UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35731

InspireMD, Inc.

(Exact name of registrant as specified in its charter)

Delaware		26-2123838
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

4 Menorat Hamaor St.

Tel Aviv, Israel 6744832

(Address of principal executive offices)

(Zip Code)

(888) 776-6204

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	NSPR	Nasdaq Capital Market
~~Series B Warrants, exercisable for one share of Common Stock~~	~~NSPRZ~~	~~Nasdaq~~ ~~Capital Market~~

The number of shares of the registrant’s common stock, $0.0001 par value, outstanding as of November 4, ~~2021:~~2022: ~~8,077,047~~8,335,606

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1110
Item 4.	Controls and Procedures	11

	PART II
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 5.	Other Information	12
Item 6.	Exhibits	1213

Item 1. Financial Statements

INSPIREMD, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE QUARTER ENDED SEPTEMBER 30, ~~2021~~2022

TABLE OF CONTENTS

	Page
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets	F-2 - F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Changes in Equity	F-5 - F-8
Consolidated Statements of Cash Flows	F-9
Notes to the Consolidated Financial Statements	F-10 - ~~F-14~~F-16

F-1

INSPIREMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(U.S. dollars in thousands)

	September 30,		December 31,		September 30,		December 31,
	2021		2020		2022		2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	13,059	$	12,645	$	3,934	$	12,004
Short-term bank deposits		24,012		-		17,111		22,036
Accounts receivable:
Trade, net		971		476		1,166		1,224
Other		141		146		207		165
Prepaid expenses		773		334		860		522
Inventory		1,135		1,415		1,414		1,143
Receivable for sale of shares		-		323
TOTAL CURRENT ASSETS		40,091		15,339		24,692		37,094

NON-CURRENT ASSETS:
Property, plant and equipment, net		563		448		876		632
Operating lease right of use assets		1,166		1,265		1,635		1,081
Fund in respect of employee rights upon retirement		786		725		858		905
TOTAL NON-CURRENT ASSETS		2,515		2,438		3,369		2,618
TOTAL ASSETS	$	42,606	$	17,777		28,061	$	39,712

F-2

INSPIREMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(U.S. dollars in thousands other than share and per share data)

	September 30,			December 31,			September 30,			December 31,
	2021			2020			2022			2021
LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Accounts payable and accruals:
Trade		556			236			404			893
Other		3,164			3,469			3,557			3,454
TOTAL CURRENT LIABILITIES		3,720			3,705			3,961			4,347

LONG-TERM LIABILITIES-
Operating lease liabilities		831			999			1,261			781
Liability for employees’ rights upon retirement		992			910			969			1,052
											-
TOTAL LONG-TERM LIABILITIES		1,823			1,909			2,230			1,833

COMMITMENTS AND CONTINGENT LIABILITIES								-			-
TOTAL LIABILITIES		5,543			5,614			6,191			6,180

EQUITY:

Common stock, par value $0.0001 per share; 150,000,000 shares authorized at September 30, 2021 and December 31, 2020; 7,900,311 and 3,284,322 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		1			*
Preferred B shares, par value $0.0001 per share; 500,000 shares authorized at September 30, 2021 and December 31, 2020; 0 and 17,303 shares issued and outstanding at September 30, 2021 and December 31, 2020		-			*
Preferred C shares, par value $0.0001 per share; 1,172,000 shares authorized at September 30, 2021 and December 31, 2020; 1,718 and 2,343 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		*			*
Preferred Stock, value
Common stock, par value $0.0001 per share; 150,000,000 shares authorized at September 30, 2022 and December 31, 2021; 8,335,606 and 8,296,256 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively								1			1
Preferred C shares, par value $0.0001 per share; 1,172,000 shares authorized at September 30, 2022 and December 31, 2021; 1,718 shares issued and outstanding at September 30, 2022 and December 31, 2021								-*			-*
Additional paid-in capital		216,059			180,339			218,609			216,625
Accumulated deficit		(178,997	)		(168,176	)		(196,740	)		(183,094	)
Total equity		37,063			12,163			21,870			33,532
Total liabilities and equity	$	42,606		$	17,777		$	28,061		$	39,712

*	Represents an amount less than $1 thousand

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

F-3

INSPIREMD, INC.

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

													2022			2021			2022			2021
	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

REVENUES	$	1,071		$	980		$	3,115		$	2,327		$	1,431		$	1,071		$	4,145		$	3,115
COST OF REVENUES		979			682			2,655			1,854			1,065			979			3,226			2,655
GROSS PROFIT		92			298			460			473			366			92			919			460
OPERATING EXPENSES:
Research and development		1,495			546			3,624			1,513			2,061			1,495			5,797			3,624
Selling and marketing		802			485			2,146			1,486			845			802			2,577			2,146
General and administrative		1,826			1,462			5,475			4,136			2,070			1,826			6,322			5,475
Total operating expenses		4,123			2,493			11,245			7,135			4,976			4,123			14,696			11,245
LOSS FROM OPERATIONS		(4,031	)		(2,195	)		(10,785	)		(6,662	)		(4,610	)		(4,031	)		(13,777	)		(10,785	)
FINANCIAL EXPENSES, net:		(40	)		(38	)		(36	)		(29	)
FINANCIAL INCOME (EXPENSES), net:														81			(40	)		131			(36	)
LOSS BEFORE TAX EXPENSES													$	(4,529	)	$	(4,071	)	$	(13,646	)	$	(10,821	)
NET LOSS	$	(4,071	)	$	(2,233	)	$	(10,821	)	$	(6,691	)	$	(4,529	)	$	(4,071	)	$	(13,646	)	$	(10,821	)
NET LOSS PER SHARE - basic and diluted	$	(0.53	)	$	(0.96	)	$	(1.50	)	$	(5.75	)	$	(0.58	)	$	(0.53	)	$	(1.75	)	$	(1.50	)
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING NET LOSS PER SHARE - basic and diluted		7,739,463			2,325,619			7,194,379			1,164,012			7,838,506			7,739,463			7,816,974			7,194,379

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

F-4

INSPIREMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

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

Common stock Series B
Convertible
Preferred Stock Series C
Convertible
Preferred Stock Additional paid-in Accumulated Total
Shares Amount Shares Amount Shares Amount capital deficit equity

BALANCE AT January 1, 2020 261,075 -* 17,303 -* 34,370 -* $ 163,015 $ (157,632 ) $ 5,383
Net loss (6,691 ) (6,691 )
Exercise of pre-funded warrants 990,427 -* 18 18

Settlement of restricted stock units in shares of common stock 11,000 -* -
Issuance of common stock, net of $945 issuance costs 770,813 -* 10,809 10,809
Exercise of Warrants F 191,107 -* 1,418 1,418
Exercise of Warrants G
Exercise of Warrants G, shares
Conversion of Series B Convertible Preferred Stock to common stock
Conversion of Series B Convertible Preferred Stock to common stock, shares
Exercise of Unit Purchase Option 16,906 -* 82 82
Conversion of Series C Convertible Preferred Stock to common stock 24,812 -* - (32,027 ) -* -
Issuance of common shares at the market offering, net of $110 issuance costs
Issuance of common shares at the market offering, net of $110 issuance costs, shares
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 2,766 shares 137,802 -* 261 261
Round up of shares due to reverse stock split effectuated on April 26, 2021
Round up of shares due to reverse stock split effectuated on April 26, 2021 , shares
BALANCE AT September 30, 2020 2,403,942 - 17,303 -* 2,343 -* $ 175,603 $ (164,323 ) $ 11,280
Shares Amount Shares Amount Shares Amount capital deficit equity
Common stock Series B
Convertible
Preferred Stock Series C
Convertible
Preferred Stock Additional paid-in Accumulated Total
Shares Amount Shares Amount Shares Amount capital deficit equity

BALANCE AT January 1, 2021 3,284,322 -^* 17,303 -^* 2,343 -^* $ 180,339 $ (168,176 ) $ 12,163
Net loss (10,821 ) (10,821 )
Issuance of common stock, including at the market offering net of $2,024 issuance costs 3,133,775 1 - - - - 25,241 - 25,242
Exercise of Warrants F 1,093,536 -^* - - - - 8,120 - 8,120
Exercise of Warrants G 131,876 -^* - - - - 1,349 - 1,349
Conversion of Series B Convertible Preferred Stock to common stock 207,528 -^* (17,303 ) -^* - - -^* - -^*
Conversion of Series C Convertible Preferred Stock to common stock 831 -^* - - (625 ) -^* -^* - -^*
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 19,036 shares 3,166 -^* - - - - 1,010 - 1,010
Round up of shares due to reverse stock split effectuated on April 26, 2021 45,277 -^* - - - - - - -^*
BALANCE AT September 30, 2021 7,900,311 1 - -^* 1,718 -^* $ 216,059 $ (178,997 ) $ 37,063

* Represents an amount less than $1 thousand

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

F-5

INSPIREMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(U.S. dollars in thousands, except share data)

Common stock
Series B
Convertible
Preferred Stock

Series C
Convertible
Preferred Stock
Additional paid-in Accumulated Total
Shares Amount Shares Amount Shares Amount capital deficit equity

BALANCE AT July 1, 2020 2,223,933 - 17,303 -* 2,343 -* $ 175,304 $ (162,090 ) $ 13,214
Net loss (2,233 ) (2,233 )
Issuance of common shares at the market offering, net of $110 issuance costs 39,540 -* - - 158 158

Share-based compensation related to restricted stock and stock options award, net of forfeitures of 1,484 shares 140,469 -* 141 141
BALANCE AT September 30, 2020 2,403,942 - 17,303 -* 2,343 -* $ 175,603 $ (164,323 ) $ 11,280
Shares Amount Shares Amount Shares Amount capital deficit equity
Common stock Series B Convertible Preferred Stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total
Shares Amount Shares Amount Shares Amount capital deficit equity

BALANCE AT July 1, 2021 7,914,339 1 - - 1,718 -^* $ 215,755 $ (174,926 ) $ 40,830
Net loss (4,071 ) (4,071 )
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 13,077 shares (11,917 ) -^* - - - - 304 - 304
Round up of shares due to reverse stock split effectuated on April 26, 2021 (2,111 ) -^* - - - - - - -^*
BALANCE AT September 30, 2021 7,900,311 1 - - 1,718 -^* $ 216,059 $ (178,997 ) $ 37,063

* Represents an amount less than $1 thousand

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

F-6

INSPIREMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(U.S. dollars in thousands, except share data)

Common stock Series B
Convertible
Preferred Stock Series C
Convertible
Preferred Stock Additional paid-in Accumulated Total
Shares Amount Shares Amount Shares Amount capital deficit equity

BALANCE AT January 1, 2021 3,284,322 -* 17,303 -* 2,343 -* $ 180,339 $ (168,176 ) $ 12,163
Net loss (10,821 ) (10,821 )
Issuance of common stock, including at the market offering net of $2,024 issuance costs 3,133,775 1 - - - - 25,241 - 25,242
Exercise of Warrants F 1,093,536 -* - - - - 8,120 - 8,120
Exercise of Warrants G 131,876 -* - - - - 1,349 - 1,349
Conversion of Series B Convertible Preferred Stock to common stock 207,528 -* (17,303) -* - - -* - -*
Conversion of Series C Convertible Preferred Stock to common stock 831 -* - - (625) -* -* - -*
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 19,036 shares 3,166 -* - - - - 1,010 - 1,010
Round up of shares due to reverse stock split effectuated on April 26, 2021 45,277 -* - - - - - - -*
BALANCE AT September 30, 2021 7,900,311 1 - - 1,718 -* $ 216,059 $ (178,997 ) $ 37,063
Shares Amount Shares Amount capital deficit equity
Common stock Series C Convertible Preferred Stock Additional paid-in Accumulated Total
Shares Amount Shares Amount capital deficit equity

BALANCE AT January 1, 2022 8,296,256 1 - 1,718 -^* 216,625 (183,094 ) 33,532
Net loss - - (13,646 ) (13,646 )
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 6,144 shares 39,350 - 1,984 1,984
BALANCE AT September 30, 2022 8,335,606 1 - 1,718 -^* 218,609 (196,740 ) 21,870
* Represents an amount less than $1 thousand

The accompanying notes are an integral part of the consolidated financial statements.
F-7

INSPIREMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(U.S. dollars in thousands, except share data)

Common stock Series B
Convertible
Preferred Stock Series C
Convertible
Preferred Stock Additional paid-in Accumulated Total
Shares Amount Shares Amount Shares Amount capital deficit equity

BALANCE AT July 1, 2021 7,914,339 1 - - 1,718 -* $ 215,755 $ (174,926 ) $ 40,830

Balance 7,914,339 1 - - 1,718 - -* $ 215,755 $ (174,926 ) $ 40,830
Net loss (4,071 ) (4,071 )
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 13,077 shares (11,917 ) -* - - - - 304 - 304
Round up of shares due to reverse stock split effectuated on April 26, 2021 (2,111 ) -* - - - - - - -
BALANCE AT September 30, 2021 7,900,311 1 - - 1,718 -* $ 216,059 $ (178,997 ) $ 37,063
Balance 7,900,311 1 - - 1,718 -* $ 216,059 $ (178,997 ) $ 37,063
Shares Amount Shares Amount capital deficit equity
Common stock Series C
Convertible
Preferred Stock Additional paid-in Accumulated Total
Shares Amount Shares Amount capital deficit equity

BALANCE AT July 1, 2022 8,323,200 1 - 1,718 -^* 217,952 (192,211 ) 25,742
Net loss - - (4,529 ) (4,529 )
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 1,581 shares 12,406 - 657 657
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures 657 657
BALANCE AT September 30, 2022 8,335,606 1 - 1,718 -^* 218,609 (196,740 ) 21,870

* Represents an amount less than $1 thousand

The accompanying notes are an integral part of the consolidated financial statements.
F-8

INSPIREMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(U.S. dollars in thousands)

2022 2021
Nine months ended
September 30 Nine months ended
September 30
2021 2020 2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (10,821 ) $ (6,691 ) $ (13,646 ) $ (10,821 )
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation 121 122 134 121
Loss from sale of property, plant and equipment 1 14 - 1
Loss on amounts funded in respect of employee rights upon retirement 114 -
Change in liability for employees’ rights upon retirement 82 114 (83 ) 82
Financial expense (income), net 1 (4 )
Other financial expense 138 13
Change in operating right of use asset and operating leasing liability (58 ) (19 ) (78 ) (58 )
Share-based compensation expenses 1,010 261 1,984 1,010
Increase in interest receivable on short term deposits (75 ) (12 )
Changes in operating asset and liability items:
Increase in prepaid expenses (439 ) (82 ) (198 ) (439 )
Decrease (increase) in trade receivables (495 ) 258 58 (495 )
Decrease (increase) in other receivables 5 (160 ) (42 ) 5
Decrease (increase) in inventory 280 (152 ) (271 ) 280
Increase (decrease) in trade payables 320 (219 ) (489 ) 320
Decrease in other payables (316 ) (323 )
Increase (decrease) in other payables 107 (316 )
Net cash used in operating activities (10,309 ) (6,881 ) (12,347 ) (10,309 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (237 ) (26 ) (378 ) (237 )
Investment in short-term deposits (24,000 ) -
Amounts funded in respect of employee rights upon retirement, net (61 ) (57 )
Net cash used in investing activities (24,298 ) (83 )
Proceeds from withdrawal of (invest in) short-term deposits 5,000 (24,000 )
Amounts funded in respect of employee rights upon retirement (67 ) (61 )
Net cash provided by (used in) investing activities 4,555 (24,298 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares and warrants and exercise of Pre-Funded Warrants and unit purchase option, net of $2,024 and $767 issuance costs, respectively 35,034 12,327
Net cash provided by financing activities 35,034 12,327
Issuance costs of At The Market offering (140 ) -
Proceeds from issuance of shares and warrants and exercise of Pre-Funded Warrants and unit purchase option, net of $2,024 issuance costs - 35,034
Net cash provided by (used in) financing activities (140 ) 35,034
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (13 ) 5 (138 ) (13 )
INCREASE IN CASH AND CASH EQUIVALENTS 414 5,368
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (8,070 ) 414
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 12,645 5,514 12,004 12,645
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 13,059 $ 10,882 $ 3,934 $ 13,059
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of right-of-use assets by means of lease liabilities 91 835 91
Sale of Fixed Asset (non-cash) - 22
The accompanying notes are an integral part of the consolidated financial statements.
F-9

INSPIREMD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS

a. General

InspireMD, Inc., a Delaware corporation (the “Company”), together with its subsidiaries, is a medical device ~~company~~Company focusing on the development and commercialization of its proprietary MicroNet™ stent platform technology for the treatment of complex vascular and coronary disease. MicroNet, a micron mesh sleeve, is wrapped over a stent to provide embolic protection in stenting procedures.

The Company’s carotid product (CGuard™ EPS) combines MicroNet and a self-expandable nitinol stent in a single device to treat carotid artery disease.

The Company’s ~~coronary product combining MicroNet and a bare-metal stent (MGuard~~MGuard™ Prime™ ~~EPS) is~~embolic protection system (“MGuard Prime EPS”) was marketed for use in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions, ~~(bypass surgery).~~or bypass surgery. MGuard Prime EPS combines MicroNet with a bare-metal cobalt-chromium based stent. MGuard Prime EPS received CE mark approval in the European Union in October 2010 for improving luminal diameter and providing embolic protection. Over the past years, there has been a shift in industry preferences away from bare-metal stents, such as MGuard Prime EPS in ST-Elevation Myocardial Infarction (“STEMI”) patients. As a result of declining sales of the MGuard Prime EPS, which the Company believes is largely driven by the predominant industry preferences favoring drug-eluting, or drug-coated, stents, during the second quarter of 2022, the Company ceased sales of the Company’s MGuard Prime EPS following a phase out period.

The Company markets its products through distributors in international markets, mainly in Europe.

b. Liquidity

~~As of the date of issuance of the consolidated financial statements, the~~The Company has ~~the ability to fund its planned operations for at least the next 12 months. However, the~~an accumulated deficit as of September 30, 2022, 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~~product, CGuard™ ~~EPS)~~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 until the end of September 2023 . 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. See also note 1b regarding the new European Medical Device Regulation.
Management’s plans include the continued commercialization of the Company’s product and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. 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.
F-10
c.
Failure to satisfy regulatory requirements of the new European Medical Device Regulation by November 12, 2022 could prevent the Company from marketing CGuard EPS in in countries requiring the CE Mark.
For the European Union nations, medical devices must obtain a CE mark before they may be placed on the market. In order to obtain and maintain the CE mark, the Company must comply with EU law on medical devices, which, until May 26, 2021 was governed by the Medical Device Directive 93/42/EEC (“MDD”), by presenting comprehensive technical files for its products demonstrating safety and efficacy of the product to be placed on the market and passing initial and annual quality management system audit as per ISO 13485 standard by a European Notified Body.
The Company has obtained ISO 13485 quality system certification and CGuard EPS that the Company currently distributes into the European Union, displays the required CE mark. In order to maintain certification, the Company is required to pass an annual surveillance audit conducted by Notified Body auditors.
The European Union replaced the MDD with the new European Medical Device Regulation, or MDR (MDR 2017/745). The MDR entered into force after a transitional period of three years and a one year extension of that transition period due to the COVID-19 pandemic on May 26, 2021 and which changes several aspects of the regulatory framework in the European Union. Manufacturers had the duration of the transition period to update their technical documentation and processes to meet the new requirements in order to ~~fund~~obtain a CE Mark. After May 26, 2021, medical devices can generally still be placed on the ~~Company’s operations~~market under the provision of the MDD until ~~such time that~~May 26, 2024; provided the CE Mark was issued prior to this date and the manufacturer continues to comply with this directive. By May 26, 2024, all medical devices entering the EU will need to have a CE Mark under the MDR, even if they have been on the market previously under the MDD.
In the Company’s’ particular case, CGuard EPS can continue to be marketed under the MDD until November 12, 2022. Specifically, the EU MDR requires changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety information for Class III products, Unique Device Identification (“UDI”) for all products, submission of core data elements to a European UDI database prior to placement of a device on the market, and multiple other labeling changes. Currently the Company ~~can generate substantial revenues,~~is under technical documentation review by the Notified Body auditor to meet the MDR requirements for recertification having completed the quality management system Notified Body audit in October 2021.
The Notified Body is currently experiencing chronic delays in processing MDR audits and reviews and the Company ~~may need~~does not expect to ~~raise additional funds.~~satisfy MDR requirements by November 12, 2022. While the Company continues to seek to expedite the review process, if the CE mark lapses, the Company will not be able to promote and sell CGuard EPS into countries requiring the CE mark until the Company receives recertification. No assurance can be provided as to the length of time it will take to obtain recertification, If the Company is unable to promote and sell CGuard EPS into countries requiring the CE mark for a prolonged period, this is expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.

The Company’s shares that previously traded on the NYSE American were approved for listing on the Nasdaq Capital Market (“Nasdaq”) and such shares began trading on Nasdaq on May 21, 2021 under the symbol, “NSPR.” The Company’s warrants that previously traded on the NYSE American were approved for listing on Nasdaq, and such warrants began trading on Nasdaq on June 8, 2021.
b.d. COVID-19 Pandemic

The COVID-19 global pandemic has led governments and authorities around the globe to take various precautionary measures in order to limit the spread of COVID-19, including government-imposed quarantines, lockdowns, and other public health safety measures. WeThe Company experienced a significant COVID-19 related impact on ~~our~~the Company’s financial condition and results of operations, primarily during the year ended December 31, 2020, which wethe Company primarily attribute to the postponement of CGuard EPS procedures (non-emergency procedures), as hospitals have shifted resources to patients affected by COVID-19. ~~To the best of our knowledge, most European countries in which we operate reinstated non-emergency procedures. However, new~~New COVID-19 variants, and potentially increasing infection rates make the current COVID-related environment highly volatile and uncertain and ~~we anticipate~~the Company anticipates that the continuation of the pandemic and related restrictions and safety measures will likely result in continued fluctuations in sales of ~~our~~the Company’s products, ~~and~~ potentially enrollments in ~~our~~the Company’s studies as well as potential disruptions to the Company’s supply chain for the upcoming periods.
~~F-10~~F-11

e. Risks Related to the Geopolitical and Military Tensions Between Russia and Ukraine in Europe
In February 2022, Russia launched a military invasion into Ukraine. The Company derived approximately 10.5% of total sales in Russia, Ukraine and Belarus in 2021 while during the nine and three months ended September 30, 2022 the Company’s sales to Russia, Ukraine and Belarus were 12.1% and 22.2% respectively. The escalation of geopolitical instability in Russia and Ukraine as well as currency fluctuations in the Russian Ruble could negatively impact the Company’s operations, sales, and future growth prospects in that region.
As a result of the crisis in Ukraine, the United States and the EU have implemented sanctions against certain Russian individuals and entities and have made it more difficult for us to collect on outstanding accounts receivable from customers in this region. The Company’s global operations expose us to risks that could adversely affect the Company’s business, financial condition, results of operations, cash flows or the market price of the Company’s securities, including the potential for increased tensions between the United States and Russia resulting from the current situation involving Russia and Ukraine, tariffs, economic sanctions and import-export restrictions imposed by either nation, and retaliatory actions by the other nation, as well as the potential negative impact on the Company’s business and sales in Russia, Ukraine and Belarus. Current geopolitical instability in Russia and Ukraine and related sanctions by the U.S. government against certain companies and individuals may hinder the Company’s ability to conduct business with potential or existing customers and vendors in these countries.
The U.S. government has imposed sanctions through several executive orders restricting U.S. companies from conducting business with specified Russian and Ukrainian individuals and companies. While the Company believes that the executive orders currently do not preclude the Company from conducting business with the Company’s current customers or vendors in Russia, Ukraine and Belarus, the sanctions imposed by the U.S. government may be expanded in the future to restrict the Company from engaging with them. If the Company is unable to conduct business with new or existing customers or vendors or pursue business opportunities in Russia, Ukraine or Belarus, the Company’s business, including revenue, profitability and cash flows, and operations could be adversely affected. The Company cannot provide assurance that current sanctions or potential future changes in sanctions will not have a material impact on the Company’s operations in Russia, Ukraine and Belarus or on the Company’s financial results.

NOTE 2 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements for the year ended December 31, ~~2020.~~2021. In the opinion of the Company, ~~the financial statements reflect~~ all adjustments ~~which include only normal recurring adjustments,~~considered necessary for a fair statement of ~~its financial position as of September 30, 2021 and its~~the results of ~~operations and cash flows for~~ the ~~three and nine months ended September 30, 2021 and 2020.~~interim periods reported herein have been included (consisting only of normal recurring adjustments). 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, ~~2020,~~2021, as found in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March ~~8, 2021.~~7, 2022. The results of operations for the three and nine months ended September 30, ~~2021~~2022 are not necessarily indicative of results that could be expected for the entire fiscal year.

F-12
NOTE 3 - EQUITY:

a. ~~On April 19, 2021, the Company filed with the Secretary of State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a~~ ~~one-for-fifteen reverse stock split of its common stock, par value $0.0001~~ ~~per share, effective as of April 26, 2021. All related share and per share data have been retroactively applied to the financial statements and their related notes for all periods presented.~~
b.
~~On February 8, 2021, the Company closed an underwritten public offering (the “Offering”) of~~ ~~1,935,484~~ ~~units (“Units”), with each Unit being comprised of one share of the Company’s common stock, par value $0.0001~~ per share, and one Series G warrant (the “Series G Warrants”) to purchase one-half of one share of Common Stock. In connection with this public offering, the underwriter exercised its over-allotment option in full and purchased an additional ~~290,322~~ ~~shares of common stock and~~ ~~145,161~~ ~~Series G Warrants. The offering price to the public was $9.30~~ ~~per Unit. The Series G Warrants are immediately exercisable at a price of $10.23~~ ~~per and expire~~ ~~five years~~ ~~from the date of issuance.~~
~~The Company granted the underwriter compensation warrants to purchase up to~~ ~~111,290~~ ~~shares of Common Stock. The underwriter warrants have an exercise price of $10.23~~ ~~per share and are exercisable immediately and for~~ ~~five years~~ ~~from the date of effectiveness of the registration statement in connection with the Offering.~~
~~The net proceeds to the Company 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.
c. ~~During the nine months ended September 30, 2021, the Company sold~~ ~~818,523~~ ~~shares of its common stock pursuant to its at-the-market (ATM) issuance sales agreement with a sales agent. These sales resulted aggregate gross proceeds to the Company of approximately $5,659,000~~.
~~F-11~~
d.
On February 3, 2021, the Company entered into a distribution agreement (the “Distribution Agreement”) with three China-based partners, pursuant to which the Chinese partners will be responsible for conducting the necessary registration trials for commercial approval of the Company’s products in China, followed by an eight-year exclusive distribution right to sell the Company’s products in China with the term of the agreement continuing on a year-to-year basis unless terminated. Under the Distribution Agreement, the China-based partners will be subject to minimum purchase obligations. The Distribution Agreement may be terminated for cause upon failure to meet minimum purchase obligations, failure to obtain regulatory approvals or for other material breaches.
In addition, and on the same day, the Company entered into an investment transaction with one of the Chinese parties to the Distribution Agreement, which included (i) a Securities Purchase Agreement (the “SPA”), pursuant to which investor agreed to invest $~~900,000~~ ~~in exchange for~~ ~~89,445~~ ~~shares of the Company’s common stock at a purchase price of $10.062~~ ~~per share.~~
e.
~~During the nine months ended September 30, 2021, Series F and Series G warrants to purchase shares of common stock were exercised by investors at an exercise price of $7.425~~ ~~and $10.23~~ ~~per share, resulting in the issuance of~~ ~~1,225,412~~ ~~shares of common stock for proceeds of approximately $9,469,000~~.
f.
~~During the nine months ended September 30, 2021, all the remaining~~ ~~17,303~~ ~~shares of Series B Convertible Preferred Stock were converted into~~ ~~207,528~~ ~~shares of common stock.~~
g.
~~During the nine months ended September 30, 2021,~~ ~~625~~ ~~shares of Series C Convertible Preferred Stock were converted into~~ ~~831~~ ~~shares of common stock.~~
h.
~~During the nine months ended September 30, 2021, the Company granted to employees, directors and consultants’ options to purchase a total of~~ ~~79,071~~ ~~shares of the Company’s common stock. The options have an exercise prices ranging from $3.89~~ ~~- $10.05~~ per share, which was the fair market value of the Company’s common stock on the date of the grant. The options are subject to a three-year vesting period, with one-third of such awards vesting each year.
~~In calculating the fair value of the above options, the Company used the following assumptions: dividend yield of~~ 0% ~~and expected term of~~ ~~5.5~~-~~6.5~~ ~~years; expected volatility ranging from~~ ~~129.12%~~-~~136.78%; and risk-free interest rate ranging from~~ ~~0.59%~~-~~1.17%~~.
~~The fair value of the above options, using the Black-Scholes option-pricing model, was approximately $478,600~~.
i.
~~During the nine months ended September 30, 2021, the Company granted~~ ~~22,202~~ ~~restricted shares of the Company’s common stock to employees. The shares are subject to a three-year vesting period, with one-third of such awards vesting each year.~~
~~The fair value of the above restricted shares was approximately $143,346~~.
j. As of September 30, ~~2021,~~2022, there were 1,718 shares of Series C Preferred Stock outstanding, convertible into an aggregate of 2,280 shares of ~~our~~the Company’s common stock.
~~F-12~~

As of September 30, ~~2021,~~2022, the Company has outstanding warrants to purchase an aggregate of ~~1,793,983~~ 1,793,815 shares of common stock as follows:
SCHEDULE OF ISSUANCE OF WARRANTS TO PURCHASE COMMON STOCK
Number of
underlying
Common stock Exercise price Number of
underlying
Common stock Exercise price
Series E Warrants 198,159 $ 27.000 198,159 $ 27.000
Series F Warrants 433,878 $ 7.425 433,878 $ 7.425
Series G Warrants 1,092,344 $ 10.230 1,092,344 $ 10.230
Underwriter Warrants 18,277 $ 7.425 18,277 $ 7.425
Other warrants 51,325 $ 225.000 and above 51,157 225 and above

Total Warrants 1,793,983 $ 1,793,815 $

As of September 30, ~~2021,~~2022, the Company had 155,000,000 authorized shares of capital stock, par value $0.0001 per share, of which 150,000,000 are shares of common stock and 5,000,000 are shares of “blank check” preferred stock.
b. During the nine months ended September 30, 2022, the Company granted to employees and consultants’ options to purchase a total of 154,508 shares of the Company’s common stock. The options have an exercise price ranging from $2.61 - $2.97 per share, which was the fair market value of the Company’s common stock on the date of the grant. 98,838 options are subject to a three-year vesting period, with one-third of such awards vesting each year and 55,670 options with performance conditions, mainly related to clinical activities.
In calculating the fair value of the above options, the Company used the following assumptions: dividend yield of 0% and expected term of 5.125-6.5 years; expected volatility ranging from 127.43%-130.93%; and risk-free interest rate ranging from 1.79%-2.88%.
The fair value of the above options, using the Black-Scholes option-pricing model, was approximately $360,356.
c. During the nine months ended September 30, 2022, the Company granted 13,987 restricted shares of the Company’s common stock to employees. The shares are subject to a three-year vesting period, with one-third of such awards vesting each year.
The fair value of the above restricted shares was approximately $25,736.

NOTE 4 – RELATED PARTIES TRANSACTIONS

~~On May 10, 2021, the board of directors of the Company appointed a new member.~~ During the nine and three months ended September 30, ~~2021,~~2022, a consulting ~~company~~Company whose founder and CEO is ~~our new~~a member of the Company’s board ~~member~~of directors, provided certain marketing services in the amount of $~~30,000~~9,276 .and $500, respectively.
F-13

NOTE 5- NET LOSS PER SHARE:

Basic and diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share excludes potential share issuances of common stock upon the exercise of share options, warrants, unvested restricted stock and unvested restricted stock units as the effect is anti-dilutive.

The total number of shares of common stock related to outstanding options, warrants, unvested restricted stock, unvested restricted stock units and Series C Preferred Stock excluded from the calculations of diluted loss per share were ~~2,163,741~~2,932,284 for the nine and three month periods ended September 30, ~~2021.~~2022.

The total number of shares of common stock related to outstanding options, warrants, restricted stock, restricted stock units and Series C Preferred Stock excluded from the calculations of diluted loss per share were ~~2,091,917~~2,163,741 for the nine and three month periods ended September 30, ~~2020.~~2021.

NOTE 6 – LEASE AGREEMENTS
1) The Company’s Israeli subsidiary has a lease agreement for a facility in Israel, which expires on December 31, 2022 with an option to extend the agreement for two additional years until December 31, 2024 under the terms stipulated in the agreement., On May 25, 2022 the Company amended the agreement mentioned above and extended it until December 31, 2026 as well as leasing of additional space in the facility, the additional space amendment was taken in consideration when calculating the operating lease right of use assets and liabilities.
2) Operating lease cost for the nine and three-month periods ended September 30, 2022 were $331,000 and $113,000 respectively.
Supplemental information related to leases are as follows:
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES

September 30 December 31
2022 2021

($ in
thousands)

($ in
thousands)

Operating lease right-of-use assets 1,635 1,081
Current operating lease liabilities (416 ) (420 )
Non-current operating lease liabilities (1,261 ) (781 )
Other information:
Operating cash flows from operating leases (cash paid in thousands) (328 ) (437 )
Weighted Average Remaining Lease Term 4.25 3
Weighted Average Discount Rate 8.69 % 8.38 %
F-14
Maturities of lease liabilities are as follows:
SCHEDULE OF MATURITIES OF LEASE LIABILITIES

Amount
($ in thousands)
2022 107
2023 429
2024 469
2025 469
2026 509
Total lease payments 1,983
Less imputed interest (307 )
Total
2022 1,677
Total 1,677
NOTE 7 – FINANCIAL INSTRUMENTS:
a. Fair value of 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.

b. As of September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, allowance for doubtful accounts was $0.
~~F-13~~

NOTE 78 – INVENTORY:
SCHEDULE OF INVENTORY

September 30, December 31, September 30, December 31,
2021 2020 2022 2021
($ in thousands) ($ in thousands)
Finished goods $ 225 $ 350 $ 217 $ 92
Work in process 329 376 347 436
Raw materials and supplies 581 689 850 615
Total inventory $ 1,135 $ 1,415 $ 1,414 $ 1,143

NOTE 89 - ACCOUNTS PAYABLE AND ACCRUALS - OTHER:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER

September 30, December 31,
2022 2021
($ in thousands)
Employees and employee institutions 1,394 1,510
Accrued vacation and recreation pay 227 233
Accrued expenses 1,425 1,136
Current Operating lease liabilities 416 420
Other 95 155
Accounts payable and accruals - other $ 3,557 $ 3,454
September 30, December 31,
2021 2020
($ in thousands)
Employees and employee institutions 1,370 1,236
Accrued vacation and recreation pay 332 278
Accrued expenses 968 886
Accrual for settlement payment - 580
Current Operating lease liabilities 411 400
Other 83 89
Accounts payable and accruals - other $ 3,164 $ 3,469
F-15

NOTE 910 - DISAGGREGATED REVENUE AND ENTITY WIDE DISCLOSURES:

Revenues are attributed to geographic areas based on the location of the customers. The following is a summary of revenues:
SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS
2021 2020 2021 2020
Three months ended
September 30, Nine months ended
September 30, Three months ended
September 30, Nine months ended
September 30,
2021 2020 2021 2020 2022 2021 2022 2021
($ in thousands) ($ in thousands)

Italy $ 219 $ 185 $ 678 $ 433 $ 240 $ 219 $ 713 $ 678
Germany 213 292 690 551 191 213 866 690
Poland 125 63 318 184 74 125 217 318
Russia 118 - 261 116 250 118 381 261
Other 396 440 1,168 1,043 676 396 1,968 1,168
Revenues $ 1,071 $ 980 $ 3,115 $ 2,327 $ 1,431 $ 1,071 $ 4,145 $ 3,115
By product:
SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRODUCT
2021 2020 2021 2020
Three months ended
September 30, Nine months ended
September 30,
2021 2020 2021 2020
($ in thousands)

CGuard $ 1,031 $ 833 $ 3,018 $ 2,075
MGuard 40 147 97 252
Revenue $ 1,071 $ 980 $ 3,115 $ 2,327

Three months ended
September 30, Nine months ended
September 30,
2022 2021 2022 2021
($ in thousands)

CGuard $ 1,431 $ 1,031 $ 4,097 $ 3,018
MGuard - 40 48 97
Revenue $ 1,431 $ 1,071 $ 4,145 $ 3,115
By principal customers:
SCHEDULE OF REVENUES ATTRIBUTED TO GEOGRAPHIC AREAS BY PRINCIPAL CUSTOMERS
2021 2020 2021 2020
Three months ended
September 30, Nine months ended
September 30, Three months ended
September 30, Nine months ended
September 30,
2021 2020 2021 2020 2022 2021 2022 2021
Customer A 19 % 27 % 21 % 22 % 13 % 19 % 21 % 21 %
Customer B 12 % 9 % 13 % 11 % 17 % 11 % 9 % 8 %
Customer C 12 % 6 % 10 % 8 % 9 % 12 % 9 % 13 %
Customer D 11 % - 8 % 5 % 5 % 12 % 5 % 10 %
Concentration risk percentage 5 % 12 % 5 % 10 %
All tangible long lived assets are located in Israel.

~~F-14~~F-16

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 may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

● our history of recurring losses and negative cash flows from operating activities, significant future commitments and the uncertainty regarding the adequacy of our liquidity to pursue our complete business objectives, and substantial doubt regarding our ability to continue as a going concern;
● our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute out stockholders’ ownership interests;
● the impact of the COVID-19 pandemic on our manufacturing, sales, business plan and the global economy;

● negative clinical trial results or lengthy product delays in key markets;

● our ability to maintain compliance with the Nasdaq Capital Market listing standards;

● our ability to generate revenues from our products and obtain and maintain regulatory approvals for our products;

● our ability to successfully obtain, maintain and adequately protect our intellectual property rights;

● our dependence on a single manufacturing facility and our ability to comply with stringent manufacturing quality standards;

● our ability to increase production as necessary;

● the risk that the data collected from our current and planned clinical trials may not be sufficient to demonstrate that our technology is an attractive alternative to other procedures and products;

● market acceptance of our products;

● our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute our stockholders’ ownership interests;
● an inability to secure and maintain regulatory approvals for the sale of our products;

● intense competition in our industry, with competitors having greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do;

● entry of new competitors and products and potential technological obsolescence of our products;

● inability to carry out research, development and commercialization plans;

3
3

● loss of a key customer or supplier;

● technical problems with our research and products and potential product liability claims;

● product malfunctions;

● price increases for supplies and components;

● adverse economic conditions;

● insufficient or inadequate reimbursement by governmental and other third-party payers for our products;

● adverse federal, state and local government regulation in the United States, Europe, Israel and other foreign jurisdictions;

● the fact that we conduct business in multiple foreign jurisdictions, exposing us to foreign currency exchange rate fluctuations, logistical and communications challenges, burdens and costs of compliance with foreign laws and political and economic volatility in certain jurisdictions;

● the escalation of hostilities in Israel, which could impair our ability to manufacture our products; and

● loss or retirement of key executives and research scientists.

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and investing in our common stock, you should carefully review the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission. The forward-looking statements contained in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

All information in this Quarterly Report on Form 10-Q relating to shares or price per share reflects the 1-for-15 reverse stock split effected by us on April 26, 2021.

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. 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 was fully launched in Europe in September 2015. Subsequently, we launched CGuard EPS in Russia and 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.~~Japan and other Asian countries. Our CE mark for CGuard EPS expires on November 12, 2022 and while we continue to seek to expedite the review process for recertification under the new European Medical Device Regulation, we do not expect to receive recertification by November 12, 2022 (see Part II – Item 1A. Risk Factors “Failure to satisfy regulatory requirements of the new European Medical Device Regulation by November 12, 2022 will prevent us from marketing CGuard EPS in countries requiring the CE mark).
4
4

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 Stent System when used to treat symptomatic and asymptomatic carotid artery stenosis in patients undergoing carotid artery stenting. The trial ~~will~~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.

On July ~~22,~~23, 2021, we announced the initiation of enrollment and successful completion of the first cases of our C-Guardian trial of CGuard EPS. The first patients, who were under the care of principal investigator, Chris Metzger, M.D., system chair of clinical research at Ballard Health System in Eastern Tennessee, were successfully implanted with the CGuard EPS stent device. These are the first of 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 enrollment phase. In April 2022, we completed our first European recruitment.

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.~~system, CGuard Prime. 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.~~portfolio such as SwitchGuard.

We consider the 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 ~~was~~will be approximately ~~$1.0 billion~~$666 million in ~~2017~~2022 (source: Health Research International ~~2017~~Personal Medical Systems, Inc. September 13, 2021 Results of Update Report on Global Carotid Stenting Procedures and Markets by Major Geography and Addressable Markets). According to this same report, 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 $5 billion.

Our MGuard™ Prime™ embolic protection system (“MGuard Prime EPS”) iswas marketed for use in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions, or bypass surgery. MGuard Prime EPS combines MicroNet with a bare-metal cobalt-chromium based 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~~Over the past years there has been a shift in industry preferences away from bare-metal stents, such as MGuard Prime EPS in favor of drug-eluting, or 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, 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. The FDA has clarified that the primary mode of action for drug-eluting cardiovascular stents, which are regulated as combination products, is that of the device component 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 expect regarding the regulatory framework related to the development of MGuard DES™.ST-Elevation Myocardial Infarction (“STEMI”) patients. As a result of declining sales of the MGuard Prime EPS, which we believe this is largely driven by the predominant industry preferences favoring drug-eluting, or drug-coated, stents, ~~rather than bare metal stents such as MGuard Prime EPS in ST-Elevation Myocardial Infarction (“STEMI”) patients,~~during the second quarter of 2022 we ~~intend to phase out future~~ceased sales of our MGuard Prime EPS ~~in 2022.~~following a phase out period.

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 and vascular disease below the knee ~~and~~as well as neurovascular ~~stenting to seal aneurysms in~~procedures, such as the ~~brain.~~treatment of acute stroke.
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Presently, none of our products may be sold or marketed in the United ~~States.~~States, but we do derive revenues from the use of our products in the currently ongoing trials.

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

~~Recent Developments~~
~~On September 30, 2021, at our 2021 annual meeting of stockholders, our stockholders approved our~~ ~~2021 Equity Incentive Plan.~~
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On October 13, 2021, we announced that our CGuard EPS stent system received a positive opinion from the National Commission for the Evaluation of Medical Devices and Health Technologies (CNEDIMTS) of the French National Authority for Health (HAS) regarding reimbursement in France, and the CGuard EPS was being added to the list of reimbursed medical products (LPPR) effective October 25, 2021. This was the final step to full commercial launch of CGuard EPS following CNEDIMTS’ positive opinion for reimbursement received by the Company on May 11, 2021 for the treatment of symptomatic and non-symptomatic lesions when surgery is not indicated.
~~COVID-19~~Recent Developments

The COVID-19 global pandemic has led governments and authorities around the globe to take various precautionary measures in order to limit the spread of COVID-19, including government-imposed quarantines, lockdowns, and other public health safety measures. We experienced a significant COVID-19 related impact on our financial condition and results of operations, primarily during the year ended December 31, 2020, which we primarily attribute to the postponement of CGuard EPS procedures (non-emergency procedures), as hospitals have shifted resources to patients affected by COVID-19. ~~To the best of our knowledge, most European countries in which we operate reinstated non-emergency procedures. However, new~~New COVID-19 variants, and potentially increasing infection rates make the current COVID-related environment highly volatile and uncertain and we anticipate that the continuation of the pandemic and related restrictions and safety measures will likely result in continued fluctuations in sales of our products and potentially enrollments in our studies as well as potential disruptions to our supply chain for the upcoming periods.
In February 2022, Russia launched a military invasion into Ukraine. We derived approximately 10.5% of total sales in Russia, Ukraine and Belarus in 2021 while during the nine and three months ended September 30, 2022 our sales to Russia, Ukraine and Belarus were 12.1% and 22.2% respectively. The escalation of geopolitical instability in Russia and Ukraine as well as currency fluctuations in the Russian Ruble could negatively impact our operations, sales, and future growth prospects in that region. As a result of the crisis in Ukraine both the United States and the EU have implemented sanctions against certain Russian individuals and entities and have made it more difficult for us to collect on outstanding accounts receivable from customers in this region. Our global operations expose us to risks that could adversely affect our business, financial condition, results of operations, cash flows or the market price of our securities, including the potential for increased tensions between the United States and Russia resulting from the current situation involving Russia and Ukraine, tariffs, economic sanctions and import-export restrictions imposed by either nation, and retaliatory actions by the other nation, as well as the potential negative impact on our business and sales in Russia, Ukraine and Belarus. Current geopolitical instability in Russia and Ukraine and related sanctions by the U.S. government against certain companies and individuals may hinder our ability to conduct business with potential or existing customers and vendors in these countries. The U.S. government has imposed sanctions through several executive orders restricting U.S. companies from conducting business with specified Russian and Ukrainian individuals and companies. While we believe that the executive orders currently do not preclude us from conducting business with our current customers or vendors in Russia, Ukraine and Belarus, the sanctions imposed by the U.S. government may be expanded in the future to restrict us from engaging with them. If we are unable to conduct business with new or existing customers or vendors or pursue business opportunities in Russia, Ukraine or Belarus, our business, including revenue, profitability and cash flows, and operations could be adversely affected. We cannot provide assurance that current sanctions or potential future changes in sanctions will not have a material impact on our operations in Russia, Ukraine and Belarus or on our financial results.

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, ~~2020.~~2021. There have not been any material changes to such critical accounting policies since December 31, ~~2020.~~2021.

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.

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Results of Operations

Three months ended September 30, ~~2021~~2022, compared to the three months ended September 30, ~~2020~~2021

Revenues. For the three months ended September 30, ~~2021,~~2022, revenue increased by ~~$91,000,~~$360,000, or ~~9.3%~~33.6%, to ~~$1,071,000,~~$1,431,000, from $980,000 during the three months ended September 30, 2020. This increase was predominantly driven by a 23.8% increase in sales volume of CGuard EPS from $833,000 during the three months ended September 30, 2020, to $1,031,000$1,071,000 during the three months ended September 30, 2021. This ~~sales~~ increase was mainly due to the fact that in the three months ended September 30, 2021, procedures with CGuard EPS, which are generally scheduled for non-emergency cases, continued to return to normal levels in additional territories as compared to the three months ended September 30, 2020, when procedures with CGuard EPS were still somewhat postponed as hospitals shifted resources to patients affectedpredominantly driven by COVID-19. In addition, the sales increased due to sales related to stents used in our FDA clinical trial which occurred in the three months ended September 30, 2021, but not in the corresponding period in 2020. Thea 38.8% increase in sales of CGuard EPS ~~was partially offset by a decrease of 72.8% in sales of MGuard Prime EPS~~ from ~~$147,000 during the three months ended September 30, 2020, to $40,000~~$1,031,000 during the three months ended September 30, 2021, ~~largely driven by~~to $1,431,000 during the ~~predominant industry preferences favoring drug-eluting~~three months ended September 30, 2022. This sales increase was due to growth in existing markets and sales in the United States related to stents ~~rather than bare metal stents such~~used in our C-Guardians FDA study as ~~MGuard Prime EPS in STEMI patients.~~enrollment accelerated.
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With respect to geographical regions, the increase in revenue was primarily attributable to a ~~$78,000~~$270,000 increase in Europe, a $79,000 increase in Latin America, and a $4,000 decrease in other geographies. This growth was mainly due to growth in existing markets. In addition, there was a $14,000 increase in revenue from ~~Europe (primarily driven by a $134,000 increase of~~North America due to sales in the United States related to stents used in our C-Guardians FDA study.
Our CE mark for CGuard EPS ~~sales, offset, in part,~~expires on November 12, 2022 and while we continue to seek to expedite the review process for recertification under the new European Medical Device Regulation, we do not expect to receive recertification by November 12, 2022. If our CE mark lapses, then we will not be able to promote and sell CGuard EPS into countries requiring the CE mark. If the duration of the lapsed CE mark continues for a ~~$56,000~~prolonged period, then we expect our revenues to decrease ~~of MGuard Prime EPS sales for reasons discussed in the paragraph above).~~significantly until such time that we obtain recertification.

Gross Profit. For the three months ended September 30, ~~2021,~~2022, gross profit (revenue less cost of revenues) ~~decreased~~increased by ~~$206,000,~~$274,000, or 297.8%, to ~~$92,000,~~$366,000, from ~~$298,000~~$92,000 during the three months ended September 30, ~~2020.~~2021. This ~~decrease~~increase in gross profit resulted from a ~~$136,000~~$95,000 increase in revenues (as mentioned above), less the associated related material and labor costs, ~~(mainly due to an increase in sales volume as well as~~ a ~~short term increase in production cost per unit), an increase~~decrease in write-offs of ~~$66,000,~~$64,000, due to components supply issues in 2021, a ~~$57,000 increase~~$64,000 decrease in new employee training costs, and ~~an increase~~a decrease of ~~$38,000~~$51,000 in miscellaneous expenses during the three months ended September 30, 2021. ~~This decrease was partially offset by a $91,000 increase in revenues mainly due to an increase in sales volume (as mentioned above).~~ Gross margin (gross profits as a percentage of revenue) ~~decreased~~increased to 25.6% during the three months ended September 30, 2022 from 8.6% during the three months ended September 30, 2021, ~~from 30.4% during the three months ended September 30, 2020,~~ driven by the ~~reasons~~factors mentioned above.

Research and Development Expenses. For the three months ended September 30, ~~2021,~~2022, research and development expenses increased by ~~173.8%~~$566,000, or 37.9%, ~~or $949,000,~~ to ~~$1,495,000,~~$2,061,000, from ~~$546,000~~$1,495,000 during the three months ended September 30, ~~2020.~~2021. This increase resulted primarily from an increase of ~~$708,000~~$455,000 in expenses related to the ~~commencement~~acceleration of enrollment in the C-Guardians FDA study ~~$151,000~~as the number of patients enrolling increased, an increase in ~~development~~share-based compensation-related expenses ~~related~~ to ~~CGuard EPS new delivery system~~employees and ~~accessory solutions~~consultants of $78,000 and ~~$91,000 in compensation expenses offset by a decrease~~an increase of ~~$1,000~~$33,000 in miscellaneous expenses.

Selling and Marketing Expenses. For the three months ended September 30, ~~2021,~~2022, selling and marketing expenses increased by ~~65.4%~~$43,000, or 5.4%, ~~or $317,000,~~ to ~~$802,000,~~$845,000, from ~~$485,000~~$802,000 during the three months ended September 30, ~~2020.~~2021. This increase resulted primarily from an increase in share-based compensation expenses of ~~$215,000 and other sales and marketing~~$61,000 due to the expense recognition of grants made during the fourth quarter of 2021 offset, in part, by a decrease of $18,000 in miscellaneous expenses ~~of $102,000, both relating to increased activity associated with expansion of existing and new markets.~~

General and Administrative Expenses. For the three months ended September 30, ~~2021,~~2022, general and administrative expenses increased by ~~24.9%~~$244,000, or 13.4%, ~~or $364,000,~~ to ~~$1,826,000,~~$2,070,000, from ~~$1,462,000~~$1,826,000 during the three months ended September 30, ~~2020.~~2021. This increase resulted primarily from an increase in ~~compensation~~share-based compensation-related expenses of ~~$258,000,~~$211,000, mainly ~~due to an increase in salary expenses and related accruals of $137,000, and an increase of approximately $121,000 of share-based compensation-related expenses~~ due to the expense recognition of grants made ~~since August 31, 2020. In addition, we had~~during the fourth quarter of 2021 and an increase ~~in Directors’ and Officers’ Liability Insurance expenses~~ of $81,000, due to increased premiums caused by recent trends in the overall insurance industry, expenses pertaining to the higher costs of our annual stockholders meeting in 2021 compared to our annual stockholders meeting in 2020 of $63,000 offset by a decrease of $38,000$33,000 in miscellaneous expenses.

Financial ~~Expenses.~~ Income (Expenses). For the three months ended September 30, ~~2021,~~2022, financial ~~expenses~~income increased by ~~5.3%, or $2,000,~~$121,000, to $81,000 of financial income, from $40,000 ~~from $38,000~~of financial expenses during the three months ended September 30, ~~2020.~~2021. The increase in financial income primarily resulted from a $67,000 increase in interest income from short-term bank deposits and an increase of $52,000 in financial income related to changes in exchange rates.
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Tax Expenses. For the three months ended September 30, ~~2021,~~2022, there was no change in our tax expenses as compared to the three months ended September 30, ~~2020.~~2021.
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Net Loss. Our net loss increased by ~~$1,838,000,~~$458,000, or ~~82.3%~~11.3%, to ~~$4,071,000,~~$4,529,000, for the three months ended September 30, ~~2021,~~2022, from ~~$2,233,000~~$4,071,000 during the three months ended September 30, ~~2020.~~2021. The increase in net loss resulted primarily from an increase of ~~$1,630,000~~$853,000 in operating expenses ~~and a decrease~~partially offset by an increase of ~~$206,000~~$274,000 in gross ~~profit.~~profit and an increase of $121,000 in financial income.

Nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020~~2021

Revenues. For the nine months ended September 30, ~~2021,~~2022, revenue increased by ~~$788,000,~~$1,030,000, or ~~33.9%~~33.1%, to ~~$3,115,000,~~$4,145,000, from ~~$2,327,000~~$3,115,000 during the nine months ended September 30, ~~2020.~~2021. This increase was predominantly driven by a ~~45.4%~~35.7% increase in sales ~~volume~~ of CGuard EPS from ~~$2,075,000~~$3,018,000 during the nine months ended September 30, ~~2020,~~2021, to ~~$3,018,000~~$4,097,000 during the nine months ended September 30, 2021. This sales increase was mainly due to ~~the fact that~~growth in existing and new markets and sales in the ~~nine months ended September 30, 2021, procedures with CGuard EPS, which are generally scheduled for non-emergency procedures began~~United States related to ~~return to normal levels~~stents used in our C-Guardians FDA study as compared to the nine months ended September 30, 2020, when procedures with CGuard EPS were postponed as hospitals shifted resources to patients affected by COVID-19 beginning in February 2020. This increase in sales of CGuard EPS was partially offset by a decrease of 61.5% in sales of MGuard Prime EPS from $252,000 during the nine months ended September 30, 2020, to $97,000 during the nine months ended September 30, 2021, largely driven by the predominant industry preferences favoring drug-eluting stents rather than bare metal stents such as MGuard Prime EPS in STEMI patients.enrollment accelerated.

With respect to geographical regions, the increase in revenue was primarily attributable to a ~~$743,000~~$559,000 increase in Europe, a $224,000 increase in Latin America, a $84,000 increase in Asia and a $29,000 increase in other geographies. This growth was mainly due to growth in existing and new markets. In addition, there was a $133,000 increase in revenue from North America due to sales ~~made~~ in ~~Europe (driven by a $835,000 increase of~~the United States related to stents used in our C-Guardians FDA study which occurred in the nine months ended September 30, 2022, but not in the corresponding period in 2021.
Our CE mark for CGuard EPS ~~sales, offset, in part,~~expires on November 12, 2022 and while we continue to seek to expedite the review process for recertification under the new European Medical Device Regulation, we do not expect to receive recertification by ~~a $92,000 decrease of MGuard Prime EPS sales for reasons discussed in the paragraph above), as well as a $60,000 increase in~~November 12, 2022. If our CE mark lapses, then we will not be able to promote and sell CGuard EPS ~~revenue from sales made in Asia.~~into countries requiring the CE mark. If the duration of the lapsed CE mark continues for a prolonged period, then we expect our revenues to decrease significantly until such time that we obtain recertification.

Gross Profit. For the nine months ended September 30, ~~2021,~~2022, gross profit (revenue less cost of revenues) ~~decreased~~increased by ~~2.7%~~99.8%, or ~~$13,000,~~$459,000, to ~~$460,000,~~$919,000, compared to a ~~gross profit of $473,000~~$460,000 for the same period in ~~2020.~~2021. This ~~decrease~~increase in gross profit resulted from ~~an increase in write-offs of $89,000, which were driven mainly by components supply issues,~~ a ~~$45,000 increase in new employees training costs and an increase of $91,000 in miscellaneous expenses. This decrease was partially offset by a $212,000~~$318,000 increase in revenues (as mentioned above) less the associated related material and labor costs ~~(as mentioned above).~~and a decrease of $141,000 in miscellaneous expenses. Gross margin (gross profits as a percentage of revenue) ~~decreased~~increased to 22.2% during the nine months ended September 30, 2022 from 14.8% during the nine months ended September 30, 2021, ~~from 20.3% during the nine months ended September 30, 2020,~~ driven by the reasons mentioned above.

Research and Development Expenses. For the nine months ended September 30, ~~2021,~~2022, research and development expenses increased by ~~139.5%~~60.0%, or ~~$2,111,000,~~$2,173,000, to ~~$3,624,000,~~$5,797,000, from ~~$1,513,000~~$3,624,000 during the nine months ended September 30, ~~2020.~~2021. This increase resulted primarily from an increase of ~~$1,191,000~~$2,102,000 in expenses related to the ~~commencement of the~~enrollment inthe C-Guardians FDA study ~~$515,000~~which commenced in ~~development expenses related to CGuard EPS new delivery system~~the second half of 2021 and ~~accessory solutions, $386,000 in compensation expenses and $19,000~~an increase of $71,000 in miscellaneous expenses.

Selling and Marketing Expenses. For the nine months ended September 30, ~~2021,~~2022, selling and marketing expenses increased by ~~44.4%~~20.1%, or ~~$660,000,~~$431,000, to ~~$2,146,000,~~$2,577,000, from ~~$1,486,000~~$2,146,000 during the nine months ended September 30, ~~2020.~~2021. This increase resulted primarily from an increase in tradeshows and travel expenses of $210,000 in light of resumed marketing activities following the lifting of restrictions related to COVID-19, an increase in share-based compensation expenses of ~~$627,000~~$175,000 due to the expense recognition of grants made during the fourth quarter of 2021 and ~~other sales and marketing~~an increase in salary expenses of ~~$33,000 both relating to increased activity associated with expansion of existing and new markets.~~$59,000.

General and Administrative Expenses. For the nine months ended September 30, ~~2021,~~2022, general and administrative expenses increased by ~~32.4%~~15.5%, or ~~$1,339,000,~~$847,000, to ~~$5,475,000,~~$6,322,000, from ~~$4,136,000~~$5,475,000 during the nine months ended September 30, ~~2020.~~2021. This increase resulted primarily from an increase in compensation expenses of $1,289,000 mainly due to increases in salary expenses and related accruals of $699,000 primarily as a result of temporary salary reductions during the nine months ended September 30, 2020 that were implemented in response to the COVID-19 effect on revenues as well as additional headcount. In addition, compensation expenses increased due to an increase in $590,000 of share-based compensation-related expenses ~~following~~of $575,000, mainly due to the expense recognition of grants made ~~since August 31, 2020. In addition, we had~~during the fourth quarter of 2021, an increase in ~~Directors’~~patent related expenses of $148,000, an increase in travel expenses of $116,000 in light of resumed activities following governments lifting restrictions related to COVID-19, an increase in directors’ and ~~Officers’ Liability~~officers’ liability insurance expenses of ~~$308,000,~~$107,000, due to increased premiums caused by recent trends in the overall insurance industry and an increase of $98,000 in miscellaneous expenses offset, in part, by a decrease in shareholder related expenses of ~~$181,000~~$197,000 mainly due to a special shareholders meeting (which occurred in 2021, but not in ~~2020)~~2022) and also due to higher costs of our annual stockholder meeting in 2021 compared to our annual stockholder meeting in 2020. These increases were partially offset by a decrease of $400,000 due to expenses for a settlement agreement with an underwriter of prior offerings which occurred in the three months ended March 31, 2020 and a decrease of $39,000 in miscellaneous expenses.2022.
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Financial ~~Expenses.~~ Income. For the nine months ended September 30, ~~2021,~~2022, financial ~~expenses~~income increased by ~~24.1%, or $7,000,~~$167,000, to $131,000 of financial income, from $36,000 ~~from $29,000~~of financial expense during the nine months ended September 30, ~~2020.~~2021. The increase in financial income primarily resulted from a $141,000 increase in interest income from short-term bank deposits and an increase of $33,000 in financial income related to changes in exchange rates.
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Tax Expenses. For the nine months ended September 30, ~~2021,~~2022, there was no material change in our tax expenses as compared to the nine months ended September 30, ~~2020.~~2021.

Net Loss. Our net loss increased by ~~$4,130,000,~~$2,825,000, or ~~61.7%~~26.1%, to ~~$10,821,000,~~$13,646,000, for the nine months ended September 30, ~~2021,~~2022, from ~~$6,691,000~~$10,821,000 during the nine months ended September 30, ~~2020.~~2021. The increase in net loss resulted primarily from an increase of ~~$4,110,000~~$3,451,000 in operating ~~expenses.~~expenses, offset by an increase of $459,000 in gross profit.

Liquidity and Capital Resources
AsWe had an accumulated deficit as of September 30, ~~2021, we have~~2022, of $197 million, as well as a net loss of $13,646,000 and negative operating cash flows for the ~~ability to fund our planned operations for at least the next 12~~nine months ~~from issuance date of the financial statement. However, we~~ended September 30, 2022. We expect to continue incurring losses and negative cash flows from operations until our ~~products (primarily CGuard™ EPS)~~product, CGuard EPS, reach commercial profitability. ~~Therefore, in order~~As a result of these expected losses and negative cash flows from operations, along with our current cash position, we believe we only have sufficient resources to fund operations through the end of September 2023. Therefore, there is substantial doubt about our ~~operations until such time~~ability to continue as a going concern.
Our plans include continued commercialization of our products and raising capital through sale of additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances, however, that we ~~can generate substantial revenues,~~will be successful in obtaining the level of financing needed for our operations. If we are unsuccessful in commercializing our products or raising capital, we may need to ~~raise additional funds.~~reduce activities, curtail or cease operations

On ~~July 28, 2020,~~June 3, 2022, we entered into a Sales Agreement with A.G.P./Alliance Global Partners, as sales agent (“A.G.P.”), pursuant to which we ~~were able to~~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~~$8,313,000 of shares of our common ~~stock (the “ATM Facility”). On January 11, 2021, we increased the aggregate amount~~stock. The issuance and sale of ~~our~~ shares ~~of common stock that may be sold~~by us 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.~~
On February 3, 2021, we entered into a Distribution Agreement with three China-based partners and on the same day, we entered into an investment transaction with QIDI, which included (i) a securities purchase agreement (“SPA”),program will be made pursuant to ~~which 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 IRA, whereby QIDI was provided certain customary registration rights, including a commitment by us to file a~~effective “shelf” registration statement on Form S-3 (Registration Statement No. File No. 333-265409) filed with the SEC on ~~Form S-1 or Form S-3~~June 3, 2022, and declared effective on June 14, 2022. No shares have ~~such registration statement become effective not later than 150 days following the closing of the transactions~~been sold under the ~~SPA. The transaction closed on February 5, 2021.~~program.
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 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 common stock and Series G Warrants to purchase 145,161 shares of 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 common stock with an exercise price of $10.23 per share and which are exercisable for five years from February 3, 2021, the date of effectiveness of the registration statement filed in connection with the offering. 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 estimated expenses associated with the offering, but excluding the proceeds, if any, from the exercise of Series G Warrants sold in the offering.
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Nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020~~2021

General. At September 30, ~~2021,~~2022, we had cash and cash equivalents of ~~$13,059,000,~~$3,934,000 as compared to ~~$12,645,000~~$12,004,000 as of December 31, ~~2020.~~2021. 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.

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For the nine months ended September 30, ~~2021,~~2022, net cash used in our operating activities increased by ~~$3,428,000~~$2,038,000, or 19.8%, to ~~$10,309,000,~~$12,347,000, from ~~$6,881,000~~$10,309,000 during the same period in ~~2020.~~2021. The primary reason for the increase in cash used in our operating activities was an increase of ~~$2,123,000~~$2,785,000 in payments for third party related expenses and for professional services ~~(primarily due to the commencement of the C-Guardians study and an increase in premium payments of our Directors’ and Officers’ Liability Insurance~~ and an increase of ~~$1,267,000~~$827,000 in compensation costs paid during the three months ended September 30, 2022 from $5,868,000 in the three months ended September 30, 2021 to $6,695,000 during the same period in 2022, offset by an increase of $1,574,000 in payments received from customers, to $4,135,000 during the three months ended September 30, 2022 from $2,561,000 during the same period in 2021.
Cash provided by our investing activities increased by $28,853,000 or 118.75%, to $4,555,000 during the nine months ended September 30, ~~2021, from $4,601,000 in the nine months ended September 30, 2020~~2022, compared to ~~$5,868,000 during the same period in 2021 as well as a decrease~~cash used of ~~$38,000 in payments received from customers, to $2,561,000 during the nine months ended September 30, 2021, from $2,599,000 during the same period in 2020.~~
~~Cash used in our investing activities was~~ $24,298,000 during the nine months ended September 30, ~~2021, compared to $83,000 during the nine months ended September 30, 2020.~~2021. The primary reasons for the increase in cash ~~used~~provided by our investing activities ~~were an investment~~is a withdrawal of ~~$24,000,000 in short term bank deposits, an increase~~$5,000,000 of ~~$211,000 in payments made for purchase of property, plant and equipment to $237,000 during the nine months ended September 30, 2021, from $26 during the same period in 2020.~~short-term deposits.

Cash ~~provided~~used by financing activities for the nine months ended September 30, ~~2021,~~2022 was ~~$35,034,000, compared to $12,327,000 during the same period in 2020. The principal sources of~~$140,000, the cash ~~provided~~used by financing activities during the nine months ended September 30, 2022 were due to issuance costs associated with a shelf registration statement on Form S-3 filed with the SEC on June 3, 2022. Cash provided by financing activities for the nine months ended September 30, 2021 was $35,034,000, the principal sources of which 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~~at-the-market offering as well as proceeds from the issuance of shares to Chinese distributor that resulted in approximately $35,034,000 of aggregate net proceeds. The principal sources of the cash provided by financing activities during the nine months ended September 30, 2020 were our June 2020 public offering of common stock, pre-funded warrants and warrants, the subsequent exercise of the pre-funded warrants sold in the offering, as well as exercise of our Series F warrants and unit purchase options that resulted in approximately $12,327,000 of aggregate net proceeds.

As of September 30, ~~2021,~~2022, our current assets exceeded our current liabilities by a multiple of ~~10.8.~~6.2, Current assets ~~increased~~decreased by ~~$24,752,000~~$12,402,000 during the period and current liabilities ~~increased~~decreased by ~~$15,000~~$386,000 during the period. As a result, our working capital ~~increased~~decreased by ~~$24,737,000~~$12,016,000 to ~~$36,371,000~~$20,731,000 as of September 30, ~~2021.~~2022.

Off Balance Sheet Arrangements

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

Factors That May Affect Future Operations

We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the ~~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.~~equipment, the impact of the COVID-19 pandemic and the ongoing conflict in the Ukraine. 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, 2020, and those described from time to time in our future reports filed with the Securities and Exchange Commission.
10
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~~Except as set forth below, during the ~~nine~~three months ended September 30, ~~2021,~~2022, there were no material changes to our contractual obligations and commitments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.
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Item 4. Controls and Procedures

Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures

As of September 30, ~~2021,~~2022, 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, ~~2021.~~2022.

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, ~~2021,~~2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

~~There have been no material changes~~From time to ~~our~~time, we may become involved in various lawsuits and legal proceedings, ~~as described~~which arise in ~~“Part I, Item 3. Legal Proceedings”~~the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our ~~Annual Report~~business. There are currently no pending material legal proceedings, and we are currently not aware of any legal proceedings or claims against us or our property that we believe will have any significant effect on ~~Form 10-K filed with the SEC on March 8, 2021.~~our business, financial position or operating results.

Item 1A. Risk Factors

Except for the Risk Factors included in our previous filings made with the SEC and as set forth below, there have been no material changes to our risk factors from those disclosed in “Part I. Item 1A. Risk Factors” in the Form 10-K filed with the SEC on March 8,7, 2022.
Failure to satisfy regulatory requirements of the new European Medical Device Regulation by November 12, 2022 will prevent us from marketing CGuard EPS in countries requiring the CE mark.
For the European Union nations, medical devices must obtain a CE mark before they may be placed on the market. In order to obtain and maintain the CE mark, we must comply with EU law on medical devices, which, until May 26, 2021 was governed by the Medical Device Directive 93/42/EEC (“MDD”), by presenting comprehensive technical files for our products demonstrating safety and efficacy of the product to be placed on the market and passing initial and annual quality management system audit as per ISO 13485 standard by a European Notified Body. We have obtained ISO 13485 quality system certification and CGuard EPS that we currently distribute into the European Union, displays the required CE mark. In order to maintain certification, we are required to pass an annual surveillance audit conducted by Notified Body auditors. The European Union replaced the MDD with the new European Medical Device Regulation, or MDR (MDR 2017/745). The MDR entered into force after a transitional period of three years and a one year extension of that transition period due to the COVID-19 pandemic on May 26, 2021 and which changes several aspects of the regulatory framework in the European Union. Manufacturers had the duration of the transition period to update their technical documentation and processes to meet the new requirements in order to obtain a CE Mark. After May 26, 2021, medical devices can generally still be placed on the market under the provision of the MDD until May 26, 2024; provided the CE Mark was issued prior to this date and the manufacturer continues to comply with this directive. By May 26, 2024, all medical devices entering the EU will need to have a CE Mark under the MDR, even if they have been on the market previously under the MDD. In our particular case, CGuard EPS can continue to be marketed under the MDD until November 12, 2022. Specifically, the EU MDR requires changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety information for Class III products, Unique Device Identification (“UDI”) for all products, submission of core data elements to a European UDI database prior to placement of a device on the market, and multiple other labeling changes. Currently we are under technical documentation review by the Notified Body auditor to meet the MDR requirements for recertification having completed the quality management system Notified Body audit in October 2021. The Notified Body is currently experiencing chronic delays in processing MDR audits and reviews and we do not expect to satisfy MDR requirements by November 12, 2022. While we continue to seek to expedite the review process, if our CE mark lapses, we will not be able to promote and sell CGuard EPS into countries requiring the CE mark until we receive recertification. No assurance can be provided as to the length of time it will take to obtain recertification, If we are unable to promote and sell CGuard EPS into countries requiring the CE mark for a prolonged period, this is expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information

On November 8, 2021, we entered into an amendment to the employment agreement of our chief executive officer, Marvin Slosman, dated December 9, 2019, pursuant to which we agreed to remove the definitive term of his employment such that his employment agreement shall expire if and when terminated by either party pursuant to the terms thereof.None.
On November 4, 2021, we entered into an amendment to the amended and restated employment agreement of our chief financial officer, chief administrative officer, secretary and treasurer, Craig Shore, dated May 5, 2014, as amended on January 5, 2015, July 25, 2016, March 25, 2019 and on August 14, 2020, pursuant to which we agreed to remove the definitive term of his employment such that his employment agreement shall expire if and when terminated by either party pursuant to the terms thereof.
Item 6. Exhibits

EXHIBIT INDEX

Exhibit No. Description

3.1 Amended and Restated Certificate of Incorporation, as amended through September 30, 2015 (incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2015)

3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Current Report on Form 8-K filed with the Securities and Exchange Commission on June 29, 2021)

3.3 Certificate of Designation, Preferences and Rights of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on October 25, 2013)
~~3.4~~ Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on May 25, 2016)

~~3.5~~3.4 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on September 29, 2016)

~~3.6~~3.5 Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 15, 2017)
3.6
~~3.7~~ Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitation of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on November 29, 2017)
12
~~3.8~~
3.7 Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on December 12, 2017)
~~3.9~~3.8 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on February 7, 2018)

~~3.10~~3.9 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 28, 2019)

~~3.11~~3.10 Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc., dated April 14, 2021 (incorporated by reference to Exhibit ~~3.1~~3.17 to the Quarterly Report on Form 10-Q filed on May 10, 2021)
~~10.1*+~~ ~~First Amendment to Employment Agreement, dated November 8, 2021, by and between InspireMD, Inc. and Marvin Slosman.~~
~~10.2*+~~ ~~Fifth Amendment to Amended and Restated Employment Agreement, dated November 4, 2021, by and between InspireMD, Inc. and Craig Shore~~

31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101* The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2021,~~2022, formatted in inline XBRL (eXtensible Business Reporting Language), (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements

~~101.INS~~ ~~Inline XBRL Instance Document~~
~~101.SCH~~ ~~Inline XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~ ~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~ ~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~ ~~Inline XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~ ~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~
104* Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* Filed herewith.
+ Management contract or compensatory plan or arrangement.

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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.

INSPIREMD, INC.

Date: November ~~8, 2021~~7, 2022 By: /s/ Marvin Slosman
Name: Marvin Slosman,
Title:
President and Chief Executive Officer
(Principal Executive Officer)

Date: November ~~8, 2021~~7, 2022 By: /s/ Craig Shore
Name: Craig Shore
Title:
Chief Financial Officer, Secretary and Treasurer
(Principal Financial and Accounting Officer)

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	Common stock				Series B Convertible Preferred Stock				Series C Convertible Preferred Stock					Additional paid-in		Accumulated			Total
	Shares		Amount		Shares		Amount		Shares			Amount		capital		deficit			equity

BALANCE AT January 1, 2020		261,075		-*		17,303		-*		34,370			-*	$	163,015	$	(157,632	)	$	5,383
Net loss																	(6,691	)		(6,691	)
Exercise of pre-funded warrants		990,427		-*											18					18

Settlement of restricted stock units in shares of common stock		11,000		-*																-
Issuance of common stock, net of $945 issuance costs		770,813		-*											10,809					10,809
Exercise of Warrants F		191,107		-*											1,418					1,418
Exercise of Warrants G
Exercise of Warrants G, shares
Conversion of Series B Convertible Preferred Stock to common stock
Conversion of Series B Convertible Preferred Stock to common stock, shares
Exercise of Unit Purchase Option		16,906		-*											82					82
Conversion of Series C Convertible Preferred Stock to common stock		24,812		-*		-				(32,027	)		-*							-
Issuance of common shares at the market offering, net of $110 issuance costs
Issuance of common shares at the market offering, net of $110 issuance costs, shares
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 2,766 shares		137,802		-*											261					261
Round up of shares due to reverse stock split effectuated on April 26, 2021
Round up of shares due to reverse stock split effectuated on April 26, 2021 , shares
BALANCE AT September 30, 2020		2,403,942		-		17,303		-*		2,343			-*	$	175,603	$	(164,323	)	$	11,280

	Common stock				Series B Convertible Preferred Stock				Series C Convertible Preferred Stock				Additional paid-in		Accumulated			Total
	Shares		Amount		Shares		Amount		Shares		Amount		capital		deficit			equity

BALANCE AT July 1, 2020		2,223,933		-		17,303		-*		2,343		-*	$	175,304	$	(162,090	)	$	13,214
Net loss																(2,233	)		(2,233	)
Issuance of common shares at the market offering, net of $110 issuance costs		39,540		-*		-				-				158					158

Share-based compensation related to restricted stock and stock options award, net of forfeitures of 1,484 shares		140,469		-*										141					141
BALANCE AT September 30, 2020		2,403,942		-		17,303		-*		2,343		-*	$	175,603	$	(164,323	)	$	11,280

							2022			2021
	Nine months ended September 30						Nine months ended September 30
	2021			2020			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(10,821	)	$	(6,691	)	$	(13,646	)	$	(10,821	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation		121			122			134			121
Loss from sale of property, plant and equipment		1			14			-			1
Loss on amounts funded in respect of employee rights upon retirement								114			-
Change in liability for employees’ rights upon retirement		82			114			(83	)		82
Financial expense (income), net		1			(4	)
Other financial expense								138			13
Change in operating right of use asset and operating leasing liability		(58	)		(19	)		(78	)		(58	)
Share-based compensation expenses		1,010			261			1,984			1,010
Increase in interest receivable on short term deposits								(75	)		(12	)
Changes in operating asset and liability items:
Increase in prepaid expenses		(439	)		(82	)		(198	)		(439	)
Decrease (increase) in trade receivables		(495	)		258			58			(495	)
Decrease (increase) in other receivables		5			(160	)		(42	)		5
Decrease (increase) in inventory		280			(152	)		(271	)		280
Increase (decrease) in trade payables		320			(219	)		(489	)		320
Decrease in other payables		(316	)		(323	)
Increase (decrease) in other payables								107			(316	)
Net cash used in operating activities		(10,309	)		(6,881	)		(12,347	)		(10,309	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(237	)		(26	)		(378	)		(237	)
Investment in short-term deposits		(24,000	)		-
Amounts funded in respect of employee rights upon retirement, net		(61	)		(57	)
Net cash used in investing activities		(24,298	)		(83	)
Proceeds from withdrawal of (invest in) short-term deposits								5,000			(24,000	)
Amounts funded in respect of employee rights upon retirement								(67	)		(61	)
Net cash provided by (used in) investing activities								4,555			(24,298	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares and warrants and exercise of Pre-Funded Warrants and unit purchase option, net of $2,024 and $767 issuance costs, respectively		35,034			12,327
Net cash provided by financing activities		35,034			12,327
Issuance costs of At The Market offering								(140	)		-
Proceeds from issuance of shares and warrants and exercise of Pre-Funded Warrants and unit purchase option, net of $2,024 issuance costs								-			35,034
Net cash provided by (used in) financing activities								(140	)		35,034
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(13	)		5			(138	)		(13	)
INCREASE IN CASH AND CASH EQUIVALENTS		414			5,368
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS								(8,070	)		414
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		12,645			5,514			12,004			12,645
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	13,059		$	10,882		$	3,934		$	13,059
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of right-of-use assets by means of lease liabilities		91						835			91
Sale of Fixed Asset (non-cash)		-			22

	a.	General

		InspireMD, Inc., a Delaware corporation (the “Company”), together with its subsidiaries, is a medical device ~~company~~Company focusing on the development and commercialization of its proprietary MicroNet™ stent platform technology for the treatment of complex vascular and coronary disease. MicroNet, a micron mesh sleeve, is wrapped over a stent to provide embolic protection in stenting procedures.

		The Company’s carotid product (CGuard™ EPS) combines MicroNet and a self-expandable nitinol stent in a single device to treat carotid artery disease.

		The Company’s ~~coronary product combining MicroNet and a bare-metal stent (MGuard~~MGuard™ Prime™ ~~EPS) is~~embolic protection system (“MGuard Prime EPS”) was marketed for use in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions, ~~(bypass surgery).~~or bypass surgery. MGuard Prime EPS combines MicroNet with a bare-metal cobalt-chromium based stent. MGuard Prime EPS received CE mark approval in the European Union in October 2010 for improving luminal diameter and providing embolic protection. Over the past years, there has been a shift in industry preferences away from bare-metal stents, such as MGuard Prime EPS in ST-Elevation Myocardial Infarction (“STEMI”) patients. As a result of declining sales of the MGuard Prime EPS, which the Company believes is largely driven by the predominant industry preferences favoring drug-eluting, or drug-coated, stents, during the second quarter of 2022, the Company ceased sales of the Company’s MGuard Prime EPS following a phase out period.

		The Company markets its products through distributors in international markets, mainly in Europe.

	b.	Liquidity

		~~As of the date of issuance of the consolidated financial statements, the~~The Company has ~~the ability to fund its planned operations for at least the next 12 months. However, the~~an accumulated deficit as of September 30, 2022, 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~~product, CGuard™ ~~EPS)~~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 until the end of September 2023 . 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. See also note 1b regarding the new European Medical Device Regulation. Management’s plans include the continued commercialization of the Company’s product and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and raising capital, it may need to reduce activities, curtail or cease operations.

	c.	Failure to satisfy regulatory requirements of the new European Medical Device Regulation by November 12, 2022 could prevent the Company from marketing CGuard EPS in in countries requiring the CE Mark. For the European Union nations, medical devices must obtain a CE mark before they may be placed on the market. In order to obtain and maintain the CE mark, the Company must comply with EU law on medical devices, which, until May 26, 2021 was governed by the Medical Device Directive 93/42/EEC (“MDD”), by presenting comprehensive technical files for its products demonstrating safety and efficacy of the product to be placed on the market and passing initial and annual quality management system audit as per ISO 13485 standard by a European Notified Body. The Company has obtained ISO 13485 quality system certification and CGuard EPS that the Company currently distributes into the European Union, displays the required CE mark. In order to maintain certification, the Company is required to pass an annual surveillance audit conducted by Notified Body auditors. The European Union replaced the MDD with the new European Medical Device Regulation, or MDR (MDR 2017/745). The MDR entered into force after a transitional period of three years and a one year extension of that transition period due to the COVID-19 pandemic on May 26, 2021 and which changes several aspects of the regulatory framework in the European Union. Manufacturers had the duration of the transition period to update their technical documentation and processes to meet the new requirements in order to ~~fund~~obtain a CE Mark. After May 26, 2021, medical devices can generally still be placed on the ~~Company’s operations~~market under the provision of the MDD until ~~such time that~~May 26, 2024; provided the CE Mark was issued prior to this date and the manufacturer continues to comply with this directive. By May 26, 2024, all medical devices entering the EU will need to have a CE Mark under the MDR, even if they have been on the market previously under the MDD. In the Company’s’ particular case, CGuard EPS can continue to be marketed under the MDD until November 12, 2022. Specifically, the EU MDR requires changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety information for Class III products, Unique Device Identification (“UDI”) for all products, submission of core data elements to a European UDI database prior to placement of a device on the market, and multiple other labeling changes. Currently the Company ~~can generate substantial revenues,~~is under technical documentation review by the Notified Body auditor to meet the MDR requirements for recertification having completed the quality management system Notified Body audit in October 2021. The Notified Body is currently experiencing chronic delays in processing MDR audits and reviews and the Company ~~may need~~does not expect to ~~raise additional funds.~~satisfy MDR requirements by November 12, 2022. While the Company continues to seek to expedite the review process, if the CE mark lapses, the Company will not be able to promote and sell CGuard EPS into countries requiring the CE mark until the Company receives recertification. No assurance can be provided as to the length of time it will take to obtain recertification, If the Company is unable to promote and sell CGuard EPS into countries requiring the CE mark for a prolonged period, this is expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.
		The Company’s shares that previously traded on the NYSE American were approved for listing on the Nasdaq Capital Market (“Nasdaq”) and such shares began trading on Nasdaq on May 21, 2021 under the symbol, “NSPR.” The Company’s warrants that previously traded on the NYSE American were approved for listing on Nasdaq, and such warrants began trading on Nasdaq on June 8, 2021.
	b.d.	COVID-19 Pandemic

		The COVID-19 global pandemic has led governments and authorities around the globe to take various precautionary measures in order to limit the spread of COVID-19, including government-imposed quarantines, lockdowns, and other public health safety measures. WeThe Company experienced a significant COVID-19 related impact on ~~our~~the Company’s financial condition and results of operations, primarily during the year ended December 31, 2020, which wethe Company primarily attribute to the postponement of CGuard EPS procedures (non-emergency procedures), as hospitals have shifted resources to patients affected by COVID-19. ~~To the best of our knowledge, most European countries in which we operate reinstated non-emergency procedures. However, new~~New COVID-19 variants, and potentially increasing infection rates make the current COVID-related environment highly volatile and uncertain and ~~we anticipate~~the Company anticipates that the continuation of the pandemic and related restrictions and safety measures will likely result in continued fluctuations in sales of ~~our~~the Company’s products, ~~and~~ potentially enrollments in ~~our~~the Company’s studies as well as potential disruptions to the Company’s supply chain for the upcoming periods.

	a.	~~On April 19, 2021, the Company filed with the Secretary of State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a~~ ~~one-for-fifteen reverse stock split of its common stock, par value $0.0001~~ ~~per share, effective as of April 26, 2021. All related share and per share data have been retroactively applied to the financial statements and their related notes for all periods presented.~~

	b.	~~On February 8, 2021, the Company closed an underwritten public offering (the “Offering”) of~~ ~~1,935,484~~ ~~units (“Units”), with each Unit being comprised of one share of the Company’s common stock, par value $0.0001~~ per share, and one Series G warrant (the “Series G Warrants”) to purchase one-half of one share of Common Stock. In connection with this public offering, the underwriter exercised its over-allotment option in full and purchased an additional ~~290,322~~ ~~shares of common stock and~~ ~~145,161~~ ~~Series G Warrants. The offering price to the public was $9.30~~ ~~per Unit. The Series G Warrants are immediately exercisable at a price of $10.23~~ ~~per and expire~~ ~~five years~~ ~~from the date of issuance.~~ ~~The Company granted the underwriter compensation warrants to purchase up to~~ ~~111,290~~ ~~shares of Common Stock. The underwriter warrants have an exercise price of $10.23~~ ~~per share and are exercisable immediately and for~~ ~~five years~~ ~~from the date of effectiveness of the registration statement in connection with the Offering.~~ ~~The net proceeds to the Company 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.
	c.	~~During the nine months ended September 30, 2021, the Company sold~~ ~~818,523~~ ~~shares of its common stock pursuant to its at-the-market (ATM) issuance sales agreement with a sales agent. These sales resulted aggregate gross proceeds to the Company of approximately $5,659,000~~.

	d.	On February 3, 2021, the Company entered into a distribution agreement (the “Distribution Agreement”) with three China-based partners, pursuant to which the Chinese partners will be responsible for conducting the necessary registration trials for commercial approval of the Company’s products in China, followed by an eight-year exclusive distribution right to sell the Company’s products in China with the term of the agreement continuing on a year-to-year basis unless terminated. Under the Distribution Agreement, the China-based partners will be subject to minimum purchase obligations. The Distribution Agreement may be terminated for cause upon failure to meet minimum purchase obligations, failure to obtain regulatory approvals or for other material breaches. In addition, and on the same day, the Company entered into an investment transaction with one of the Chinese parties to the Distribution Agreement, which included (i) a Securities Purchase Agreement (the “SPA”), pursuant to which investor agreed to invest $~~900,000~~ ~~in exchange for~~ ~~89,445~~ ~~shares of the Company’s common stock at a purchase price of $10.062~~ ~~per share.~~

	e.	~~During the nine months ended September 30, 2021, Series F and Series G warrants to purchase shares of common stock were exercised by investors at an exercise price of $7.425~~ ~~and $10.23~~ ~~per share, resulting in the issuance of~~ ~~1,225,412~~ ~~shares of common stock for proceeds of approximately $9,469,000~~.
	f.	~~During the nine months ended September 30, 2021, all the remaining~~ ~~17,303~~ ~~shares of Series B Convertible Preferred Stock were converted into~~ ~~207,528~~ ~~shares of common stock.~~
	g.	~~During the nine months ended September 30, 2021,~~ ~~625~~ ~~shares of Series C Convertible Preferred Stock were converted into~~ ~~831~~ ~~shares of common stock.~~
	h.	~~During the nine months ended September 30, 2021, the Company granted to employees, directors and consultants’ options to purchase a total of~~ ~~79,071~~ ~~shares of the Company’s common stock. The options have an exercise prices ranging from $3.89~~ ~~- $10.05~~ per share, which was the fair market value of the Company’s common stock on the date of the grant. The options are subject to a three-year vesting period, with one-third of such awards vesting each year. ~~In calculating the fair value of the above options, the Company used the following assumptions: dividend yield of~~ 0% ~~and expected term of~~ ~~5.5~~-~~6.5~~ ~~years; expected volatility ranging from~~ ~~129.12%~~-~~136.78%; and risk-free interest rate ranging from~~ ~~0.59%~~-~~1.17%~~. ~~The fair value of the above options, using the Black-Scholes option-pricing model, was approximately $478,600~~.
	i.	~~During the nine months ended September 30, 2021, the Company granted~~ ~~22,202~~ ~~restricted shares of the Company’s common stock to employees. The shares are subject to a three-year vesting period, with one-third of such awards vesting each year.~~ ~~The fair value of the above restricted shares was approximately $143,346~~.
	j.	As of September 30, ~~2021,~~2022, there were 1,718 shares of Series C Preferred Stock outstanding, convertible into an aggregate of 2,280 shares of ~~our~~the Company’s common stock.

	Number of underlying Common stock		Exercise price		Number of underlying Common stock		Exercise price
Series E Warrants		198,159	$	27.000		198,159	$	27.000
Series F Warrants		433,878	$	7.425		433,878	$	7.425
Series G Warrants		1,092,344	$	10.230		1,092,344	$	10.230
Underwriter Warrants		18,277	$	7.425		18,277	$	7.425
Other warrants		51,325	$	225.000 and above		51,157		225 and above

Total Warrants		1,793,983	$			1,793,815	$

	1)	The Company’s Israeli subsidiary has a lease agreement for a facility in Israel, which expires on December 31, 2022 with an option to extend the agreement for two additional years until December 31, 2024 under the terms stipulated in the agreement., On May 25, 2022 the Company amended the agreement mentioned above and extended it until December 31, 2026 as well as leasing of additional space in the facility, the additional space amendment was taken in consideration when calculating the operating lease right of use assets and liabilities.

	2)	Operating lease cost for the nine and three-month periods ended September 30, 2022 were $331,000 and $113,000 respectively.


	September 30			December 31
	2022			2021
	($ in thousands)			($ in thousands)
Operating lease right-of-use assets		1,635			1,081
Current operating lease liabilities		(416	)		(420	)
Non-current operating lease liabilities		(1,261	)		(781	)

Operating cash flows from operating leases (cash paid in thousands)	(328	)	(437	)
Weighted Average Remaining Lease Term	4.25		3
Weighted Average Discount Rate	8.69	%	8.38	%


	Amount
		($ in thousands)
2022		107
2023		429
2024		469
2025		469
2026		509
Total lease payments		1,983
Less imputed interest		(307	)
Total
2022		1,677
Total		1,677


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
	($ in thousands)

CGuard	$	1,431	$	1,031	$	4,097	$	3,018
MGuard		-		40		48		97
Revenue	$	1,431	$	1,071	$	4,145	$	3,115

	●	our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute out stockholders’ ownership interests;

	●	the impact of the COVID-19 pandemic on our manufacturing, sales, business plan and the global economy;

	●	negative clinical trial results or lengthy product delays in key markets;

	●	our ability to maintain compliance with the Nasdaq Capital Market listing standards;

	●	our ability to generate revenues from our products and obtain and maintain regulatory approvals for our products;

	●	our ability to successfully obtain, maintain and adequately protect our intellectual property rights;

	●	our dependence on a single manufacturing facility and our ability to comply with stringent manufacturing quality standards;

	●	our ability to increase production as necessary;

	●	the risk that the data collected from our current and planned clinical trials may not be sufficient to demonstrate that our technology is an attractive alternative to other procedures and products;

	●	market acceptance of our products;

	●	our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute our stockholders’ ownership interests;

	●	an inability to secure and maintain regulatory approvals for the sale of our products;

	●	intense competition in our industry, with competitors having greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do;

	●	entry of new competitors and products and potential technological obsolescence of our products;

	●	inability to carry out research, development and commercialization plans;

	●	loss of a key customer or supplier;

	●	technical problems with our research and products and potential product liability claims;

	●	product malfunctions;

	●	price increases for supplies and components;

	●	adverse economic conditions;

	●	insufficient or inadequate reimbursement by governmental and other third-party payers for our products;

	●	adverse federal, state and local government regulation in the United States, Europe, Israel and other foreign jurisdictions;

	●	the fact that we conduct business in multiple foreign jurisdictions, exposing us to foreign currency exchange rate fluctuations, logistical and communications challenges, burdens and costs of compliance with foreign laws and political and economic volatility in certain jurisdictions;

	●	the escalation of hostilities in Israel, which could impair our ability to manufacture our products; and

	●	loss or retirement of key executives and research scientists.

Exhibit No.		Description

3.1		Amended and Restated Certificate of Incorporation, as amended through September 30, 2015 (incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2015)

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Current Report on Form 8-K filed with the Securities and Exchange Commission on June 29, 2021)

3.3		Certificate of Designation, Preferences and Rights of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on October 25, 2013)

~~3.4~~		Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on May 25, 2016)

~~3.5~~3.4		Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on September 29, 2016)

~~3.6~~3.5		Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 15, 2017)

3.6
~~3.7~~		Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitation of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on November 29, 2017)

~~3.8~~
3.7		Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on December 12, 2017)

~~3.9~~3.8		Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on February 7, 2018)

~~3.10~~3.9		Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 28, 2019)

~~3.11~~3.10		Certificate of Amendment to Amended and Restated Certificate of Incorporation of InspireMD, Inc., dated April 14, 2021 (incorporated by reference to Exhibit ~~3.1~~3.17 to the Quarterly Report on Form 10-Q filed on May 10, 2021)

~~10.1*+~~		~~First Amendment to Employment Agreement, dated November 8, 2021, by and between InspireMD, Inc. and Marvin Slosman.~~

~~10.2*+~~		~~Fifth Amendment to Amended and Restated Employment Agreement, dated November 4, 2021, by and between InspireMD, Inc. and Craig Shore~~

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2021,~~2022, formatted in inline XBRL (eXtensible Business Reporting Language), (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements

~~101.INS~~		~~Inline XBRL Instance Document~~

~~101.SCH~~		~~Inline XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~		~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~		~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~		~~Inline XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~		~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~

104*		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

	INSPIREMD, INC.

Date: November ~~8, 2021~~7, 2022	By:	/s/ Marvin Slosman
	Name:	Marvin Slosman,
	Title:	President and Chief Executive Officer (Principal Executive Officer)

Date: November ~~8, 2021~~7, 2022	By:	/s/ Craig Shore
	Name:	Craig Shore
	Title:	Chief Financial Officer, Secretary and Treasurer (Principal Financial and Accounting Officer)