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: June 30, 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

The number of shares of the registrant’s common stock, $0.0001 par value, outstanding as of August 8, 2022: 8,323,200

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	10
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	12

INSPIREMD, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS

	Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets	F-2 - F-3
Condensed Consolidated Statements of Operations	F-4
Condensed Consolidated Statements of Changes in Equity	F-5 - F-8
Condensed Consolidated Statements of Cash Flows	F-9
Notes to the Condensed Consolidated Financial Statements	F-10 - F-15

F-1

INSPIREMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(U.S. dollars in thousands)

	June 30,		December 31,
	2022		2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,393	$	12,004
Short-term bank deposits		20,078		22,036
Accounts receivable:
Trade, net		1,183		1,224
Other		171		165
Prepaid expenses		221		522
Inventory		1,454		1,143
TOTAL CURRENT ASSETS		29,500		37,094

NON-CURRENT ASSETS:
Property, plant and equipment, net		700		632
Operating lease right of use assets		1,717		1,081
Fund in respect of employee rights upon retirement		849		905
TOTAL NON-CURRENT ASSETS		3,266		2,618
TOTAL ASSETS	$	32,766	$	39,712

F-2

INSPIREMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

	June 30,			December 31,
	2022			2021
LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Accounts payable and accruals:
Trade		1,127			893
Other		3,585			3,454
TOTAL CURRENT LIABILITIES		4,712			4,347

LONG-TERM LIABILITIES-
Operating lease liabilities		1,350			781
Liability for employees’ rights upon retirement		962			1,052

TOTAL LONG-TERM LIABILITIES		2,312			1,833

COMMITMENTS AND CONTINGENT LIABILITIES		-			-
TOTAL LIABILITIES		7,024			6,180

EQUITY:

Common stock, par value $0.0001 per share; 150,000,000 shares authorized at June 30, 2022 and December 31, 2021; 8,323,200 and 8,296,256 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		1			1
Preferred C shares, par value $0.0001 per share; 1,172,000 shares authorized at June 30, 2022 and December 31, 2021; 1,718 shares issued and outstanding at June 30, 2022 and December 31 2021, respectively		-	*		-	*
Additional paid-in capital		217,952			216,625
Accumulated deficit		(192,211	)		(183,094	)
Total equity		25,742			33,532
Total liabilities and equity	$	32,766		$	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 June 30,						Six months ended June 30,
	2022			2021			2022			2021

REVENUES	$	1,531		$	1,038		$	2,714		$	2,044
COST OF REVENUES		1,100			776			2,161			1,676
GROSS PROFIT		431			262			553			368
OPERATING EXPENSES:
Research and development		2,056			1,290			3,736			2,129
Selling and marketing		986			636			1,732			1,344
General and administrative		2,070			1,776			4,252			3,649
Total operating expenses		5,112			3,702			9,720			7,122
LOSS FROM OPERATIONS		(4,681	)		(3,440	)		(9,167	)		(6,754	)
FINANCIAL INCOME (EXPENSES), net:		45			(67	)		50			4
LOSS BEFORE TAX EXPENSES		(4,636	)		(3,507	)		(9,117	)		(6,750	)
NET LOSS	$	(4,636	)	$	(3,507	)	$	(9,117	)	$	(6,750	)
NET LOSS PER SHARE - basic and diluted	$	(0.59	)	$	(0.46	)	$	(1.17	)	$	(0.98	)
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING NET LOSS PER SHARE - basic and diluted		7,807,795			7,704,707			7,806,030			6,918,090

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)

	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																		(6,750	)		(6,750	)
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 5,959 shares		15,083		-^*		-			-		-			-		706		-			706
Round up of shares due to reverse stock split effectuated on April 26, 2021		47,388		-^*		-			-		-			-		-		-			-
BALANCE AT June 30, 2021		7,914,339		1		-			-		1,718			-^*	$	215,755	$	(174,926	)	$	40,830

*	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)

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

BALANCE AT April 1, 2021		7,852,791		1		-		-		1,718		-^*	$	215,372	$	(171,419	)	$	43,954
Net loss																(3,507	)		(3,507	)
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 2,683 shares		14,160		-^*		-		-		-		-		383		-			383
Round up of shares due to reverse stock split effectuated on April 26, 2021		47,388		-^*		-		-		-		-		-		-			-
BALANCE AT June 30, 2021		7,914,339		1		-		-		1,718		-^*	$	215,755	$	(174,926	)	$	40,830

*	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)

	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												(9,117	)		(9,117	)
Share-based compensation related to restricted stock, restricted stock units and stock options award, net of forfeitures of 4,563 shares		26,944		-^*				-		1,327		-			1,327
BALANCE AT June 30, 2022		8,323,200		1		1,718		-^*		217,952		(192,211	)		25,742

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

BALANCE AT April 1, 2022		8,317,876		1		1,718		-^*		217,278		(187,575	)		29,704
Net loss												(4,636	)		(4,636	)
Share-based compensation related to restricted stock, restricted stock units and stock options award		5,324		-^*				-		674		-			674
BALANCE AT June 30, 2022		8,323,200		1		1,718		-^*		217,952		(192,211	)		25,742

*	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
	Six months ended June 30
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,117	)	$	(6,750	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation		84			84
Loss from sale of property, plant and equipment		-			1
Loss on amounts funded in respect of employee rights upon retirement, net		103			-
Change in liability for employees’ rights upon retirement		(90	)		52
Other financial expenses		132			12
Change in operating right of use asset and operating leasing liability		(63	)		(69	)
Share-based compensation expenses		1,327			706
Increase in interest receivable on short term deposits		(42	)		-
Changes in operating asset and liability items:
Decrease in prepaid expenses		338			271
Decrease (increase) in trade receivables		41			(486	)
Decrease (increase) in other receivables		(6	)		10
Decrease (increase) in inventory		(311	)		73
Increase in trade payables		234			503
Increase (decrease) in other payables		127			(576	)
Net cash used in operating activities		(7,243	)		(6,169	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from withdrawal of (invest in) short-term deposits		2,000			-
Purchase of property, plant and equipment		(152	)		(80	)
Amounts funded in respect of employee rights upon retirement, net		(47	)		(34	)
Net cash provided by (used by) investing activities		1,801			(114	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance costs of At The Market offering		(37	)		-
Proceeds from issuance of shares and warrants and exercise of Pre-Funded Warrants net of $1,989 issuance costs,		-			35,069
Net cash provided by financing activities		(37	)		35,069
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(132	)		(12	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(5,611	)		28,774
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		12,004			12,645
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	6,393		$	41,419
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of right-of-use assets by means of lease liabilities		835			91
Issuance Costs	$	-			35

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

F-9

INSPIREMD, INC.

NOTES TO THE CONDENSED 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 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 MGuard™ Prime™ 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, 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 believe 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.

		As of the date of issuance of the consolidated financial statements, the Company has the ability to fund its planned operations for at least the next 12 months. However, the Company expects to continue incurring losses and negative cash flows from operations until its products (primarily CGuard™ EPS) reach commercial profitability. Therefore, in order to fund the Company’s operations until such time that the Company can generate substantial revenues, the Company may need to raise additional funds. See also note 1b regarding the new European Medical Device Regulation.

	b.	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 Europe. 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 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 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 is under technical documentation review by the Notified Body auditor which is requesting new submission of materials to meet the MDR requirements for recertification having completed the quality management system Notified Body audit in October 2021. There is no assurance that the Company will be able to satisfy MDR requirements by November 12, 2022. While the Company is seeking to expedite the review process, if the Company does not receive recertification by this time or otherwise is determined to be non-compliant, its CE Mark used under the MDD will lapse and the Company will not be able to promote and sell CGuard EPS into CE Mark European countries until the Company receives recertification, which could have a material adverse effect on its business, financial condition, results of operations or cash flows.

	c.	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. The Company experienced a significant COVID-19 related impact on the company’s financial condition and results of operations, primarily during the year ended December 31, 2020, which the Company primarily attribute to the postponement of CGuard EPS procedures (non-emergency procedures), as hospitals have shifted resources to patients affected by COVID-19. New COVID-19 variants, and potentially increasing infection rates make the current COVID-related environment highly volatile and uncertain and the Company anticipates that the continuation of the pandemic and related restrictions and safety measures will likely result in continued fluctuations in sales of the company’s products, potentially enrollments in the company’s studies as well as potential disruptions to the company’s supply chain for the upcoming periods.

F-10

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 six and three months ended June 30, 2022 the company’s sales to Russia were 6.8% and 10.9% respectively, there were no sales to Ukraine and minimal sales in Belarus. The escalation of geopolitical instability in Russia and Ukraine as well as currency fluctuations in th

SEC Form 10-Q filed by InspireMD Inc.