InspireMD Inc

UNAUDITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -DESCRIPTION OF BUSINESS

NOTE 2 -BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements. In the opinion of the Company, the financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2024 and its results of operations, changes in equity and cash flows for the three months ended March 31, 2024 and 2023. 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, 2023, as found in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 5, 2024. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of results that could be expected for the entire fiscal year.

NOTE 3 -RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

Recently adopted accounting pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06 “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40).” This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company adopted the provisions of this update as of January 1, 2024 with no material impact on its consolidated financial statements.

Recently issued accounting pronouncement, not yet adopted

NOTE 4 –FAIR VALUE MEASUREMENTS

Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows:

The Company’s debt securities are classified within Level 2 because it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value.

The cost of marketable securities as of March 31, 2024 is $23,878 thousand.

Fair value of financial instruments

The carrying amounts of financial instruments included in working capital approximate their fair value due to the relatively short-term maturities of such instruments.

As of March 31, 2024, and December 31, 2023, allowance for expected credit loss was immaterial.

NOTE 5 -MARKETABLE SECURITIES

The following table sets forth the Company’s marketable securities for the indicated period:

The following table summarizes the fair value of the Company’s marketable securities classified by maturity as of March 31, 2024, and December 31, 2023:

The table below sets forth a summary of the changes in the fair value of the Company’s marketable securities for the three month period ended March 31, 2024:

NOTE 6 -EQUITY:

As of March 31, 2024, 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.

NOTE 7 –RELATED PARTIES TRANSACTIONS

During the three months ended March 31, 2024, a member of the immediate family of the CEO provided certain administrative services in connection with the Company’s expansion to the U.S. in the amount of $15 thousand.

NOTE 8 -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, pre-funded warrants and fully vested restricted stock units outstanding during the period. The calculation of diluted net loss per share excludes the effect of potential dilution of share options, warrants, and unvested restricted stocks, unvested restricted stock units and Series C preferred stock as the effect is anti-dilutive.

For the purpose of calculating basic net loss per share, the additional shares of common stock that are issuable upon exercise of the pre-funded warrants have been included since the shares are issuable for a negligible consideration, as determined by the Company according to ASC 260-10-45-13, and have no vesting or other contingencies associated with them. For the three month period ended March 31, 2024, the Company had weighted average pre-funded warrants to purchase 15,254,623 share of common stock, which was used in the computation of net loss per share for the quarter.

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, which were excluded from the calculations of diluted loss per share were 62,556,668 and 2,773,675 for the three month period ended March 31, 2024 and 2023. This amount includes 4,611,500 and 342,766 of unvested restricted stock included in the number of issued and outstanding shares as of March 31, 2024 and 2023.

NOTE 9 -INVENTORY:

NOTE 10 -ACCOUNTS PAYABLE AND ACCRUALS - OTHER:

NOTE 11 -DISAGGREGATED REVENUE AND ENTITY WIDE DISCLOSURES:

Revenues are attributed to geographic areas based on the location of the customers. The following is a summary of revenues:

By principal customers:

All tangible long lived assets are located in Israel.