease cost for the nine and three-month periods ended September 30, 2022 were $ 331,000 and $ 113,000 respectively. Supplemental information related to leases are as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES September 30 December 31 2022 2021 ($ in thousands) ($ in thousands) Operating lease right-of-use assets 1,635 1,081 Current operating lease liabilities ( 416 ) ( 420 ) Non-current operating lease liabilities ( 1,261 ) ( 781 ) Other information: Operating cash flows from operating leases (cash paid in thousands) ( 328 ) ( 437 ) Weighted Average Remaining Lease Term 4.25 3 Weighted Average Discount Rate 8.69 % 8.38 % F- 14 Maturities of lease liabilities are as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Amount ($ in thousands) 2022 107 2023 429 2024 469 2025 469 2026 509 Total lease payments 1,983 Less imputed interest ( 307 ) Total 2022 1,677 Total 1,677 NOTE 7 – FINANCIAL INSTRUMENTS : a. Fair value of financial instruments The carrying amounts of financial instruments included in working capital approximate their fair value either because these amounts are presented at fair value or due to the relatively short-term maturities of such instruments. b. As of September 30, 2022, and December 31, 2021, allowance for doubtful accounts was $ 0 . NOTE 8 – INVENTORY : SCHEDULE OF INVENTORY September 30, December 31, 2022 2021 ($ in thousands) Finished goods $ 217 $ 92 Work in process 347 436 Raw materials and supplies 850 615 Total inventory $ 1,414 $ 1,143 NOTE 9 - ACCOUNTS PAYABLE AND ACCRUALS - OTHER : SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER September 30, December 31, 2022 2021 ($ in thousands) Employees and employee institutions 1,394 1,510 Accrued vacation and recreation pay 227 233 Accrued expenses 1,425 1,136 Current Operating lease liabilities 416 420 Other 95 155 Accounts payable and accruals - other $ 3,557 $ 3,454 F- 15 NOTE 10 - DISAGGREGATED REVENUE AND ENTITY WIDE DISCLOSURES : Revenues are attributed to geographic areas based on the location of the customers. The following is a summary of revenues: SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 ($ in thousands) Italy $ 240 $ 219 $ 713 $ 678 Germany 191 213 866 690 Poland 74 125 217 318 Russia 250 118 381 261 Other 676 396 1,968 1,168 Revenues $ 1,431 $ 1,071 $ 4,145 $ 3,115 By product: SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRODUCT Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 ($ in thousands) CGuard $ 1,431 $ 1,031 $ 4,097 $ 3,018 MGuard - 40 48 97 Revenue $ 1,431 $ 1,071 $ 4,145 $ 3,115 By principal customers: SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRINCIPAL CUSTOMERS Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Customer A 13 % 19 % 21 % 21 % Customer B 17 % 11 % 9 % 8 % Customer C 9 % 12 % 9 % 13 % Customer D 5 % 12 % 5 % 10 % Concentration risk percentage 5 % 12 % 5 % 10 % All tangible long lived assets are located in Israel. F- 16