NOTE 1 - DESCRIPTION OF BUSINESS:

InspireMD, Inc. (formerly Saguaro Resources, Inc.), a Delaware corporation (the "Company"), was formed on February 29, 2008. On March 28, 2011, the Company changed its name to InspireMD, Inc. in connection with a share exchange transaction between the Company, InspireMD Ltd., a limited company incorporated under the laws of the State of Israel in April 2005, and the shareholders of InspireMD Ltd.

On December 19, 2012, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company's Amended and Restated Certificate of Incorporation to effect a one-for-four reverse stock split of its common stock (the "Reverse Stock Split"), which decreased the number of issued and outstanding shares of common stock from approximately 72.1 million shares to approximately 18.0 million shares. The Company's authorized common stock was not affected by the Reverse Stock Split. All related share and per share data have been retroactively applied to the financial statements and their related notes for all periods presented.

On April 16, 2013, the Company consummated an underwritten public offering, pursuant to which it sold a total of 12,500,000 shares of common stock (the "Offering"). The price to the public in the Offering was $2.00 per share, and the aggregate net proceeds of the Offering to the Company were approximately $22.6 million, after the underwriters' commissions and offering expenses. In connection with the Offering, the Company also granted the underwriters a 30-day option to purchase up to an additional 1.875 million shares to cover over-allotments, if any. On April 11, 2013, following the pricing of the Offering, the Company's common stock began trading on the NYSE MKT.

On April 9, 2013, the Company, entered into an exchange and amendment agreement with the holders of the Company's outstanding senior secured convertible debentures (the "Debentures") due April 5, 2014 and as subsequently amended on April 15, 2013 (the "Exchange Agreement"). Pursuant to the Exchange Agreement, simultaneously with the closing of the Offering and in full satisfaction of the Company's obligations under the Debentures, the Company:

repaid $8,787,234 in cash;

issued 2,159,574 shares of common stock to the holders of the Debentures, reflecting a conversion price of $2.00 per share for the remaining unpaid portion of the Debentures;

issued five year warrants to the holders of the Debentures to purchase an aggregate of 659,091 shares of common stock for $3.00 per share;

amended the securities purchase agreement pursuant to which the Debentures were originally issued to prohibit the Company from issuing securities containing anti-dilution protective provisions; and

amended the warrants issued in connection with the Debentures to (i) eliminate the automatic incorporation of the terms of any of the Company's securities that are superior to those of such warrants, except with respect to exercise price and warrant coverage and (ii) provide that upon a fundamental transaction, the holders of such warrants will have the right to cause the Company to repurchase the unexercised portion of such warrants at their Black-Scholes value on the date of such fundamental transaction, payable in shares of common stock, rather than in cash as was previously provided.

The above transactions pursuant to the Exchange Agreement are referred to herein as the "Exchange."

Pursuant to the terms of the securities purchase agreement that the Company entered into on March 31, 2011 (the "2011 SPA"), as a result of the Offering and the Exchange, the Company issued the purchasers in its March 31, 2011 financing, or their assigns, an aggregate of 755,207 shares of common stock. The related expense has been recorded to "Financial expenses (income), net" within the Consolidated Statements of Operations.

Due to the Offering and the Exchange, the Company believes that it has sufficient cash to continue its operations into 2015. However, depending on the operating results in 2013 and 2014, the Company may need to obtain additional cash in 2015 to continue to fund its operations.