InspireMD, Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-35731 InspireMD, Inc. (Exact name of registrant as specified in its charter) Delaware 26-2123838 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4 Menorat Hamaor St. Tel Aviv , Israel 6744832 (Address of principal executive offices) (Zip Code) ( 888 ) 776-6204 (Registrant’s telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.0001 per share NSPR Nasdaq Capital Market The number of shares of the registrant’s common stock, $0.0001 par value, outstanding as of August 7, 2023: 21,195,103 TABLE OF CONTENTS Page PART I Item 1. Financial Statements F-1 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3 Item 3. Quantitative and Qualitative Disclosures About Market Risk 10 Item 4. Controls and Procedures 11 PART II Item 1. Legal Proceedings 12 Item 1A. Risk Factors 12 Item 5. Other Information 12 Item 6. Exhibits 13 2 Item 1. Financial Statements INSPIREMD, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE QUARTER ENDED JUNE 30, 2023 TABLE OF CONTENTS Page CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: Condensed Consolidated Balance Sheets F-2 - F-3 Condensed Consolidated Statements of Operations F-4 Condensed Consolidated Statements of Changes in Equity F-5 - F-8 Condensed Consolidated Statements of Cash Flows F-9 Notes to the Condensed Consolidated Financial Statements F-10 - F-18 F- 1 INSPIREMD, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. dollars in thousands) June 30, December 31, 2023 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 11,545 $ 4,632 Short-term bank deposits 6,631 13,171 Marketable securities 28,817 - Accounts receivable: Trade, net 1,470 1,034 Other 312 213 Prepaid expenses 56 655 Inventory 1,689 1,621 TOTAL CURRENT ASSETS 50,520 21,326 NON-CURRENT ASSETS: Property, plant and equipment, net 873 917 Operating lease right of use assets 1,388 1,554 Fund in respect of employee rights upon retirement 857 856 TOTAL NON-CURRENT ASSETS 3,118 3,327 TOTAL ASSETS $ 53,638 $ 24,653 F- 2 INSPIREMD, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. dollars in thousands other than share and per share data) June 30, December 31, 2023 2022 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable and accruals: Trade 768 659 Other 4,061 4,411 TOTAL CURRENT LIABILITIES 4,829 5,070 LONG-TERM LIABILITIES- Operating lease liabilities 970 1,195 Liability for employees’ rights upon retirement 1,026 995 TOTAL LONG-TERM LIABILITIES 1,996 2,190 COMMITMENTS AND CONTINGENT LIABILITIES - - TOTAL LIABILITIES 6,825 7,260 EQUITY: Common stock, par value $ 0.0001 per share; 150,000,000 shares authorized at June 30, 2023 and December 31, 2022; 21,192,204 and 8,330,918 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively 2 1 Preferred C shares, par value $ 0.0001 per share; 1,172,000 shares authorized at June 30, 2023 and December 31, 2022; 1,718 shares issued and outstanding at June 30, 2023 and December 31 2022, respectively - * - * Additional paid-in capital 257,729 218,977 Accumulated deficit ( 210,918 ) ( 201,585 ) Total equity 46,813 17,393 Total liabilities and equity $ 53,638 $ 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) 2023 2022 2023 2022 Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 REVENUES $ 1,649 $ 1,531 $ 2,888 $ 2,714 COST OF REVENUES 1,158 1,100 2,024 2,161 GROSS PROFIT 491 431 864 553 OPERATING EXPENSES: Research and development 1,993 2,056 3,836 3,736 Selling and marketing 892 986 1,680 1,732 General and administrative 2,921 2,070 5,044 4,252 Total operating expenses 5,806 5,112 10,560 9,720 LOSS FROM OPERATIONS ( 5,315 ) ( 4,681 ) ( 9,696 ) ( 9,167 ) FINANCIAL INCOME, net: 238 45 363 50 NET LOSS $ ( 5,077 ) $ ( 4,636 ) $ ( 9,333 ) $ ( 9,117 ) NET LOSS PER SHARE - basic and diluted $ ( 0.24 ) $ ( 0.59 ) $ ( 0.64 ) $ ( 1.17 ) NET LOSS PER SHARE - basic $ ( 0.24 ) $ ( 0.59 ) $ ( 0.64 ) $ ( 1.17 ) WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING NET LOSS PER SHARE - basic and diluted 21,074,187 7,807,795 14,619,622 7,806,030 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING NET LOSS PER SHARE - basic 21,074,187 7,807,795 14,619,622 7,806,030 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 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 - - ( 9,117 ) ( 9,117 ) Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 4,563 shares 26,944 - * 1,327 1,327 BALANCE AT June 30, 2022 8,323,200 1 1,718 - * 217,952 ( 192,211 ) 25,742 * 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) Common stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total Shares Amount Shares Amount capital deficit equity BALANCE AT April 1, 2022 8,317,876 1 1,718 - * 217,278 ( 187,575 ) 29,704 Net loss - - ( 4,636 ) ( 4,636 ) Share-based compensation related to restricted stock, restricted stock units and stock options award 5,324 - * 674 674 BALANCE AT June 30, 2022 8,323,200 1 1,718 - * 217,952 ( 192,211 ) 25,742 * 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) 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 Net loss - - ( 9,333 ) ( 9,333 ) Issuance of common shares, pre-funded warrants and warrants, net of $ 4,635 issuance costs 10,266,270 1 37,533 37,534 Share-based compensation related to stock, restricted stock, restricted stock units and stock options award, net of forfeitures of 4,270 shares 2,595,016 - * 1,219 1,219 BALANCE AT June 30, 2023 21,192,204 2 1,718 - * 257,729 ( 210,918 ) 46,813 * 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) Common stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total Shares Amount Shares Amount capital deficit equity BALANCE AT April 1, 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 Net loss - - ( 5,077 ) ( 5,077 ) Issuance of common shares, pre-funded warrants and warrants, net of $ 4,635 issuance costs 10,266,270 1 37,533 37,534 Share-based compensation related to stock, restricted stock, restricted stock units and stock options award 2,599,286 - * 930 930 BALANCE AT June 30, 2023 21,192,204 2 1,718 - * 257,729 ( 210,918 ) 46,813 Balance 21,192,204 2 1,718 - * 257,729 ( 210,918 ) 46,813 * 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) 2023 2022 Six months ended June 30 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ( 9,333 ) $ ( 9,117 ) Adjustments required to reconcile net loss to net cash used in operating activities: Depreciation 113 84 Gain from sale of property, plant and equipment ( 8 ) - Loss on amounts funded in respect of employee rights upon retirement 42 103 Changes in fair value of marketable securities 21 - Change in liability for employees’ rights upon retirement 31 ( 90 ) Other financial expenses 23 132 Change in operating right of use asset and leasing liability ( 60 ) ( 63 ) Share-based compensation expenses 1,219 1,327 Decrease (increase) in interest receivable on short term deposits 40 ( 42 ) Changes in operating asset and liability items: Decrease in prepaid expenses 599 338 Decrease (increase) in trade receivables ( 436 ) 41 Increase in other receivables ( 99 ) ( 6 ) Increase in inventory ( 68 ) ( 311 ) Increase in trade payables 109 234 Increase (decrease) in other payables ( 349 ) 127 Net cash used in operating activities ( 8,156 ) ( 7,243 ) CASH FLOWS FROM INVESTING ACTIVITIES: Investment in short-term bank deposits ( 5,500 ) ( 10,000 ) Purchase of property, plant and equipment ( 70 ) ( 152 ) Proceeds from sale of property, plant and equipment 9 - Investments in marketable securities ( 28,838 ) - Withdrawal from short-term bank deposits 12,000 12,000 Amounts funded in respect of employee rights upon retirement ( 43 ) ( 47 ) Net cash provided by (used in) investing activities ( 22,442 ) 1,801 CASH FLOWS FROM FINANCING ACTIVITIES: Issuance costs of At The Market offering - ( 37 ) Proceeds from issuance of shares and warrants net of $ 4,635 issuance costs, 37,534 - Net cash provided by financing activities 37,534 ( 37 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 23 ) ( 132 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,913 ( 5,611 ) 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 $ 11,545 $ 6,393 SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: Acquisition of right-of-use assets by means of lease liabilities - 835 The accompanying notes are an integral part of the consolidated financial statements. F- 9 INSPIREMD, INC. NOTES TO THE CONDENSED 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. As 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 product, CGuard™ EPS, reaches commercial profitability. 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. b. 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. c. 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 six and three months ended June 30, 2023, the Company’s sales to Russia and Belarus were 10.0% and 11.6%, compared to 6.8% and 10.9% in the six and three months ended June 30, 2022, 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. F- 10 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, 2022. 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, 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 and six months ended June 30, 2023, are not necessarily indicative of results that could be expected for the entire fiscal year. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. As of June 30, 2023, cash and cash equivalents consisted of cash, short-term deposits (up to three months from the date of deposit) and money market funds. As of December 31, 2022, this balance consisted solely of cash. Marketable securities Marketable securities consist of debt securities. The Company elected the fair value option to measure and recognize its investments in debt securities in accordance with ASC 825, Financial Instruments as the Company manages its portfolio and evaluates the performance on a fair value basis. Changes in fair value, realized gains and losses on sales of marketable securities, are reflected in the statements of operation as finance expense (income), net. NOTE 3 - NEW ACCOUNTING PRONOUNCEMENT Recently adopted accounting pronouncement 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 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. Recently issued accounting pronouncement, not yet adopted In August 2020, the FASB issued ASU 2020-06 “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40).” This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU 2020-06 on the Company’s consolidated financial statements. F- 11 NOTE 4 – FAIR VALUE MEASUREMENTS Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows: SCHEDULE OF FINANCIAL ASSETS SUBJECT TO FAIR VALUE MEASUREMENTS Total Level 1 Level 2 Level 3 As of June 30, 2023 Total Level 1 Level 2 Level 3 ($ in thousands) Assets: Cash equivalents- Money market funds $ 3,598 $ 3,598 $ - $ - Cash equivalents $ 3,598 $ 3,598 $ - $ - Marketable securities- U.S government bonds $ 28,817 $ - $ 28,817 $ - Marketable securities $ 28,817 $ - $ 28,817 $ - The Company’s debt securities are classified within Level 2 because it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. The cost of marketable securities as of June 30, 2023 is $ 28,838 thousand. F- 12 NOTE 5 - MARKETABLE SECURITIES The following table sets forth the Company’s marketable securities for the indicated period: SCHEDULE OF MARKETABLE SECURITIES June 30, December 31, 2023 2022 ($ in thousands) U.S government bonds $ 28,817 $ - Marketable securities $ 28,817 $ - The following table summarizes the fair value of the Company’s marketable securities classified by maturity as of June 30, 2023, and December 31, 2022: SCHEDULE OF FAIR VALUE OF MARKETABLE SECURITIES CLASSIFIED BY MATURITY June 30, December 31, 2023 2022 ($ in thousands) Amounts maturing within one year $ 17,429 $ - Amounts maturing after one year through two years 11,388 - $ 28,817 $ - The table below sets forth a summary of the changes in the fair value of the Company’s marketable securities for the six months period ended June 30, 2023: SCHEDULE OF CHANGES IN FAIR VALUE OF MARKETABLE SECURITIES Six months ended June 30, 2023 ($ in thousands) Balance at beginning of the period $ - Additions 28,838 Sale or maturity - Changes in fair value during the period ( 21 ) Balance at end of the period 28,817 Balance at end of the period 28,817 NOTE 6 - EQUITY : a. Private Placement 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 12,914,078 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 Private Placement Offering closed on May 16, 2023. F- 13 Aggregate gross proceeds to the Company in respect of the Private Placement Offering were $ 42.2 million, before deducting fees payable to the placement agent and other offering expenses payable by the Company which amounted to approximately $ 4.6 million. If the Warrants are exercised in cash in full this would result in an additional $ 71.4 million of gross proceeds. The Pre-Funded Warrants are immediately exercisable at an exercise price of $ 0.0001 per share and will not expire until exercised in full. The Warrants are immediately exercisable upon issuance at an exercise price of $ 1.3827 per share. 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 (PMA) from the Food and Drug Administration, or 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 transcarotid system and CGuard Prime 80 cm 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 begin. The Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares underlying the warrants. As of June 30, 2023, there are 15,561,894 outstanding Pre-Funded Warrants. Pursuant to the full ratchet anti-dilution adjustment provisions in the respective certificate of designation for the Company’s Series C Preferred Stock, the conversion price of the outstanding shares of the Series C Preferred Stock was reduced to $ 1.3827 per share, effective as of the date of the securities purchase agreement entered for the Offering, and the number of shares of common stock issuable upon conversion of the Series Series C Preferred Stock increased by 5,668 additional shares of common stock upon conversion of the Series C Preferred Stock, based on 1,718 shares of Series C Preferred Stock outstanding as of May 16, 2023. As of June 30, 2023, there were 1,718 shares of Series C Preferred Stock outstanding, convertible into an aggregate of 7,952 shares of the company’s common stock. b. As of June 30, 2023, the Company has outstanding warrants to purchase an aggregate of 53,449,832 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 0 Series F Warrants 433,878 $ 7.4250 Series G Warrants 1,092,344 $ 10.230 0 Series H Warrants 12,914,086 $ 1.3827 Series I Warrants 12,914,078 $ 1.3827 Series J Warrants 12,914,086 $ 1.3827 Series K Warrants 12,914,078 $ 1.3827 Underwriter Warrants 17,966 $ 7.4250 Other warrants 51,157 225 and above Total Warrants 53,449,832 $ As of June 30, 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. F- 14 c. During the six months ended June 30, 2023, the Company granted 2,569,540 restricted shares of the Company’s common stock to employees and directors. 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 $ 4.52 million. d. During the six months ended June 30, 2023, the Company granted 1,045,150 restricted share units of the Company’s common stock to the chief executive officer. 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 share units was approximately $ 1,839 thousand. e. On January 6, 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 5.125 - 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 . On May 17, 2023, the Company granted to employees and directors options to purchase a total of 1,011,930 shares of the Company’s common stock. The options have an exercise prices of $ 1.76 per share, which was the fair market value of the Company’s common stock on the date of the grant. The options are subject to a three-year vesting period, with one-third of such awards vesting each year. 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 of 116.76 %- 123.30 %; and risk-free interest rate of 3.58 %. The fair value of the above options, using the Black-Scholes option-pricing model, was approximately $ 1.56 million. On May 17, 2023, the Company granted to consultants options to purchase a total of 575,000 shares of the Company’s common stock. The options have an exercise price of $ 1.76 per share, which was the fair market value of the Company’s common stock on the date of the grant. The options are subject to a three-year vesting period, with one-third of such awards vesting each year. 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 of 116.76 %- 123.30 %; and risk-free interest rate of 3.58 %. The fair value of the above options, using the Black-Scholes option-pricing model, was approximately $ 885 thousand. F- 15 f. Election to Receive Shares of Common Stock in lieu of Cash Compensation Beginning on January 1, 2023, non-employee directors may elect to receive all or a portion of their cash retainer amount in shares of the Company’s common stock under the 2021 Equity Incentive Plan. If a director makes that election, a stock award under the 2021 Equity Incentive Plan will be paid quarterly on the first day of each next quarter (“Issuance Dates”) and will become fully vested on the Issuance Dates. The stock award will be determined by dividing (x) the product of the cash retainer amount and percentage of the cash retainer amount elected to be taken in shares by (y) the “Fair Market Value” (as defined in the 2021 Equity Incentive Plan) of a share on the Issuance Dates. If a director’s service on the board terminates for any reasons prior to an Issuance Date, he/she will receive a pro rata portion of shares or cash based on the number of days served on the board during the relevant quarter. On April 1, 2023, the Company issued 29,746 shares of common stock to non-employee directors who elected to receive all or a portion of their cash retainer amount for the three months ended March 31, 2023 in shares of the Company’s common stock under the 2021 Equity Incentive Plan. As of June 30, 2023, there was an accrual for $ 55,000 for director’s fees for the three months ended June 30, 2023. Out of this an amount of $ 22,875 will be paid in cash and $ 32,125 will be issued in shares of the Company’s common stock under the 2021 Equity Incentive Plan and accordingly on July 1, 2023 the Company issued 12,648 share of common stock. NOTE 7 – RELATED PARTIES TRANSACTIONS During the six and three months ended June 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 $ 8,776 and $ 2,500 , respectively. During the six and three months ended June 30, 2023, no marketing services were provided. NOTE 8 - 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, fully vested pre-funded warrants and fully vested restricted stock units 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, unvested restricted stock units and Series C preferred stock as the effect is anti-dilutive. For 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. For the six and three-month periods ended June 30, 2023, we had weighted average Pre-funded Warrants of 3,954,956 and 7,866,452 , respectively, which were used in the computations of net loss per share for the six and three-month periods. 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 75,186,979 for the six and three-month periods ended June 30, 2023. This amount includes 2,905,615 of unvested restricted stock included in the number of issued and outstanding shares as of June 30, 2023. 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 3,010,707 for the six and three month periods ended June 30, 2022. This amount includes 547,792 of unvested restricted stock included in the number of issued and outstanding shares as of June 30, 2022. F- 16 NOTE 9 - FINANCIAL INSTRUMENTS : a. Fair value of financial instruments The carrying amounts of financial instruments 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 June 30, 2023, and December 31, 2022, allowance for expected credit loss was immaterial. NOTE 10- INVENTORY : SCHEDULE OF INVENTORIES June 30, December 31, 2023 2022 ($ in thousands) Finished goods $ 177 $ 179 Work in process 513 510 Raw materials and supplies 999 932 Total inventory $ 1,689 $ 1,621 NOTE 11 - ACCOUNTS PAYABLE AND ACCRUALS - OTHER : SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER June 30, December 31, 2023 2022 ($ in thousands) Employees and employee institutions 1,263 1,853 Accrued vacation and recreation pay 303 197 Accrued expenses 742 554 Clinical trial accrual 1,214 1,258 Current Operating lease liabilities 418 419 Other 121 130 Accounts Payable and Accruals - Other 4,061 4,411 F- 17 NOTE 12 - 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 June 30, Six months ended June 30, 2023 2022 2023 2022 ($ in thousands) Germany $ 276 $ 426 $ 490 $ 675 Italy 338 229 605 473 Other 1,035 876 1,793 1,566 $ 1,649 $ 1,531 $ 2,888 $ 2,714 By product: SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRODUCT Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 ($ in thousands) CGuard $ 1,649 $ 1,505 $ 2,888 $ 2,666 MGuard - 26 - 48 $ 1,649 $ 1,531 $ 2,888 $ 2,714 By principal customers: SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRINCIPAL CUSTOMERS Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Customer A 17 % 28 % 17 % 25 % Customer B 11 % 8 % 12 % 9 % All tangible long lived assets are located in Israel. F- 18 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Form 10-Q to the “Company,” “InspireMD,” “we,” “our” and “us” refer to InspireMD, Inc., a Delaware corporation, and its subsidiaries. Forward-Looking Statements This Quarterly Report on Form 10-Q contains “forward-looking statements,” which include information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation, including revenue growth. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: ● our history of recurring losses and negative cash flows from operating activities, significant future commitments and the uncertainty regarding the adequacy of our liquidity to pursue our complete business objectives; ● our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute out stockholders’ ownership interests; ● an inability to secure and maintain regulatory approvals for the sale of our products; ● negative clinical trial results or lengthy product delays in key markets; ● our ability to maintain compliance with the Nasdaq Capital Market listing standards; ● our ability to generate revenues from our products and obtain and maintain regulatory approvals for our products; ● our ability to adequately protect our intellectual property rights; ● our dependence on a single manufacturing facility and our ability to comply with stringent manufacturing quality standards; ● the risk that the data collected from our current and planned clinical trials may not be sufficient to demonstrate that our technology is an attractive alternative to other procedures and products; ● intense competition in our industry, with competitors having greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do; ● entry of new competitors and products and potential technological obsolescence of our products; ● inability to carry out research, development and commercialization plans; 3 ● loss of a key customer or supplier; ● technical problems with our research and products and potential product liability claims; ● product malfunctions; ● price increases for supplies and components; ● adverse economic conditions; ● insufficient or inadequate reimbursement by governmental and other third-party payers for our products; ● adverse federal, state and local government regulation in the United States, Europe, Israel and other foreign jurisdictions; ● the fact that we conduct business in multiple foreign jurisdictions, exposing us to foreign currency exchange rate fluctuations, logistical and communications challenges, burdens and costs of compliance with foreign laws and political and economic volatility in certain jurisdictions; ● the escalation of hostilities in Israel, which could impair our ability to manufacture our products; and ● current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk. The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and investing in our common stock, you should carefully review the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission. The forward-looking statements contained in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events. Overview We are a medical device company focusing on the development and commercialization of our proprietary MicroNet™ stent platform for the treatment of carotid artery disease and other vascular disease. A stent is an expandable “scaffold-like” device, usually constructed of a metallic material, that is inserted into the lumen of the artery to create patency and revascularization of blood flow. MicroNet, a micron mesh sleeve, is attached over a stent to provide embolic protection both during and after stenting procedures. Our CGuard™ carotid embolic prevention system (“CGuard EPS™”) combines MicroNet and a unique self-expandable nitinol stent in a single device for use in carotid artery revascularization. Our CGuard EPS originally received CE mark approval under Medical Device Directive 93/42/EEC (“MDD”) in the European Union (“EU”) in March 2013 and was fully launched in Europe in September 2015. Subsequently, we launched CGuard EPS in over 30 countries and on February 3, 2021, we executed a distribution agreement with Chinese partners for the purpose of expanding our presence in the Asian markets. Currently, we are seeking strategic partners for a potential launch of CGuard EPS in Japan and other Asian countries. Our CE mark for CGuard EPS under the MDD expired on November 12, 2022 and we are in the final stages of technical documentation review by the Notified Body auditor to meet the Medical Device Regulation (“MDR”) (MDR 2017/745) requirements (which replaced the MDD) for recertification. In the meantime, on February 14, 2023, we received a derogation per Article 97 paragraph 1 of Regulation 2017/745 from the Agency for Medicines and Health Products (FAMHP) allowing us 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 us to continue marketing CGuard EPS in EU countries under the MDD directive until December 31, 2027. As a result of the foregoing, we may market and sell CGuard EPS in the EU and certain other jurisdictions subject to certain procedural requirements while our MDR CE recertification is pending. We continue to expedite the review process for recertification under the MDR. 4 On September 8, 2020, we received approval from the U.S. Food and Drug Administration (“FDA”) of our Investigation Device Exemption (“IDE”), thereby allowing us to proceed with a pivotal study of our CGuard™ Carotid Stent System, C-Guardians, for prevention of stroke in patients in the United States. C-Guardians is a prospective, multicenter, single-arm, pivotal study to evaluate the safety and efficacy of the CGuard™ Carotid Stent System when used to treat symptomatic and asymptomatic carotid artery stenosis in patients undergoing carotid artery stenting. The trial was designed to enroll approximately 315 subjects in a maximum of 40 study sites located in the United States and Europe. Study sites in Europe may contribute a maximum of approximately 50% of the total enrollees. The primary endpoint of the study will be the composite of incidence of death (all-cause mortality), all stroke, and myocardial infarction (DSMI) through 30-days post-index procedure, based on the clinical events committee (CEC) adjudication and ipsilateral stroke from 31-365 day follow-up, based on Clinical Events Committee (CEC) adjudication. The composite index will be compared to a performance goal based on the observed rate of the two components of the primary endpoint from previous pivotal stent trials which are considered industry standard. The performance goal will be considered met if the upper bound of the two-sided 95% confidence interval calculated from the observed primary endpoint rate is < 11.6% and the p-value is less than 0.025. In June 2023, we completed enrollment of 315 patients across 25 trial sites in the U.S. and Europe in our IDE clinical trial, Additionally, we intend to continue to invest in current and future potential new indications, products and manufacturing enhancements for CGuard EPS that are expected to reduce cost of goods and/or provide the best-in-class performing delivery systems, such as CGuard Prime™for transfemoral access. In furtherance of our strategy that focuses on establishing CGuard EPS as a viable alternative to vascular surgery, we are developing a new transcarotid artery revascularization (TCAR) delivery system, SwitchGuard™, for transcarotid access and neuro protection. In addition, we intend to explore new indications for CGuard EPS to leverage the advantages of stent design and mesh protection, well suited in labels such as acute stroke with tandem lesions. We consider our current addressable market for our CGuard EPS to be individuals with diagnosed, symptomatic high-grade carotid artery stenosis (HGCS, ≥70% occlusion) for whom intervention is preferable to medical (drug) therapy. This group includes not only carotid artery stenting patients but also individuals undergoing carotid endarterectomy, as the two approaches compete for the same patient population. Assuming full penetration of the intervention caseload by CGuard EPS, we estimate that the addressable market for CGuard EPS will be approximately $1.3 billion in 2023 (source: Health Research International Personal Medical Systems, Inc. September 13, 2021 Results of Update Report on Global Carotid Stenting Procedures and Markets by Major Geography and Addressable Markets and internal estimates). According to this same report, and internal estimates, assuming full penetration of the caseload for all individuals diagnosed with high-grade carotid artery stenosis, we estimate that the total available market for CGuard EPS in 2022 will be approximately $9.3 billion. Our mission is to offer a comprehensive set of delivery solutions (TCAR and Transfemoral) in order to deliver best in class results through patient outcomes by way of stent performance with CGuard EPS. We were organized in the State of Delaware on February 29, 2008. Recent Developments Private Placement On May 12, 2023, we entered into a securities purchase agreement (the “Purchase Agreement”) pursuant to which we 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 our 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. 5 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. Under the terms of the Pre-Funded Warrants and Warrants, certain of the selling stockholders may not exercise the Pre-Funded Warrants or Warrants to the extent such exercise would cause such selling stockholder, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 4.99% or 9.99% of our then outstanding common stock following such exercise, excluding for purposes of such determination common stock issuable upon exercise of the Pre-Funded Warrants or Warrants which have not been exercised. The Warrants may be exercised into pre-funded warrants if the selling stockholder is unable to exercise the Warrant due to the foregoing beneficial ownership limitation or at the selling shareholder’s election. In connection with the Purchase Agreement, we entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, we are 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. We will be obligated to pay certain liquidated damages if we fail to file the Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, of if we fail to maintain the effectiveness of the Registration Statement. The Registration Statement was subsequently filed on May 23, 2023 and declared effective on June 1, 2023. We paid LifeSci Capital LLC, a placement fee equal to 5.6% of the aggregate gross proceeds from the closing of the Private Placement Offering, or approximately $2.4 million, and legal expenses of $41,600. In addition, we paid Piper Sandler & Co. a financial advisory fee of $1.5 million, AGP/Alliance Global Partners a financial advisory fee of $250,000 and lead investor counsel expenses of $125,000. Critical Accounting Policies A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are more fully described in both (i) “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) Note 2 of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2022. Other than the following new accounting policies, there have not been any material changes to such critical accounting policies since December 31, 2022. Cash and Cash Equivalents We consider all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. As of June 30, 2023, cash and cash equivalents consisted of cash, short-term deposits (up to three months from the date of deposit) and money market funds. As of December 31, 2022, this balance consisted solely of cash. 6 Marketable securities Marketable securities consist of debt securities. we elected the fair value option to measure and recognize its investments in debt securities in accordance with ASC 825, Financial Instruments as we manage our portfolio and evaluates the performance on a fair value basis. Changes in fair value, realized gains and losses on sales of marketable securities, are reflected in the statements of operation as finance expense (income), net. The currency of the primary economic environment in which our operations are conducted is the U.S. dollar (“$” or “dollar”). Contingencies We and our subsidiaries are involved in legal proceedings that arise from time to time in the ordinary course of business. We record accruals for these types of contingencies to the extent that we conclude the occurrence of such contingencies is probable and that the related liabilities are estimable. When accruing these costs, we recognize an accrual in the amount within a range of loss that is the best estimate within the range. When no amount within the range is a better estimate than any other amount, we accrue for the minimum amount within the range. Legal costs are expensed as incurred. Results of Operations Three months ended June 30, 2023, compared to the three months ended June 30, 2022 Revenues . For the three months ended June 30, 2023, revenue increased by $118,000, or 7.7%, to $1,649,000, from $1,531,000 during the three months ended June 30, 2022. This increase was predominantly driven by a 9.6% increase in sales of CGuard EPS from $1,505,000 during the three months ended June 30, 2022, to $1,649,000 during the three months ended June 30, 2023. This sales increase was mainly due to growth in existing markets. With respect to geographical regions, the increase in revenue was primarily attributable to a $63,000 increase in Asia, a $53,000 increase in Latin America and a $13,000 increase in other geographies, for reasons mentioned in the paragraph above. This increase was offset by a $11,000 decrease in Europe. Gross Profit . For the three months ended June 30, 2023, gross profit (revenue less cost of revenues) increased by $60,000, or 14.0%, to $491,000, from $431,000 during the three months ended June 30, 2022. This increase in gross profit resulted from a $90,000 increase in revenues (as mentioned above), less the associated related material and labor offset by $30,000 in miscellaneous expenses. Gross margin (gross profits as a percentage of revenue) increased to 29.8% during the three months ended June 30, 2023, from 28.1% during the three months ended June 30, 2022, driven by the factors mentioned above. Research and Development Expenses . For the three months ended June 30, 2023, research and development expenses decreased by $63,000, or 3.1%, to $1,993,000, from $2,056,000 during the three months ended June 30, 2022. This decrease resulted primarily from a decrease of $261,000 in expenses related to the C-Guardians FDA study, offset, in part, by an increase of $132,000 in compensation expenses, and an increase of $66,000 in miscellaneous expenses. Selling and Marketing Expenses . For the three months ended June 30, 2023, selling and marketing expenses decreased by $94,000, or 9.5%, to $892,000, from $986,000 during the three months ended June 30, 2022. This decrease resulted primarily from a decrease in compensation expenses of $104,000 offset, in part, by an increase of $10,000 in miscellaneous expenses. 7 General and Administrative Expenses . For the three months ended June 30, 2023, general and administrative expenses increased by $851,000, or 41.1%, to $2,921,000, from $2,070,000 during the three months ended June 30, 2022. This increase resulted primarily from an increase in compensation expenses of $457,000, mainly due to an increase of approximately $257,000 of share-based compensation-related expenses due to the expense recognition of grants made during the second quarter of 2023 and an increase in salary expenses and related accruals of $208,000 mainly due to hiring of a General Manager of North America and VP of Global Marketing, an increase of legal expenses of $219,000 and an increase of $175,000 in miscellaneous expenses. Financial Income . For the three months ended June 30, 2023, financial income increased by $193,000, to $238,000, from $45,000 during the three months ended June 30, 2022. The increase in financial income primarily resulted from a $211,000 increase in interest income from investment in marketable securities, money market funds and short-term bank deposits . Tax Expenses. For the three months ended June 30, 2023, there was no change in our tax expenses as compared to the three months ended June 30, 2022. Net Loss . Our net loss increased by $441,000, or 9.5%, to $5,077,000, for the three months ended June 30, 2023, from $4,636,000 during the three months ended June 30, 2022. The increase in net loss resulted primarily from an increase of $694,000 in operating expenses partially offset by an increase of $193,000 in financial income and an increase of $60,000 in gross profit. Six months ended June 30, 2023, compared to the six months ended June 30, 2022 Revenues . For the six months ended June 30, 2023, revenue increased by $174,000, or 6.4%, to $2,888,000, from $2,714,000 during the six months ended June 30, 2022. This increase was predominantly driven by a 8.3% increase in sales volume of CGuard EPS from $2,666,000 during the six months ended June 30, 2022, to $2,888,000 during the six months ended June 30, 2023. This sales increase was mainly due to growth in existing markets. With respect to geographical regions, the increase in revenue was primarily attributable to a $167,000 increase in Europe, a $38,000 increase in Asia and a $3,000 increase in other geographies. This increase in sales of was partially offset by a $34,000 decrease in Latin America. This growth was mainly due to reason mentioned in the paragraph above. Gross Profit . For the six months ended June 30, 2023, gross profit (revenue less cost of revenues) increased by 56.2%, or $311,000, to $864,000, compared to a $553,000 for the same period in 2022. This increase in gross profit resulted from a decrease in write-offs of $181,000 and a $161,000 increase in revenues (as mentioned above) less the associated related material and labor costs. This increase was partially offset by an increase of $31,000 in miscellaneous expenses. Gross margin (gross profits as a percentage of revenue) increased to 29.9% during the six months ended June 30, 2023, from 20.4% during the six months ended June 30, 2022, driven by the reasons mentioned above. Research and Development Expenses . Research and Development Expenses . For the six months ended June 30, 2023, research and development expenses increased by 2.7%, or $100,000, to $3,836,000, from $3,736,000 during the six months ended June 30, 2022. This increase resulted primarily from an increase of $158,000 in expenses related to the CGuard Prime regulatory and approval process, increase in compensation expenses of $169,000 and an increase of $129,000 in miscellaneous expenses offset, in part, by a decrease of $356,000 in expenses related to the C-Guardians FDA study. Selling and Marketing Expenses . For the six months ended June 30, 2023, selling and marketing expenses decreased by 3.0%, or $52,000, to $1,680,000, from $1,732,000 during the six months ended June 30, 2022. This decrease resulted primarily from a decrease of approximately $64,000 of share-based compensation-related expenses, offset, in part, by an increase of $12,000 in miscellaneous expenses. General and Administrative Expenses . For the six months ended June 30, 2023, general and administrative expenses increased by 18.6%, or $792,000, to $5,044,000, from $4,252,000 during the six months ended June 30, 2022. This increase resulted primarily from an increase in salary expenses of $276,000, an increase in legal expenses of $261,000, an increase in regulatory expenses of $193,000 related to MDR registration process and an increase of $62,000 in miscellaneous expenses. 8 Financial Income . For the six months ended June 30, 2023, financial income increased by $313,000, to $363,000 of financial income, from $50,000 of financial income during the six months ended June 30, 2022. The increase in financial income primarily resulted from a $299,000 increase in interest income from investment in marketable securities, money market funds and short-term bank deposits . Tax Expenses. For the six months ended June 30, 2023, there was no change in our tax expenses as compared to the six months ended June 30, 2022. Net Loss . Our net loss increased by $216,000, or 2.4%, to $9,333,000, for the six months ended June 30, 2023, from $9,117,000 during the six months ended June 30, 2022. The increase in net loss resulted primarily from an increase of $840,000 in operating expenses, offset by an increase of $313,000 in financial income and increase of $311,000 in gross profit. Liquidity and Capital Resources As of June 30, 2023, we have the ability to fund our planned operations for at least the next 12 months from issuance date of the financial statement. However, we expect to continue incurring losses and negative cash flows from operations until our products (primarily CGuard™ EPS) reach commercial profitability. Therefore, in order to fund our operations until such time that we can generate substantial revenues, we may need to raise additional funds. Our plans include continued commercialization of our products and raising capital through sale of additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances, however, that we will be successful in obtaining the level of financing needed for our operations. If we are unsuccessful in commercializing our products or raising capital, we may need to reduce activities, curtail or cease operations. In May 2023, we closed a Private Placement Offering that resulted in aggregate gross proceeds of approximately $42.2 million, before deducting fees payable to the placement agent and other offering expenses payable by the Company. If the Warrants from the Private Placement Offering are exercised in cash in full this would result in an additional $71.4 million of gross proceeds. Six months ended June 30, 2023 compared to the six months ended June 30, 2022 General . At June 30, 2023, we had cash and cash equivalents of $11,545,000 short-term bank deposits of $6,631,000 and marketable securities of $28,817,000 as compared to cash and cash equivalents of $4,632,000 and short-term bank deposits of $13,171,000 as of December 31, 2022. We have historically met our cash needs through a combination of issuing new shares, borrowing activities and product sales. Our cash requirements are generally for research and development, marketing and sales activities, finance and administrative costs, capital expenditures and general working capital. For the six months ended June 30, 2023, net cash used in our operating activities increased by $913,000, or 12.6%, to $8,156,000, from $7,243,000 during the same period in 2022. The primary reason for the increase in cash used in our operating activities was an increase of $687,000 in compensation costs paid during the six months ended June 30, 2023 from $4,625,000 in the six months ended June 30, 2022 to $5,312,000 during the same period in 2023 and a decrease of $235,000 in payments received from customers, to $2,472,000 during the six months ended June 30, 2023 from $2,707,000 during the same period in 2022, offset in part by a decrease of $9,000 in payments for third party related expenses and for professional services. Cash used in our investing activities was $22,442,000 during the six months ended June 30, 2023, compared to cash provided of $1,801,000 during the six months ended June 30, 2022. The primary reasons for the increase in cash used by our investing activities is an investment in marketable securities of $28,838,000, offset by an increase in withdrawal from short-term bank deposits, net of investment in short-term deposits, of $4,500,00, and a decrease of $82,000 in payments made for purchase of property, plant and equipment to $70,000 during the three months ended June 30, 2023. 9 Cash provided by financing activities for the six months June 30, 2023, was $37,534,000. The principal source of the cash provided by financing activities during the six months ended June 30, 2023 were the proceeds from the Private Placement Offering in May 2023 that resulted in approximately $37,534,000 of aggregate net proceeds. Cash used by financing activities for the six months ended June 30, 2022 was $37,000 and the cash used by financing activities during the six months ended June 30, 2022 were due to issuance cost associated with a shelf registration statement on Form S-3 filed with the SEC on June 3, 2022. As of June 30, 2023, our current assets exceeded our current liabilities by a multiple of 10.5. Current assets increased by $29,194,000 during the period and current liabilities decreased by $241,000 during the period. As a result, our working capital increased by $29,435,000 to $45,691,000 as of June 30, 2023. Off Balance Sheet Arrangements We have no off-balance sheet transactions, arrangements, obligations (including contingent obligations) or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Factors That May Affect Future Operations We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of the ordering patterns of our distributors, timing of regulatory approvals, the implementation of various phases of our clinical trials and manufacturing efficiencies due to the learning curve of utilizing new materials and equipment. Our operating results could also be impacted by a weakening of the Euro and strengthening of the NIS, both against the U.S. dollar. Lastly, other economic conditions we cannot foresee may affect customer demand, such as individual country reimbursement policies pertaining to our products. Contractual Obligations and Commitments During the three months ended June 30, 2023, there were no material changes to our contractual obligations and commitments. Recently Adopted and Issued Accounting Pronouncements See Note 3 to our condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for new accounting pronouncements adopted. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable. 10 Item 4. Controls and Procedures Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures As of June 30, 2023, we conducted an evaluation, under the supervision and participation of management including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of June 30, 2023. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are currently no pending material legal proceedings, and we are currently not aware of any legal proceedings or claims against us or our property that we believe will have any significant effect on our business, financial position or operating results. Item 1A. Risk Factors Except for the Risk Factors included in our previous filings made with the SEC, there have been no material changes to our risk factors from those disclosed in “Part I. Item 1A. Risk Factors” in the Form 10-K filed with the SEC on March 30, 2023. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information During the quarter ended June 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K). 12 Item 6. Exhibits EXHIBIT INDEX Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation, as amended through March 31, 2015 (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) 3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Current Report on Form 8-K filed with the Securities and Exchange Commission on June 29, 2021) 3.3 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on May 25, 2016) 3.4 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on September 29, 2016) 3.5 Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 15, 2017) 3.6 Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitation of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on November 29, 2017) 3.7 Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on December 12, 2017) 3.8 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on February 7, 2018) 3.9 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 28, 2019) 3.10 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc., dated April 14, 2021 (incorporated by reference to Exhibit 3.17 to the Quarterly Report on Form 10-Q filed on May 10, 2021) 31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS* Inline XBRL Instance Document (the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document) 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) * Filed herewith. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INSPIREMD, INC. Date: August 7, 2023 By: /s/ Marvin Slosman Name: Marvin Slosman, Title: President and Chief Executive Officer (Principal Executive Officer) Date: August 7, 2023 By: /s/ Amir Kohen Name: Amir Kohen Title: Interim Chief Financial Officer, Secretary and Treasurer (Principal Financial and Accounting Officer) 14