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TAXES ON INCOME (Tables)

6 Months Ended

Jun. 30, 2012

Years	Development Zone A			Other Areas in Israel

"Preferred enterprise"
2011-2012		10	%		15	%
2013-2014		7	%		12.5	%
2015 and thereafter		6	%		12	%
"Special Preferred Enterprise" commencing 2011		5	%		8	%

Schedule of the Components of Loss before Income Taxes

	6 month period ended			Year ended December 31
	June 30, 2012			2011			2010			2009
	($ in thousands)
Profit (loss) before taxes on income:
InspireMD, Inc.	$	(2,226	)	$	(7,029	)	$	-		$	-
InspireMD Ltd.		(4,814	)		(7,636	)		(3,115	)		(2,624	)
InspireMD GmbH		(9	)		2			(258	)		(53	)
	$	(7,049	)	$	(14,663	)	$	(3,373	)	$	(2,677	)

Schedule of Current Taxes on Income

	6 month period ended			Year ended December 31
	June 30, 2012			2011			2010			2009
	($ in thousands)
Loss before taxes on income, as reported in the statements of operations	$	7,049		$	14,663		$	3,373		$	2,677
Theoretical tax benefit		(2,397	)		(4,985	)		(1,147	)		(910	)
Increase in tax benefit resulting from permanent differences		863			601			431			92
Increase (decrease) in taxes on income resulting from the computation of deferred taxes at a rate which is different from the theoretical rate					(116	)		62			24
Increase (decrease) in uncertain tax positions - net					(60	)		30			30
Decrease in theoretical tax benefit resulting from subsidiaries different tax rate		434			1,385			304			214
Change in corporate tax rates, see c above					(545	)		-			481
Change in valuation allowance		1,132			3,722			367			116
	$	32		$	2		$	47		$	47

Schedule of the Changes in the Valuation Allowance

	6 month period ended		Year ended December 31
	June 30, 2012		2011		2010		2009
	($ in thousands)
Balance at the beginning of the year	$	6,918	$	3,196	$	2,829	$	2,713
Changes during the year		1,132		3,722		367		116
Balance at the end of the year	$	8,050	$	6,918	$	3,196	$	2,829

Reconciliation of Unrecognized Tax Benefits

	6 month period ended		Year ended December 31
	June 30, 2012		2011			2010		2009
	($ in thousands)
Balance at beginning of period	$	-	$	60		$	30	$	0
Increase in unrecognized tax benefits as a result of tax positions taken during the year							30		30
Decrease in unrecognized tax benefits as a result of tax positions taken during a prior year				(60	)
Balance at end of period	$	-	$	-		$	60	$	30

Schedule of Open Tax Years

Jurisdiction				Years
U.S.				2008-2011
Israel				2006-2011
Germany				2008-2011

Schedule of Deferred Tax Assets and Liabilities

	6 month period ended			Year ended December 31
	June 30, 2012			2011			2010
	($ in thousands)
Short-term:
Allowance for doubtful accounts	$	54		$	37		$	36
Provision for vacation and recreation pay		70			69			38
		124			106			74
Long-term:
R&D expenses		746			522			531
Convertible debenture		(1,251	)
Non cash issuance costs		89
Share-based compensation		693			276
Carry forward tax losses		7,631			6,000			2,582
Accrued severance pay, net		18			14			9
		7,926			6,812			3,122
Less-valuation allowance		(8,050	)		(6,918	)		(3,196	)
	$	-		$	-		$	-

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

+ References+ Details

- Definition

Tabular disclosure of valuation allowances to reduce deferred tax assets to net realizable value, including identification of the deferred tax asset more likely than not will not be fully realized and the corresponding amount of the valuation allowance.

+ References+ Details