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TAXES ON INCOME (Tables)

12 Months Ended

Jun. 30, 2013

If the Company will opt for application of Preferred Enterprise status, it will accordingly be subject, under law to the following tax rates:

Years	Areas in Israel (other than "Zone A"- as defined by the law)

"Preferred enterprise"
2013		12.5	%
2014*		12.5	%
2015 and thereafter*		12	%

On August 5, 2013 the Law for Change of National Priorities 2013 (Legislative Amendment for Achieving the Budgetary Goals for 2013-2014), as describe below, was published, and among other things, amended the tax rate for the years 2014 and thereafter.

Schedule of the Components of Loss before Income Taxes

The components of loss before income taxes are as follows:

	Year ended June 30,
	2013			2012
	($ in thousands)
Profit (loss) before taxes on income:
InspireMD, Inc.	$	(19,613	)	$	(11,078	)
InspireMD Ltd.		(9,653	)		(6,501	)
InspireMD GmbH		16			(4	)
	$	(29,250	)	$	(17,583	)

Schedule of Current Taxes on Income

The following is a reconciliation of the theoretical tax expense, assuming all income were taxed at the regular tax rates applicable to the Company in the U.S. and the actual tax expense:

	Year ended June 30,
	2013			2012
	($ in thousands)
Loss before taxes on income, as reported in the statements of operations	$	29,250		$	17,583
Theoretical tax benefit		(9,945	)		(5,984	)
Increase in tax benefit resulting from permanent differences		1,613			1,448
Increase (decrease) in taxes on income resulting from the computation of deferred taxes at a rate which is different from the theoretical rate		205			(75	)
Increase (decrease) in uncertain tax positions - net		-			(71	)
Decrease in theoretical tax benefit resulting from subsidiaries different tax rate		(61	)		1,408
Change in corporate tax rates, see c above		-			(245	)
Change in valuation allowance		8,196			3,533
	$	8		$	14

Schedule of the Changes in the Valuation Allowance

The changes in the valuation allowance for the years ended June 30, 2013 and 2012 were as follows:

	Year ended June 30,
	2013		2012
	($ in thousands)
Balance at the beginning of the year	$	8,050	$	4,517
Changes during the year		8,196		3,533
Balance at the end of the year	$	16,246	$	8,050

Reconciliation of Unrecognized Tax Benefits

The following is a reconciliation of the total amounts of the Company's unrecognized tax benefits during the years ended June 30, 2013 and 2012:

	Year ended June 30,
	2013		2012
	($ in thousands)
Balance at beginning of period	$	-	$	71
Decrease in unrecognized tax benefits as a result of tax positions taken during a prior year				(71	)
Balance at end of period	$	-	$	-

Schedule of Open Tax Years

A summary of open tax years by major jurisdiction is presented below:

Jurisdiction		Years
U.S.		2008-2012

Israel		2007-2012

Germany		2007-2012

Schedule of Deferred Tax Assets and Liabilities

Deferred income tax:

	Year ended June 30,
	2013			2012
	($ in thousands)
Short-term:
Allowance for doubtful accounts	$	82		$	54
Provision for bonus		51
Provision for vacation and recreation pay		79			70
		212			124
Long-term:
R&D expenses		1,227			746
Beneficial conversion feature		-			(1,251	)
Non cash issuance costs		-			89
Share-based compensation		1,698			693
Carry forward tax losses		13,060			7,631
Accrued severance pay, net		49			18
		16,034			7,926
Less-valuation allowance		(16,246	)		(8,050	)
	$	-		$	-

- 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.

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