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TAXES ON INCOME (Tables)

6 Months Ended

Dec. 31, 2013

Schedule of the Components of Loss before Income Taxes

The components of loss before income taxes are as follows:

	6 month period ended			Year ended June 30,
	December 31, 2013			2013			2012
	($ in thousands)
Profit (loss) before taxes on income:
InspireMD, Inc.	$	(2,632	)	$	(19,613	)	$	(11,078	)
InspireMD Ltd.		(6,698	)		(9,653	)		(6,501	)
InspireMD GmbH		4			16			(4	)
	$	(9,326	)	$	(29,250	)	$	(17,583	)

Schedule of Current Taxes on Income

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

	6 month period ended			Year ended June 30,
	December 31, 2013			2013			2012
	($ in thousands)

Loss before taxes on income, as reported in the statements of operations	$	9,326		$	29,250		$	17,583
Theoretical tax benefit		(3,171	)		(9,945	)		(5,984	)
Increase in tax benefit resulting from permanent differences		164			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		(171	)		205			(75	)
Increase (decrease) in uncertain tax positions - net		-			-			(71	)
Decrease in theoretical tax benefit resulting from subsidiaries different tax rate		(14	)		(61	)		1,408
Change in corporate tax rates		(121	)		-			(245	)
Change in valuation allowance		3,323			8,196			3,533
	$	10		$	8		$	14

Schedule of the Changes in the Valuation Allowance

The changes in the valuation allowance for the six month period ended December 31, 2013 and the years ended June 30, 2013 and 2012 were as follows:

	6 month period ended		Year ended June 30,
	December 31, 2013		2013		2012
	($ in thousands)
Balance at the beginning of the year	$	16,246	$	8,050	$	4,517
Changes during the year		3,323		8,196		3,533
Balance at the end of the year	$	19,569	$	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 six month period ended December 31, 2013, as well as the years ended June 30, 2013 and 2012:

	6 month period ended		Year ended June 30,
	December 31, 2013		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.		2008-2013
Israel		2010-2013
Germany		2008-2013

Schedule of Deferred Tax Assets and Liabilities

Deferred income tax:

	6 month period ended			Year ended June 30,
	December 31, 2013			2013			2012
	($ in thousands)
Short-term:
Allowance for doubtful accounts	$	107		$	82		$	54
Provision for bonus					51
Provision for vacation and recreation pay		85			79			70
		192			212			124
Long-term:
R&D expenses		1,085			1,227			746
Beneficial conversion feature					-			(1,251	)
Non cash issuance costs					-			89
Share-based compensation		2,137			1,698			693
Carry forward tax losses		16,111			13,060			7,631
Accrued severance pay, net		44			49			18
		19,377			16,034			7,926
Less-valuation allowance		(19,569	)		(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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