InspireMD, Inc. 10-Q

Item 1. Financial Statements INSPIREMD, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE QUARTER ENDED MARCH 31, 2023 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 Consolidated Statements of Cash Flows F-7 Notes to the Consolidated Financial Statements F-8 - F-15 F- 1 INSPIREMD, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. dollars in thousands) March 31 December 31 2023 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4,228 $ 4,632 Short-term bank deposits 8,657 13,171 Accounts receivable: Trade, net 1,417 1,034 Other 310 213 Prepaid expenses 394 655 Inventory 1,697 1,621 TOTAL CURRENT ASSETS 16,703 21,326 NON-CURRENT ASSETS: Property, plant and equipment, net 887 917 Operating lease right of use assets 1,472 1,554 Fund in respect of employee rights upon retirement 859 856 TOTAL NON-CURRENT ASSETS 3,218 3,327 TOTAL ASSETS $ 19,921 $ 24,653 F- 2 INSPIREMD, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. dollars in thousands other than share and per share data) March 31 December 31 2023 2022 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable and accruals: Trade 607 659 Other 3,776 4,411 TOTAL CURRENT LIABILITIES 4,383 5,070 LONG-TERM LIABILITIES- Operating lease liabilities 1,081 1,195 Liability for employees rights upon retirement 1,031 995 TOTAL LONG-TERM LIABILITIES 2,112 2,190 COMMITMENTS AND CONTINGENT LIABILITIES - TOTAL LIABILITIES 6,495 7,260 EQUITY: Common stock, par value $ 0.0001 per share; 150,000,000 shares authorized at March 31, 2023 and December 31, 2022; 8,326,648 and 8,330,918 shares issued and outstanding at March 31, 2023 and December 2022, respectively 1 1 Preferred C shares, par value $ 0.0001 per share; 1,172,000 shares authorized at March 31, 2023 and December 31, 2022; 1,718 shares issued and outstanding at March 31, 2023 and December 31 2022, respectively - * - * Additional paid-in capital 219,266 218,977 Accumulated deficit ( 205,841 ) ( 201,585 ) Total equity 13,426 17,393 Total liabilities and equity $ 19,921 $ 24,653 * 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) 3 Months Ended March 31, 2023 2022 REVENUES $ 1,239 $ 1,183 COST OF REVENUES 866 1,061 GROSS PROFIT 373 122 OPERATING EXPENSES: Research and development 1,843 1,680 Selling and marketing 788 746 General and administrative 2,123 2,182 Total operating expenses 4,754 4,608 LOSS FROM OPERATIONS ( 4,381 ) ( 4,486 ) FINANCIAL INCOME, net 125 5 NET LOSS $ ( 4,256 ) $ ( 4,481 ) NET LOSS PER SHARE - basic and diluted ( 0.53 ) ( 0.57 ) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES USED IN COMPUTING NET LOSS PER SHARE - basic and diluted 8,093,340 7,804,245 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) 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 ( 4,481 ) ( 4,481 ) Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 4,563 shares 21,620 - 653 653 BALANCE AT March 31, 2022 8,317,876 1 1,718 - * 217,278 ( 187,575 ) 29,704 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the consolidated financial statements. F- 5 INSPIREMD, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (U.S. dollars in thousands, except share data) Common stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total Shares Amount Shares Amount capital deficit equity BALANCE AT January 1, 2023 8,330,918 1 1,718 - * 218,977 ( 201,585 ) 17,393 Balance 8,330,918 1 1,718 - * 218,977 ( 201,585 ) 17,393 Net loss ( 4,256 ) ( 4,256 ) Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 4,270 shares ( 4,270 ) - 289 289 Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures ( 4,270 ) - 289 289 BALANCE AT March 31, 2023 8,326,648 1 1,718 - * 219,266 ( 205,841 ) 13,426 Balance 8,326,648 1 1,718 - * 219,266 ( 205,841 ) 13,426 * 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 CASH FLOWS (Unaudited) (U.S. dollars in thousands) Three months ended March 31 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 4,256 ) $ ( 4,481 ) Adjustments required to reconcile net loss to net cash used in operating activities: Depreciation 55 41 Change in liability for employees rights upon retirement 36 46 Other financial expenses 22 7 Change in right of use asset and leasing liability ( 34 ) ( 25 ) Share-based compensation expenses 289 653 Loss on amounts funded in respect of employee rights upon retirement, net 23 18 Decrease (increase) in interest receivable on short term deposits 14 ( 17 ) Changes in operating asset and liability items: Decrease in prepaid expenses 261 231 Decrease (Increase) in trade receivables ( 383 ) 111 Decrease (Increase) in other receivables ( 97 ) 74 Increase in inventory ( 76 ) ( 143 ) Increase (Decrease) in trade payables ( 52 ) 7 Decrease in other payables ( 633 ) ( 656 ) Net cash used in operating activities ( 4,831 ) ( 4,134 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment ( 25 ) ( 37 ) Investment in short-term bank deposits ( 2,500 ) ( 6,000 ) Withdrawal from short-term bank deposits 7,000 6,000 Amounts funded in respect of employee rights upon retirement ( 26 ) ( 28 ) Net cash provided by (used in) investing activities 4,449 ( 65 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net cash provided by (used in) financing activities - - EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 22 ) ( 7 ) DECREASE IN CASH AND CASH EQUIVALENTS ( 404 ) ( 4,206 ) BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 4,632 12,004 BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 4,228 $ 7,798 The accompanying notes are an integral part of the consolidated financial statements. F- 7 INSPIREMD, INC. UNAUDITED 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 March 31, 2023, 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, reaches 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. 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. On May 12, 2023, the Company entered into a securities purchase agreement for the issuance and sale of Company securities in a private placement. Aggregate gross proceeds to the Company in respect of the private placement is expected to be approximately $ 42.2 million, before deducting fees payable to the placement agent and other offering expenses payable by the Company and before exercising any warrants. The offering is expected to close on or about May 15, 2023, subject to the satisfaction of customary closing conditions. F- 8 c. Failure to satisfy regulatory requirements of the new European Medical Device Regulation could prevent the Company from marketing CGuard EPS 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 Company with EU law on medical devices, which, until May 26, 2021 was governed by the MDD, by presenting comprehensive technical files for the Company’s 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 distribute 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 MDR regulations. 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. In the Company’s specific case, the Company’s CE mark for CGuard EPS under the MDD expired on November 12, 2022, and the Company is in the final stages of technical documentation review by the Notified Body auditor to meet the MDR requirements for recertification. In the meantime, on February 14, 2023, the Company received a derogation per Article 97 paragraph 1 of Regulation 2017/745 from the Agency for Medicines and Health Products (FAMHP) allowing the Company to continue marketing CGuard EPS in the EU until August 15, 2023, subject to certain procedural requirements. Subsequently, on March 20, 2023 Regulation (EU) 2023/607 was published allowing the Company to continue marketing CGuard EPS in EU countries under the MDD directive until December 31, 2027. As a result of the foregoing, the Company may market and sell CGuard EPS in the EU and certain other jurisdictions subject to certain procedural requirements while the Company’s MDR CE recertification is pending. F- 9 d. 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 12.1% of total sales in Russia and Belarus in 2022 while during the three months ended March 31, 2023 and March 31,2022, The Company’s sales to Russia and Belarus were 7.9% and 1.5% 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 the Company to collect on outstanding accounts receivable from customers in this region. The Company’s global operations expose the Company 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, 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 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, 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, 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, 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. In the opinion of the Company, the financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2023 and its results of operations, changes in equity and cash flows for the three months ended March 31, 2023 and 2022. 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, 2022, as found in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2023. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of results that could be expected for the entire fiscal year. F- 10 NOTE 3 - RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS Newly issued accounting pronouncements Financial Instruments - Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments. This guidance replaces the current incurred loss impairment methodology. 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. 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): 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 had 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 met the definition of an SRC and adopted 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 adopted the provisions of this update as of January 1, 2023 with no material impact on its consolidated financial statements. F- 11 NOTE 4 - EQUITY : a. As of March 31, 2023, there were 1,718 shares of Series C Preferred Stock outstanding, convertible into an aggregate of 2,280 shares of our common stock. As of March 31, 2023, the Company has outstanding warrants to purchase an aggregate of 1,793,504 shares of common stock as follows: SCHEDULE OF ISSUANCE OF WARRANTS TO PURCHASE COMMON STOCK Number of underlying Common stock Weighted average 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 17,966 $ 7.425 Other warrants 51,157 225 and above Total Warrants 1,793,504 $ As of March 31, 2023, 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 three months ended March 31, 2023, the Company granted to a consultant options to purchase a total of 50,000 shares of the Company’s common stock. The options have an exercise price of $ 1.15 per share, which was the fair market value of the Company’s common stock on the date of the grant. 45,000 options are subject to a three -year vesting period (of which 20,000 options are vesting in the first year, 15,000 options are vesting in the second year and 10,000 options are vesting in the third year) and 5,000 options with performance conditions related to marketing activities. In calculating the fair value of the above options, the Company used the following assumptions: dividend yield of 0 % and expected term of 5.5 - 6.5 years; expected volatility ranging from 124.58 %- 125.61 %; and risk-free interest rate ranging from 3.65 %- 3.68 %. The fair value of the above options, using the Black-Scholes option-pricing model, was approximately $ 50,658 . F- 12 NOTE 5 – RELATED PARTIES TRANSACTIONS During the three months ended March 31, 2022, a consulting company whose founder and CEO is our board member provided certain marketing services in the amount of $ 6,276 . NOTE 6 - 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, and unvested restricted stocks and unvested restricted stock units as the effect is anti-dilutive. The total number of shares of common stock related to outstanding options, warrants, restricted stock, restricted stock units, Series C Preferred Stock excluded from the calculations of diluted loss per share were 2,773,675 . This amount includes 342,766 of unvested restricted stock included in the number of issued and outstanding shares as of March 31, 2023. The total number of shares of common stock related to outstanding options, warrants, restricted stock, restricted stock units, Series C Preferred Stock excluded from the calculations of diluted loss per share were 2,903,634 . This amount includes 547,383 of unvested restricted stock included in the number of issued and outstanding shares as of March 31, 2022. NOTE 7 - FINANCIAL INSTRUMENTS : a. Fair value of financial instruments The carrying amounts of financial instruments included in working capital approximate their fair value due to the relatively short-term maturities of such instruments. b. As of March 31, 2023, and December 31, 2022, allowance for expected credit loss was immaterial. NOTE 8 - INVENTORY : SCHEDULE OF INVENTORY March 31, December 31, 2023 2022 ($ in thousands) Finished goods $ 138 $ 179 Work in process 690 510 Raw materials and supplies 869 932 Total inventory $ 1,697 $ 1,621 F- 13 NOTE 9 - ACCOUNTS PAYABLE AND ACCRUALS - OTHER : SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER March 31, December 31, 2023 2022 ($ in thousands) Employees and employee institutions 970 1,853 Accrued vacation and recreation pay 240 197 Accrued expenses 933 554 Clinical trial accrual 1,046 1,258 Current Operating lease liabilities 417 419 Other 170 130 Accounts payable and accruals-other $ 3,776 $ 4,411 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 March 31 2023 2022 ($ in thousands) Italy $ 267 $ 243 Germany 214 249 Other 758 691 $ 1,239 $ 1,183 By product: SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRODUCT Three months ended March 31 2023 2022 ($ in thousands) CGuard $ 1,239 $ 1,161 MGuard - 22 $ 1,239 $ 1,183 By principal customers: SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRINCIPAL CUSTOMERS Three months ended March 31 2023 2022 Customer A 17 % 21 % Customer B 13 % 11 % All tangible long lived assets are located in Israel. F- 14 NOTE 11 – SUBSEQUENT EVENTS On May 12, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) pursuant to which the Company agreed to sell and issue in a private placement (the “Private Placement Offering) an aggregate of 10,266,270 shares (the “Private Placement Shares”) of the Company’s common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 15,561,894 shares of common stock and warrants to purchase up to an aggregate of 51,656,328 shares of common stock, consisting of Series H warrants to purchase up to 12,914,086 shares of common stock (the “Series H Warrants”), Series I warrants to purchase up to 12,914,078 shares of common stock (the “Series I Warrants”), Series J warrants to purchase up to 12,914,086 shares of Common Stock (the “Series J Warrants”) and Series K warrants to purchase up to 12,914,086 shares of common stock (the “Series K Warrants” and together with the Series H Warrants, Series I Warrants and Series J Warrants, the “Warrants”), at an offering price of $ 1.6327 per Private Placement Share and associated Warrants and an offering price of $ 1.6326 per Pre-Funded Warrant and associated Warrants. The Pre-Funded Warrants will be immediately exercisable at an exercise price of $ 0.0001 per share and will not expire until exercised in full. The Warrants will be immediately exercisable upon issuance at an exercise price of $ 1.3827 per share, subject to adjustment as set forth therein. The Warrants have a term of the earlier of (i) five years from the date of issuance and (ii) (A) in the case of the Series H Warrants, 20 trading days following the Company’s public release of primary and secondary end points related to one year follow up study results from the Company’s C-Guardians pivotal trial, (B) in the case of the Series I Warrants, 20 trading days following the Company’s announcement of receipt of Premarket Approval from the Food and Drug Administration (“FDA”) for the CGuard Prime Carotid Stent System (135 cm), (C) in the case of the Series J Warrants, 20 trading days following the Company’s announcement of receipt of FDA approval for the SwitchGuard and CGuard Prime 80 and (D) in the case on the Series K Warrants, 20 trading days following the end of the fourth fiscal quarter after the fiscal quarter in which the first commercial sales of the CGuard Carotid Stent System in the United States begins. The Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares underlying the warrants. In connection with the Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company is required to file a resale registration statement (the “Registration Statement”) with the SEC to register for resale the Private Placement Shares and the shares of common stock issuable upon exercise of the Pre-Funded Warrants and Warrants, within 20 days of the signing date of the Purchase Agreement (the “Signing Date”), and to have such Registration Statement declared effective within 45 days after the Signing Date in the event the Registration Statement is not reviewed by the SEC, or 90 days of the Signing Date in the event the Registration Statement is reviewed by the SEC. The Company will be obligated to pay certain liquidated damages if the Company fails to file the Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, of if the Company fails to maintain the effectiveness of the Registration Statement. Aggregate gross proceeds to the Company in respect of the Private Placement Offering are expected to be approximately $ 42.2 million, before deducting fees payable to the placement agent and other offering expenses payable by the Company which are expected to amount to approximately $ 4.6 million. If the Warrants are exercised in cash in full this would result in an additional $ 71.4 million of proceeds. The Private Placement Offering is expected to close on or about May 15, 2023, subject to satisfaction of customary closing conditions. F- 15