* Represents an amount less than $1 thousand

The accompanying notes are an integral part of the interim consolidated financial statements.

INSPIREMD, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(U.S. dollars in thousands, except share data)

* Represents an amount less than $1 thousand

The accompanying notes are an integral part of the consolidated financial statements.

INSPIREMD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(U.S. dollars in thousands)

The accompanying notes are an integral part of the consolidated financial statements.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS

InspireMD, Inc., a Delaware corporation (the “Company”), together with its subsidiaries, is a medical device company focusing on the development and commercialization of its proprietary MicroNet™ stent platform technology for the treatment of complex vascular and coronary disease. MicroNet, a micron mesh sleeve, is wrapped over a stent to provide embolic protection in stenting procedures. In October 2014, the Company launched a limited market release of its carotid embolic prevention system (CGuard™ EPS), which combines MicroNet and a self-expandable nitinol stent in a single device to treat carotid artery disease. In January 2015, a new version of CGuard, with a rapid exchange delivery system, received CE mark approval in Europe and in September 2015, the Company announced the full market launch of CGuard EPS in Europe.

The Company’s coronary products combining MicroNet and a bare-metal stent (MGuard Prime™ EPS) are marketed for use in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass surgery). The Company markets its products through distributors in international markets, mainly in Europe and Latin America.

The Company has an accumulated deficit as of September 30, 2017, as well as a history of net losses and negative operating cash flows in recent years. The Company expects to continue incurring losses and negative cash flows from operations until its products (primarily CGuard™ EPS) reach 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 has sufficient resources to fund operations only for a period of up to 4 months from the date of issuing these interim consolidated financial statements. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern. These financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

Management’s plans include the continued commercialization of the Company’s products and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. 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.

NOTE 2 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements. In the opinion of management,the company, the financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly thefor a fair statement of its financial position as of March 31, 2021 and its results of operations ofand cash flows for the Company.three months ended March 31, 2021 and 2020. These consolidated financial statements and notes thereto are unaudited and should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2016,2020, as found in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 16, 2017.March 8, 2021. The results ofoperations for the nine and three months ended September 30, 2017March 31, 2021 are not necessarily indicative of results that could be expected for the entire fiscal year.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

NOTE 3 – RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS- EQUITY:

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)approximately $9,469,000.

In May 2014, the FASB issued Accounting Standards Codification (“ASC”) 606, Revenue from contracts with customers. The objective of the new revenue standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets. The revenue standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services, based on a five step model that includes the identification of the contract with the customer and the performance obligations in the contract, determination of the transaction price, allocation of the transaction price to the performance obligations in the contract and recognizing revenue when (or as) the entity satisfies a performance obligation. The revenue standard is effective for annual periods beginning on or after December 15, 2017.

On July 22, 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory,” which requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out and the retail inventory method are not impacted by the new guidance. The new guidance was adopted by the Company during the first quarter of 2017.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The accounting standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

NOTE 4 - LONG-TERM LOAN:

During the three months ended March 31, 2017, the Company paid the remaining interest and principal balances under the Company’s Loan and Security Agreement, dated as of October 23, 2013, in consideration of $2,684,000. All liens and other security interests granted by the Company and its subsidiaries in connection with the Loan and Security Agreement were terminated upon such payment.

NOTE 5 - EQUITY:remaining 17,303 shares of Series B Convertible Preferred Stock were converted into 207,528 shares of common stock.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)As of March 31, 2021, the Company has outstanding warrants to purchase an aggregate of 1,794,158 shares of common stock as follows:

The Company received gross proceeds

As of approximately $6.8 million from the offering, before deducting placement agent fees payable byMarch 31, 2021, the Company equal to 8.0%had 155,000,000 authorized shares of the gross proceeds of the offering and a solicitation fee equal to 3.0% of the proceeds from the exercise of the Series C Warrants and offering expenses payable by the Company.

The holders of Series C Convertible Preferred Stock may elect to convert at any time. The Series C Convertible Preferred Stock has certain anti-dilution provisions which provisions require the lowering of the applicable conversion price, as then in effect, to the purchase price of equity or equity-linked securities issued in subsequent offerings.

The Series B warrants are exercisable immediately and have a term of exercise of five years from the date of issuance and have an exercise price of $2.00capital stock, par value $0.0001 per share, of common stock.

The Series C warrants were exercisable immediately and had a term of exercise of six months from the date of issuance and had an exercise price of $1.60 per share of common stock. As of September 30, 2017 all Series C warrants were expired and none were exercised prior to their expiration.

For accounting purposes, the Company analyzed the classification of the Series C Convertible Preferred Stock, including whether the embedded conversion options should be bifurcated. As the Series C Convertible Preferred Stock is not redeemable, and the host contract was determined to be akin to equity, the entire instrument was classified as equity.

The Company has also concluded that the warrants accompanying Series C Convertible Preferred Stockwhich 150,000,000 are classified as equity, since the warrants bear a fixed conversion ratio and all other criteria for equity classification have been met.

During the 9 month period ended September 30, 2017, 326,609 shares of Series C Convertible Preferred Stock were converted into 1,306,436 shares of common stock.

Pursuant to the terms of the public offering of Series B Convertible Preferred Stock and accompanying warrants closed in July 2016, that provided the holders of the Series B Convertible Preferred Stock with certain anti-dilution provisions, which provisions require the lowering of the applicable conversion price, as then in effect, to the purchase price of equity or equity-linked securities issued in subsequent offerings, upon closing of the March 2017 offering, the conversion price of the Series B Convertible Preferred Stock was adjusted to $1.60 per share of common stock and each share of Series B Convertible Preferred Stock became convertible into 20.6255,000,000 are shares of common“blank check” preferred stock. The holders of Series B Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 15% per annum of the stated value for five years, payable in cash or common stock, at our discretion. As a result of such adjustment, the Company was required to issue to the holders of the Series B Convertible Preferred Stock an aggregate of 9,063,314 additional shares of common stock upon conversion of the Series B Convertible Preferred Stock and the payment of the dividends thereunder in common stock, based on 311,521 shares of Series B Convertible Preferred Stock outstanding as of March 8, 2017.

The issuance of additional common stock at a price lower than $1.60 will entitle holders of Series B Convertible Preferred Stock and holders of Series C Convertible Preferred Stock to receive additional shares upon conversion and with respect to the Series B Convertible Preferred Stock additional shares or cash due to their dividend entitlement as described above.

During the 9 month period ended September 30, 2017, 130,529 shares of Series B Convertible Preferred Stock were converted into 4,711,281 shares of common stock.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

NOTE 6-4- NET LOSS PER SHARE:

Basic and diluted net loss per share is computed by dividing the net loss for the period attributable to common stock (after adding the beneficial conversion feature included in the series C preferred shares) by the weighted average number of shares of common stock outstanding during the period, including 2,928,358 and 3,732,960 weighted average shares of common stock issuable to holders of Series B Convertible Preferred Stock for the nine and three month periods ended September 30, 2017, respectively (since they are convertible based on passage of time).period. The calculation of diluted net loss per share excludes potential share issuances of common stock upon the exercise of share options, warrants, and restricted stocks and placement agent unit as the effect is anti-dilutive.

The total number of shares of common stock related to outstanding options, warrants, restricted stock, restricted stock units, Series C Convertible Preferred Stock and placement agent units excluded from the calculations of diluted loss per share were 10,234,3582,164,985  for the nine and three month periodsthree-month period ended September 30, 2017.

The total number of shares of common stock related to outstanding options, warrants and restricted stock excluded from the calculations of diluted loss per share were 2,449,774 for the nine and three month periods ended September 30, 2016.

NOTE 7 - FAIR VALUE MEASURMENTMarch 31, 2021.

Fair value of financial instrumentsNOTE 5 - FINANCIAL INSTRUMENTS:

The carrying amounts of financial instruments included in working capital approximate their fair value either because these amounts are presented at fair value or due to the relatively short-term maturities of such instruments.

As of September 30, 2017 and December 31, 2016, allowance for doubtful accounts was $72,000 and $336,000, respectively, with the decrease resulting primarily from bad debt write offs.

NOTE 86 - INVENTORY:

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

NOTE 97 - ACCOUNTS PAYABLE AND ACCRUALS - OTHER:

NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES:

Litigation:

The Company received written communication from a distributor to provide unspecified compensation for pre-paid goods subject to the voluntary field action. After considering the views of its legal counsel as well as other factors, the Company’s management believes that there is a reasonably possible likelihood of a loss from any related future proceedings that would range from a minimal amount up to 1,075,000 Euros.

On April 26, 2016, the Company received a suit seeking damages from the Company amounting to $2.2 million in cash and unspecified compensation in equity in connection with certain finders’ fees. The Company’s management, after considering the views of its legal counsel as well as other factors, is of the opinion that a loss to the Company is neither probable nor in an amount or range of loss that is estimable.

In July 2016, a service provider filed a suit seeking damages from the Company’s subsidiary amounting to $1,967,822. The Company’s management, after considering the views of its legal counsel as well as other factors, is of the opinion that a loss to the Company is neither probable nor in an amount or range of loss that is estimable.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

NOTE 118 - 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:

By product:

By principal customers:

All tangible long lived assets are located in Israel.

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. 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 will probablymay 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:

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 in our Annual Report on Form 10-K for the twelve month period ended December 31, 2016, and those described from time to time in our future reports filed with the Securities and Exchange Commission. The forward-looking statements contained in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

Overview

We are a medical device company focusing on the development and commercialization of our proprietary MicroNet™ stent platform technology for the treatment of complex vascular and coronary disease. A stent is an expandable “scaffold-like” device, usually constructed of a metallic material, that is inserted into an artery to expand the inside passage and improve blood flow. Our MicroNet, a micron mesh sleeve, is wrapped over a stent to provide embolic protection in stenting procedures.

Our CGuard™ carotid embolic prevention system (“CGuard EPS”) combines MicroNet and a self-expandable nitinol stent in a single device for use in carotid artery applications. Our CGuard EPS received CE mark approval in the European Union in March 2013 and wewas fully launched its release on a limited basis in October 2014. In January 2015, a new version of CGuard, with a rapid exchange delivery system, received CE mark approval in Europe and in September 2015, we announced the full market launch of CGuard EPS in Europe.2015. Subsequently, we launched CGuard EPS in Argentina, ColombiaRussia and Russia.certain countries in Latin America and Asia, including India. In September 2020, we launched CGuard EPS in Brazil after receiving regulatory approval in July 2020 and, as discussed below, on February 3, 2021 we executed a distribution agreement with Chinese partners for the purpose of expanding our presence in China. Currently, we are seeking strategic partners for a potential launch of CGuard EPS in Japan.

On September 8, 2020, we received approval from the U.S. Food and Drug Administration (“FDA”) of our Investigation Device Exemption (“IDE”), thereby allowing us to proceed with a pivotal study of our CGuard™ Carotid Stent System, CARENET-III, for prevention of stroke in patients in the United States. CARENET-lll is a prospective, multicenter, single-arm, pivotal study to evaluate the safety and efficacy of the CGuard™ Carotid Stent System when used to treat symptomatic and asymptomatic carotid artery stenosis in patients undergoing carotid artery stenting. The trial will enroll approximately 315 subjects in a maximum of 40 study sites located in the United States. Additional sites in Europe may also participate in the study, contributing a maximum of ~50% of the total enrollees. The primary endpoint of the study will be the composite of the following: incidence of the following major adverse events: death (all- cause mortality), all stroke, and myocardial infarction (DSMI) through 30-days post-index procedure, based on the clinical events committee (CEC) adjudication or ipsilateral stroke from 31-365 day follow-up, based on Clinical Events Committee (CEC) adjudication.

Additionally, we intend to continue to invest in current and future potential product and manufacturing enhancements for CGuard EPS that are expected to reduce cost of goods and/or provide the best-in-class performing delivery system. In furtherance of our strategy that focuses on establishing CGuard EPS as a viable alternative to vascular surgery, we are exploring adding new delivery systems and accessory solutions for procedural protection to our portfolio.

We consider the addressable market for our CGuard EPS to be individuals with diagnosed, symptomatic high-grade carotid artery stenosis (HGCS, ≥70% occlusion) for whom intervention is preferable to medical (drug) therapy. This group includes not only carotid artery stenting patients but also individuals undergoing carotid endarterectomy, as the two approaches compete for the same patient population. Assuming full penetration of the intervention caseload by CGuard EPS, we estimate that the addressable market for CGuard EPS was approximately $1.0 billion in 2017 (source: Health Research International 2017 Results of Update Report on Global Carotid Stenting Procedures and Markets by Major Geography and Addressable Markets).

Our MGuard™ Prime™ Embolic Protection Systemembolic protection system (“MGuard Prime EPS”) is marketed for use in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass surgery). MGuard Prime EPS combines MicroNet with a bare-metal cobalt-chromium based stent and, together with our first generation MGuard stent combining MicroNet with a bare-metal stainless steel stent, unless otherwise indicated, we refer to both kinds of bare-metal stents as our MGuard coronary products. We market and sell MGuard Prime EPS for the treatment of coronary disease in the European Union.stent. MGuard Prime EPS received CE mark approval in the European Union in October 2010 for improving luminal diameter and providing embolic protection. However, as a result of a shift in industry preferences away from bare-metal stents in favor of drug-eluting (drug-coated) stents, in 2014 we decided to curtail further development of this product in order to focus on the development of a drug-eluting stent product, MGuard DES™. Due to limited resources, though,however, our efforts have been limited to testing drug-eluting stents manufactured by potential partners for compatibility with MicroNet and seeking to incorporate MicroNet onto a drug-eluting stent manufactured by a potential partner.

We The FDA has clarified that the primary mode of action for drug-eluting cardiovascular stents, which are also developing a neurovascular flow diverter (“NGuard”), whichregulated as combination products, is an endovascularthat of the device that directs blood flow away from cerebral aneurysms in ordercomponent and has assigned the FDA Center for Devices and Radiological Health (CDRH) primary responsibility for premarket review and regulation, providing some clarity about what to ultimately sealexpect regarding the aneurysms. Our flow diverter would utilize an open cell, highly flexible metal scaffoldregulatory framework related to which MicroNet would be attached. We have completed initial pre-clinical testing of this product in both simulated bench models and standard in vivo pre-clinical models. However, as we plan to focus our resources on the further expansion of our sales and marketing activities for CGuard EPS and MGuard Prime EPS and, provided that we have sufficient resources, the development of CGuard EPS with a smaller delivery catheter (5 French gauge) and its submission for CE mark approval, we do not intend to resume further development of NGuard until at least the third quarter of 2018.MGuard DES™.

We also intend to develop a pipeline of other products and additional applications by leveraging our MicroNet technology to new applications to improve peripheral vascular and neurovascular procedures, such as the treatment of the superficial femoral artery disease, vascular disease below the knee and neurovascular stenting to open diseased vesselsseal aneurysms in the brain.

Presently, none of our products may be sold or marketed in the United States.

We were organized in the State of Delaware on February 29, 2008.

Recent Developments

Reverse Stock Split

On April 14, 2021, our stockholders approved a reverse stock split of our common stock, following which, and on the same date, our board of directors approved a ratio of 1-for-15 for the reverse stock split, or the Reverse Stock Split. On April 14, 2021, the Delaware Secretary of State approved our Certificate of Amendment to our Amended and Restated Certificate of Incorporation, which set an effective date of April 26, 2021 for the Reverse Stock Split, or the Effective Date. The post-Reverse Stock Split CUSIP number for our common stock is 45779A 846.

On the Effective Date, the total number of shares of our common stock held by each stockholder was converted automatically into the number of whole shares of common stock equal to (i) the number of issued and outstanding shares of common stock held by such stockholder immediately prior to the Reverse Stock Split, divided by (ii) 15.

No fractional shares were issued in connection with the Reverse Stock Split, and no cash or other consideration was be paid. Instead, we issued one whole share of the post-Reverse Stock Split common stock to any shareholder who otherwise would have received a fractional share as a result of the Reverse Stock Split.

Public Offering

On February 8, 2021, we closed an underwritten public offering of 1,935,484 units, with each such unit being comprised of one share of our common stock, par value $0.0001 per share, and one Series G Warrant to purchase one-half of one share of our common stock. The offering price to the public was $9.30 per unit. The Series G Warrants were immediately exercisable at a price of $10.23 per share, subject to adjustment in certain circumstances, and expire five years from the date of issuance. We also granted the underwriter of the offering an option to purchase an additional 290,322 shares of our common stock and Series G Warrants to purchase 145,161 shares of our common stock, which the underwriter exercised in full. In connection with the offering we granted to the underwriter a compensation warrant to purchase up to 111,290 shares of our common stock with an exercise price of $10.23 per share and which are exercisable for five years from February 3, 2021. Our net proceeds from the offering, after giving effect to the exercise of the underwriter’s over-allotment option, were approximately $18.9 million, after deducting underwriting discounts and commissions and payment of other expenses associated with the offering, but excluding the proceeds, if any, from the exercise of Series G Warrants sold in the offering.

Distribution and Purchase Agreement with Chinese Partners

On February 3, 2021, we entered into a 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 our products in China, followed by an eight-year exclusive distribution right to sell our 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, and on the same day, we entered into an investment transaction with QIDI, which included (i) a securities purchase agreement, or SPA, pursuant to which QIDI Asia Medical Limited, a Hong Kong limited company, or QIDI, agreed to invest $900,000 in exchange for shares of our common stock at a purchase price of $10.062 per share, and (ii) an investor rights agreement, or IRA, whereby QIDI was provided certain customary registration rights, including a commitment by us to file a registration statement with the SEC on Form S-1 or Form S-3 and have such registration statement become effective not later than 150 days following the closing of the transactions under the SPA.

The transactions closed on February 5, 2021.

ATM Offering

On July 28, 2020, we entered into a Sales Agreement with A.G.P. pursuant to which we may offer and sell, from time to time, at our option, through or to A.G.P., up to an aggregate of approximately $9,300,000 of shares of our common stock (the “ATM Facility”). On January 11, 2021, we increased the aggregate amount of shares of our common stock that may be sold under the Sales Agreement from $9,300,000 to $10,382,954, and, as a result, utilized and sold the maximum amount allowable under the ATM Facility, which resulted in an aggregate amount of $10,381,958.

COVID-19 Developments

In an effort to contain and mitigate the spread of COVID-19, which the World Health Organization, or WHO, declared to be a pandemic on March 12, 2020, many countries have imposed unprecedented restrictions on travel, quarantines and other public health safety measures. As of the beginning of the second quarter of 2020, we began to experience a significant COVID-19 related impact on our financial condition and results of operations, which we primarily attribute to the postponement of CGuard EPS procedures (non-emergency procedures), as hospitals shifted resources to patients affected by COVID-19. To our knowledge, most European countries in which we operate are slowly reinstating elective procedures, but we do not know when the hospitals will resume to normal pre-pandemic levels with such procedures in light of recent increases in COVID-19 cases in the territories we sell into. We anticipate that the continuation of the pandemic and related restrictions and safety measures would likely result in continued fluctuations in sales of our products for the upcoming periods. For more discussion on our risks related to COVID-19, please see risk factors included under “Item 1A. Risk Factors” herein.

In response to significant market volatility and uncertainties relating to COVID-19, the fees and salaries of our Board, management and most of our employees were reduced in order to alleviate corporate operating expenses.

Effective April 1, 2020, the Board approved a 50% decrease in the annual cash compensation for non-employee directors from an aggregate amount of $154,000 to $77,000. Effective as of the same date, we reduced the annual salaries of most of our employees by 20% to 30% until further notice.

On April 21, 2020, Marvin Slosman, our President, Chief Executive Officer and Director, and Craig Shore, our Chief Financial Officer, Chief Administrative Officer, Secretary and Treasurer, each signed waivers reducing their monthly base salaries for the period beginning April 1, 2020 and which, pursuant to their independent determinations, ended on June 1, 2020. Each of the salaries for the remaining officers, directors and employees was similarly reinstated by no later than June 30, 2020.

As a result of the reduction of those fees and salaries during the second quarter of 2020, our operating expenses were reduced by approximately $235,000 in the second quarter of 2020.

Critical Accounting Policies

A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are more fully described in both (i) “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) Note 2 of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2016.2020. There have not been any material changes to such critical accounting policies since December 31, 2016.2020.

The currency of the primary economic environment in which our operations are conducted is the U.S. dollar (“$” or “dollar”).

Contingencies

We and our subsidiaries are involved in legal proceedings that arise from time to time in the ordinary course of business. We record accruals for these types of contingencies to the extent that we conclude the occurrence of such contingencies is probable and that the related liabilities are estimable. When accruing these costs, we recognize an accrual in the amount within a range of loss that is the best estimate within the range. When no amount within the range is a better estimate than any other amount, we accrue for the minimum amount within the range. Legal costs are expensed as incurred.

Results of Operations

Three months ended September 30, 2017March 31, 2021 compared to the three months ended September 30, 2016March 31, 2020

Revenues. For the three months ended September 30, 2017,March 31, 2021, revenue increaseddecreased by $249,000,$28,000, or 53.1%2.7%, to $718,000$1,006,000, from $469,000$1,034,000 during the three months ended September 30, 2016. This increase was predominantly driven by an 89.9% increase in sales ofMarch 31, 2020. CGuard EPS from $277,000 inrevenue remained essentially unchanged at $969,000 during the three months ended September 30, 2016,March 31, 2021 as compared to $526,000 in$971,000 during the three months ended September 30, 2017March 31, 2020, in spite of the continued postponement of many elective procedures as we continued focus on expanding existing markets such as Italy, expansion into new geographies such as Russia, as well asa result of the transitionresidual COVID directed resources. However, MGuard Prime EPS revenue decreased by a 41.3% from our prior exclusive distribution partner for most of Europe to local distributors. The transition to local distributors reflects an effort to broaden our sales efforts from only interventional neuroradiologists to include vascular surgeons, interventional cardiologists and interventional radiologists, as well. Revenue from sales of MGuard EPS remained flat at $192,000 in$63,000 during the three months ended September 30, 2017, comparedMarch 31, 2020, to $37,000 during the same periodthree months ended March 31, 2021, largely driven by the predominant industry preferences favoring drug-eluting stents rather than bare metal stents such as MGuard Prime EPS in 2016.ST-Elevation Myocardial Infarction (“STEMI”) patients.

With respect to geographical regions, the increasedecrease in revenue was primarily attributable to an increasea $25,000 decrease in revenue from Asia and the Middle East (primarily driven by a $22,000 decrease of $233,000CGuard EPS for the reasons discussed in the paragraph above), a decrease of $12,000 in revenue from sales of CGuard EPS from our distributorsmade in Europe and(primarily driven by a $17,000 decrease of MGuard Prime EPS sales for the reasons discussed in the paragraph above), offset, in part, by an increase of $21,000$15,000 in revenue from sales made in Latin America (primarily driven by a $20,000 increase of CGuard EPS sales for the reasons discussed in Latin America.the paragraph above).

Gross Profit. For the three months ended September 30, 2017,March 31, 2021, gross profit (revenue less cost of revenues) increaseddecreased by 410.0%64.1%, or $123,000,$189,000, to $153,000, compared to $30,000$106,000, from $295,000 during the same period in 2016. The increasethree months ended March 31, 2020. This decrease in gross profit resulted primarily from an increase in write-offs of $249,000 in revenues (as mentioned above),$156,000, which were driven mainly by a decreasecomponent supply issue during the three months ended March 31, 2021 and an increase of $25,000 of expenses related to the underutilization of our manufacturing resources and a decrease of $14,000$33,000 in miscellaneous expenses partially offset by an increase in material and labor costs of $165,000, which resulted from our increase in sales.during the three months ended March 31, 2021. Gross margin (gross profits as a percentage of revenue) increaseddecreased to 21.3% in10.5% during the three months ended September 30, 2017March 31, 2021 from 6.4% in28.5% during the three months ended September 30, 2016.March 31, 2020, driven by the factors mentioned above.

Research and Development Expenses. For the three months ended September 30, 2017,March 31, 2021, research and development expenses remained relatively flat comparedincreased by 60.4%, or $316,000, to $839,000, from $523,000 during the same period in 2016 due tothree months ended March 31, 2020. This increase resulted primarily from an increase of $40,000$136,000 in a salary related accrual. This increase in research and development expenses was partially offset by a decreaserelated to CGuard EPS new delivery system and accessory solutions, an increase of $41,000$112,000 in compensation expenses and an increase of $68,000 in miscellaneous expenses.

Selling and Marketing Expenses. For the three months ended September 30, 2017,March 31, 2021, selling and marketing expenses increased by 117.2%13.5%, or $362,000,$84,000, to $671,000,$708,000, from $309,000$624,000 during the three months ended September 30, 2016.March 31, 2020. This increase in selling and marketing expenses resulted primarily from an increase in compensation expenses of $195,000$162,000 relating to increased activity associated with expansion of existing and new markets, offset, in salary expenses, an increase of $100,000part, by a decrease in travel expenses of $59,000 in light of restrictions imposed by governments worldwide in order to mitigate the spread of COVID-19, offset, and an increaseby a decrease of $67,000$19,000 in miscellaneous expenses. The increase in selling and marketing expenses was driven primarily to support the CGuard EPS sales and marketing related activities as we transitioned away from our prior exclusive distribution partner for most of Europe to using local distributors, as well as expansion of existing markets and into new geographies.

General and Administrative Expenses. For the three months ended September 30, 2017,March 31, 2021, general and administrative expenses increased by 7.5%60.2%, or $89,000,$704,000, to $1,279,000$1,873,000, from $1,190,000$1,169,000 during the three months ended September 30, 2016. TheMarch 31, 2020. This increase in general and administrative expenses resulted primarily from an increase in compensation expenses of $88,000$431,000, mainly due to an increase in salary expenses primarilyand related accruals of $195,000, and an increase of approximately $209,000 of share-based compensation-related expenses in the three months ended March 31, 2021, due to the expense recognition of grants made in the second half of 2020, an increase in Directors’ and Officers’ Liability Insurance expenses of $118,000, partially due to increased premiums caused by recent trends in the overall insurance industry, an increase in shareholder related expenses of $108,000 mainly due to a salary related accrual,special shareholders meeting (which occurred in 2021, but not in 2020, during the first quarter of the fiscal year) and an increase of $67,000 in expenses related to our 2017 regulatory audit which included the recertification of our CE Mark as well as an increase of $35,000$47,000 in miscellaneous expenses. These increase in general and administrative expenses were partially offset by a decrease of $101,000 in share based compensation expenses due to the timing of vesting of certain equity grants to our chief executive officer and the reversal of certain equity grants to two former directors.

Financial ExpensesIncome. . For the three months ended September 30, 2017,March 31, 2021, financial expenses decreasedincome increased by 99.6%65.1%, or $236,000,$28,000, to $1,000,$71,000, from $237,000$43,000 during the three months ended September 30, 2016.March 31, 2020. The decreaseincrease in financial expensesincome primarily resulted from a decreasean increase of $46,000 in interest expenses duefinancial income related to the repaymentchanges in exchange rates, offset, in part, by an increase of the remaining balance of our outstanding indebtedness of $1.2 million on March 21, 2017.$18,000 in miscellaneous expenses.

Tax Expenses (Income).Expenses. For the three months ended September 30, 2017,March 31, 2021, there was no material change in our tax expenses (income)as compared to the same period in 2016.three months ended March 31, 2020.

Net Loss. Our net loss increased by $91,000,$1,265,000, or 4.6%64.0%, to $2,086,000$ 3,243,000, for the three months ended September 30, 2017,March 31, 2021, from $1,995,000$1,978,000 during the same period in 2016.three months ended March 31, 2020. The increase in net loss resulted primarily from an increase of $450,000$1,104,000 in operating expenses partially offset byand a decrease of $236,000 in financial expenses and an increase of $123,000$189,000 in gross profit.

Nine months ended September 30, 2017 compared to the nine months ended September 30, 2016

Revenues. For the nine months ended September 30, 2017, revenue increased by $355,000, or 22.6%, to $1,927,000, from $1,572,000 during the nine months ended September 30, 2016. This increase was predominantly driven by a 38.1% increase in sales of CGuard EPS from $952,000 in the nine months ended September 30, 2016, to $1,315,000 in the nine months ended September 30, 2017, as we expanded into new geographies such as Russia, continued focus on expanding existing markets such as Italy, as well as the transition from our prior exclusive distribution partner for most of Europe to local distributors. The transition to local distributors reflects an effort to broaden our sales efforts from only interventional neuroradiologists to include vascular surgeons, interventional cardiologists and interventional radiologists, as well. This increase in sales of CGuard EPS was partially offset by a 1.3% decrease in sales of MGuard Prime EPS from $620,000 in the nine months ended September 30, 2016, to $612,000 in the nine months ended September 30, 2017, largely driven by doctors increasingly using drug-eluting stents rather than bare metal stents such as MGuard Prime EPS in STEMI patients.

With respect to regions, the increase in revenue was primarily attributable to an increase of $333,000 in revenue from sales of CGuard EPS from our distributors in Europe an increase of $132,000 in revenue from sales of MGuard Prime EPS from our distributors in Latin America and an increase of $30,000 in revenue from sales of CGuard EPS from our distributors in Latin America, partially offset by a decrease of $96,000 in revenue from sales of MGuard Prime EPS from our distributors in Europe and a decrease of $44,000 in revenue from sales of MGuard Prime EPS from our distributors in the Middle East.

Gross Profit. For the nine months ended September 30, 2017, gross profit (revenue less cost of revenues) increased by 136.7%, or $216,000, to $374,000, compared to $158,000 during the same period in 2016. The increase in gross profit resulted primarily from an increase of $355,000 in revenues (as mentioned above), a decrease of $76,000 of expenses related to the underutilization of our manufacturing resources and a decrease in write-offs of inventory of MGuard Prime EPS of $66,000. These increases in gross profit were partially offset by an increase in material and labor costs of $244,000, which resulted from our increase in sales and an increase of $37,000 in miscellaneous expenses. Gross margin (gross profits as a percentage of revenue) increased to 19.4% in the nine months ended September 30, 2017 from 10.1% in the nine months ended September 30, 2016.

Research and Development Expenses. For the nine months ended September 30, 2017, research and development expenses increased by 10.0%, or $95,000, to $1,041,000, from $946,000 during the nine months ended September 30, 2016. This increase in research and development expenses resulted primarily from an increase of $191,000 in salary expenses primarily due to the resignation and timing of the replacement of our former vice president of research and development who resigned on March 10, 2016, lowering our expenses in the nine months ended September 30, 2016 as well as a salary related accrual in 2017. In addition to the increase in salary expenses, the increase in research and development expenses for the nine months ended September 30, 2017, compared to the same period in 2016 resulted from an increase of $104,000 in development and clinical expenses associated with CGuard EPS, primarily due to our pre-IDE meeting with the FDA. This increase however, was partially offset by a decrease of $166,000 in share-based compensation expenses due to the recognition of all remaining unrecognized costs following the option cancellation agreement with our chief executive officer in 2016 while he was our chief operating officer, resulting in higher share-based compensation expenses in 2016, as well as a decrease of $34,000 in miscellaneous expenses.

Selling and Marketing Expenses. For the nine months ended September 30, 2017, selling and marketing expenses increased by 70.4%, or $758,000, to $1,835,000, from $1,077,000 during the nine months ended September 30, 2016. This increase in selling and marketing expenses resulted primarily from an increase of $264,000 in salary expenses, an increase of $182,000 in travel expenses, an increase of $113,000 in consulting fees, an increase of $99,000 in share-based compensation expenses due to a former employee’s forfeiture of the former employee’s share-based compensation in 2016, reducing our 2016 share-based compensation expenses, for which, no such reduction occurred during 2017, an increase of $95,000 in expenditures related to our participation in trade shows and promotional activities and an increase of $5,000 in miscellaneous expenses. The increase in selling and marketing expenses was primarily to support the new sales and marketing CGuard EPS related activities due to the transition from our prior exclusive distribution partner for most of Europe to local distributors.

General and Administrative Expenses. For the nine months ended September 30, 2017, general and administrative expenses increased by 16.0%, or $592,000, to $4,281,000, from $3,689,000 during the nine months ended September 30, 2016. The increase in general and administrative expenses resulted primarily from an increase of $292,000 due to a salary related accrual, an increase of $121,000 in rent and related expense, primarily due to a city tax refund we received in 2016, which reduced our 2016 rent and related expenses, while no such refund was received in 2017, as well as a termination fee for our Boston office in the nine months ended September 30, 2017, which increased our rent and related expenses, an increase of $52,000 in legal expenses and an increase of $127,000 in miscellaneous expenses.

Financial Expenses. For the nine months ended September 30, 2017, financial expenses decreased by 75.7%, or $483,000, to $155,000, from $638,000 during the nine months ended September 30, 2016. The decrease in financial expenses primarily resulted from a decrease in interest expenses due to the repayment of the remaining balance of our outstanding indebtedness of $1.2 million on March 21, 2017.

Tax Expenses (Income). For the nine months ended September 30, 2017, there was no material change in tax expenses (income) compared to the same period in 2016.

Net Loss. Our net loss increased by $746,000, or 12.0%, to $6,939,000 for the nine months ended September 30, 2017, from $6,193,000 during the same period in 2016. The increase in net loss resulted primarily from an increase of $1,445,000 in operating expenses, partially offset by a decrease of $483,000 in financial expenses and an increase of $216,000 in gross profit.

Liquidity and Capital Resources

We had an accumulated deficit asAs of September 30, 2017,March 31, 2021, we have the ability to fund our planned operations for at least the next 12 months from issuance date of $139 million, as well as a net loss of $6,939,000 and negative operating cash flows. Wethe financial statement. However, we expect to continue incurring losses and negative cash flows from operations until our products (primarily CGuardCGuard™ EPS) reach commercial profitability. AsTherefore, in order to fund our operations until such time that we can generate substantial revenues, we may need to raise additional funds.

On July 28, 2020, we entered into a Sales Agreement with A.G.P. in connection with the ATM Facility. Any shares to be offered and sold under the Sales Agreement will be issued and sold pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-223130), filed with the SEC on February 21, 2018 and the prospectus supplement thereto filed with the SEC on July 28, 2020, by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or if specified by us, by any other method permitted by law. On January 11, 2021, we increased the aggregate amount of our shares of common stock that may be sold under the Sales Agreement from $9,300,000 to $10,382,954, and, as a result, utilized and sold the maximum amount allowable under the ATM Facility, which resulted in an aggregate amount of these expected losses$10,381,958.

On February 3, 2021, we entered into a Distribution Agreement with three China-based partners and negative cash flows from operations, alongon the same day, we entered into an investment transaction with QIDI, which included (i) an SPA, pursuant to which QIDI agreed to invest $900,000 in exchange for shares of our current cash position,common stock at a purchase price of $10.062 per share, and (ii) an IRA, whereby QIDI was provided certain customary registration rights, including a commitment by us to file a registration statement with the SEC on Form S-1 or Form S-3 and have such registration statement become effective not later than 150 days following the closing of the transactions under the SPA. The transaction closed on February 5, 2021.

On February 8, 2021, we only have sufficient resourcesclosed an underwritten public offering of 1,935,484 units, with each such unit being comprised of one share of our common stock, par value $0.0001 per share, and one Series G Warrant to fund operations forpurchase one-half of one share of common stock. The offering price to the public was $9.30 per unit. The Series G Warrants were immediately exercisable at a periodprice of up$10.23 per share, subject to four monthsadjustment in certain circumstances, and expire five years from the date of filingissuance. We also granted the underwriter of this Quarterly Report on Form 10-Q. Therefore, there is substantial doubt about our abilitythe offering an option to continue as a going concern.

Our plans include the continued commercialization of our products and raising capital through the sale ofpurchase an additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances, however, that we will be successful in obtaining the level of financing needed for our operations. If we are unsuccessful in commercializing our products and raising capital, we may need to reduce activities, curtail or cease operations.

On March 14, 2017, we announced the closing of a “best efforts” public offering of Series C Convertible Preferred Stock, Series B warrants to purchase290,322 shares of common stock and Series C warrantsG Warrants to purchase shares of common stock. We received gross proceeds of approximately $6.8 million from the offering, before deducting placement agent fees and offering expenses.

Our outstanding shares of Series B Preferred Stock and Series B Preferred Stock contain anti-dilution provisions that may result in the reduction of the conversion price thereof in the future. This feature may result in an indeterminate number of145,161 shares of common stock, being issued upon conversion ofwhich the Series B Convertible Preferred Stock orunderwriter exercised in full. In connection with the Series C Convertible Preferred Stock. In addition, The Series B Convertible Preferred Stock provides foroffering, we granted to the payment of dividends in cash or in shares of our common stock, and we may not be ableunderwriter a compensation warrant to pay such dividends in cash, which will require uspurchase up to have111,290 shares of common stock available to paywith an exercise price of $10.23 per share and which are exercisable for five years from February 3, 2021, the dividend. Salesdate of additional shares of common stock issuable upon conversioneffectiveness of the Series B Convertible Preferred Stock or Series C Convertible Preferred stock as a result of anti-dilution adjustments or on the Series B Preferred Stock as dividends on the Series B Preferred Stock will dilute the interests of other security holders and may depress the price of our common stock. Accordingly, we may find it more difficult to raise additional equity capital while any of our Series B Convertible Preferred Stock or Series C Convertible Preferred Stock is outstanding.

On March 21, 2017, we paid down the remaining $1.2 million balance under our Loan and Security Agreement (the “Loan Agreement”), dated as of October 23, 2013, with Hercules Technology Growth Capital, Inc. (“Hercules”). All liens and other security interests granted to Hercules by us and our subsidiariesregistration statement filed in connection with the Loan Agreementoffering. Our net proceeds from the offering, after giving effect to the exercise of the underwriter’s over-allotment option, were terminated upon such payment.

approximately $18.9 million, after deducting underwriting discounts and commissions and payment of other estimated expenses associated with the offering, but excluding the proceeds, if any, from the exercise of Series G Warrants sold in the offering.

NineThree months ended September 30, 2017March 31, 2021 compared to the ninethree months ended September 30, 2016March 31, 2020

General. At September 30, 2017,March 31, 2021, we had cash and cash equivalents of $4,765,000,$44,034,000, as compared to $7,516,000$12,645,000 as of December 31, 2016.2020. 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 ninethree months ended September 30, 2017,March 31, 2021, net cash used in our operating activities increased $742,000by $1,287,000 to $6,356,000,$3,641,000, from $5,614,000 in$2,354,000 during the same period in 2016.2020. The primary reason for the increase in cash used in our operating activities was an increase of $647,000 in payments for third party related expenses and for professional services of $1,201,000 including the end of term charge of $520,000(primarily due to Hercules, from $3,833,000a settlement payment made to $5,034,000. This increase in cash used in operating activities was partially offset bya former distributor) and an increase of $351,000$410,000 in payments receivedcompensation costs paid during the three months ended March 31, 2021, from customers from $1,421,000$1,904,000 in the ninethree months ended September 30, 2016March 31, 2020 to $1,772,000 in$2,314,000 during the same period in 20172021 as well as a decrease of $108,000$230,000 in salary payments received from $3,202,000 incustomers, to $759,000 during the nine months ended September 30, 2016 to $3,094,000 inMarch 31, 2021, from $989,000 during the same period in 2017.2020.

Cash used in our investing activities was $24,000 during the three months ended March 31, 2021, compared to $3,000 during the three months ended March 31, 2020. The primary reasons for the increase in cash used by our investing activities was $282,000were: an increase of $26,000 in payments made for purchase of property, plant and equipment to $26,000 during the ninethree months ended September 30, 2017, resulting primarilyMarch 31, 2021, from the purchase of production equipment, compared to $81,000 of cash provided$0 during the same period in 2016 resulting primarily from the receipt of cash previously funded to employee retirement funds.2020.

Cash provided by financing activities for the ninethree months ended September 30, 2017March 31, 2021, was $3,883,000,$35,068,000, compared to $12,756,000$3,000 during the same period in 2016.2020. The principal sources of the cash provided by financing activities during the three months ended March 31, 2021 were our February 2021 public offering of common stock and warrants, exercise of Series F and Series G warrants, proceeds from an At-the-market offering as well as proceeds from the issuance of shares to Chinese distributor that resulted in approximately $35,068,000 of aggregate net proceeds. The principal source of the cash provided by financing activities during the ninethree months ended September 30, 2017, was the funds received from our March 2017 public offering of preferred stock and warrants that resulted in approximately $6,072,000 of aggregate net proceeds, offset by loan repayments of $2,179,000. The principal source of the cash provided by financing activities during the nine months ended September 30, 201631, 2020, was the funds received from the issuanceexercise of preferred stock andpre-funded warrants that resulted in a public offering closed on July 7, 2016, as well issuanceapproximately $3,000 of shares and warrants in a concurrent public offering and private placement closed on March 21, 2016, for approximately $14,424,000 ofaggregate net proceeds, offset by loan repayments of $1,651,000.proceeds.

As of September 30, 2017,March 31, 2021, our current assets exceeded our current liabilities by a multiple of 2.3.16.1. Current assets decreasedincreased by $2,439,000$30,911,000 during the period and current liabilities decreased by $2,055,000$839,000 during the period. As a result, our working capital decreasedincreased by $384,000$31,750,000 to $3,432,000 at September 30, 2017.$43,384,000 as of March 31, 2021.

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.

Recent Accounting Pronouncements

See Note 3 – “Recently Issued Accounting Pronouncements” in the accompanied financial statements.

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 impact of the COVID-19 pandemic, cyclical nature of the ordering patterns of our distributors, timing of regulatory approvals, the implementation of various phases of our clinical trials and manufacturing efficiencies due to the learning curve of utilizing new materials and equipment. Our operating results could also be impacted by a weakening of the Euro and strengthening of the New Israeli Shekel, or 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. For a discussion of these and other risks that relate to our business, you should carefully review the risks and uncertainties described under the heading “Part II – Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2016,2020, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

The ultimate impact of the COVID-19 pandemic on the Company’s operations remains undetermined and will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, including the duration of the COVID-19 pandemic, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that regulators, or the board or management of the Company, may determine are needed.

Contractual Obligations and Commitments

During the ninethree months ended September 30, 2017,March 31, 2021, there were no material changes to our contractual obligations and commitments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable

Item 4. Controls and Procedures

Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures

As of September 30, 2017,March 31, 2021, we conducted an evaluation, under the supervision and participation of management including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of September 30, 2017.March 31, 2021.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2017,March 31, 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in litigation that arises through the normal course of business. As of the date of this filing, we are not aware of any material changes from the information set forth in “Item 3. Legal Proceedings” in the Form 10-K filed with the SEC on March 8, 2021 and available at the following link:

On April 26, 2016, Microbanc, LLC and Todd Spenla of Microbanc, LLC filed suit in the New York State Supreme Court (New York County) against us asserting claims for breach of agreement, quantum meruit, unjust enrichment and fraud and seeking approximately $2.2 million and 9% of the amount of stock and warrants sold in 2011 and 2012 in alleged damages relating to certain alleged finders’ fees that they claim are owed. We removed the suit to federal court and filed a motion to dismiss all claims on June 30, 2016. By Order dated February 23, 2017, the U.S. District Court for the Southern District of New York granted our motion to dismiss the suit in its entirety. Microbanc, LLC and Todd Spenla had until March 16, 2017, to file a motion for application for leave to replead its claims for breach of contract. On March 16, 2017, Microbanc, LLC filed a motion for leave to file an amended complaint to replead all claims and to substitute Estate of Todd Spenla for the deceased plaintiff, Todd Spenla. We have opposed this motion, which remains pending before the district court. On April 14, 2017, James D. Burchetta filed a motion to intervene as a plaintiff. On April 19, 2017, the court granted our request for an adjournment of this motion to intervene, pending resolution of Microbanc, LLC’s motion for leave to file the amended complaint and to substitute the Estate of Todd Spenla for the deceased plaintiff, Todd Spenla. We intend to contest the matter vigorously. Due to the uncertainties of litigation, however, we can give no assurance that we will prevail on any claims made against us in any such lawsuit. Also, we can give no assurance that any other lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.https://www.sec.gov/Archives/edgar/data/1433607/000149315221005564/form10-k.htm#a_003

On July 12, 2016, Medpace Inc., a former service provider, filed suit with the Court of Common Pleas, Hamilton County, Ohio, against us asserting that we breached a master services agreement with Medpace Inc. by failing to pay Medpace Inc. certain fees purportedly owed to it in connection with Medpace Inc.’s provision of certain clinical development program services to Inspire Ltd. We have removed the suit to the U.S. District Court for the Southern District of Ohio. Since removal, Medpace Inc. has amended its complaint to name InspireMD Ltd., our wholly owned subsidiary, as the only defendant. Medpace Inc. is seeking $1,967,822 in damages plus interest, costs, attorneys’ fees and expenses against InspireMD Ltd. InspireMD Ltd. filed a motion to dismiss all claims on February 10, 2017. On May 17, 2017, the district court denied InspireMD’s motion to dismiss, but ordered Medpace Inc. to file a second amended complaint by June 5, 2017. Medpace Inc. filed a second amended complaint on June 5, 2017, and InspireMD again moved to dismiss all claims on June 19, 2017. That motion is fully briefed and awaits resolution in the district court. InspireMD Ltd. intends to contest this matter vigorously. Due to the uncertainties of litigation, however, we can give no assurance that InspireMD Ltd. will prevail on any claims made against InspireMD Ltd. in any such lawsuit. Also, we can give no assurance that any other lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.

Item 1A. Risk Factors

DuringExcept for the fiscal quarter ended September 30, 2017,Risk Factors set forth herein, there werehave been no material changes tofrom the risk factors disclosed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2016, under the heading “Risk Factors” other than the description of risk factorsinformation set forth in Part II, Item 1A“Item 1A. Risk Factors” in the Form 10-K filed with the SEC on March 8, 2021.

The Reverse Stock Split may not result in a proportional increase in the per share price of our common stock.

On April 14, 2021, our stockholders approved the Reverse Stock Split, and, pursuant to the Certificate of Amendment to our Amended and Restated Certificate of Incorporation, which was approved by the Delaware Secretary of State on April 14, 2021, the Effective Date of the Quarterly Report on Form 10-QReverse Stock Split was April 26, 2021. The primary purpose for the Reverse Stock Split was to increase the price of our common stock in order to meet the initial listing requirements of the Nasdaq Capital Market (“Nasdaq”) and, secondly, to provide appropriate flexibility we require to issue shares in the event that our board of directors determines that it is necessary or appropriate to (i) raise additional capital through the sale of equity securities, (ii) enter into strategic business transactions, (iii) provide equity incentives to directors, officers and employees pursuant to equity compensation plans or (iv) further other corporate purposes. The effect of the Reverse Stock Split on the market price for our common stock cannot be accurately predicted. It is not uncommon for the market price of a company’s common stock to decline in the period ended March 31, 2017. Our business, financial condition and operating results canfollowing a reverse stock split. If the market price of our common stock declines during the period following the Reverse Stock Split, the percentage decline may be greater than would occur in the absence of the Reverse Stock Split. The market price of our common stock may also be affected by aother factors which may be unrelated to the Reverse Stock Split or the number of factors, whether currently known or unknown, including butshares outstanding.

Moreover, because some investors may view the Reverse Stock Split negatively, we cannot assure you that the Reverse Stock Split will not limited to those described below, any one or moreadversely impact the market price of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affectcommon stock. Accordingly, our business, financial condition, operating results and stock price.total market capitalization after the Reverse Stock Split may be lower than the market capitalization before the Reverse Stock Split.

Item 5. Other Information

Not applicable

Item 6. Exhibits

See Index to Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EXHIBIT INDEX

* Filed herewith.

+ Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.