InspireMD, Inc. 10-Q

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; ● security, political and economic instability in the Middle East that could harm our business, including due to the current war between Israel and Hamas; 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 316 patients across 24 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. 30-Day Results from the U.S. Investigational Device Exemption (IDE) clinical trial On November 1, 2023, the Company released 30-day results from the C-GUARDIANS U.S. Investigational Device Exemption (IDE) clinical trial. From July 2021 to June 2023, 316 patients were prospectively enrolled in a single-arm carotid artery stenting study performed at 24 sites in the United States and the European Union. The primary endpoint in the clinical trial was a composite of: (1) incidence of major adverse events including death (all-cause mortality), any stroke, or myocardial infarction (“DSMI”) through 30-days post index procedure, or (2) ipsilateral stroke from day 31 to day 365 post-procedure. Stenting with the C-Guard carotid stent system in patients with carotid artery stenosis and at high risk for carotid endarterectomy had a DSMI rate of 0.95%, measured from the date of the procedure through 30 days follow-up post-procedure. Recent Developments Potentially Affecting Our Business. In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas and other terrorist organizations in parallel to their continued rocket and terror attacks. We cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can we predict how this war will ultimately affect our business and operations or Israel’s economy in general. 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 September 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 September 30, 2023, compared to the three months ended September 30, 2022 Revenues . For the three months ended September 30, 2023, revenue increased by $125,000, or 8.7%, to $1,556,000, from $1,431,000 during the three months ended September 30, 2022. This increase was predominantly driven by growth in existing markets. With respect to geographical regions, the increase in revenue was primarily attributable to a $84,000 increase in Europe, a $52,000 increase in Asia and a $30,000 increase in other geographies, for reasons mentioned in the paragraph above. This increase was offset by a $41,000 decrease in the United States as we completed in June 2023 the enrollment of all patients in our C-Guardians IDE clinical trial and accordingly there were no further enrollments in the three months ended September 30, 2023. Gross Profit . For the three months ended September 30, 2023, gross profit (revenue less cost of revenues) increased by $72,000, or 19.7%, to $438,000, from $366,000 during the three months ended September 30, 2022. This increase in gross profit resulted from a $85,000 increase in revenues less the associated related material and labor offset by $13,000 in miscellaneous expenses. Gross margin (gross profits as a percentage of revenue) increased to 28.1% during the three months ended September 30, 2023, from 25.6% during the three months ended September 30, 2022, driven by the factors mentioned above. Research and Development Expenses . For the three months ended September 30, 2023, research and development expenses increased by $49,000, or 2.4%, to $2,110,000, from $2,061,000 during the three months ended September 30, 2022. This increase resulted primarily from an increase of $178,000 in expenses related to the SwitchGuard regulatory and approval process, an increase in compensation expenses of $145,000, mainly due to an increase of share-based compensation-related expenses due to the expense recognition of grants made during the second quarter of 2023 and an increase of $107,000 in miscellaneous expenses. These increases were partially offset by a $381,000 decrease in expenses related to the C-Guardians FDA study. The enrollment of all patients in our IDE clinical trial was completed in June 2023, resulting in no enrollment expenses for the three months ended September 30, 2023. Selling and Marketing Expenses . For the three months ended September 30, 2023, selling and marketing expenses increased by $31,000, or 3.7%, to $876,000, from $845,000 during the three months ended September 30, 2022. This increase resulted from an increase of $31,000 in miscellaneous expenses. 7 General and Administrative Expenses . For the three months ended September 30, 2023, general and administrative expenses increased by $1,021,000, or 49.3%, to $3,091,000, from $2,070,000 during the three months ended September 30, 2022. This increase resulted primarily from an increase in compensation expenses of $941,000, mainly due to an increase of approximately $755,000 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 $186,000 mainly due to hiring of a General Manager of North America and VP of Global Marketing (who was subsequently promoted to the Company’s Chief Commercial Officer in the third quarter of 2023) and an increase of $80,000 in miscellaneous expenses. Financial Income . For the three months ended September 30, 2023, financial income increased by $380,000, to $461,000, from $81,000 during the three months ended September 30, 2022. The increase in financial income primarily resulted from a $412,000 increase in interest income from investment in marketable securities, money market funds and short-term bank deposits. Tax Expenses. For the three months ended September 30, 2023, there was no change in our tax expenses as compared to the three months ended September 30, 2022. Net Loss . Our net loss increased by $649,000, or 14.3%, to $5,178,000, for the three months ended September 30, 2023, from $4,529,000 during the three months ended September 30, 2022. The increase in net loss resulted primarily from an increase of $1,101,000 in operating expenses partially offset by an increase of $380,000 in financial income and an increase of $72,000 in gross profit. Nine months ended September 30, 2023, compared to the Nine months ended September 30, 2022 Revenues . For the nine months ended September 30, 2023, revenue increased by $299,000, or 7.2%, to $4,444,000, from $4,145,000 during the Nine months ended September 30, 2022. This increase was predominantly driven by a 8.5% increase in sales volume of CGuard EPS from $4,097,000 during the nine months ended September 30, 2022, to $4,444,000 during the nine months ended September 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 $251,000 increase in Europe, a $90,000 increase in Asia. and a $4,000 increase in the Middle East. This increase in sales of was partially offset by a $46,000 decrease in other geographies mainly driven by 41,000 decrease in the United States as we completed in June 2023 the enrollment of all patients in our C-Guardians IDE clinical trial and accordingly there were no further enrollments in the three months ended September 30, 2023. Gross Profit . For the nine months ended September 30, 2023, gross profit (revenue less cost of revenues) increased by 41.7%, or $383,000, to $1,302,000, compared to a $919,000 for the same period in 2022. This increase in gross profit resulted from a $246,000 increase in revenues less the associated related material and labor costs and a decrease in write-offs of $199,000. This increase was partially offset by an increase of $62,000 in miscellaneous expenses. Gross margin (gross profits as a percentage of revenue) increased to 29.3% during the nine months ended September 30, 2023, from 22.2% during the Nine months ended September 30, 2022, driven by the reasons mentioned above. Research and Development Expenses . Research and Development Expenses . For the nine months ended September 30, 2023, research and development expenses increased by 2.6%, or $149,000, to $5,946,000, from $5,797,000 during the nine months ended September 30, 2022. This increase resulted primarily from an increase of compensation expenses of $314,000, an increase of $187,000 in expenses related to the SwitchGuard regulatory and approval process, an increase of $130,000 in expenses related to the CGuard Prime regulatory and approval process and an increase of $261,000 in miscellaneous expenses offset, in part, by a decrease of $743,000 in expenses related to the C-Guardians FDA study. Selling and Marketing Expenses . For the nine months ended September 30, 2023, selling and marketing expenses decreased by 0.8%, or $21,000, to $2,556,000, from $2,577,000 during the nine months ended September 30, 2022. This decrease resulted from a decrease of $21,000 in miscellaneous expenses. General and Administrative Expenses . For the nine months ended September 30, 2023, general and administrative expenses increased by 28.7%, or $1,813,000, to $8,135,000, from $6,322,000 during the nine months ended September 30, 2022. This increase resulted primarily from an increase in compensation expenses of $1,148,000, mainly due to an increase of approximately $702,000 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 $446,000 mainly due to hiring of a General Manager of North America and VP of Global Marketing (who was subsequently promoted to the Company’s Chief Commercial Officer in the third quarter of 2023), an increase in legal expenses of $254,000, an increase in regulatory expenses of $215,000 related to MDR registration process and an increase of $196,000 in miscellaneous expenses. 8 Financial Income . For the nine months ended September 30, 2023, financial income increased by $693,000, to $824,000 of financial income, from $131,000 of financial income during the nine months ended September 30, 2022. The increase in financial income primarily resulted from a $689,000 increase in interest income from investment in marketable securities, money market funds and short-term bank deposits. Tax Expenses. For the nine months ended September 30, 2023, there was no change in our tax expenses as compared to the nine months ended September 30, 2022. Net Loss . Our net loss increased by $865,000, or 6.3%, to $14,511,000, for the nine months ended September 30, 2023, from $13,646,000 during the nine months ended September 30, 2022. The increase in net loss resulted primarily from an increase of $1,941,000 in operating expenses, offset by an increase of $693,000 in financial income and increase of $383,000 in gross profit. Liquidity and Capital Resources As of September 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. Nine months ended September 30, 2023 compared to the Nine months ended September 30, 2022 General . At September 30, 2023, we had cash and cash equivalents of $13,839,000 and marketable securities of $29,159,000 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 nine months ended September 30, 2023, net cash used in our operating activities decreased by $148,000, or 1.2%, to $12,199,000, from $12,347,000 during the same period in 2022. The primary reason for the decrease in cash used in our operating activities was an increase of $613,000 in interest income received from money market funds and short-term bank deposits, an increase of $298,000 in payments received from customers, to $4,433,000 during the nine months ended September 30, 2023 from $4,135,000 during the same period in 2022, offset in part by an increase of $637,000 in compensation costs paid during the nine months ended September 30, 2023 from $6,695,000 in the nine months ended June 30, 2022 to $7,332,000 during the same period in 2023 and an increase of $127,000 in payments for third party related expenses and for professional services. Cash used in our investing activities was $16,056,000 during the nine months ended September 30, 2023, compared to cash provided of $4,555,000 during the nine months ended September 30, 2022. The primary reason 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 $8,000,000, and a decrease of $212,000 in payments made for purchase of property, plant and equipment during the nine months ended September 30, 2023. 9 Cash provided by financing activities for the nine months September 30, 2023, was $37,534,000. The principal source of the cash provided by financing activities during the nine months ended September 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 nine months ended September 30, 2022 was $140,000, the cash used by financing activities during the nine months ended September 30, 2022 were due to issuance costs associated with a shelf registration statement on Form S-3 filed with the SEC on June 3, 2022. As of September 30, 2023, our current assets exceeded our current liabilities by a multiple of 10.0. Current assets increased by $25,402,000 during the period and current liabilities decreased by $380,000 during the period. As a result, our working capital increased by $25,782,000 to $42,038,000 as of September 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 September 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