InspireMD, Inc. 10-K

Item 9A. Controls and Procedures. Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures We conducted an evaluation of the effectiveness of our “disclosure controls and procedures”, as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of December 31, 2024, the end of the period covered by this Annual Report on Form 10-K. The disclosure controls and procedures evaluation was done under the supervision and with the participation of management, including our chief executive officer and chief financial officer. 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 have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2024. Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate over time. Management, including our chief executive officer and our chief financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework 2013 . Based on its assessment and those criteria, management has concluded that we maintained effective internal control over financial reporting as of December 31, 2024. Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. 69 Insider Trading Plans and Arrangements During the quarter ended December 31, 2024, none of our directors or officers notified us that they adopted , modified or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement as defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance. Code of Ethics We have adopted a code of ethics and business conduct that applies to our officers, directors and employees, including our principal executive officer, principal financial officer and principal accounting officer, which is posted on our website at www.inspiremd.com . We intend to disclose future amendments to certain provisions of the code of ethics, or waivers of such provisions granted to executive officers and directors, on this website within four business days following the date of such amendment or waiver. Insider Trading Policy We have adopted a statement of trading policies that governs the trading in our securities by our directors, officers and certain other covered persons, and which is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to the Company. A copy of the Insider Trading Policy is included as Exhibit 19.1 to this annual report. In addition, with regard to any trading in our own securities, it is our policy to comply with the federal securities laws and the applicable exchange listing requirements. Clawback Policy We have adopted an Executive Officer Clawback Policy (the “Clawback Policy”), in accordance with the Nasdaq listing standards and Exchange Act Rule 10D-1, which applies to our current and former executive officers. Under the Clawback Policy, we are required to recoup the amount of any Erroneously Awarded Compensation (as defined in the Clawback Policy) on a pre-tax basis within a specified lookback period in the event of any Accounting Restatement (as defined in the Clawback Policy), subject to limited impracticability exception. Other Information The remaining information required by this Item 10 will be included in our definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 11. Executive Compensation. The information required by this Item 11 will be included in our definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item 12 will be included in our definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item 13 will be included in our definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services. The information required by this Item 14 will be included in our definitive Proxy Statement for the 2025 Annual Meeting of Stockholders and is incorporated herein by reference. 70 PART IV Item 15. Exhibits and Financial Statement Schedules. Documents filed as part of report: 1. Financial Statements The following financial statements are included herein: ● Report of Kesselman & Kesselman, Independent Registered Public Accounting Firm (PCAOB name: Kesselman & Kesselman C.P.A.s and PCAOB ID: 1309) ● Consolidated Balance Sheets as of December 31, 2024 and 2023 ● Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023 ● Consolidated Statements of Changes in Equity for the Years Ended December 31, 2024 and 2023 ● Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 ● Notes to Consolidated Financial Statements 2. Financial Statement Schedules None 3. Exhibits See Index to Exhibits Item 16. Form 10-K Summary Not applicable. 71 Index to Exhibits Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation (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 Certificate of Designation of Preferences, Rights and Limitation of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 1, 2018) 3.10 Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitation of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 3, 2018) 3.11 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc., dated March 27, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 28, 2019) 3.12 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc., dated April 14, 2021 (incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2021) 3.13 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 5, 2013) 4.1 Description of Securities (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K filed on March 5, 2024) 10.1+ Form of Indemnity Agreement between InspireMD, Inc. and each of the directors and executive officers thereof (incorporated by reference to Exhibit 10.22 to Amendment No. 1 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 26, 2011) 10.2+ InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on December 20, 2013) 10.3+ Amended and Restated Employment Agreement, dated May 5, 2014, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 7, 2014) 72 10.4+ First Amendment to the InspireMD, Inc. Amended and Restated 2011 UMBRELLA Option Plan (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 7, 2014) 10.5+ Form of Incentive Stock Option Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.2 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.6+ Form of Nonqualified Stock Option Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.3 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.7+ Form of Restricted Stock Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.4 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.8+ Form of Restricted Stock Unit Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.5 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.9+ Form of Section 3(i) Stock Option Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (Israeli) (incorporated by reference to Exhibit 99.6 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.10+ Form of Section 102 Capital Gain Stock Option Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (Israeli) (incorporated by reference to Exhibit 99.7 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.11+ Form of Section 102 Capital Gain Restricted Stock Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (Israeli) (incorporated by reference to Exhibit 99.8 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.12+ Form of Stock Option Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (European) (incorporated by reference to Exhibit 99.9 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.13+ Form of Restricted Stock Award Agreement under the InspireMD, Inc. 2013 Long-Term Incentive Plan (European) (incorporated by reference to Exhibit 99.10 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.14+ Form of Stock Option Award Agreement outside the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.11 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 5, 2014) 10.15+ First Amendment to Amended and Restated Employment Agreement, dated January 5, 2015, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2015) 10.16+ First Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 9, 2015) 10.17+ Second Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 25, 2016) 10.18+ Second Amendment to Amended and Restated Employment Agreement, dated July 25, 2016, by and between InspireMD, Inc. and Craig Shore agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 29, 2016) 73 10.19+ Third Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 29, 2016) 10.20+ Director Offer Letter, between InspireMD, Inc. and Thomas J. Kester, dated September 6, 2016 10.21+ Fourth Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 26, 2018) 10.22+ Fifth Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 21, 2019) 10.23+ Third Amendment to Amended and Restated Employment Agreement, dated March 25, 2019, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 28, 2019) 10.24+ Employment Agreement, dated December 9, 2019, by and between the Company and Marvin Slosman (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on December 10, 2019). 10.25+ First Amendment to Employment Agreement, dated December 31, 2019, by and between the Company and Marvin Slosman (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on January 6, 2020). 10.26+ Nonqualified Stock Option Agreement, by and between the Company and Marvin Slosman (incorporated by reference to Exhibit 10.60 to the Annual Report on Form 10-K filed on March 10, 2020) 10.27+ Restricted Stock Unit Award agreement, by and between the Company and Marvin Slosman (incorporated by reference to Exhibit 10.61 to the Annual Report on Form 10-K filed on March 10, 2020) 10.28 Form of Series F Warrant (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-1, Amendment No. 1, filed with the SEC on June 1, 2020 (File No. 333-238247)). 10.29 Form of Underwriter Warrant (incorporated by reference to Exhibit 1.1 to the Company’s Registration Statement on Form S-1, Amendment No. 1, filed with the SEC on June 1, 2020 (File No. 333-238247)) 10.30 Form of Series G Warrant (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-1, Amendment No. 1, filed with the SEC on February 3, 2021 (File No. 333-238247)) 10.31 Form of Underwriter Warrant (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-1, Amendment No. 1, filed with the SEC on February 3, 2021 (File No. 333-238247)) 74 10.32+ Sixth Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 31, 2020) 10.33+ Seventh Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on August 9, 2021) 10.34+ First Amendment to Employment Agreement, dated November 8, 2021, by and between InspireMD, Inc. and Marvin Slosman (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on November 8, 2021). 10.35+ Fifth Amendment to Employment Agreement, dated November 4, 2021, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on November 8, 2021). 10.36+ Sixth Amendment to Employment Agreement, dated January 17, 2022, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.51 to the Annual Report on Form 10-K filed on March 7, 2022) 10.37+ 2021 Equity Compensation Plan (incorporated by reference to Annex A to the registrant’s Proxy Statement on Schedule 14A filed with the Commission on August 12, 2021). 10.38+ Form of Nonqualified Stock Option Agreement for U.S. employees under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.53 to the Annual Report on Form 10-K filed on March 7, 2022) 10.39+ Form of Nonqualified Stock Option Agreement for European employees under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.54 to the Annual Report on Form 10-K filed on March 7, 2022) 10.40+ Form of Nonqualified Stock Option Agreement for consultants under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.55 to the Annual Report on Form 10-K filed on March 7, 2022) 10.41+ Form of Nonqualified Stock Option Agreement for Israeli employees under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.56 to the Annual Report on Form 10-K filed on March 7, 2022) 10.42+ Form of Nonqualified Stock Option Agreement for U.S. directors under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.57 to the Annual Report on Form 10-K filed on March 7, 2022) 10.43+ Form of Restricted Stock Award Agreement for U.S. employees under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.58 to the Annual Report on Form 10-K filed on March 7, 2022) 10.44+ Form of Restricted Stock Award Agreement for U.S. directors under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.59 to the Annual Report on Form 10-K filed on March 7, 2022) 10.45+ Form of Restricted Stock Award Agreement for Israeli employees under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.60 to the Annual Report on Form 10-K filed on March 7, 2022) 10.46+ Form of Restricted Stock Award Agreement for European employees under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.61 to the Annual Report on Form 10-K filed on March 7, 2022) 75 10.47+ Form of Restricted Stock Unit Award Agreement under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.62 to the Annual Report on Form 10-K filed on March 7, 2022) 10.48+ Third Amendment to Employment Agreement, dated January 5, 2023, by and between InspireMD, Inc. and Marvin Slosman (incorporated by reference to Exhibit 10.64 to the Annual Report on Form 10-K filed on March 30, 2023) 10.49+ Seventh Amendment to Employment Agreement, dated January 18, 2023, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.65 to the Annual Report on Form 10-K filed on March 30, 2023) 10.50+^ Employment Agreement, dated November 2, 2020, by and between the Company and Andrea Tommasoli (incorporated by reference to Exhibit 10.66 to the Annual Report on Form 10-K filed on March 30, 2023) 10.51 Form of Securities Purchase Agreement dated as of May 12, 2023 between the Company and purchaser identified therein (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated May 15, 2023) 10.52 Form of Pre-Funded Warrant dated May 15, 2023 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated May 15, 2023) 10.53 Form of Series H Warrant dated May 15, 2023 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K dated May 15, 2023) 10.54 Form of Series I Warrant dated May 15, 2023 (incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K dated May 15, 2023) 10.55 Form of Series J Warrant dated May 15, 2023 (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K dated May 15, 2023) 10.56 Form of Series K Warrant dated May 15, 2023 (incorporated by reference to Exhibit 10.6 of the Current Report on Form 8-K dated May 15, 2023) 10.57 Form of Registration Rights Agreement dated as of May 12, 2023 between the Company and purchaser identified therein (incorporated by reference to Exhibit 10.7 of the Current Report on Form 8-K dated May 15, 2023) 10.58+ Fourth Amendment to Employment Agreement, dated August 14, 2020, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.62 to the Annual Report on Form 10-K filed on March 5, 2024) 10.59+ Fourth Amendment to Employment Agreement, dated April 1, 2024, by and between InspireMD, Inc. and Marvin Slosman (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated April 2, 2024) 10.60+ Eighth Amendment to Employment Agreement, dated April 1, 2024, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated April 2, 2024) 76 10.61 Equity Distribution Agreement by and between InspireMD, Inc. and Piper Sandler & Co., dated May 31, 2024 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated May 31, 2024) 10.62 InspireMD, Inc. 2024 Inducement Plan (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated October 1, 2024) 10.63 Form of Inducement Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated October 1, 2024) 10.64 Form of Inducement Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K dated October 1, 2024) 10.65 Form of Inducement Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K dated October 1, 2024) 10.66 Lease Agreement, dated October 9, 2024, by and between InspireMD, Inc. and ROIB Waterford, LLC (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated October 15, 2024) 10.67+ Ninth Amendment to Employment Agreement, dated December 10, 2024, by and between InspireMD, Inc. and Craig Shore (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated December 12, 2024) 10.68* Employment Agreement, dated Fe bruary 12, 2023, by and between InspireMD, Inc. and Shane Gleason 19.1* Insider Trading Policy 21.1 List of Subsidiaries (incorporated by reference to Exhibit 21.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on April 6, 2011) 23.1* Consent of Kesselman & Kesselman, Certified Public Accountants 31.1* Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 31.2* Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1 InspireMD, Inc. Executive Officer Clawback Policy (incorporated by reference to Exhibit 97.1 to the Annual Report on Form 10-K filed on March 5, 2024) 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 (embedded within the Inline XBRL document) * Filed herewith. + Management contract or compensatory plan or arrangement. ^ Portions of this exhibit (indicated by asterisks) have been omitted under rules of the U.S. Securities and Exchange Commission permitting the confidential treatment of select information. 77 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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: March 12, 2025 By: /s/ Marvin Slosman Marvin Slosman President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Marvin Slosman President, Chief Executive Officer and Director March 12, 2025 Marvin Slosman (principal executive officer) /s/ Craig Shore Chief Financial Officer, Chief Administrative Officer, Secretary and Treasurer March 12, 2025 Craig Shore (principal financial and accounting officer) /s/ Paul Stuka Chairman of the Board of Directors March 12, 2025 Paul Stuka /s/ Michael Berman Director March 12, 2025 Michael Berman /s/ Thomas J. Kester Director March 12, 2025 Thomas J. Kester /s/ Gary Roubin Director March 12, 2025 Gary Roubin /s/ Kathryn Arnold Director March 12, 2025 Kathryn Arnold /s/ Scott R. Ward Director March 12, 2025 Scott R. Ward 78 INSPIREMD, INC. CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2024 TABLE OF CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB name: Kesselman & Kesselman C.P.A.s and PCAOB ID: 1309 ) F-2 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-5 Consolidated Statements of Changes in Equity F-6 - F-7 Consolidated Statements of Cash Flows F-8 Notes to the Consolidated Financial Statements F-9 - F-30 F- 1 Report of Independent Registered Public Accounting Firm To the board of directors and shareholders of InspireMD Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of InspireMD Inc. and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in equity and cash flows for each of the two years ended December 31,2024, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt About the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1b to the consolidated financial statements, the Company has suffered recurring losses from operations and cash outflows from operating activities that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1b. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. We determined there are no critical audit matters. /s/ Kessleman & Kesselman Kesselman & Kesselman Certified Public Accountants (Isr.) A member of PricewaterhouseCoopers International Limited Tel-Aviv, Israel March 12, 2025 We have served as the Company’s auditor since 2010 F- 2 INSPIREMD, INC. CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands and except share and per share data) 2024 2023 December 31, 2024 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 18,916 $ 9,640 Marketable securities 15,721 29,383 Accounts receivable: Trade, net 1,572 1,804 Other 682 648 Prepaid expenses 1,060 578 Inventory 2,570 2,106 TOTAL CURRENT ASSETS 40,521 44,159 NON-CURRENT ASSETS: Long term deposit 426 - Property, plant and equipment, net 2,371 1,060 Operating lease right of use assets 2,360 1,473 Fund in respect of employee rights upon retirement 1,129 951 TOTAL NON-CURRENT ASSETS 6,286 3,484 TOTAL ASSETS $ 46,807 $ 47,643 F- 3 December 31, 2024 2023 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable and accruals: Trade 1,254 939 Other 6,424 5,081 TOTAL CURRENT LIABILITIES 7,678 6,020 LONG-TERM LIABILITIES: Operating lease liabilities net of current maturities 1,796 1,038 Liability for employee rights upon retirement and others 1,247 1,084 TOTAL LONG-TERM LIABILITIES 3,043 2,122 TOTAL LIABILITIES 10,721 8,142 COMMITMENTS AND CONTINGENT LIABILITIES (Note 8) - - EQUITY: Common stock, par value $ 0.0001 per share; 150,000,000 shares authorized at December 31, 2024 and 2023; 26,611,033 and 21,841,215 shares issued and outstanding at December 31, 2024 and 2023, respectively 3 2 Preferred C shares, par value $ 0.0001 per share; 1,172,000 shares authorized at December 31, 2024 and 2023; 1,718 shares issued and outstanding at December 31, 2024 and 2023; - * - * Additional paid-in capital 289,589 261,000 Accumulated deficit ( 253,506 ) ( 221,501 ) Total equity 36,086 39,501 Total liabilities and equity $ 46,807 $ 47,643 * Represents an amount less than $1 The accompanying notes are an integral part of the consolidated financial statements. F- 4 INSPIREMD, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) 2024 2023 Year Ended December 31, 2024 2023 REVENUES $ 7,009 $ 6,205 COST OF REVENUES 5,503 4,398 GROSS PROFIT 1,506 1,807 OPERATING EXPENSES: Research and development 13,634 7,981 Selling and marketing 6,069 3,865 General and administrative 15,306 11,104 Total operating expenses 35,009 22,950 LOSS FROM OPERATIONS ( 33,503 ) ( 21,143 ) FINANCIAL INCOME, net: 1,557 1,292 LOSS BEFORE TAX EXPENSES ( 31,946 ) ( 19,851 ) TAX EXPENSES 59 65 NET LOSS $ ( 32,005 ) $ ( 19,916 ) NET LOSS PER SHARE - basic and diluted ( 0.76 ) ( 0.82 ) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES USED IN COMPUTING NET LOSS PER SHARE - basic and diluted 41,928,360 24,268,181 The accompanying notes are an integral part of the consolidated financial statements. F- 5 INSPIREMD, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (U.S. dollars in thousands, except share data) Shares Amount Shares Amount capital deficit equity Common stock Preferred C shares Additional paid-in Accumulated Total Shares Amount Shares Amount capital deficit equity BALANCE as of January 1, 2023 8,330,918 1 1,718 - * 218,977 ( 201,585 ) 17,393 Net loss ( 19,916 ) ( 19,916 ) Exercise of pre-funded warrants 307,260 - * - - - - - 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 29,695 shares 2,936,767 - * - - 4,490 - 4,490 BALANCE as of December 31, 2023 21,841,215 2 1,718 - * 261,000 ( 221,501 ) 39,501 * Represents an amount less than $1 F- 6 INSPIREMD, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (U.S. dollars in thousands, except share data) Shares Amount Shares Amount capital deficit equity Common stock Preferred C shares Additional paid-in Accumulated Total Shares Amount Shares Amount capital deficit equity BALANCE as of January 1, 2024 21,841,215 2 1,718 - * 261,000 ( 221,501 ) 39,501 Balance, value 21,841,215 2 1,718 - 261,000 ( 221,501 ) 39,501 Net loss ( 32,005 ) ( 32,005 ) 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 Issuance of common stock, included at the market offering net of $ 81 issuance costs 647,277 - * - - 1,598 - 1,598 Share-based compensation related to stock, restricted stock, restricted stock units and stock options award, net of forfeitures of 128,660 shares 2,101,163 - * - - 10,138 - 10,138 BALANCE as of December 31, 2024 26,611,033 3 1,718 - * 289,589 ( 253,506 ) 36,086 Balance, value 26,611,033 3 1,718 - 289,589 ( 253,506 ) 36,086 * Represents an amount less than $1 F- 7 INSPIREMD, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) 2024 2023 Year ended December 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 32,005 ) $ ( 19,916 ) Adjustments required to reconcile net loss to net cash used in operating activities: Depreciation 280 232 Gain from sale of property, plant and equipment - ( 6 ) Change in fair value of markable securities, net of interest received ( 894 ) ( 739 ) Change in liability for employees rights upon retirement 163 89 Other financial expense (income) ( 51 ) 58 Change in operating right of use asset and operating leasing liability ( 144 ) 62 Share-based compensation expenses 10,138 4,490 Decrease in interest receivable on short term deposits - 171 Gain on amounts funded in respect of employee rights upon retirement, net ( 91 ) ( 16 ) Changes in operating asset and liability items: Decrease (increase) in prepaid expenses ( 482 ) 77 Decrease (increase) in trade receivables 232 ( 770 ) Increase in other receivables ( 34 ) ( 435 ) Increase in inventory ( 464 ) ( 485 ) Increase in trade payables 315 280 Increase in other payables 1,169 532 Net cash used in operating activities ( 21,868 ) ( 16,376 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment ( 1,402 ) ( 381 ) Proceeds from sale of property, plant and equipment - 12 Investment in long-term deposit ( 426 ) - Investment in short-term bank deposits - ( 5,500 ) Investments in marketable securities ( 14,444 ) ( 34,644 ) Proceeds from matured marketable securities 29,000 6,000 Amounts funded in respect of employee rights upon retirement ( 87 ) ( 79 ) Withdrawal from short-term bank deposits - 18,500 Net cash provided by (used in) investing activities 12,641 ( 16,092 ) 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 of $ 81 and $ 4,635 issuance costs, respectively 1,598 37,534 Net cash provided by (used in) financing activities 18,452 37,534 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 51 ( 58 ) INCREASE IN CASH AND CASH EQUIVALENTS 9,276 5,008 BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 9,640 4,632 BALANCE OF CASH AND CASH EQUIVALENTS AT END OF YEAR 18,916 $ 9,640 SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: Acquisition of right-of-use assets by means of lease liabilities 1,344 419 Non-cash lease incentive 45 Decrease in right-of-use assets and lease liabilities due to shortening lease term - 131 Non-cash purchase of property and equipment 189 - The accompanying notes are an integral part of the consolidated financial statements. F- 8 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF BUSINESS a. General InspireMD, Inc., a Delaware corporation (the “Company”), together with its subsidiaries, including InspireMD Ltd., an Israeli corporation, and InspireMD GmbH, a German corporation, is a medical device company focusing on the development and commercialization of products for the treatment of carotid artery disease and other vascular disease, including the Company’s proprietary CGuard™ stent platform. A stent is an expandable scaffold-like device, usually constructed of a metallic material, that is inserted into the lumen of an artery to create patency and improved blood flow. A sleeve of MicroNet™ mesh is attached over a stent to provide embolic protection both during and after 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, and is seeking FDA approval for its CGuard Prime carotid stent system to enter the U.S. market. b. Liquidity The Company has an accumulated deficit as of December 31, 2024, as well as a history of net losses and negative operating cash flows. 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 consolidated 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 exercises 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 on several fronts. As of the date of these consolidated financial statements, sustained conflict in the region is ongoing and Israel has entered into certain ceasefires, the results of which are uncertain. The Company operations, including its production facility, are located in Israel. Currently, such activities in Israel remain largely unaffected. During the years ended December 31, 2024 and 2023, 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. d. Risks Related to the Geopolitical and Military Tensions Between Russia and Ukraine in Europe The Company derived approximately 14.5 % and 13.5 % in the years ended December 31, 2024 and 2023, respectively, of total sales in Russia and Belarus. 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. F- 9 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES a. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates using assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to the determination of the lease terms in operating leases. b. Functional currency The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the U.S. dollar (“$” or “dollar”). Accordingly, the functional currency of the Company and its subsidiaries is the U.S. dollar. The dollar figures are determined as follows: transactions and balances originally denominated in dollars are presented in their original amounts. Balances in foreign currencies are translated into dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. The resulting translation gains or losses are recorded as financial income or expense, as appropriate. For transactions reflected in the statements of operations in foreign currencies, the exchange rates at transaction dates are used. Depreciation and changes in inventories and other changes deriving from non-monetary items are based on historical exchange rates. c. Principles of consolidation The consolidated financial statements include the accounts of the Company and of its subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation. d. 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 December 31, 2024 and 2023, cash and cash equivalents consisted of cash, short-term deposits (up to three months from the date of deposit) and money market funds. e. 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 consolidated statements of operation as finance expense (income), net. Marketable securities are classified under current assets in the consolidated balance sheets as they represent the investment of funds available for the Company’s current operations. F- 10 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued): f. Concentration of credit risk and allowance for doubtful accounts Financial instruments that may potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, marketable securities and long-term deposits, which are deposited in major financially sound institutions in the U.S. Israel and Germany, and trade accounts receivable and other receivables. The Company’s trade accounts receivable is derived from revenues earned from customers from various countries. The Company performs ongoing credit evaluations of its customers’ financial condition and, requires no collateral from its customers. The Company also has a credit insurance policy for some of its customers. The Company maintains the allowance for estimated losses resulting from the inability of the Company’s customers to make required payments. The allowance represents the current estimate of lifetime expected credit losses over the remaining duration of existing accounts receivable considering current market conditions and supportable forecasts when appropriate. The estimate is a result of the Company’s ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses, and future expectations. The allowance for expected credit losses was immaterial during the periods presented. g. Inventory Inventories are stated at the lower of cost (cost is determined on a “first-in, first-out” basis) or net realizable value. The Company’s inventories generally have a limited shelf life and are subject to impairment as they approach their expiration dates. The Company regularly evaluates the carrying value of its inventory and when, based on such evaluation, factors indicate that impairment has occurred, the Company impairs the inventories’ carrying value. There were no impairments or inventory allowances during the years ended December 31, 2024 and 2023. h. Leases Operating leases are included in operating lease right-of-use (“ROU”) assets. Short-term balances regarding lease liabilities are included in accounts payable and accruals - Other and long-term balances regarding lease liabilities are included in operating lease liabilities. ROU assets represent Company’s right to use an underlying asset for the lease term and lease liabilities represent obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses the incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of the incremental borrowing rate requires management judgment based on information available at lease commencement. The lease terms may include periods covered by options to extend the lease when it is reasonably certain that the Company will exercise such options, and periods covered by options to terminate the lease when it is reasonably certain that the Company will not exercise such options. Operating lease cost is recognized on a straight-line basis over the lease term. Lease agreements that include lease and non-lease components are accounted for as a single lease component. The Company elected the short-term lease recognition exemption for leases with a lease term of 12 months or less. i. Property, plant and equipment Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets: over three years for computers and other electronic equipment, and seven to fifteen years for office furniture and equipment and machinery and equipment (mainly seven years). Leasehold improvements are amortized on a straight-line basis over the term of the lease, which is shorter than the estimated life of the improvements. j. Impairment in value of long-lived assets The Company tests long-lived tangible assets for impairment whenever events or circumstances present an indication of impairment. If the sum of expected future cash flows (undiscounted and without interest charges) of the long-lived assets is less than the carrying amount of such assets, an impairment would be recognized, and the assets would be written down to their estimated fair values, based on expected future discounted cash flows. F- 11 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued): k. Revenue recognition A contract with a customer exists only when: 1) the parties to the contract have approved it and are committed to perform their respective obligations, 2) the Company can identify each party’s rights regarding the distinct goods or services to be transferred (“Performance Obligations”), 3) the Company can determine the transaction price for the goods or services to be transferred, 4) the contract has commercial substance and 5) it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Revenues are recorded in the amount of consideration to which the Company expects to be entitled in exchange for Performance Obligations upon transfer of control to the customer, excluding sales taxes. Revenue from sales of goods, including sales to distributors, is recognized when the customer obtains control of the product, once the Company has a present right to payment and the customer has legal title, and risks and rewards of ownership are obtained by the customer. Generally, this occurs when products are shipped. In few cases when products are directly sold to medical centers on consignment basis, revenue is recognized when the product is consumed. The Company recognizes the incremental costs of obtaining contracts as an expense since the amortization period of the assets that the Company otherwise would have recognized is one year or less. The costs are recorded under selling and marketing expenses. Disaggregated revenue is disclosed in Note 13. The Company recognizes revenue net of value added tax (VAT). l. Research and development costs Research and development costs, including the costs of the Company’s U.S.-based clinical trial costs which were approximately $ 3,815 and $ 3,300 thousand for the years ended December 31, 2024 and 2023, respectively, are charged to the consolidated statements of operations as incurred. m. Share-based compensation The Company has equity incentive plans under which the Company grants equity awards, including stock options, restricted stock and restricted stock units (“RSUs”) to employees, directors and service providers. Employee and service providers equity awards are accounted for using the grant-date fair value method. The Company determines compensation expense associated with restricted stock and RSUs based on the fair value of our common stock on the date of grant. The fair value of option awards is estimated using the Black-Scholes valuation model and expensed over the requisite service period. The Company elected to account for forfeitures as they occur. The Company elected to recognize compensation expenses for awards to employees with only service conditions that have graded vesting schedules using the accelerated multiple option approach. The attribution for nonemployee awards is in the same manner as if the Company had paid cash for the goods or services. In addition, some of our share-based awards to service providers are performance based, i.e., the vesting of these awards depends upon achieving certain goals. The Company recognizes compensation expenses for awards with performance conditions when the company concludes that it is probable that the performance condition will be achieved. F- 12 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) n. Uncertain tax positions The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit. If under the first step a tax position is assessed to be more likely than not of being sustained on audit, the second step is performed, under which the tax benefit is measured as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Such liabilities are classified as long-term, unless the liability is expected to be resolved within twelve months from the balance sheet date. The Company’s policy is to include interest related to unrecognized tax benefits within “Financial income - net”. o. Deferred income taxes Deferred taxes are determined utilizing the “asset and liability” method based on the estimated future tax effects of differences between the financial accounting and tax bases of assets and liabilities under the applicable tax laws, and on tax rates anticipated to be in effect when the deferred taxes are expected to be paid or realized. The Company assesses realization of deferred income tax assets and, based on all available evidence, concludes whether it is more likely than not that the net deferred income tax assets will be realized. A valuation allowance is provided for the amount of deferred income tax assets not considered to be realizable. The Company may incur an additional tax liability in the event of intercompany dividend distributions by its subsidiaries. Such additional tax liability in respect of these foreign subsidiaries has not been provided for in these consolidated financial statements as it is the Company’s policy to permanently reinvest the subsidiaries’ earnings and to consider distributing dividends only in connection with a specific tax opportunity that may arise. Taxes that would apply in the event of disposal of investments in a foreign subsidiary have not been taken into account in computing the deferred taxes, as it is the Company’s intention to hold, and not to realize, these investments. F- 13 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued): p. Advertising Costs related to advertising and promotion of products are charged to sales and marketing expense as incurred. Advertising expenses were approximately $ 691 and $ 426 thousand for the years ended December 31, 2024 and 2023, respectively. q. 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. 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, which were excluded from the calculations of diluted loss per share were 48,681,495 and 59,723,455 for the years ended December 31, 2024 and 2023, respectively . This amount includes 4,073,966 and 3,054,086 of unvested restricted stock included in the number of issued and outstanding shares as of December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023 the weighted average number of ordinary shares used in computing net loss per share - basic and diluted was as follows: SCHEDULE OF WEIGHTED AVERAGE NUMBER OF SHARES 2024 2023 2024 2023 Weighted average number of ordinary shares 20,501,816 14,606,248 Weighted average Vested restricted stock units 306,731 23,335 Weighted average Pre-funded Warrants 21,119,813 9,638,598 Total Weighted average number of ordinary shares used in computing net loss per share - basic and diluted 41,928,360 24,268,181 r. Segment reporting The Company has one operating and reportable segment. The Company has adopted the new accounting standard ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures” in 2024, see note 14. s. Fair value measurement The Company measures fair value and discloses fair value measurements for financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: 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. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. F- 14 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued): t. Recently issued accounting pronouncement, not yet adopted 1) 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 and disclosures. 2) In November 2024, the FASB issued ASU No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The ASU improves the disclosures about a public business entity’s expenses and provides more detailed information about the types of expenses in commonly presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense caption (such as cost of sales, SG&A and research and development). The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s financial statements and disclosures. F- 15 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 3 – FAIR VALUE MEASUREMENTS As of December 31, 2024 and 2023, the carrying amounts of accounts payable, accounts receivable and other receivables approximate their fair values due to the short-term maturities of these instruments. The carrying amount of the long-term deposit approximates its fair value since it is measured at its present value applying prevailing interest rates, see note 7. 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 December 31, 2024 ($ in thousands) Total Level 1 Level 2 Level 3 Assets: Cash equivalents- Money market funds $ 6,281 $ 6,281 $ - $ - Marketable securities- U.S government bonds $ 15,721 $ - $ 15,721 $ - 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 1 and 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 December 31, 2024 and 2023 is $ 15,277 and 28,727 thousand, respectively. F- 16 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 4 - MARKETABLE SECURITIES The following table sets forth the Company’s marketable securities for the indicated period: SCHEDULE OF MARKETABLE SECURITIES 2024 2023 December 31, 2024 2023 ($ in thousands) U.S. government bonds $ 15,721 $ 29,383 Marketable securities $ 15,721 $ 29,383 The following table summarizes the fair value of the Company’s marketable securities classified by maturity as of December 31, 2024 and 2023: SCHEDULE OF FAIR VALUE OF MARKETABLE SECURITIES CLASSIFIED BY MATURITY 2024 2023 December 31, 2024 2023 ($ in thousands) Amounts maturing within one year $ 15,721 $ 24,523 Amounts maturing after one year through two years - 4,860 Marketable securities $ 15,721 $ 29,383 The table below sets forth a summary of the changes in the fair value of the Company’s marketable securities for the years ended December 31, 2024 and 2023: SCHEDULE OF CHANGES IN FAIR VALUE OF MARKETABLE SECURITIES 2024 2023 2024 2023 ($ in thousands) Balance at beginning of the year $ 29,383 - Additions 14,444 34,644 Maturity ( 29,000 ) ( 6,000 ) Interest received ( 299 ) ( 38 ) Changes in fair value during the year 1,193 777 Balance at end of the period 15,721 29,383 NOTE 5 - PROPERTY, PLANT AND EQUIPMENT a. Composition of assets, grouped by major classifications, is as follows: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT 2024 2023 December 31, 2024 2023 ($ in thousands) Cost: Computer equipment $ 726 $ 425 Office furniture and equipment 464 249 Machinery and equipment 2,640 1,702 Leasehold improvements 861 724 Property plant and equipment, gross 4,691 3,100 Less - accumulated depreciation and amortization ( 2,320 ) ( 2,040 ) Net carrying amount $ 2,371 $ 1,060 b. Depreciation and amortization expenses totaled approximately $ 280,000 and $ 232,000 for the years ended December 31, 2024, and 2023, respectively, excluding fixed assets that the company purchased, which is awaiting FDA approval and, as a result, is not yet operational and not depreciated. F- 17 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 6 - LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT AND OTHERS Israeli labor law generally requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain other circumstances. Pursuant to section 14 of the Israeli Severance Compensation Act, 1963, most of the Company’s employees are entitled to have monthly deposits, at a rate of 8.33 % of their monthly salary, made in their name with insurance companies. Payments in accordance with section 14 relieve the Company from any future severance payments to these employees. The severance pay expenses for such employees were approximately $ 293,000 and $ 256,000 for the years ended December 31, 2024 and 2023, respectively. The severance pay liability of the Company for the rest of its Israeli employees amounting to $ 1,224 thousand and $ 1,084 thousand for the years ended December 31, 2024 and 2023, respectively, reflects the undiscounted amount of the liability and is based upon the number of years of service and the latest monthly salary. The severance pay liability is partly covered by insurance policies and by regular deposits with recognized severance payment funds. The Company may only withdraw funds previously deposited for savings in connection with the payment of severance. The severance pay expenses for such employees were approximately $ 124,000 and $ 116,000 for the years ended December 31, 2024 and 2023, respectively. NOTE 7 – LEASE AGREEMENTS 1) On October 9, 2024, the Company entered into a lease agreement in Miami, Florida (the “U.S. Lease”) for the establishment of its new global headquarters. The U.S. lease rent commences on the date that the landlord delivers the entire premises to the Company with (i) the landlord’s completion of the construction of Suite 280 and (ii) the construction of Suite 215 being substantially complete (the “Commencement Date”). The U.S. lease will be in effect until August 31, 2030, with an option for a five-year extension in accordance with the lease terms. However, the Company has determined that the lease renewal option is not reasonably certain to be exercised due to operational and strategic factors. Under the U.S. 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. The present value of the deposit as of December 31, 2024, is $ 426 thousand, and it is classified as Long-term Deposit while the remaining is included as Operating Lease Right of Use Assets. The Company took possession of Suite 215 as of November 1, 2024 (“Commencement Date”), and it expects to take possession of Suite 280 in May 2025 following the substantial completion of landlord improvements as outlined in the U.S. Lease. 2) The Company’s Israeli subsidiary had a lease agreement for a facility in Israel (the “Israeli Lease”), which expired on December 31, 2022 with an option to extend the Israeli Lease for two additional years until December 31, 2024. On May 25, 2022 the Company amended the Israeli Lease and extended it until December 31, 2026 and also leased additional space in the facility. On August 24, 2023, the Company amended the Israeli Lease, leasing additional space in the facility and shortened the lease term of another space in the building. The balances of right of use assets and lease liabilities increased due to the newly leased space and decreased due to the lease that was shortened. On March 14, 2024, the Company amended the Israeli Lease, modifying the structure of the extension options. While the lease term currently extends through December 31, 2027, any extensions beyond this date are subject to the landlord’s approval and are not solely at the Company’s discretion. In the fourth quarter of 2024, as part of the approval of the Company’s long term strategic production plan, the Company reassessed its long-term leasing strategy. Following this reassessment, the Company updated its assumption on the lease term for the Israeli premise and included the optional period until the end of 2027 within the lease term. F- 18 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) Operating lease cost for the years ended December 31, 2024 and 2023 in Tel-Aviv was $ 423 and $ 433 thousand respectively. Operating lease cost for the years ended December 31, 2024 and 2023 in Miami was $ 34 thousand and $ 0 respectively. In addition to the fixed lease payments in Miami, the Company incurred variable expenses related to the lease, including utilities, maintenance, and other common area costs, totaling approximately $ 21 thousand for the year ended December 31, 2024. Supplemental information related to leases are as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES 2024 2023 December 31, 2024 2023 ($ in thousands) Operating lease right-of-use assets 2,360 1,473 Current Operating lease liabilities ( 542 ) ( 557 ) Non-current operating lease liabilities ( 1,796 ) ( 1,038 ) Other information: Operating cash flows from operating leases (cash paid in thousands) ( 745 ) ( 429 ) Weighted Average Remaining Lease Term 3.93 3 Weighted Average Discount Rate 11.82 % 9.73 % Maturities of lease liabilities as of December 31, 2024 are as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Amount ($ in thousands) 2025 571 2026 853 2027 922 2028 217 2029 onwards 376 Total lease payments 2,939 Less imputed interest ( 601 ) Total 2,338 F- 19 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 8 - COMMITMENTS AND CONTINGENT LIABILITIES : Distribution Agreement with Chinese Partner On February 3, 2021, the Company entered into a distribution agreement (the “Distribution Agreement”) with three China-based partners, pursuant to which the Chinese partners will be responsible for conducting the necessary registration trials for commercial approval of the Company’s products in China, followed by an eight-year exclusive distribution right to sell the Company’s products in China with the term of the agreement continuing on a year-to-year basis unless terminated. Under the Distribution Agreement, the China-based partners will be subject to minimum purchase obligations. The Distribution Agreement may be terminated for cause upon failure to meet minimum purchase obligations, failure to obtain regulatory approvals or for other material breaches. In addition, the agreement stipulates that if the Distributor fails to obtain the Regulatory Approvals by the time stipulated in the agreement due to the failure of the clinical trials, and this Agreement was terminated as a result of such failure to obtain Regulatory Approvals, InspireMD shall reimburse Distributor in an amount which is 50 % of Distributor’s direct out of pocket costs to 3rd parties for conducting the clinical trials, which reimbursement will not exceed USD 1,000,000 . The consolidated financial statements include a liability, based on 50 % of the Distributor costs incurred until December 31, 2024. The liability at December 31, 2023 and 2024 is immaterial. NOTE 9 - EQUITY a. Share capital The Company’s shares of common stock are listed on the Nasdaq Capital Market. 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. 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. In 2024 and 2023, the Company issued a total of 1,728,382 and 307,260 shares of its common stock, respectively, in connection with the exercise of Pre-Funded Warrants to purchase 1,728,390 and 307,271 , respectively, shares of common stock of which 200,000 and 307,271 , respectively, Pre-Funded Warrants were exercised to 199,992 and 307,260 shares of its common stock on a cashless basis.As of December 31, 2024 and 2023, there are Pre-Funded Warrants to purchase an aggregate of 26,147,323 and 15,254,623 , respectively shares of common stock outstanding. F- 20 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) SCHEDULE OF EXERCISE OF WARRANTS AND 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 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 December 31, 2024 and 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, with a total stated value of $ 10,997 . Exercise of Series H Warrant The Series H Warrants had 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 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 approximately $ 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 Offering. ATM Offering On May 31, 2024, the Company entered into an at-the-market (“ATM”) facility with Piper Sandler & Co. (“Piper”) pursuant to an Equity Distribution Agreement (the “Distribution Agreement”). In accordance with the Distribution 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. For the year ended December 31, 2024, the net proceeds to the Company from the issuance of 647,277 shares of common stock were $ 1,598 thousand after deduction of issuance fees of approximately $ 81 thousand. As of December 31, 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 years ended December 31, 2024 and 2023, a total of 213,458 and 54,135 warrants expired, respectively. F- 21 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 9 – EQUITY (continued): b. Share-Based Compensation 1) On September 30, 2021, at the Company’s 2021 annual meeting of stockholders, the Company’s stockholders approved the 2021 Equity Incentive Plan. The Company’s 2021 Equity Incentive Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted singly, in combination, or in tandem. As of December 31, 2024, we had 9,237,869 shares of common stock available for future issuance under the 2021 Equity Incentive Plan. 2) On September 30, 2024, the compensation committee of the Company’s board of directors 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. As of December 31, 2024, the Company had 1,957,763 shares of common stock available for future issuance under the 2024 Inducement Plan. 3) The following table summarizes information about stock options granted to employees: SCHEDULE OF STOCK OPTIONS GRANTED Year ended December 31 2024 2023 Weighted Weighted Number of options average exercise price Number of options average exercise price Outstanding - beginning of the year 1,379,696 2.58 294,712 5.21 Granted 777,761 3.07 1,097,250 1.89 Forfeited ( 3,314 ) 3.54 ( 12,266 ) 4.00 Outstanding- end of period 2,154,143 2.76 1,379,696 2.58 Exercisable at the end of the year 644,882 3.36 215,709 5.38 F- 22 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 4) The following table summarizes information about stock options granted to non-employees: Year ended December 31 2024 2023 Weighted Weighted Number of options average exercise price Number of options average exercise price Outstanding - beginning of the year 791,669 2.06 166,669 3.37 Granted 125,000 2.37 625,000 1.71 Outstanding - end of period 916,669 2.10 791,669 2.06 Exercisable at the end of the year 387,333 2.37 84,667 3.42 5) The following table summarizes information about restricted stock granted to employees: SCHEDULE OF RESTRICTED STOCK GRANTED TO EMPLOYEES Year ended December 31 2024 2023 Number of restricted stock Outstanding - beginning of the year 3,054,086 355,951 Granted 2,217,966 2,914,340 Forfeited ( 128,660 ) ( 29,695 ) Vested ( 1,069,428 ) ( 186,510 ) Outstanding - end of the year 4,073,964 3,054,086 6) The following table summarizes information about RSUs granted to employees: SCHEDULE OF RESTRICTED STOCK UNIT GRANTED TO EMPLOYEES Year ended December 31 2024 2023 Number of RSUs Outstanding - beginning of the year 1,282,228 237,078 Granted 563,499 1,045,150 Outstanding - end of the year 1,845,727 1,282,228 7) The following table provides additional information about all options outstanding and exercisable: SCHEDULE OF ADDITIONAL INFORMATION ABOUT ALL OPTIONS OUTSTANDING AND EXERCISABLE Outstanding as of December 31, 2024 Exercise price Options outstanding Weighted average remaining contractual life (years) Options exercisable $ 1.15 - 3.14 2,686,358 8.56 704,641 $ 3.30 - 4.12 227,932 7.53 171,052 $ 4.95 - 10.05 152,469 6.00 152,469 $ 16.50 4,087 5.01 4,053 3,070,846 8.35 1,032,215 The weighted average of the remaining contractual life of total vested and exercisable options as of December 31, 2024 was 7.73 years. The aggregate intrinsic value of the total exercisable options as of December 31, 2024 was approximately $ 494,250 . The weighted average fair value of options granted to employees was $ 2.54 and $ 1.65 for the years ended December 31, 2024 and 2023, respectively. The weighted average fair value of options granted was estimated using the Black-Scholes option-pricing model. The weighted average fair value of options granted to consultants was $ 1.87 and $ 1.50 for the years ended December 31, 2024 and 2023, respectively. The weighted average fair value of options granted was estimated using the Black-Scholes option-pricing model. The weighted average fair value of restricted stock granted was $ 2.94 and $ 1.95 for the years ended December 31, 2024 and 2023, respectively. The weighted average fair value of RSU granted was $ 3.14 and $ 1.76 for the years ended December 31, 2024 and 2023, respectively. The vesting period for outstanding stock options, restricted stock, and RSUs is typically three years , with one-third of the awards vesting annually. The options and restricted stock to directors are subject to a one-year vesting period. Additionally, some of our share-based awards to service providers are performance-based, vesting upon the achievement of specified performance criteria related to clinical or marketing activities. F- 23 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 8) The following table sets forth the assumptions that were used in determining the fair value of options granted to employees and consultants for the year December 31, 2024 and 2023: SCHEDULE OF FAIR VALUE OF OPTIONS GRANTED TO EMPLOYEES Year ended December 31 2024 2023 Expected life 5.125 - 10 years 5.125 - 6.5 years Risk-free interest rates 3.93 %- 4.44 % 3.58 %- 4.73 % Volatility 91.82 %- 119.38 % 109.62 %- 125.61 % Dividend yield - - The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Accordingly, as to ordinary course options granted, the expected term was determined using the simplified method, which takes into consideration the option’s contractual life and the vesting periods (for non-employees, the expected term is equal to the option’s contractual life). The annual risk-free rates are based on the yield rates of zero coupon non-index linked U.S. Federal Reserve treasury bonds as both the exercise price and the share price are in dollar terms. The Company’s expected volatility is derived from its historical data. 9) As of December 31, 2024, the total unrecognized compensation cost on employee and non-employee stock options, restricted stock and RSUs, related to unvested stock-based compensation, amounted to approximately $ 7.29 million. This cost is expected to be recognized over a weighted-average period of approximately 0.85 years. This expected cost does not include the impact of any future stock-based compensation awards. 10) The following table summarizes the allocation of total share-based compensation expense in the consolidated statements of operations: SCHEDULE OF ALLOCATION OF TOTAL SHARE-BASED COMPENSATION EXPENSE Year ended December 31 2024 2023 ($ in thousands) Cost of revenues $ 256 $ 93 Research and development 2,412 649 Sales and marketing 1,025 416 General and administrative 6,445 3,332 $ 10,138 $ 4,490 F- 24 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 10 – RELATED PARTIES TRANSACTIONS 1) During the year ended December 31, 2023, a consulting company whose founder and chief executive officer is one of our board members provided certain marketing services in the amount of $ 788 . No services were provided during the year ended December 31, 2024. 2) On September 15, 2023, the board approved the company’s entry into a consultancy agreement (the “Consultancy Agreement”) with a member of the immediate family of the Company’s chief executive officer for certain administrative projects in connection with the Company’s expansion to the U.S. until a full-time Company employee is retained in such capacity. Pursuant to the Consultancy Agreement, the Company will pay a fixed hourly fee of $ 50 for a maximum of 20 hours per week and customary expenses. On July 1, 2024 the audit committee amended the Consultancy Agreement. Pursuant to the amended Consultancy Agreement, the Company will pay a fixed hourly fee of $ 100 for a maximum of 95 hours per month in an aggregate amount not to exceed $ 120,000 , including expenses, for the subsequent twelve month period until June 30, 2025. Consulting expenses for the years ended December 31, 2024 and 2023, were $ 75,522 and $ 11,440 , respectively. 3) Election to Receive Shares of Common Stock in lieu of Cash Compensation During 2023, certain non-employee directors elected 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. For a director that made that election, a stock award under the 2021 Equity Incentive Plan was paid quarterly on the first day of each next quarter (“Issuance Dates”) and became fully vested on the Issuance Dates. The stock award was 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. For the year ended 2024, no expenses were recorded in shares of the company. During the year ended December 31, 2023 the Company issued 52,129 shares of common stock to non-employee directors who elected to receive all or a portion of their cash retainer amount for the nine months ended September 30, 2023 in shares of the Company’s common stock under the 2021 Equity Incentive Plan. As of December 31, 2023, there was an accrual for $ 55,000 for director’s fees. Out of this an amount of $ 22,875 was paid in cash and $ 32,125 was issued in shares of the Company’s common stock under the 2021 Equity Incentive Plan. On January 1, 2024 the Company issued 11,854 shares of common stock. F- 25 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 11 - TAXES ON INCOME: a. Tax laws applicable to the Company and its subsidiaries Taxation in the United States InspireMD, Inc. is taxed under U.S. tax laws. Accordingly, the applicable federal corporate tax rate in 2024 and 2023 is 21 %. The applicable state income tax rate in 2024 and 2023 is 3.42 %. Taxation in Israel InspiredMD, Ltd is taxed under Israeli tax laws. Accordingly, the applicable corporate tax rate in 2024 and 2023 is 23 %. Taxation in Germany InspireMD GmbH is taxed according to the tax laws in Germany. Accordingly, the applicable tax rates are corporate tax rate of 15.825 % and trade tax rate of 17.15 % in 2024 and 2023 b. Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the “Law”): On December 29, 2016, the Investment Law was amended (“73 Amendment”), which includes, inter alia, two new tax incentive opportunities. These are the Preferred Technological Enterprise (“PTE”) and Special Preferred Technological Enterprise (“SPTE”). In order to benefit from either of these options, a company must meet certain qualifications and receive formal approval from the Israel Innovation Authority (“IIA”) which allows the company to use the reduced corporate tax rate of 12 % on its “Preferred Technological Income” (earned from enterprises located in Development outside of Zone A) in the case of a “preferred technology enterprise”, or 6 % on its “preferred technology income” (earned from enterprises located in Development Zone A or outside it) in the case of a “special preferred technology enterprise”. Additionally, any “technology income”, as this term is defined by the Law, not classified as “preferred technology income” is subject to the corporate tax rate. Furthermore, according to the provisions regarding “preferred technology enterprise” and “special preferred technology enterprise” in the Law and the regulations thereunder, and to the extent the income is attributable to manufacturing, this income is classified as “preferred income” and is taxed at 7.5 % or 16 % according to the development zone. To the extent the income is from an intangible asset used for marketing, it is subject to the normal corporate tax rate. Additionally, when income of a company originating from “preferred technology income” is distributed as dividend to a foreign-resident corporation, tax withholding from the dividend is 4 %, provided that 90 % or more of that company’s shares are directly held by one or more foreign corporations, and the profits resulted after they acquired the shares. c. Carry forward tax losses As of December 31, 2024, the Company had a net carry forward tax loss of approximately $ 60 million, of which approximately $ 35 million (arising before January 1, 2018), expires until 2038, and approximately $ 25 million, which does not expire, but is limited to offset 80 % of the net income in the year it is utilized. Under the U.S. tax laws, for net operating losses (NOLs) arising after December 31, 2017, the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “2017 Act”) limits a taxpayer’s ability to utilize NOL carryforwards to 80% of taxable income. F- 26 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) In addition, NOLs arising after 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018, will not be subject to the foregoing taxable income limitation and will continue to have a two-year carryback and twenty-year carryforward period. As of December 31, 2024 and 2023, InspireMD Ltd., an Israeli subsidiary, had a net carry forward tax loss of approximately $ 126 and $ 107 million. Under Israeli tax laws, the carry forward tax losses can be utilized indefinitely. The Israeli subsidiary is taxed in New Israeli Shekel (“NIS”), which is different from its functional currency (U.S. Dollar). The change in the Israeli subsidiary NOL’s for tax purposes partly resulted by such rate differences. d. Loss before income taxes The components of loss before income taxes are as follows: SCHEDULE OF COMPONENTS OF LOSS BEFORE INCOME TAXES Year ended December 31 2024 2023 ($ in thousands) Loss before taxes on income: InspireMD, Inc. $ ( 10,385 ) $ ( 5,772 ) Subsidiaries ( 21,561 ) ( 14,079 ) $ ( 31,946 ) $ ( 19,851 ) NOTE 11 - TAXES ON INCOME (continued): e. Current taxes on income The main reconciling item between the statutory tax rate of the Company and its subsidiaries and the effective tax rate is the change in valuation allowance in respect of tax benefits from carried forward tax losses due to uncertainty of the realization of such tax benefits. The changes in the valuation allowance for the years ended December 31, 2024 and 2023 were as follows: SCHEDULE OF CHANGES IN VALUATION ALLOWANCE Year ended December 31 2024 2023 ($ in thousands) Balance at the beginning of the year $ 42,651 $ 40,071 Changes during the year: Losses during the year (including foreign exchange rate effect) 5,779 2,580 Balance at the end of the year $ 48,430 $ 42,651 F- 27 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) f. Accounting for Uncertain Tax positions The following is a reconciliation of the total amounts of the Company’s uncertain tax positions during the years ended December 31, 2024 and 2023: SCHEDULE OF RECONCILIATION OF UNCERTAIN TAX POSITIONS Year ended December 31, 2024 2023 ($ in thousands) Balance at beginning of the year $ 168 $ 106 Additions related to uncertain tax positions taken this year 57 62 Balance at end of the year $ 225 $ 168 A summary of open tax years by major jurisdiction is presented below: SCHEDULE OF OPEN TAX YEARS BY MAJOR JURISDICTION Jurisdiction Years U.S. 2021 - 2024 Israel 2020 - 2024 Germany 2021 - 2024 NOTE 11 - TAXES ON INCOME (continued): g. Deferred income tax: SCHEDULE OF DEFERRED INCOME TAX December 31, 2024 2023 ($ in thousands) Provision for vacation and recreation pay 82 68 R&D expenses 2,204 1,691 Operating lease right of use assets ( 525 ) ( 339 ) Operating lease liabilities 554 367 Share-based compensation 4,489 3,492 Marketable securities ( 100 ) - Carry forward tax losses 41,699 37,342 Accrued severance pay, net 27 30 Deferred tax assets noncurrent 48,430 42,651 Less-valuation allowance ( 48,430 ) ( 42,651 ) Deferred tax assets - - NOTE 12 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION: Balance sheets: Inventory: SCHEDULE OF INVENTORIES December 31, 2024 2023 ($ in thousands) Finished goods $ 18 $ 210 Work in process 638 562 Raw materials and supplies 1,914 1,334 Total inventory $ 2,570 $ 2,106 F- 28 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 12 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (continued): SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER a. Accounts payable and accruals-other: December 31, 2024 2023 ($ in thousands) Employees and employee institutions $ 3,414 $ 2,188 Accrued vacation and recreation pay 369 287 Accrued expenses 1,325 1,115 Clinical trial accrual 519 744 Current Operating lease liabilities 542 557 Other 255 190 Accounts Payable and Accruals - Other $ 6,424 $ 5,081 NOTE 13 – 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 Year ended December 31, 2024 2023 ($ in thousands) Italy $ 1,223 $ 1,195 Germany 926 896 Russia 713 738 Other * 4,147 3,376 Revenues $ 7,009 $ 6,205 * Other countries don’t exceed 10% in the years ended December 2024 and 2023. By principal customers (part of revenues): SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRINCIPAL CUSTOMERS Year ended December 31, 2024 2023 Customer A 13 % 14 % Customer B 10 % 12 % Sales percentage 10 % 12 % The following table presents the Company’s long-lived assets by geographic region, which consist of property, plant and equipment, net and operating lease right of use assets: SCHEDULE OF LONG-LIVED ASSETS BY GEOGRAPHIC REGION December 31, 2024 2023 ($ in thousands) Israel 2,750 2,533 United States 1,981 - Total long-lived assets $ 4,731 2,533 F- 29 INSPIREMD, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 14 – SEGMENT INFORMATION The Company has one operating and reporting segment, that develops, manufactures and markets products for the treatment of carotid artery disease and other vascular disease, including the Company’s proprietary CGuard™ stent platform. The Company’s Chief Operating Decision Maker (“CODM”), who is the CEO evaluates the Company’s performance based on its internal reporting which is consistent with the presentation in the Company’s consolidated financial statements. Accordingly, our CODM uses consolidated net loss to measure segment profit or loss, allocate resources, and assess performance. The CODM examines, within each operational function the employee salaries including the bonus and share based compensation, clinical trials expenses within the research and development operations and certain other expenses. The following table summarizes the Company’s segment revenue, significant segment expenses, and segment loss. SCHEDULE OF SEGMENT REVENUE Year ended December 31, 2024 2023 Revenues 7,009 6,205 Cost of Revenues: Material and Labor 4,698 3,807 Other cost of revenues 805 591 Total Cost of Revenues 5,503 4,398 Research and development (R&D) Payroll and Benefits 2,858 1,916 Share based compensation 2,412 649 Clinical trials 3,815 3,300 Other R&D 4,549 2,116 Total Research and development 13,634 7,981 Selling and marketing (S&M) Payroll and Benefits 3,769 2,508 Share based compensation 1,025 416 Other S&M 1,275 941 Total Selling and marketing 6,069 3,865 General and administrative (G&A) Payroll and Benefits 4,221 3,344 Share based compensation 6,445 3,332 Other G&A 4,640 4,428 Total General and administrative 15,306 11,104 Financial Income, net; 1,557 1,292 Tax Expenses 59 65 Segment net Loss ( 32,005 ) ( 19,916 ) NOTE 15 - SUBSEQUENT EVENTS: Subsequent to December 31, 2024, the Company granted 2,253,445 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. Subsequent to December 31, 2024, the Company granted 558,417 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. Subsequent to December 31, 2024, the Company granted to employees and directors options to purchase a total of 848,204 shares of the Company’s common stock. The options have an exercise price of $ 2.76 per share, which was the fair market value of the Company’s common stock on the date 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. F- 30