InspireMD Inc

Previous wording

In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. In addition, since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and southern border (with the Houthi movement in Yemen). It is possible that hostilities with Hezbollah in Lebanon will escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other hostile countries will join the hostilities. In addition, Iran recently launched a direct attack on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. Such clashes may escalate in the future into a greater regional conflict. We cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can we predict how this war will ultimately affect our business and operations or Israel’s economy in general.

Current wording

In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. In addition, since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and on other fronts from various extremist groups in region, such as the Houthis in Yemen and various rebel militia groups in Syria and Iraq. It is possible that hostilities with Hezbollah in Lebanon will escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other hostile countries will join the hostilities. In addition, Iran recently launched direct attacks on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. Such clashes may escalate in the future into a greater regional conflict. We cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can we predict how this war will ultimately affect our business and operations or Israel’s economy in general.

Previous wording

Revenues. For the three months ended June 30, 2024, revenue increased by $90,000, or 5.4%, to $1,739,000, from $1,649,000 during the three months ended June 30, 2023. This increase was predominantly driven by growth in existing and new markets, partially offset by a reduction in clinical trial revenue driven by the conclusion of C-GUARDIANS enrollment in June 2023.

Current wording

Revenues. For the three months ended September 30, 2024, revenue increased by $254,000, or 16.3%, to $1,810,000, from $1,556,000 during the three months ended September 30, 2023. This increase was predominantly driven by growth in existing and new markets.

Previous wording

With respect to geographical regions, the increase in revenue was primarily attributable to a $303,000 increase in Europe for reasons mentioned in the paragraph above. This increase was offset by a $87,000 decrease in Latin America a $80,000 decrease in Asia due to timing of shipment of orders, and a $45,000 decrease in the United States as we completed in June 2023 the enrollment of all patients in our C-Guardians IDE clinical trial.

Current wording

With respect to geographical regions, the increase in revenue was primarily attributable to a $142,000 increase in Europe, a $109,000 increase in Asia and a $13,000 increase in the Middle East, all for reasons mentioned in the paragraph above. This increase was offset by a $7,000 decrease in Latin America.

Previous wording

Gross Profit. For the three months ended June 30, 2024, gross profit (revenue less cost of revenues) decreased by $160,000, or 32.6%, to $331,000, from $491,000 during the three months ended June 30, 2023. This decrease in gross profit resulted from a $237,000 increase in material and labor costs mainly due to higher sales volume as well as compensation expense for new and current employees, additional space to build capacity for anticipated increased volume requirements and additional training expenses offset by an increase of the revenues of $90,000 (see above), and an increase $13,000 in miscellaneous expense. Gross margin (gross profits as a percentage of revenue) decreased to 19.0% during the three months ended June 30, 2024, from 29.8% during the three months ended June 30, 2023, driven by the factors mentioned above.

Current wording

Gross Profit. For the three months ended September 30, 2024, gross profit (revenue less cost of revenues) decreased by $24,000, or 5.6%, to $414,000, from $438,000 during the three months ended September 30, 2023. This decrease in gross profit resulted from a $24,000 increase in miscellaneous expense. Gross margin (gross profits as a percentage of revenue) decreased to 22.9% during the three months ended September 30, 2024, from 28.1% during the three months ended September 30, 2023, driven by the factors mentioned above.

Previous wording

Research and Development Expenses.Research and Development Expenses. For the six months ended June 30, 2024, research and development expenses increased by 57.1%, or $2,190,000 to $6,026,000, from $3,836,000 during the six months ended June 30, 2023. This increase resulted primarily from an increase in compensation expenses of $1,364,000, mainly due to an increase of share-based compensation-related expenses due to the expense recognition of grants made to employees and consultants since the second quarter of 2023 and due to the hiring of the Executive Vice President and General Manager of North America in connection with our expansion plans in the United States, an increase of $501,000 of SwitchGuard NPS development and regulatory approval process, an increase of $235,000 related to an early feasibility study of CGuard Prime for the treatment of acute stroke patients with tandem lesions, an increase of $99,000 related to the establishment of operations in the United States, offset by a decrease of $9,000 in miscellaneous expenses.

Current wording

Research and Development Expenses. For the three months ended September 30, 2024, research and development expenses increased by $1,805,000, or 85.5%, to $3,915,000, from $2,110,000 during the three months ended September 30, 2023. This increase resulted primarily due to an increase of $1,016,000 of SwitchGuard NPS development and regulatory approval process including expenses related to the IDE application for the CGUARDIANS II pivotal study of the CGuard Prime 80cm Carotid Stent System, an increase in compensation expenses of $670,000, mainly due to an increase of share-based compensation-related expenses and due to the hiring of the Executive Vice President and General Manager of North America in connection with our expansion plans in the United States, an increase of $140,000 related to an early feasibility study of CGuard Prime for the treatment of acute stroke patients with tandem lesions and an increase of $224,000 in miscellaneous expenses. These increases were offset by a decrease of $245,000 in expenses associated with the C-Guardians FDA Study as the one-year follow-up finalized in the second quarter of 2024 and the submission this quarter of the PMA application to the FDA.

Previous wording

Selling and Marketing Expenses. For the six months ended June 30, 2024, selling and marketing expenses increased by 59.6%, or $1,002,000, to $2,682,000, from $1,680,000 during the six months ended June 30, 2023. This increase resulted primarily from an increase in compensation expenses of $850,000 and an increase of $152,000 in miscellaneous expenses.

Current wording

Selling and Marketing Expenses. For the three months ended September 30, 2024, selling and marketing expenses increased by $596,000, or 68.0%, to $1,472,000, from $876,000 during the three months ended September 30, 2023. This increase resulted primarily from an increase in compensation expenses of $524,000 as the Company build its U.S. commercial infrastructure to enter the U.S. market and an increase of $72,000 in miscellaneous expenses.

Previous wording

General and Administrative Expenses. For the six months ended June 30, 2024, general and administrative expenses increased by 50.5%, or $2,545,000, to $7,589,000, from $5,044,000 during the six months ended June 30, 2023. This increase resulted primarily from an increase in compensation expenses of $2,674,000, mainly due to an increase of share-based compensation-related expenses due to the expense recognition of grants made during the second quarter of 2023 and the first quarter of 2024, offset by a decrease of $129,000 in miscellaneous expenses.

Current wording

General and Administrative Expenses. For the three months ended September 30, 2024, general and administrative expenses increased by $398,000, or 12.9%, to $3,489,000, from $3,091,000 during the three months ended September 30, 2023. This increase resulted primarily from an increase in compensation expenses of $354,000, mainly due to an increase of share-based compensation-related expenses and an increase of $44,000 in miscellaneous expenses.

Previous wording

Financial Income. For the three months ended June 30, 2024, financial income increased by $113,000 or 47.5%, to $351,000, from $238,000 during the three months ended June 30, 2023. The increase in financial income primarily resulted from a $123,000 increase in interest income from investment in marketable securities, money market funds and short-term bank deposits.

Current wording

Financial Income. For the three months ended September 30, 2024, financial income increased by $111,000 or 24.1%, to $572,000, from $461,000 during the three months ended September 30, 2023. The increase in financial income primarily resulted from a $91,000 increase in interest income from investment in marketable securities, money market funds and short-term bank deposits.

Previous wording

Net Loss. Our net loss increased by $2,832,000, or 55.8%, to $7,909,000, for the three months ended June 30, 2024, from $5,077,000 during the three months ended June 30, 2023. The increase in net loss resulted primarily from an increase of $2,785,000 in operating expenses.

Current wording

Net Loss. Our net loss increased by $2,712,000, or 52.4%, to $7,890,000, for the three months ended September 30, 2024, from $5,178,000 during the three months ended September 30, 2023. The increase in net loss resulted primarily from an increase of $2,799,000 in operating expenses.

Previous wording

Revenues. For the six months ended June 30, 2024, revenue increased by $362,000, or 12.5%, to $3,250,000, from $2,888,000 during the six months ended June 30, 2023. This sales increase was mainly due to growth in existing and new markets, partially offset by a reduction in clinical trial revenue driven by the conclusion of C-GUARDIANS enrollment in June 2023.

Current wording

Revenues. For the nine months ended September 30, 2024, revenue increased by $616,000, or 13.9%, to $5,060,000 from $4,444,000 during the nine months ended September 30, 2023. This increase was mainly due to growth in existing and new markets, partially offset by a reduction in clinical trial revenue driven by the conclusion of C-GUARDIANS enrollment in June 2023.

Previous wording

With respect to geographical regions, the increase in revenue was primarily attributable to a $472,000 increase in Europe, a $28,000 increase in Latin America and a $8,000 increase in other territories for reasons mentioned above. This increase was offset by a $104,000 decrease in the United States as we completed in June 2023 the enrollment of all patients in our C-Guardians IDE clinical trial, a $30,000 decrease in Asia and a $12,000 decrease in other territories.

Current wording

With respect to geographical regions, the increase in revenue was primarily attributable to a $614,000 increase in Europe, a $79,000 increase in Asia, a $22,000 increase in Latin America and $6,000 in other territories for reasons mentioned above. This increase was offset by a $104,000 decrease in the United States as we completed in June 2023 the enrollment of all patients in our C-Guardians IDE clinical trial.

Previous wording

Gross Profit. For the six months ended June 30, 2024, gross profit (revenue less cost of revenues) decreased by 27.9%, or $241,000, to $623,000, compared to a $864,000 for the same period in 2023. This decrease in gross profit resulted from a $585,000 increase in material and labor costs mainly due to higher sales volume as well as compensation expense for new and current employees, additional space to build capacity for anticipated increased volume requirements and additional training expenses offset by an increase of the revenues of $362,000 (see above), and an increase $18,000 in miscellaneous expense. Gross margin (gross profits as a percentage of revenue) decreased to 19.2% during the three months ended June 30, 2024, from 29.9% during the three months ended June 30, 2023, driven by the factors mentioned above.

Current wording

Gross Profit. For the nine months ended September 30, 2024, gross profit (revenue less cost of revenues) decreased by 20.4%, or $265,000, to $1,037,000, compared to a $1,302,000 for the same period in 2023. This decrease in gross profit resulted from a $744,000 increase in material and labor costs. This increase in cost was mainly due to higher sales volume, increased compensation expense for new and current employees, additional space to build capacity for anticipated increased volume requirements and additional training expenses. In addition, the increase resulted from $78,000 related to production facility downtime for maintenance, write-offs of $58,000 and $3,000 in miscellaneous expense. This decrease was offset by an increase of the revenues of $616,000 as described above.

Previous wording

Research and Development Expenses. For the three months ended June 30, 2024, research and development expenses increased by $1,408,000, or 70.6%, to $3,401,000, from $1,993,000 during the three months ended June 30, 2023. This increase resulted primarily from an increase in compensation expenses of $741,000, mainly due to an increase of share-based compensation-related expenses due to the expense recognition of grants made to employees and consultants since the second quarter of 2023 and due to the hiring of the Executive Vice President and General Manager of North America in connection with our expansion plans in the United States, an increase of $427,000 of SwitchGuard NPS development and regulatory approval process, an increase of $82,000 related to the establishment of operations in the United States, an increase of $77,000 related to an early feasibility study of CGuard Prime for the treatment of acute stroke patients with tandem lesions and an increase of $81,000 in miscellaneous expenses.

Current wording

Research and Development Expenses.Research and Development Expenses. For the nine months ended September 30, 2024, research and development expenses increased by 67.2%, or $3,995,000 to $9,941,000, from $5,946,000 during the nine months ended September 30, 2023. This increase resulted primarily from an increase in compensation expenses of $2,032,000, mainly due to an increase of share-based compensation-related expenses and due to the hiring of the Executive Vice President and General Manager of North America in connection with our expansion plans in the United States, an increase of $1,518,000 of SwitchGuard NPS development and regulatory approval process including expenses related to the IDE application for the CGUARDIANS II pivotal study of the CGuard Prime 80cm Carotid Stent System, an increase of $376,000 related to an early feasibility study of CGuard Prime for the treatment of acute stroke patients with tandem lesions, an increase of $161,000 related to the establishment of operations in the United States and an increase of $394,000 in miscellaneous expenses. These increases were offset by a decrease of $486,000 in expenses associated with the C-Guardians FDA Study as the one-year follow-up finalized in the second quarter of 2024 and the submission this quarter of the PMA application to the U.S. FDA.

Previous wording

Selling and Marketing Expenses. For the three months ended June 30, 2024, selling and marketing expenses increased by $553,000, or 62.0%, to $1,445,000, from $892,000 during the three months ended June 30, 2023. This increase resulted primarily from an increase in compensation expenses of $469,000 and an increase of $84,000 in miscellaneous expenses.

Current wording

Selling and Marketing Expenses. For the nine months ended September 30, 2024, selling and marketing expenses increased by 62.5%, or $1,598,000, to $4,154,000, from $2,556,000 during the nine months ended September 30, 2023. This increase resulted primarily from an increase in compensation expenses of $1,374,000 and an increase of $224,000 in miscellaneous expenses.

Previous wording

General and Administrative Expenses. For the three months ended June 30, 2024, general and administrative expenses increased by $824,000, or 28.2%, to $3,745,000, from $2,921,000 during the three months ended June 30, 2023. This increase resulted primarily from an increase in compensation expenses of $993,000, mainly due to an increase of share-based compensation-related expenses due to the expense recognition of grants made during the second quarter of 2023 and the first quarter of 2024, offset by a decrease of $92,000 in legal expenses and a $77,000 in miscellaneous expenses.

Current wording

General and Administrative Expenses. For the nine months ended September 30, 2024, general and administrative expenses increased by 36.2%, or $2,944,000, to $11,079,000, from $8,135,000 during the nine months ended September 30, 2023. This increase resulted primarily from an increase in share-based compensation expenses of $2,868,000 and an increase of $76,000 in miscellaneous expenses.

Previous wording

Financial Income. For the six months ended June 30, 2024, financial income increased by $370,000, to $733,000 of financial income, from $363,000 of financial income during the six months ended June 30, 2023. The increase in financial income primarily resulted from a $387,000 increase in interest income from investment in marketable securities, money market funds and short-term bank deposits.

Current wording

Financial Income. For the nine months ended September 30, 2024, financial income increased by $481,000, to $1,305,000 of financial income, from $824,000 of financial income during the nine months ended September 30, 2023. The increase in financial income primarily resulted from a $478,000 increase in interest income from investment in marketable securities, money market funds and short-term bank deposits.

Previous wording

Tax Expenses. For the six months ended June 30, 2024, there was no material change in our tax expenses as compared to the six months ended June 30, 2023.

Current wording

Tax Expenses. For the nine months ended September 30, 2024, there was no material change in our tax expenses as compared to the nine months ended September 30, 2023.

Previous wording

Net Loss. Our net loss increased by $5,608,000, or 60.1%, to $14,941,000, for the six months ended June 30, 2024, from $9,333,000 during the six months ended June 30, 2023. The increase in net loss resulted primarily from an increase of $5,737,000 in operating expenses and decrease of $241,000 in gross profit, offset by an increase of $370,000 in financial income.

Current wording

Net Loss. Our net loss increased by $8,320,000, or 57.3%, to $22,831,000, for the nine months ended September 30, 2024, from $14,511,000 during the nine months ended September 30, 2023. The increase in net loss resulted primarily from an increase of $8,536,000 in operating expenses and decrease of $265,000 in gross profit, offset by an increase of $481,000 in financial income.

Previous wording

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 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 reduce activities, curtail or cease operations.

Current wording

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

Previous wording

General. At June 30, 2024, we had cash and cash equivalents of $28,385,000 and marketable securities of $18,778,000 as compared to cash and cash equivalents of $9,640,000 and marketable securities of $29,383,000 as of December 31, 2023. 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.

Current wording

General. At September 30, 2024, we had cash and cash equivalents of $15,818,000 and marketable securities of $24,584,000, as compared to cash and cash equivalents of $9,640,000 and marketable securities of $29,383,000 as of December 31, 2023. 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.

Previous wording

For the six months ended June 30, 2024, net cash used in our operating activities increased by $1,262,000, or 15.5%, to $9,418,000, from $8,156,000 during the same period in 2023. The primary reason for the increase in cash used in our operating activities was an increase of $1,757,000 in payments for third party related expenses and for professional services, an increase of $874,000 in compensation costs paid during the six months ended June 30, 2024, from $5,312,000 in the six months ended June 30, 2023 to $6,186,000, offset in part by an increase of $1,254,000 in payments received from customers, and an increase of $115,000 in interest income received from money market funds and marketable securities.

Current wording

For the nine months ended September 30, 2024, net cash used in our operating activities increased by $2,919,000, or 23.9%, to $15,118,000, from $12,199,000 during the same period in 2023. The primary reason for the increase in cash used in our operating activities was an increase of $2,276,000 in payments for third party related expenses and for professional services, an increase of $1,506,000 in compensation costs paid during the nine months ended September 30, 2024, from $7,332,000 in the nine months ended September 30, 2023 to $8,838,000, a decrease of $99,000 in interest income received from money market funds, marketable securities and bank deposits, offset in part by an increase of $933,000 in payments received from customers.

Previous wording

Cash provided in our investing activities was $10,323,000 during the Six months ended June 30, 2024, compared to cash used of $22,442,000 during the Six months ended June 30, 2023. The primary reason for the increase in cash provided by our investing activities is proceeds from matured marketable securities of $11,040,000, net of investment in marketable securities in the Six months ended June 30, 2024, compared to an investment in marketable securities of $28,838,000, offset by a withdrawal from short-term bank deposits, net of investment in short-term deposits, of $6,500,000 in the Six months ended June 30, 2023 and by an increase of $600,000 in payments made for purchase of property, plant and equipment during the Six months ended June 30, 2024.

Current wording

Cash provided in our investing activities was $4,399,000 during the nine months ended September 30, 2024, compared to cash used of $16,056,000 during the nine months ended September 30, 2023. The primary reason for the increase in cash provided by our investing activities is proceeds from matured marketable securities of $5,556,000, net of investment in marketable securities in the nine months ended September 30, 2024, compared to an investment in marketable securities of $28,838,000, offset by a withdrawal from short-term bank deposits, net of investment in short-term deposits, of $18,500,000 in the nine months ended September 30, 2023 and by an increase of $925,000 in payments made for purchase of property, plant and equipment during the nine months ended September 30, 2024.

Previous wording

Cash provided by financing activities for the six months June 30, 2024, was $17,854,000. The source of the cash provided by financing activities during the six months ended June 30, 2024, were the proceeds from exercise of Series H warrants. Cash provided by financing activities for the six months June 30, 2023, was $37,534,000. The source of the cash provided by financing activities during the six months ended June 30, 2023, were the proceeds from the Private Placement Offering in May 2023 that resulted in approximately $37,534,000 of aggregate net proceeds.

Current wording

Cash provided by financing activities for the nine months September 30, 2024, was $16,889,000. The source of the cash provided by financing activities during the nine months ended September 30, 2024, were the proceeds from exercise of Series H warrants. Cash provided by financing activities for the nine months September 30, 2023, was $37,534,000. The source of the cash provided by financing activities during the nine months ended September 30, 2023, were the proceeds from the Private Placement Offering in May 2023 that resulted in approximately $37,534,000 of aggregate net proceeds.

Previous wording

As of June 30, 2024, our current assets exceeded our current liabilities by a multiple of 7.4. Current assets increased by $7,684,000 during the period and current liabilities increased by $945,000 during the period. As a result, our working capital increased by $6,739,000 to $44,878,000 as of June 30, 2024.

Current wording

As of September 30, 2024, our current assets exceeded our current liabilities by a multiple of 6.4. Current assets increased by $2,235,000 during the period and current liabilities increased by $1,245,000 during the period. As a result, our working capital increased by $990,000 to $39,129,000 as of September 30, 2024.

Previous wording

During the six months ended June 30, 2024, there were no material changes to our contractual obligations and commitments since the year ended December 31, 2023.

Current wording

During the nine months ended September 30, 2024, there were no material changes to our contractual obligations and commitments since the year ended December 31, 2023.