All tangible long lived assets are located in Israel.

NOTE 11 – SUBSEQUENT EVENTS

On May 12, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) pursuant to which the Company agreed to sell and issue in a private placement (the “Private Placement Offering) an aggregate of 10,266,270 shares (the “Private Placement Shares”) of the Company’s common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 15,561,894 shares of common stock and warrants to purchase up to an aggregate of 51,656,328 shares of common stock, consisting of Series H warrants to purchase up to 12,914,086 shares of common stock (the “Series H Warrants”), Series I warrants to purchase up to 12,914,078 shares of common stock (the “Series I Warrants”), Series J warrants to purchase up to 12,914,086 shares of Common Stock (the “Series J Warrants”) and Series K warrants to purchase up to 12,914,086 shares of common stock (the “Series K Warrants” and together with the Series H Warrants, Series I Warrants and Series J Warrants, the “Warrants”), at an offering price of $1.6327 per Private Placement Share and associated Warrants and an offering price of $1.6326 per Pre-Funded Warrant and associated Warrants.

The Pre-Funded Warrants will be immediately exercisable at an exercise price of $0.0001 per share and will not expire until exercised in full. The Warrants will be immediately exercisable upon issuance at an exercise price of $1.3827 per share, subject to adjustment as set forth therein. The Warrants have a term of the earlier of (i) five years from the date of issuance and (ii) (A) in the case of the Series H Warrants, 20 trading days following the Company’s public release of primary and secondary end points related to one year follow up study results from the Company’s C-Guardians pivotal trial, (B) in the case of the Series I Warrants, 20 trading days following the Company’s announcement of receipt of Premarket Approval from the Food and Drug Administration (“FDA”) for the CGuard Prime Carotid Stent System (135 cm), (C) in the case of the Series J Warrants, 20 trading days following the Company’s announcement of receipt of FDA approval for the SwitchGuard and CGuard Prime 80 and (D) in the case on the Series K Warrants, 20 trading days following the end of the fourth fiscal quarter after the fiscal quarter in which the first commercial sales of the CGuard Carotid Stent System in the United States begins. The Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares underlying the warrants.

In connection with the Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company is required to file a resale registration statement (the “Registration Statement”) with the SEC to register for resale the Private Placement Shares and the shares of common stock issuable upon exercise of the Pre-Funded Warrants and Warrants, within 20 days of the signing date of the Purchase Agreement (the “Signing Date”), and to have such Registration Statement declared effective within 45 days after the Signing Date in the event the Registration Statement is not reviewed by the SEC, or 90 days of the Signing Date in the event the Registration Statement is reviewed by the SEC. The Company will be obligated to pay certain liquidated damages if the Company fails to file the Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, of if the Company fails to maintain the effectiveness of the Registration Statement.

Aggregate gross proceeds to the Company in respect of the Private Placement Offering are expected to be approximately $42.2 million, before deducting fees payable to the placement agent and other offering expenses payable by the Company which are expected to amount to approximately $4.6 million. If the Warrants are exercised in cash in full this would result in an additional $71.4 million of proceeds. The Private Placement Offering is expected to close on or about May 15, 2023, subject to satisfaction of customary closing conditions.

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.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 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 complexcarotid artery disease and other vascular and coronary disease. A stent is an expandable “scaffold-like” device, usually constructed of a metallic material, that is inserted into anthe lumen of the artery to expand the inside passagecreate patency and improverevascularization of blood flow. Our MicroNet, a micron mesh sleeve, is wrappedattached over a stent to provide embolic protection inboth during and after stenting procedures.

Our CGuard™ carotid embolic prevention system (“CGuard EPS”EPS™”) combines MicroNet and a unique self-expandable nitinol stent in a single device for use in carotid artery applications.revascularization. Our CGuard EPS originally received CE mark approval under Medical Device Directive 93/42/EEC (“MDD”) in the European Union (“EU”) in March 2013 and 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, Colombiaover 30 countries and Russia.on February 3, 2021, we executed a distribution agreement with Chinese partners for the purpose of expanding our presence in the Asian markets. Currently, we are seeking strategic partners for a potential launch of CGuard EPS in Japan and other Asian countries.

Our CE mark for CGuard EPS under the MDD expired on November 12, 2022 and we are in the final stages of technical documentation review by the Notified Body auditor to meet the Medical Device Regulation (“MDR”) (MDR 2017/745) requirements (which replaced the MDD) for recertification. In the meantime, on February 14, 2023, we received a derogation per Article 97 paragraph 1 of Regulation 2017/745 from the Agency for Medicines and Health Products (FAMHP) allowing us to continue marketing CGuard EPS in the EU until August 15, 2023 subject to certain procedural requirements. Subsequently, on March 20, 2023, Regulation (EU) 2023/607 was published allowing us to continue marketing CGuard EPS in EU countries under the MDD directive until December 31, 2027. As a result of the foregoing, we may market and sell CGuard EPS in the EU and certain other jurisdictions subject to certain procedural requirements while our MDR CE recertification is pending. We continue to expedite the review process for recertification under the MDR.

On September 8, 2020, we received approval from the U.S. Food and Drug Administration (“FDA”) of our Investigation Device Exemption (“IDE”), thereby allowing us to proceed with a pivotal study of our CGuard™ Carotid Stent System, C-Guardians, for prevention of stroke in patients in the United States. C-Guardians is a prospective, multicenter, single-arm, pivotal study to evaluate the safety and efficacy of the CGuard™ Carotid Sten System when used to treat symptomatic and asymptomatic carotid artery stenosis in patients undergoing carotid artery stenting. The trial was designed to enroll approximately 315 subjects in a maximum of 40 study sites located in the United States and Europe. Study sites in Europe may contribute a maximum of approximately 50% of the total enrollees. The primary endpoint of the study will be the composite of incidence of death (all-cause mortality), all stroke, and myocardial infarction (DSMI) through 30-days post-index procedure, based on the clinical events committee (CEC) adjudication and ipsilateral stroke from 31-365 day follow-up, based on Clinical Events Committee (CEC) adjudication. The composite index will be compared to a performance goal based on the observed rate of the two components of the primary endpoint from previous pivotal stent trials which are considered industry standard. The performance goal will be considered met if the upper bound of the two-sided 95% confidence interval calculated from the observed primary endpoint rate is < 11.6% and the p-value is less than 0.025.

On July 23, 2021, we announced the initiation of enrollment and successful completion of the first cases of our C-Guardian trial of CGuard EPS. There are 315 patients who are expected to be enrolled in the trial and receive CGuard EPS in the treatment of carotid artery stenosis in symptomatic and asymptomatic patients undergoing carotid artery stenting. We are currently continuing with the enrolment phase at approximately 20 trial sites and expect it to be completed approximately at the end of the second quarter of 2023.

Additionally, we intend to continue to invest in current and future potential new indications, products and manufacturing enhancements for CGuard EPS that are expected to reduce cost of goods and/or provide the best-in-class performing delivery systems, such as CGuard Prime™for transfemoral access. In furtherance of our strategy that focuses on establishing CGuard EPS as a viable alternative to vascular surgery, we are developing a new transcarotid artery revascularization (TCAR) delivery system, SwitchGuard™, for transcarotid access and neuro protection. In addition, we intend to explore new indications for CGuard EPS to leverage the advantages of stent design and mesh protection, well suited in labels such as acute stroke with tandem lesions.

We consider our current addressable market for our CGuard EPS to be individuals with diagnosed, symptomatic high-grade carotid artery stenosis (HGCS, ≥70% occlusion) for whom intervention is preferable to medical (drug) therapy. This group includes not only carotid artery stenting patients but also individuals undergoing carotid endarterectomy, as the two approaches compete for the same patient population. Assuming full penetration of the intervention caseload by CGuard EPS, we estimate that the addressable market for CGuard EPS will be approximately $1.3 billion in 2023 (source: Health Research International Personal Medical Systems, Inc. September 13, 2021 Results of Update Report on Global Carotid Stenting Procedures and Markets by Major Geography and Addressable Markets and internal estimates). According to this same report, and internal estimates, assuming full penetration of the caseload for all individuals diagnosed with high-grade carotid artery stenosis, we estimate that the total available market for CGuard EPS in 2022 will be approximately $9.3 billion. Our mission is to offer a comprehensive set of delivery solutions (TCAR and Transfemoral) in order to deliver best in class results through patient outcomes by way of stent performance with CGuard EPS.

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

Our MGuard™ Prime™ Embolic Protection System (“MGuard Prime EPS”Recent Developments

Private Placement

On May 12, 2023, we entered into a securities purchase agreement (the “Purchase Agreement”) is marketed for usepursuant to which we agreed to sell and issue in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack)a private placement (the “Private Placement Offering) an aggregate of 10,266,270 shares (the “Private Placement Shares”) of our common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 15,561,894 shares of common stock and saphenous vein graft coronary interventions (bypass surgery). MGuard Prime EPS combines MicroNet with a bare-metal cobalt-chromium based stentwarrants to purchase up to an aggregate of 51,656,328 shares of common stock, consisting of Series H warrants to purchase up to 12,914,086 shares of common stock (the “Series H Warrants”), Series I warrants to purchase up to 12,914,078 shares of common stock (the “Series I Warrants”), Series J warrants to purchase up to 12,914,086 shares of Common Stock (the “Series J Warrants”) and Series K warrants to purchase up to 12,914,086 shares of common stock (the “Series K Warrants” and together with our first generation MGuard stent combining MicroNet withthe Series H Warrants, Series I Warrants and Series J Warrants, the “Warrants”), at an offering price of $1.6327 per Private Placement Share and associated Warrants and an offering price of $1.6326 per Pre-Funded Warrant and associated Warrants.

The Pre-Funded Warrants will be immediately exercisable at an exercise price of $0.0001 per share and will not expire until exercised in full. The Warrants will be immediately exercisable upon issuance at an exercise price of $1.3827 per share, subject to adjustment as set forth therein. The Warrants have a bare-metal stainless steel stent, unless otherwise indicated, we referterm of the earlier of (i) five years from the date of issuance and (ii) (A) in the case of the Series H Warrants, 20 trading days following the Company’s public release of primary and secondary end points related to both kindsone year follow up study results from the Company’s C-Guardians pivotal trial, (B) in the case of bare-metal stents as our MGuard coronary products. We marketthe Series I Warrants, 20 trading days following the Company’s announcement of receipt of Premarket Approval from the Food and sell MGuard Prime EPSDrug Administration (“FDA”) for the treatment of coronary diseaseCGuard Prime Carotid Stent System (135 cm), (C) in the European Union. MGuardcase of the Series J Warrants, 20 trading days following the Company’s announcement of receipt of FDA approval for the SwitchGuard and CGuard Prime EPS received CE mark approval80 and (D) 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 focuscase on the developmentSeries K Warrants, 20 trading days following the end of the fourth fiscal quarter after the fiscal quarter in which the first commercial sales of the CGuard Carotid Stent System in the United States begins. The Warrants may be exercised on a drug-eluting stent product, MGuard DES™. Due to limited resources, though, 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.cashless basis if there is no effective registration statement registering the shares underlying the warrants.

In connection with the Purchase Agreement, we entered into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, we are required to file a resale registration statement (the “Registration Statement”) with the SEC to register for resale the Private Placement Shares and the shares of common stock issuable upon exercise of the Pre-Funded Warrants and Warrants, within 20 days of the signing date of the Purchase Agreement (the “Signing Date”), and to have such Registration Statement declared effective within 45 days after the Signing Date in the event the Registration Statement is not reviewed by the SEC, or 90 days of the Signing Date in the event the Registration Statement is reviewed by the SEC. We will be obligated to pay certain liquidated damages if we fail to file the Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, of if we fail to maintain the effectiveness of the Registration Statement.

WeAggregate gross proceeds to us in respect of the Private Placement Offering are also developing a neurovascular flow diverter (“NGuard”), which isexpected to be approximately $42.2 million, before deducting fees payable to the placement agent and other offering expenses. If the Warrants are exercised in cash in full this would result in an endovascular device that directs blood flow away from cerebral aneurysms in order to ultimately seal the aneurysms. Our flow diverter would utilize an open cell, highly flexible metal scaffold to which MicroNet would be attached. We have completed initial pre-clinical testingadditional $71.4 million 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.proceeds.

We also intendagreed to developpay LifeSci Capital LLC, a pipeline of other products and additional applications by leveraging our MicroNet technologyplacement fee equal to new applications to improve peripheral vascular and neurovascular procedures, such as the treatment5.6% of the superficial femoral artery disease, vascular disease belowaggregate gross proceeds from the kneeclosing of the Private Placement Offering and neurovascular stentinga non-accountable expense allowance of $25,000. In addition, we have agreed to open diseased vessels in the brain.pay Piper Sandler & Co. a financial advisory fee of $1.5 million and AGP/Alliance Global Partners a financial advisory fee of $250,000.

The Private Placement Offering is expected to close on or about May 15, 2023, subject to satisfaction of customary closing conditions.

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

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, 2016.2022. There have not been any material changes to such critical accounting policies since December 31, 2016.2022.

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, 2023, compared to the three months ended September 30, 2016March 31, 2022

Revenues. For the three months ended September 30, 2017,March 31, 2023, revenue increased by $249,000,$56,000, or 53.1%4.7%, to $718,000$1,239,000, from $469,000$1,183,000 during the three months ended September 30, 2016.March 31, 2022. This increase was predominantly driven by an 89.9%a 6.7% increase in sales of CGuard EPS from $277,000 in$1,161,000 during the three months ended September 30, 2016,March 31, 2022, to $526,000 in$1,239,000 during the three months ended September 30, 2017 as we continued focus on expanding existing markets such as Italy, expansion into new geographies such as Russia, as well asMarch 31, 2023. During the transition fromsecond half of the quarter, our prior exclusive distribution partner for most of EuropeCE mark was reinstated under the MDD directive allowing us to local distributors. The transition to local distributors reflects an effort to broaden ourresume 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 the three months ended September 30, 2017, comparedshipments to the same periodEU countries and we spent the remainder of the quarter shipping product in 2016.order to reduce the backlog of orders that accumulated over the past few months. We believe the quarter over quarter increase in revenue is not representative of the real market demand for CGuard EPS, due to our inability to ship product for the first half of the quarter. We continue to expedite the review process for recertification under the MDR.

With respect to geographical regions, the increase in revenue was primarily attributable to ana $177,000 increase of $233,000in Europe, for reasons mentioned in the paragraph above, and a $13,000 increase from the Middle East. This increase was offset by a $87,000 decrease in Latin America and $52,000 decrease in revenue from salesother regions such as Australia and Asia due to the timing of CGuard EPS fromshipments to our distributors in Europe and an increase of $21,000 in revenue from sales of CGuard EPS in Latin America.distributers.

Gross Profit. For the three months ended September 30, 2017,March 31, 2023, gross profit (revenue less cost of revenues) increased by 410.0%$251,000, or 205.6%, or $123,000, to $153,000, compared to $30,000$373,000, from $122,000 during the same period in 2016. Thethree months ended March 31, 2022. This increase in gross profit resulted primarily from ana decrease in write-offs of $184,000 and a $71,000 increase of $249,000 in revenues (as mentioned above), a decrease of $25,000 of expensesless the associated related to the underutilization of our manufacturing resources and a decrease of $14,000 in miscellaneous expenses, partially offset by an increase in material and labor costs of $165,000, which resulted from our increase in sales.labor. Gross margin (gross profits as a percentage of revenue) increased to 21.3% in30.1% during the three months ended September 30, 2017March 31, 2023 from 6.4% in10.3% during the three months ended September 30, 2016.March 31, 2022, driven by the factors mentioned above.

Research and Development Expenses. For the three months ended September 30, 2017,March 31, 2023, research and development expenses remained relatively flat comparedincreased by $163,000, or 9.7%, to $1,843,000, from $1,680,000 during the same period in 2016 due tothree months ended March 31, 2022. This increase resulted primarily from an increase of $40,000$170,000 in a salaryexpenses related accrual. Thisto the CGuard Prime regulatory and approval process and an increase of $88,000 in research and developmentmiscellaneous expenses was partially offset, in part, by a decrease of $41,000$95,000 in miscellaneous expenses.expenses related to the C-Guardians FDA study.

Selling and Marketing Expenses. For the three months ended September 30, 2017,March 31, 2023, selling and marketing expenses increased by 117.2%$42,000, or 5.6%, or $362,000, to $671,000,$788,000, from $309,000$746,000 during the three months ended September 30, 2016.March 31, 2022. This increase in selling and marketing expenses resulted primarily from an increase in compensation expenses of $195,000$49,000 offset, in salary expenses, an increasepart, by a decrease of $100,000 in travel expenses and an increase of $67,000$7,000 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, 2023, general and administrative expenses increaseddecreased by 7.5%$59,000, or 2.7%, or $89,000, to $1,279,000$2,123,000, from $1,190,000$2,182,000 during the three months ended September 30, 2016. The increase in general and administrative expensesMarch 31, 2022. This decrease resulted primarily from a decrease in share-based compensation-related expenses of $310,000 as no new grants were made from the fourth quarter of 2021 through March 31, 2023 offset, in part, by an increase in regulatory expenses of $171,000 related to MDR registration process and an increase of $88,000 in salary expenses, primarily due to a salary related accrual, 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$80,000 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, 2023, financial expenses decreasedincome increased by 99.6% or $236,000,$120,000, to $1,000,$125,000, from $237,000$5,000 during the three months ended September 30, 2016.March 31, 2022. The decreaseincrease in financial expensesincome primarily resulted from a decrease$88,000 increase in interest expenses due to the repayment of the remaining balance of our outstanding indebtedness of $1.2 million on March 21, 2017.income from short-term bank deposits.

Tax Expenses (Income).Expenses. For the three months ended September 30, 2017,March 31, 2023, there was no material change in our tax expenses (income)as compared to the same period in 2016.three months ended March 31, 2022.

Net Loss. Our net loss increaseddecreased by $91,000,$225,000, or 4.6%5.0%, to $2,086,000$4,256,000, for the three months ended September 30, 2017,March 31, 2023, from $1,995,000$4,481,000 during the same period in 2016.three months ended March 31, 2022. The increasedecrease in net loss resulted primarily from an increase of $450,000$251,000 in operating expenses, partially offset by a decrease of $236,000 in financial expensesgross profit and an increase of $123,000$120,000 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 werefinancial income 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$146,000 in operating expenses, partially offset by a decrease of $483,000 in financial expenses and an increase of $216,000 in gross profit.expenses.

Liquidity and Capital Resources

We had an accumulated deficit as of September 30, 2017,March 31, 2023 of $139$206 million, as well as a net loss of $6,939,000$4,256,000 and negative operating cash flows. We expect to continue incurring losses and negative cash flows from operations until our products (primarilyproduct, CGuard EPS) reachEPS, reaches commercial profitability. As a result of these expected losses and negative cash flows from operations, along with our current cash position, we onlybelieve we have sufficient resources to fund operations for a perioduntil the end of up to four months from the date of filing of this Quarterly Report on Form 10-Q.September 2023. Therefore, there is substantial doubt about our ability to continue as a going concern.

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

On March 14, 2017,May 12, 2023, we announcedentered into a securities purchase agreement for the closingissuance and sale of our securities in a “best efforts” public offering of Series C Convertible Preferred Stock, Series B warrants to purchase shares of common stock and Series C warrants to purchase shares of common stock. We receivedprivate placement. Aggregate gross proceeds to us in respect of the private placement is expected to be approximately $6.8$42.2 million, from the offering, before deducting fees payable to the 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 of shares of common stock being issued upon conversion of the Series B Convertible Preferred Stock or the Series C Convertible Preferred Stock. In addition, The Series B Convertible Preferred Stock provides for the payment of dividends in cash or in shares of our common stock, and we may not be able to pay such dividends in cash, which will require us to have shares of common stock available to pay the dividend. Sales of additional shares of common stock issuable upon conversion 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 byoffering expenses payable us and our subsidiaries in connection withbefore exercising any warrants. The offering is expected to close on or about May 15, 2023, subject to the Loan Agreement were terminated upon such payment.satisfaction of customary closing conditions.

NineThree months ended September 30, 2017March 31, 2023 compared to the ninethree months ended September 30, 2016March 31, 2022

General. At September 30, 2017,March 31, 2023, we had cash and cash equivalents of $4,765,000,$4,228,000 and short-term bank deposits of $8,657,000 as compared to $7,516,000$4,632,000 and short-term bank deposits of $13,171,000 as of December 31, 2016.2022. We have historically met our cash needs through a combination of issuing new shares, borrowing activities and product sales. Our cash requirements are generally for research and development, marketing and sales activities, finance and administrative costs, capital expenditures and general working capital.

For the ninethree months ended September 30, 2017,March 31, 2023, net cash used in our operating activities increased $742,000by $697,000, or 16.9%, to $6,356,000,$4,831,000, from $5,614,000 in$4,134,000 during the same period in 2016.2022. The primary reason for the increase in cash used in our operating activities was an increase of $449,000 in compensation costs paid during the three months ended March 31, 2023 from $2,679,000 in the three months ended March 31, 2022 to $3,128,000 during the same period in 2023 and a decrease of $366,000 in payments received from customers, to $925,000 during the three months ended March 31, 2023 from $1,291,000 during the same period in 2022 ,offset in part by a decrease of $118,000 in payments for third party related expenses and for professional services

Cash provided in our investing activities was $4,449,000 during the three months ended March 31, 2023, compared to cash used of $1,201,000 including$65,000 during the end of term charge of $520,000 to Hercules, from $3,833,000 to $5,034,000. Thisthree months ended March 31, 2022. The primary reasons for the increase in cash used in operating activities was partially offset by an increase of $351,000 in payments received from customers from $1,421,000 in the nine months ended September 30, 2016 to $1,772,000 in the same period in 2017 as well as a decrease of $108,000 in salary payments from $3,202,000 in the nine months ended September 30, 2016 to $3,094,000 in the same period in 2017.

Cash usedprovided by our investing activities was $282,000is a withdrawal of short-term deposits, net of investments of $4,500,000 of short-term deposits, offset by a decrease of $12,000 in payments made for purchase of property, plant and equipment to $25,000 during the ninethree months ended September 30, 2017, resulting primarily from the purchase of production equipment, compared to $81,000 ofMarch 31, 2023.

There was no cash provided during the same period in 2016 resulting primarily from the receipt of cash previously funded to employee retirement funds.

Cash provided by financing activities for the ninethree months ended September 30, 2017 was $3,883,000, compared to $12,756,000 duringMarch 31, 2023 and for the same period in 2016. 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, 2016 was the funds received from the issuance of preferred stock and warrants in a public offering closed on July 7, 2016, as well issuance of shares and warrants in a concurrent public offering and private placement closed on March 21, 2016, for approximately $14,424,000 of net proceeds, offset by loan repayments of $1,651,000.31, 2022.

As of September 30, 2017,March 31, 2023, our current assets exceeded our current liabilities by a multiple of 2.3.3.8. Current assets decreased by $2,439,000$4,623,000 during the period and current liabilities decreased by $2,055,000$687,000 during the period. As a result, our working capital decreased by $384,000$3,936,000 to $3,432,000 at September 30, 2017.$12,320,000 as of March 31, 2023.

Off Balance Sheet Arrangements

We have no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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 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, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

Contractual Obligations and Commitments

During the ninethree months ended September 30, 2017,March 31, 2023, there were no material changes to our contractual obligations and commitments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicableapplicable.

Item 4. Controls and Procedures

Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures

As of September 30, 2017,March 31, 2023, 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, 2023.

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, 2023, 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 bebecome involved in litigation that arises throughvarious lawsuits and legal proceedings, which arise in the normalordinary course of business.

On April 26, 2016, Microbanc, LLC Litigation is subject to inherent uncertainties, and Todd Spenlaan adverse result in these or other matters may arise from time to time that may harm our business. There are currently no pending material legal proceedings, and we are currently not aware of Microbanc, LLC filed suit in the New York State Supreme Court (New York County)any legal proceedings or claims 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 grantedor 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 assuranceproperty that we believe will prevail onhave 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 adversesignificant effect on our business, financial condition, liquidityposition or operating results.

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 included in our previous filings made with the SEC and as set forth below, there werehave been no material changes to theour risk factors from those disclosed in Part I,“Part I. Item 1A of1A. Risk Factors” in the Annual Report on Form 10-K forfiled with the year ended December 31, 2016, under the heading “Risk Factors” other than the descriptionSEC on March 30, 2023.

Item 2. Unregistered Sales of risk factors set forth in Part II, Equity Securities and Use of Proceeds

None.

Item 1A of the Quarterly Report on Form 10-Q for the period ended March 31, 2017. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more 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 affect our business, financial condition, operating results and stock price.3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicableNone.

Item 6. Exhibits

See Index to Exhibits.EXHIBIT INDEX

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.