InspireMD, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Form 10-Q to the “Company,” “InspireMD,” “we,” “our” and “us” refer to InspireMD, Inc., a Delaware corporation, and its subsidiaries. Forward-Looking Statements This Quarterly Report on Form 10-Q contains “forward-looking statements,” which include information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation, including revenue growth. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: ● our history of recurring losses and negative cash flows from operating activities, significant future commitments and the uncertainty regarding the adequacy of our liquidity to pursue our complete business objectives, and substantial doubt regarding our ability to continue as a going concern; ● our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute our stockholders’ ownership interests; ● the clinical development, commercialization and market acceptance of our products; ● whether the clinical trial results for our products will be predictive of real-world results; ● an inability to secure and maintain regulatory approvals for the sale of our products; ● any impact of a product recall, including the current recall in the U.S. regarding the CGuard Prime 135cm Carotid Stent System, on our business, results of operations and financial conditions; ● negative clinical trial results or lengthy product delays in key markets; ● our ability to maintain compliance with the Nasdaq listing standards; ● our ability to generate significant revenues from our products; ● estimates of our expenses, future revenues, capital requirements and our needs for and ability to access sufficient additional financing, including any unexpected costs or delays in the ongoing commercial launch of our products; ● our dependence on a single manufacturing facility and our ability to comply with stringent manufacturing quality standards and to increase production as necessary; ● the risk that the data collected from our current and planned clinical trials may not be sufficient to demonstrate that our technology is an attractive alternative to other procedures and products; 2 ● intense competition in our industry, with competitors having substantially greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do; ● entry of new competitors and products and potential technological obsolescence of our products; ● inability to carry out research, development and commercialization plans; ● loss of a key customer or supplier; ● technical problems with our research and products and potential product liability claims; ● product malfunctions; ● price increases for supplies and components; ● whether access to our products is achieved in a commercially viable manner and whether our products receive adequate reimbursement by governmental and other third-party payers; ● our efforts to successfully obtain and maintain intellectual property protection covering our products, which may not be successful; ● adverse federal, state and local government regulation, in the United States, Europe or Israel and other foreign jurisdictions; 3 ● the fact that we conduct business in multiple foreign jurisdictions, exposing us to foreign currency exchange rate fluctuations, logistical and communications challenges, burdens and costs of compliance with foreign laws and political and economic instability in each jurisdiction; ● security, political and economic instability in the Middle East that could harm our business, including due to the current security situation in Israel; ● current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk; and ● changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements and the impact of such policies on us, our customers and suppliers, and the global economic environment. The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and investing in our common stock, you should carefully review the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission. The forward-looking statements contained in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events. Overview We are a medical device company specializing in the development and commercialization of products for the treatment of carotid artery disease and other vascular conditions. Our portfolio includes two commercial products based on our proprietary CGuard carotid stent technology, designed to provide market-leading embolic protection during and after stenting procedures. A stent is an expandable scaffold-like metallic device placed in an artery to widen the lumen and restore blood flow. Our first product, the CGuard Carotid Embolic Prevention System (“CGuard EPS”), integrates a self-expanding nitinol stent with a MicroNet mesh sleeve as a single device for carotid artery revascularization. In January 2024, we received CE Mark recertification for CGuard EPS under the EU Medical Device Regulation (“MDR”). Our CGuard EPS previously held CE Mark approval under the former Medical Device Directive (“MDD”). CGuard EPS is marketed in over 30 countries outside the United States through a network of distributors. In the first quarter of 2026, we submitted a premarket approval for the CGuard EPS with a view to potential FDA approval in the second half of 2026. Our second product, the CGuard Prime Carotid Stent System (“CGuard Prime”), uses the same stent and MicroNet mesh as the CGuard EPS with a differentiated deployment mechanism. CGuard Prime received premarket approval (“PMA”) by the U.S. Food and Drug Administration (“FDA”) on June 23, 2025. In May 2026, we announced a voluntary recall in the U.S. of CGuard Prime, undertaken in consultation with the FDA after a controlled launch demonstrated that the technical success of its delivery system during CAS procedures did not meet performance expectations, with the voluntary action pertaining specifically to the delivery system and not to the CGuard stent implant. For additional information, see “ FDA Matters ” below. CGuard Prime also received MDR CE Mark approval on June 12, 2025. In October 2024, the FDA approved the Company’s IDE to initiate the CGUARDIANS II pivotal study of its CGuard Prime 80 cm carotid stent system during transcarotid revascularization (“TCAR”) procedures. In the first quarter of 2026, we completed enrollment in the CGUARDIANS II pivotal study, and in June 2026, we announced summary 30-day outcome data from the study, which showed acute device success of 100% with no major adverse events. In May 2026, the FDA approved the Company’s IDE to initiate the CGUARDIANS III pivotal study of its CGuard Prime 80 cm carotid stent system during TCAR procedures, and in June 2026, we announced enrollment of the first patient. In October 2023, the Centers for Medicare & Medicaid Services (“CMS”) issued its final National Coverage Determination (“NCD”), expanding coverage for both carotid artery stenting (“CAS”) and TCAR procedures to include both asymptomatic and standard risk patients, significantly expanding and supporting the future growth of the U.S. addressable market for CAS. 4 In November 2025, the results of the CREST-2 study were released, which showed that CAS combined with medical therapy demonstrated a significantly lower stroke risk as compared to intensive medical management alone in patients with severe asymptomatic carotid stenosis. CREST-2 was an independent study sponsored by the National Institute of Health (NIH) with a set of two parallel, observer-blinded clinical trials across 155 centers globally. CREST-2 showed that, among patients with high-grade carotid stenosis without recent neurological symptoms, the addition of stenting led to significantly better outcomes than intensive medical management alone, as measured by a decreased risk of the composite of perioperative stroke or death or ipsilateral stroke within four years. In a separate arm of the same trial, carotid endarterectomy (“CEA”) did not achieve a significant benefit for these patients as compared to intensive medical management alone. We continue to invest in new product generations and potential new clinical indications for the CGuard platform with a strategy of focusing on advancing a “stent-first” approach to carotid revascularization. As part of this strategy, we are evaluating CGuard Prime in TCAR-based clinical programs, including the CGUARDIANS II pivotal trial, which studies the use of the CGuard Prime 80 cm carotid stent system in conjunction with an established neuroprotection device, and the CGUARDIANS III pivotal trial, which evaluates our proprietary SwitchGuard neuroprotection system (“SwitchGuard NPS”) paired with CGuard Prime to enable flow-reversal neuroprotection during TCAR. In parallel, we are pursuing new clinical applications outside TCAR, including the treatment of acute ischemic stroke with tandem lesions, which is currently being studied in an early feasibility study conducted with the Jacobs Institute. In this acute-stroke setting, the flexible, low-metal-burden design and MicroNet mesh of CGuard Prime may offer advantages where traditional embolic-protection devices cannot be used. We consider our current addressable market for our CGuard EPS, CGuard Prime, and SwitchGuard NPS to be both symptomatic and asymptomatic individuals with diagnosed high-grade carotid artery stenosis for whom intervention is preferable to medical (drug) therapy. This group includes not only patients eligible for either CAS or TCAR procedures, but also individuals who are candidates for CEA, as all three approaches can be options to treat these patients. Assuming full penetration of the intervention caseload, we estimate that the addressable market for CGuard EPS, CGuard Prime, and SwitchGuard NPS is approximately $1.3 billion (source: Health Research International Personal Medical Systems, Inc. September 13, 2021 Results of Update Report on Global Carotid Stenting Procedures and Markets by Major Geography and Addressable Markets and internal estimates). According to this same report and internal estimates, assuming full penetration of treatment for all individuals diagnosed with high-grade carotid artery stenosis, we estimate the total available market for CGuard EPS, CGuard Prime, and SwitchGuard NPS to be approximately $9.3 billion, which may grow over time if expanded treatment options such as our products lead to increased patient screening for carotid artery disease. FDA Matters In May 2026, we announced a voluntary recall in the U.S. of CGuard Prime, initiated in consultation with the FDA. The Company acted after determining during a controlled launch that the technical success rate of the delivery system during CAS procedures had not met performance expectations. The voluntary action was limited to the CGuard Prime delivery system and did not involve the CGuard stent implant. The Company’s assessment did not identify new safety concerns for patients who had previously received a CGuard implant. We believe we have identified the root cause of the deployment resistance and are implementing design modifications intended to address the issue. We are currently performing verification and validation testing of these modifications in support of a PMA supplement to the FDA which we expect to submit in the fourth quarter of 2026. We cannot provide any assurance that the FDA will be satisfied with the corrective actions we are implementing in connection with the voluntary recall, or as to the timing of the resolution of such issues. Until these issues are resolved to the FDA’s satisfaction, we may be unable to resume commercialization of CGuard Prime in the United States. If the FDA determines that our corrective actions are inadequate or requires additional remediation, testing, validation or regulatory submissions, such requirements could increase costs, delay or prevent FDA acceptance or approval of our proposed PMA supplement, extend the duration of the voluntary recall, delay our ability to reintroduce CGuard Prime to the U.S. market or otherwise adversely affect our future commercialization plans, which could have a material adverse effect on our business, financial condition and results of operations. During the six months ended June 30, 2026, substantially all affected products were returned, and credits were issued to customers. We recorded approximately $734,000 as a reduction of revenue related to these returns and approximately $612,000 of inventory impairment associated with the recall. Workforce Reduction Initiative Subsequent to June 30, 2026, we commenced implementation of a workforce reduction as part of a broader initiative to reduce our operating expenses, improve operational efficiency and better align our resources with our strategic priorities. The workforce reduction is expected to reduce the number of positions in the organization by almost 20%. We expect the initiative to result in annualized operating expense savings of approximately $9.0 million, primarily through reduced personnel-related expenses resulting from both the elimination of certain employee positions and the decision not to fill certain currently vacant positions. These estimates are based on management’s current expectations regarding personnel reductions and hiring plans, and actual cost savings may differ from those currently anticipated. We expect to incur aggregate restructuring charges of approximately $0.9 million to $1.2 million, consisting primarily of employee severance and related employee termination costs. Because the workforce reduction was initiated after June 30, 2026, no liability associated with these actions was recorded in the accompanying consolidated financial statements as of June 30, 2026. We expect the workforce reduction to be substantially completed by the end of the third quarter of 2026. Actual costs incurred may differ from current estimates. We expect these actions to better align our resources with key product development, regulatory, clinical and commercialization priorities while reducing our overall operating expense base. Critical Accounting Policies A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are more fully described in both (i) “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) Note 2 of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2025. There have not been any material changes to such critical accounting policies since December 31, 2025. The currency of the primary economic environment in which our operations are conducted is the U.S. dollar (“$” or “dollar”). 5 Results of Operations Three months ended June 30, 2026, compared to the three months ended June 30, 2025 Revenues . For the three months ended June 30, 2026, revenue was $1,771,000, a decrease of $7,000, or 0.4 %, compared to $1,778,000 during the three months ended June 30, 2025. The decrease was primarily attributable to the net impact of $734,000 of credits issued in connection with the voluntary recall of CGuard Prime products in the U.S. in May 2026, which offset revenues generated from direct sales of the CGuard Prime product in the U.S., and continued growth in sales of the CGuard product through distributors in international markets. With respect to geographical regions, U.S. revenue was $(351,000) for the three months ended June 30, 2026, compared to $27,000 for the three months ended June 30, 2025. The decrease of $378,000 in the U.S., was primarily due to the aforementioned credits issued in connection with the voluntary recall of CGuard Prime products. This decrease was partially offset by 21% growth in international markets, with international revenue increasing to $2,122,000 for the three months ended June 30, 2026, compared to $1,751,000 for the three months ended June 30, 2025, including increases of $128,000 in Europe, $176,000 in Latin America and $67,000 in all other regions, reflecting continued growth in demand in these markets. Gross Profit (Loss) . For the three months ended June 30, 2026, gross loss (revenue less cost of revenues) was $774,000 compared to gross profit of $313,000 for the three months ended June 30, 2025. The decrease in gross profit was primarily attributable to the voluntary recall of CGuard Prime products in the U.S., including the net credits of $734,000 issued to customers, which reduced revenues, and approximately $612,000 of inventory impairment associated with CGuard Prime inventory, which increased cost of revenues. Gross margin represents our gross profit or loss as a percentage of revenue. Gross margin was negative 43.7% for the three months ended June 30, 2026, a decrease of 61.3 percentage points compared to gross margins of 17.6% for the three months ended June 30, 2025, primarily due to the factors discussed above. Research and Development Expenses . For the three months ended June 30, 2026, research and development expenses were $4,295,000, an increase of $461,000, or 12%, compared to $3,834,000 during the three months ended June 30, 2025. This increase resulted primarily from higher development and clinical expenses for the SwitchGuard NPS and CGuard Prime 80 cm carotid stent system, regulatory activity related to the PMA for CGuard NPS, and redesign work for the CGuard Prime 135 cm. Selling and Marketing Expenses . For the three months ended June 30, 2026, selling and marketing expenses were $5,221,000, an increase of $1,049,000, or 25.1%, compared to $4,172,000 during the three months ended June 30, 2025. This increase resulted primarily from higher commercial staffing levels following the commercial launch of CGuard Prime in the U.S. in July 2025. General and Administrative Expenses . For the three months ended June 30, 2026, general and administrative expenses were $4,155,000, a decrease of $1,171,000, or 22%, compared to $5,326,000 during the three months ended June 30, 2025. The decrease was primarily driven by lower compensation expenses, mainly due to severance costs related to our former chief financial officer’s retirement that were recognized in the three months ended June 30, 2025, and lower share-based compensation expense. Financial Income . For the three months ended June 30, 2026, financial income was $121,000 compared to financial expense of $132,000 during the three months ended June 30, 2025, representing a decline in the financial expense of $253,000, or 191.7%. The increase in financial income primarily resulted from higher income from investment in marketable securities and money market funds and lower financial expenses related to changes in exchange rates. Tax Expenses. We did not incur any tax expenses during the three months ended June 30, 2026 and June 30, 2025. Net Loss . For the three months ended June 30, 2026, our net loss was $14,324,000, an increase of $1,173,000, or 8.9%, compared to $13,151,000 during the three months ended June 30, 2025. The increase in net loss resulted primarily from a decrease in gross profit of $1,087,000 and an increase in total operating expenses of $339,000, partially offset by an increase in financial income of $253,000 compared to the prior-year period. 6 Six months ended June 30, 2026, compared to the six months ended June 30, 2025 Revenues . For the six months ended June 30, 2026, revenue was $5,169,000, an increase of $1,862,000, or 56.3%, compared to $3,307,000 during the six months ended June 30, 2025. The increase was driven mainly by direct sales of the CGuard Prime product in the U.S. and continued growth in sales of the CGuard product through distributors in international markets. The increase was partially offset by $734,000 of credits issued in connection with the voluntary recall of CGuard Prime products in the U.S. during the six months ended June 30, 2026. With respect to geographical regions, U.S. revenue was $827,000 for the six months ended June 30, 2026, compared to $54,000 for the six months ended June 30, 2025. The increase of approximately $772,000 was driven by commercial sales of CGuard Prime, partially offset by credits issued in connection with the voluntary recall of CGuard Prime in May 2026. International revenue was $4,342,000 for the six months ended June 30, 2026, compared to $3,253,000 for the six months ended June 30, 2025. Revenue from international markets grew by $1,089,000, or 33%, including $557,000 in Europe, $348,000 in Latin America and $184,000 in all other regions. The international sales performance reflects continued growth in demand in these markets. Gross loss . For the six months ended June 30, 2026, gross loss (revenue less cost of revenues) was $87,000 compared to gross profit of $605,000 for the six months ended June 30, 2025. The decrease in gross profit was primarily attributable to the voluntary recall of CGuard Prime products in the U.S., including $734,000 in net credits issued to customers, which reduced revenues, as well as inventory impairment and inventory obsolescence charges of a combined $1,085,000 related to our CGuard Prime delivery system, which increased cost of revenues. These impacts were partially offset by the increase in revenue year-over-year. Gross margin represents our gross profit or loss as a percentage of revenue. Gross margin was negative 1.7% for the six months ended June 30, 2026, a decrease of 20.0 percentage points compared to gross margin of 18.3% for the six months ended June 30, 2025, primarily due to the factors discussed above. Research and Development Expenses . For the six months ended June 30, 2026, research and development expenses were $9,058,000, an increase of $1,165,000, or 14.8%, compared to $7,893,000 during the six months ended June 30, 2025. The increase was primarily driven by higher clinical trial expenses related to the initiation of the CGUARDIANS III pivotal trial and higher compensation expenses due to the hiring of new employees in connection with our expansion in the United States. These increases were partially offset by lower clinical trial expenses due to the completion of the CGUARDIANS I and CGUARDIANS II pivotal trials. Selling and Marketing Expenses . For the six months ended June 30, 2026, selling and marketing expenses were $10,401,000, an increase of $3,479,000, or 50.3%, compared to $6,922,000 during the six months ended June 30, 2025. This increase resulted primarily from higher commercial staffing levels following the commercial launch of CGuard Prime in the U.S. in July 2025. General and Administrative Expenses . For the six months ended June 30, 2026, general and administrative expenses were $8,877,000, a decrease of $1,392,000, or 13.6%, compared to $10,269,000 during the six months ended June 30, 2025. The decrease was primarily driven by lower compensation expenses, mainly due to severance costs related to our former chief financial officer’s retirement that were recognized in the six months ended June 30, 2025, and lower share-based compensation expense. Financial Income . For the six months ended June 30, 2026, financial income was $410,000, an increase of $248,000, or 153.1%, compared to $162,000 during the six months ended June 30, 2025. The increase in financial income primarily resulted from higher income from investment in marketable securities and money market funds and lower financial expenses related to changes in exchange rates. Tax Expenses. For the six months ended June 30, 2026, there was no material change in our tax expenses as compared to the six months ended June 30, 2025. Net Loss . For the six months ended June 30, 2026, our net loss was $28,013,000, an increase of $3,696,000, or 15.2%, compared to $24,317,000 during the six months ended June 30, 2025. The increase in net loss resulted primarily from a decrease in gross profit and an increase in total operating expenses, partially offset by an increase in financial income compared to the prior-year period. 7 Liquidity and Capital Resources We had an accumulated deficit as of June 30, 2026, of $330 million, as well as a net loss of $28 million for the six months ended June 30, 2026 and negative operating cash flows. We expect to continue incurring losses and negative cash flows from operations until we expand our commercial revenue to a scale that funds our commercial resources, development activities and support functions. As a result of these expected losses and negative cash flows from operations, along with our current cash position, we believe we do not have sufficient resources to fund operations for at least the next 12 months. Therefore, there is substantial doubt about our ability to continue as a going concern. Our plans include continued commercialization of our products and raising capital through sale of additional equity securities, debt or capital inflows from strategic partnerships and exercise of warrants. There are no assurances, however, that we will be successful in obtaining the level of financing needed for our operations. If we are unsuccessful in commercializing our products or raising capital, we may need to reduce activities, curtail or cease operations. In May 2023, we closed a private placement offering that resulted in aggregate gross proceeds of approximately $42.2 million, before deducting fees payable to the placement agent and other offering expenses payable by us, pursuant to which we issued and sold 10,266,270 shares of our common stock, 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 “May 2023 Warrants”), at an offering price of $1.6327 per Private Placement Share and associated May 2023 Warrants and an offering price of $1.6326 per pre-funded warrant and associated May 2023 Warrants. If the May 2023 Warrants are exercised in cash in full this would result in an additional $71.4 million of gross proceeds (of which approximately $33.8 million has been received as of the date of this Quarterly Report on Form 10-Q). There can be no assurance that we will achieve any of the remaining milestones set forth in the outstanding May 2023 Warrants or that the outstanding May 2023 Warrants will be exercised in cash in full. The exercise price of the outstanding May 2023 Warrants is $1.3827 per share. The Series J Warrants expire 20 trading days after FDA approval of SwitchGuard and CGuard Prime 80 cm, while the Series K Warrants expire on October 28, 2026, which is 20 trading days after the end of the fourth fiscal quarter following the commencement of first U.S. commercial sales of CGuard Prime in July 2025. The last reported sale price of our shares of common stock on August 13, 2026 was $0.8401 per share. We believe that the likelihood that warrant holders will exercise their outstanding May 2023 Warrants, and therefore the amount of cash proceeds we would receive, is dependent upon the trading price of our shares of common stock. If the trading price of our shares of common stock is less than $1.3827 per share, we believe that warrant holders will be unlikely to exercise their outstanding May 2023 Warrants. Following the announcement of the one year follow up study results from the Company’s C-GUARDIANS trial, the Series H Warrants were exercised in full into 292,996 shares of common stock and pre-funded warrants to purchase 12,621,090 shares of common stock. The net proceeds from the exercise of the Series H Warrants were $16.9 million after deducting placement agent fees. Following the announcement of the PMA approval of the CGuard Prime carotid stent system in the United States, the Series I warrants were exercised in full into 2,352,393 shares of common stock and pre-funded warrants to purchase 10,561,685 shares of common stock during June and July 2025. The net proceeds from the exercise of the Series I Warrants were $16.9 million after deducting placement agent fees. In May 2024, we entered into an Equity Distribution Agreement (the “2024 Distribution Agreement”) with Piper Sandler & Co., as sales agent (“Piper Sandler”). Pursuant to the 2024 Distribution Agreement, we were able to offer and sell from time to time, at our option, through or to Piper Sandler shares of our common stock having an aggregate offering price of up to $75 million. We paid Piper Sandler a commission at a fixed rate of 3.0% of the aggregate gross proceeds from each sale of the shares under the 2024 Distribution Agreement. On April 3, 2026, we terminated the 2024 Distribution Agreement in connection with our entry into the 2026 Distribution Agreement (as defined below) with BTIG (as defined below). During the first half of 2026, we did not sell any shares pursuant to the 2024 Distribution Agreement. In August 2025, we closed the private placement offering that resulted in aggregate gross proceeds of approximately $40.1 million, before deducting fees payable to the placement agent and other offering expenses payable by us. In April 2026, we entered into an Equity Distribution Agreement (the “2026 Distribution Agreement”) with BTIG, LLC, as sales agent (“BTIG”). Pursuant to the 2026 Distribution Agreement, we may offer and sell from time to time, at our option, through or to BTIG shares of our common stock having an aggregate offering price of up to $75 million. We will pay BTIG a commission at a fixed rate of up to 3.0% of the aggregate gross proceeds from each sale of the shares under the 2026 Distribution Agreement. As of the date hereof, we have not sold any shares pursuant to the 2026 Distribution Agreement. 8 Six months ended June 30, 2026, compared to the Six months ended June 30, 2025 General. As of June 30, 2026, we had cash and cash equivalents of $15,149,000 and marketable securities of $15,272,000 as compared to cash and cash equivalents of $8,939,000 and marketable securities of $45,272,000 as of December 31, 2025. We have historically met our cash needs through a combination of issuing new shares, borrowing activities and product sales. Our cash requirements are generally for research and development, marketing and sales activities, finance and administrative costs, capital expenditures and general working capital. For the six months ended June 30, 2026, net cash used in our operating activities increased by $6,107,000, or 35.7%, to $23,232,000, from $17,125,000 during the same period in 2025. The primary reasons for the increase in cash used in our operating activities were an increase of $6,741,000 in compensation costs paid during the six months ended June 30, 2026 (from $11,474,000 in the six months ended June 30, 2025 to $18,215,000 in the six months ended June 30, 2026), an increase of $1,937,000 in payments to vendors, clinical service providers and other professional service providers, offset by an increase of $2,617,000 in payments received from customers during the six months ended June 30, 2026 (from $3,380,000 in the six months ended June 30, 2025 to $5,997,000 during the six months ended June 30, 2026). Cash provided by our investing activities was $29,432,000 during the six months ended June 30, 2026, compared to $7,024,000 during the six months ended June 30, 2025. The primary reason for the increase in cash provided by our investing activities is withdrawal of $30,000,000 from our investment in marketable securities. There was no cash provided by financing activities for the six months ended June 30, 2026. Cash provided by financing activities for the six months ended June 30, 2025, was $2,643,000. The source of the cash provided by financing activities during the six months ended June 30, 2025, were the proceeds from exercise of Series I warrants of $1,947,000, and proceeds from issuance of shares of $696,000, net of issuance costs, received from our ATM Program. Off Balance Sheet Arrangements We have no off-balance sheet transactions, arrangements, obligations (including contingent obligations) or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Factors That May Affect Future Operations We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the market acceptance of the U.S. commercial launch, cyclical nature of the ordering patterns of our distributors, timing of regulatory approvals, the implementation of various phases of our clinical trials, manufacturing efficiencies due to the learning curve of utilizing new materials and equipment and the costs or other consequences associated with any current or future product recall that may occur. Product recalls in particular have adversely affected and may continue to adversely affect our operating results through the direct costs of executing a recall, lost revenues resulting from the removal of affected products from the market and the interruption of sales during any remediation period, costs associated with redesigning and remanufacturing affected products, potential regulatory, litigation and other legal costs, and longer-term reputational harm that may reduce market acceptance of our current and future products. Our operating results could also be impacted by a weakening of the Euro and strengthening of the NIS, both against the U.S. dollar. Lastly, other economic conditions we cannot foresee may affect customer demand, such as individual country reimbursement policies pertaining to our products. 9 Contractual Obligations and Commitments During the six months ended June 30, 2026, there were no material changes to our contractual obligations and commitments since the year ended December 31, 2025. Recently Adopted and Issued Accounting Pronouncements See Note 3 to our condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for new accounting pronouncements adopted. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable.