InspireMD, Inc. 10-Q

Item 1. Financial Statements INSPIREMD, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE QUARTER ENDED SEPTEMBER 30, 2024 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-17 F- 1 INSPIREMD, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. dollars in thousands) September 30, December 31, 2024 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 15,818 $ 9,640 Marketable securities 24,584 29,383 Accounts receivable: Trade, net 1,530 1,804 Other 741 648 Prepaid expenses 1,276 578 Inventory 2,445 2,106 TOTAL CURRENT ASSETS 46,394 44,159 NON-CURRENT ASSETS: Property, plant and equipment, net 1,946 1,060 Operating lease right of use assets 1,145 1,473 Fund in respect of employee rights upon retirement 996 951 TOTAL NON-CURRENT ASSETS 4,087 3,484 TOTAL ASSETS $ 50,481 $ 47,643 F- 2 INSPIREMD, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. dollars in thousands other than share and per share data) September 30, December 31, 2024 2023 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable and accruals: Trade 1,305 939 Other 5,960 5,081 TOTAL CURRENT LIABILITIES 7,265 6,020 LONG-TERM LIABILITIES- Operating lease liabilities 682 1,038 Liability for employees’ rights upon retirement 1,183 1,084 TOTAL LONG-TERM LIABILITIES 1,865 2,122 COMMITMENTS AND CONTINGENT LIABILITIES - TOTAL LIABILITIES 9,130 8,142 EQUITY: Common stock, par value $ 0.0001 per share; 150,000,000 shares authorized at September 30, 2024 and December 31, 2023; 25,719,632 and 21,841,215 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively 3 2 Preferred C shares, par value $ 0.0001 per share; 1,172,000 shares authorized at September 30, 2024 and December 31, 2023; 1,718 shares issued and outstanding at September 30, 2024 and December 31 2023, respectively - * - * Additional paid-in capital 285,680 261,000 Accumulated deficit ( 244,332 ) ( 221,501 ) Total equity 41,351 39,501 Total liabilities and equity $ 50,481 $ 47,643 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the condensed consolidated financial statements. F- 3 INSPIREMD, INC. (Unaudited) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except per share data) 2024 2023 2024 2023 Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 REVENUES $ 1,810 $ 1,556 $ 5,060 $ 4,444 COST OF REVENUES 1,396 1,118 4,023 3,142 GROSS PROFIT 414 438 1,037 1,302 OPERATING EXPENSES: Research and development 3,915 2,110 9,941 5,946 Selling and marketing 1,472 876 4,154 2,556 General and administrative 3,489 3,091 11,078 8,135 Total operating expenses 8,876 6,077 25,173 16,637 LOSS FROM OPERATIONS ( 8,462 ) ( 5,639 ) ( 24,136 ) ( 15,335 ) FINANCIAL INCOME, net: 572 461 1,305 824 NET LOSS $ ( 7,890 ) $ ( 5,178 ) $ ( 22,831 ) $ ( 14,511 ) NET LOSS PER SHARE - basic and diluted $ ( 0.16 ) $ ( 0.15 ) $ ( 0.58 ) $ ( 0.69 ) WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING NET LOSS PER SHARE - basic and diluted 48,369,412 33,984,953 39,413,004 21,148,538 The accompanying notes are an integral part of the condensed 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, 2023 8,330,918 1 1,718 - * 218,977 ( 201,585 ) 17,393 Net loss ( 14,511 ) ( 14,511 ) Issuance of common shares, pre-funded warrants and warrants, net of $ 4,635 issuance costs 10,266,270 1 - - 37,533 37,534 Issuance of common shares, pre-funded warrants and warrants, net of 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 14,019 shares 2,802,975 - * - - 2,841 2,841 BALANCE AT September 30, 2023 21,400,163 2 1,718 - * 259,351 ( 216,096 ) 43,257 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the condensed 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 July 1, 2023 21,192,204 2 1,718 - * 257,729 ( 210,918 ) 46,813 Net loss ( 5,178 ) ( 5,178 ) Share-based compensation related to stock, restricted stock, restricted stock units and stock options award, net of forfeitures of 9,749 shares 207,959 - * - - 1,622 1,622 BALANCE AT September 30, 2023 21,400,163 2 1,718 - * 259,351 ( 216,096 ) 43,257 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the condensed 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, 2024 21,841,215 2 1,718 - * 261,000 ( 221,501 ) 39,501 Net loss ( 22,831 ) ( 22,831 ) Exercise of pre-funded warrants 1,728,382 - * - - * Exercise of Warrants Series H to 12,621,090 pre-funded warrants and 292,996 common stock, net of $ 1,000 issuance costs 292,996 1 - 16,853 16,854 Exercise of Warrants Series H to pre-funded warrants and common stock, net of issuance costs 292,996 1 - 16,853 16,854 Issuance of common shares, Included at the market offering net of $ 1 issuance costs 12,961 - 35 35 Share-based compensation related to stock, restricted stock, restricted stock units and stock options award, net of forfeitures of 112,382 shares 1,844,078 - * - 7,792 7,792 BALANCE AT September 30, 2024 25,719,632 3 1,718 - * 285,680 ( 244,332 ) 41,351 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the condensed 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 July 1, 2024 25,196,479 3 1,718 - * 283,202 ( 236,442 ) 46,763 Balance 25,196,479 3 1,718 - * 283,202 ( 236,442 ) 46,763 Net loss ( 7,890 ) ( 7,890 ) Exercise of pre-funded warrants 199,992 - * - - - - * Issuance of common shares, Included at the market offering net of $ 1 issuance costs 12,961 35 35 Issuance of common shares, including at the market offering 12,961 - - - 35 - 35 Share-based compensation related to stock, restricted stock, restricted stock units and stock options award 310,200 2,443 2,443 BALANCE AT September 30, 2024 25,719,632 3 1,718 - * 285,680 ( 244,332 ) 41,351 Balance 25,719,632 3 1,718 - * 285,680 ( 244,332 ) 41,351 * Represents an amount less than $1 thousand The accompanying notes are an integral part of the condensed consolidated financial statements. F- 8 INSPIREMD, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (U.S. dollars in thousands) 2024 2023 Nine months ended September 30 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 22,831 ) $ ( 14,511 ) Adjustments required to reconcile net loss to net cash used in operating activities: Depreciation 205 171 Gain from sale of property, plant and equipment - ( 4 ) Loss on amounts funded in respect of employee rights upon retirement 21 70 Changes in fair value of marketable securities, net of interest received ( 757 ) ( 321 ) Change in liability for employees’ rights upon retirement 99 16 Other financial expenses (income) ( 8 ) 72 Change in operating right of use asset and leasing liability ( 39 ) ( 39 ) Share-based compensation expenses 7,792 2,841 Decrease in interest receivable on short term deposits - 171 Changes in operating asset and liability items: Decrease (increase) in prepaid expenses ( 698 ) 179 Decrease (increase) in trade receivables 274 ( 11 ) Increase in other receivables ( 93 ) ( 150 ) Increase in inventory ( 339 ) ( 225 ) Increase (decrease) in trade payables 366 ( 59 ) Increase (decrease) in other payables 890 ( 399 ) Net cash used in operating activities ( 15,118 ) ( 12,199 ) CASH FLOWS FROM INVESTING ACTIVITIES: Investment in short-term bank deposits - ( 5,500 ) Purchase of property, plant and equipment ( 1,091 ) ( 166 ) Proceeds from sale of property, plant and equipment - 9 Investments in marketable securities ( 14,444 ) ( 28,838 ) Proceeds from matured marketable securities 20,000 - Withdrawal from short-term bank deposits - 18,500 Amounts funded in respect of employee rights upon retirement ( 66 ) ( 61 ) Net cash provided by (used in) investing activities 4,399 ( 16,056 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of warrants, net of $ 1,000 issuance costs 16,854 - Proceeds from issuance of shares and warrants, net 35 37,534 Net cash provided by financing activities 16,889 37,534 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 8 ( 72 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,178 9,207 BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 9,640 4,632 BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 15,818 $ 13,839 SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: Acquisition of right-of-use assets by means of lease liabilities - 419 Non-cash lease incentive - 45 Decrease in right-of-use assets and lease liabilities due to shortening lease term - 131 The accompanying notes are an integral part of the condensed 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 markets its products through distributors in international markets, mainly in Europe. b . Liquidity The Company has an accumulated deficit as of September 30, 2024, as well as a history of net losses and negative operating cash flows in recent years. The Company expects to continue incurring losses and negative cash flows from operations until its product, CGuard™ EPS, reaches commercial profitability. As a result of these expected losses and negative cash flows from operations, along with the Company’s current cash position, the Company does not have sufficient resources to fund operations for at least the next 12 months. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern. These financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. Management’s plans include the continued commercialization of the Company’s product and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships and exercise of warrants. There are no assurances however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and raising capital, it may need to reduce activities, curtail or cease operations. c. Risks Related to the Company’s Operations in Israel In October 2023, Israel was attacked by a terrorist organization and entered a state of war. In addition, since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization), Israel’s southern border with the Gaza Strip (with the Hamas terrorist organization) and on other fronts from various extremist groups in region, such as the Houthis in Yemen and various rebel militia groups in Syria and Iraq. In addition, Iran recently launched direct attacks on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. As of the date of these consolidated financial statements, the war in Israel is ongoing and continues to evolve. The Company operations, including its production facility, are located in Israel. Currently, such activities in Israel remain largely unaffected. During the nine and three months ended September 30, 2024, the impact of this war on the Company’s results of operations and financial condition was immaterial, but such impact may increase, which could be material, as a result of the continuation, escalation or expansion of such war. F- 10 NOTE 2 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements for the year ended December 31, 2023. 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 condensed 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, 2023, as found in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2024. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of results that could be expected for the entire fiscal year. NOTE 3 - RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS Recently adopted accounting pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 adopted the provisions of this update as of January 1, 2024 with no material impact on its consolidated financial statements. Recently issued accounting pronouncement, not yet adopted 1) In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under Accounting Standards Codification (“ASC”) 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements related disclosures. 2) In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. This guidance is intended to enhance the transparency and decision-usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the U.S. and in foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. 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 September 30, 2024 Total Level 1 Level 2 Level 3 Assets: Cash equivalents- Money market funds $ 2,677 $ 2,677 $ - $ - Marketable securities- U.S. government bonds $ 24,584 $ - $ 24,584 $ - Total Level 1 Level 2 Level 3 As of December 31, 2023 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Cash equivalents- Money market funds $ 7,094 $ 7,094 $ - $ - Cash equivalents $ 7,094 $ 7,094 $ - $ - Marketable securities- U.S. government bonds $ 29,383 $ - $ 29,383 $ - Marketable securities $ 29,383 $ - $ 29,383 $ - 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 September 30, 2024, is $ 23,919 thousand. The cost of Marketable securities as of December 31, 2023 is $ 28,727 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 September 30, December 31, 2024 2023 ($ in thousands) U.S. government bonds $ 24,584 $ 29,383 Marketable securities $ 24,584 $ 29,383 The following table summarizes the fair value of the Company’s marketable securities classified by maturity as of September 30, 2024, and December 31, 2023: SCHEDULE OF FAIR VALUE OF MARKETABLE SECURITIES CLASSIFIED BY MATURITY September 30, December 31, 2024 2023 ($ in thousands) Amounts maturing within one year $ 24,584 $ 24,523 Amounts maturing after one year through two years - 4,860 $ 24,584 $ 29,383 The table below sets forth a summary of the changes in the fair value of the Company’s marketable securities for the nine months period ended September 30, 2024: SCHEDULE OF CHANGES IN FAIR VALUE OF MARKETABLE SECURITIES Nine months ended September 30, Nine months ended September 30, 2024 2023 ($ in thousands) Balance at beginning of the period $ 29,383 - Additions 14,444 28,838 Maturity ( 20,000 ) Interest received ( 217 ) Changes in fair value during the period 974 321 Balance at end of the period 24,584 29,159 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. NOTE 6 - EQUITY : 1) Exercise of Series H Warrant The Series H Warrants have a term of the earlier of (i) five years from the date of issuance and (ii) (A) 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. Following the announcement on May 28, 2024 of the one year follow up study results from the Company’s C-GUARDIANS pivotal trial, the Series H warrants for the purchase of 12,914,086 shares of common stock were exercised in full into 292,996 shares of common stock and pre-funded warrants exercisable into 12,621,090 shares of common stock. The net proceeds to the Company from the exercise of the Series H warrants were $ 16.9 million after deduction of placement agent fees of $ 1 million. The Series H warrants, each exercisable at $ 1.3827 per share of common stock and $ 1.3826 per pre-funded warrant, were issued as part of the private placement financing that the Company consummated on May 15, 2023. F- 13 2) ATM Offering The Company maintains an at-the-market (“ATM”) facility with Piper Sandler & Co. (“Piper”) pursuant to an Equity Distribution Agreement entered into in May 2024. In accordance with the agreement, the Company is entitled, at its sole discretion, to offer and sell through or to Piper Sandler, acting as a sales agent, shares of its common stock having an aggregate offering price of up to $ 17.0 million throughout the period during which the ATM facility remains in effect. The Company has agreed to pay Piper a commission of 3.0 % of the gross proceeds from the sale of shares of common stock under the ATM facility. As of nine months ended September 30, 2024, 12,961 shares of common stock have been sold under the ATM program for total gross proceeds of approximately $ 35 thousand and total fees of approximately $ 1 thousand. 3) During the nine months ended September 30, 2024, the Company issued a total of 1,728,382 shares of its common stock in connection with the exercise of Pre-Funded Warrants to purchase 1,728,390 shares of common stock of which 200,000 Pre-Funded were exercised to 199,992 shares of its common stock on a cashless basis. As of September 30, 2024, there are Pre-Funded Warrants to purchase an aggregate of 26,147,323 shares of common stock outstanding. 4) As of September 30, 2024, 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 with a total stated value of $ 10,997 . 5) As of September 30, 2024, the Company has outstanding warrants to purchase an aggregate of 40,268,464 shares of common stock as follows: SCHEDULE OF ISSUANCE OF WARRANTS TO PURCHASE COMMON STOCK Number of underlying Common stock Exercise price Expiration date Series F Warrants 433,878 $ 7.4250 June 5, 2025-October 16, 2025 Series G Warrants 1,092,344 $ 10.230 February 8, 2026 Series I Warrants 12,914,078 $ 1.3827 - * Series J Warrants 12,914,086 $ 1.3827 - * Series K Warrants 12,914,078 $ 1.3827 - * Total Warrants 40,268,464 * The Warrants have a term of the earlier of (i) May 15, 2028 and (ii) (A) 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), (B) 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 (C) 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. During the nine months ended September 30, 2024, a total of 213,458 warrants expired. 6) As of September 30, 2024, 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 7) On September 30, 2024, the compensation committee of the Company’s board of directors of approved the InspireMD, Inc. 2024 Inducement Plan (the “2024 Inducement Plan”) to be used exclusively for grants of equity-based awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company. 8) During the nine months ended September 30, 2024, the Company granted 1,944,603 restricted shares of the Company’s common stock to employees and directors. The shares to employees are subject to a three-year vesting period, with one-third of such awards vesting each year. The shares to directors are subject to a one-year vesting period. The fair value of the above restricted shares was approximately $ 5.83 million. 9) During the nine months ended September 30, 2024, the Company granted 563,499 restricted share units of the Company’s common stock to the chief executive officer (CEO). 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 $ 1.77 million. 10) During the nine months ended September 30, 2024, the Company granted to employees and directors options to purchase a total of 761,114 shares of the Company’s common stock. The options have exercise prices ranging from $ 2.44 -$ 3.14 per share, which was the fair market value of the Company’s common stock on the respective dates of the grant. The options to employees are subject to a three-year vesting period, with one-third of such awards vesting each year. The options to directors are subject to a one-year vesting period. In calculating the fair value of the above options, the Company used the following assumptions: dividend yield of 0 % and expected term of 5.5 - 6.5 years; expected volatility ranging from 93.18 %- 119.38 %; and risk-free interest rate ranging from 3.93 %- 4.44 %. The fair value of the above options, using the Black-Scholes option-pricing model, was approximately $ 1.94 million. 11) On April 1, 2024, the Company granted to consultants options to purchase a total of 125,000 shares of the Company’s common stock. The options have an exercise price of $ 2.37 per share, which was the fair market value of the Company’s common stock on the date of the grant. 25,000 options are subject to a two-year vesting period (of which 12,500 options are vesting in the first year and 12,500 options are vesting in the second year) and 100,000 options with performance conditions related to clinical activities. In calculating the fair value of the above options, the Company used the following assumptions: dividend yield of 0 %; expected volatility ranging from 96.01 %- 100.76 %; and risk-free interest rate ranging from 4.33 %- 4.34 %. The fair value of the above options, using the Black-Scholes option-pricing model, was $ 233,169 . NOTE 7 – RELATED PARTIES TRANSACTIONS During the nine and three months ended September 30, 2024, a member of the immediate family of the CEO provided certain administrative services in connection with the Company’s expansion to the U.S. in the amount of $ 55,000 and $ 25,000 , respectively. 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, pre-funded warrants and fully vested restricted stock units outstanding during the period. The calculation of diluted net loss per share excludes the effect of potential dilution 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 nine and three-month periods ended September 30, 2024, we had weighted average pre-funded warrants of 19,016,286 and 26,199,497 , respectively, which were used in the computations of net loss per share for the nine and three-month periods. F- 15 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 48,619,222 and 59,753,458 as of September 30, 2024 and 2023, respectively. This amount includes 3,979,486 and 3,073,821 of unvested restricted stock included in the number of issued and outstanding shares as of September 30, 2024 and 2023, respectively. 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 September 30, 2024, and December 31, 2023, allowance for expected credit loss was immaterial. NOTE 10- INVENTORY : SCHEDULE OF INVENTORIES September 30, December 31, 2024 2023 ($ in thousands) Finished goods $ 68 $ 210 Work in process 557 562 Raw materials and supplies 1,820 1,334 Total inventory $ 2,445 $ 2,106 NOTE 11 - ACCOUNTS PAYABLE AND ACCRUALS - OTHER : SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER September 30, December 31, 2024 2023 ($ in thousands) Employees and employee institutions 2,312 2,188 Accrued vacation and recreation pay 401 287 Accrued expenses 1,437 1,115 Clinical trials accrual 1,078 744 Current Operating lease liabilities 546 557 Other 186 190 Accounts Payable and Accruals - Other 5,960 5,081 F- 16 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 2024 2023 2024 2023 Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 ($ in thousands) Germany 306 209 855 699 Italy 306 328 865 932 Russia 190 250 375 483 Poland 176 122 534 320 Other 832 647 2,431 2,010 Revenues $ 1,810 $ 1,556 $ 5,060 $ 4,444 By principal customers: SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRINCIPAL CUSTOMERS 2024 2023 2024 2023 Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Customer A 17 % 13 % 17 % 16 % Customer B 11 % 16 % 7 % 11 % Customer C 7 % 13 % 8 % 10 % Customer D 10 % 8 % 9 % 11 % Customer E 10 % 8 % 11 % 7 % Customer 10 % 8 % 11 % 7 % NOTE 13 – SUBSEQUENT EVENTS 1) As of the approval date of these financial statements, the Company has issued an aggregate of 197,167 shares of restricted common stock pursuant to the 2024 Inducement Plan and 32,648 shares of restricted common stock under the 2021 plan. 2) On October 9, 2024, the Company entered into a lease agreement in Miami, Florida (the “Lease”) for the establishment of its new global headquarters. The Lease has a term of 64 months from the Commencement Date (as defined in the Lease) subject to a five -year extension in accordance with the terms of the Lease. Under the Lease, the Company will pay the Landlord a security deposit of $ 500 thousand. Provided the Company does not default, the security deposit will be refunded at specified intervals throughout the lease term. Additionally, the Company will pay a base rent of $ 23 thousand per month for the first year, with gradual annual increases each subsequent year. The Company is also responsible for covering standard lease expenses, including applicable taxes, operating expenses, and utilities. 3) From October 1, 2024 through the date of the approval of these financial statements, 134,316 shares of common stock have been sold under the ATM program for total gross proceeds of approximately $ 341 thousands and total fees of approximately $ 10 thousands. F- 17