EQUITY

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

EQUITY

NOTE 7 - EQUITY

a. Share capital

The Company’s shares that previously traded on the NYSE American were approved for listing on the Nasdaq Capital Market (“Nasdaq”) and such shares began trading on Nasdaq on May 21, 2021 under the symbol, “NSPR.” The Company’s warrants that previously traded on the NYSE American were approved for listing on Nasdaq, and such warrants began trading on Nasdaq on June 8, 2021.

On April 19, 2021, the Company filed with the Secretary of State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a one-for-fifteen reverse stock split of its common stock, par value $0.0001 per share, effective as of April 26, 2021.

All related share and per share data have been retroactively applied to the financial statements and their related notes for all periods presented.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

Public Offerings

On June 5, 2020, the Company closed an underwritten public offering of (i) 509,053 units (“Units”), with each Unit being comprised of one share of the Company’s common stock, par value $0.0001 per share, and one Series F warrant (a “Series F Warrant”) to purchase one share of common stock, and (ii) 972,427 pre-funded units (the “Pre-Funded Units”), with each Pre-Funded Unit being comprised of one pre-funded warrant (a “Pre-Funded Warrant”) to purchase one share of common stock and one Series F Warrant. In connection with this public offering, the underwriter exercised its over-allotment option in full and purchased an additional 222,220 shares of common stock and 222,220 Series F Warrants. The offering price to the public was $6.75 per Unit and $6.735 per Pre-Funded Unit. The net proceeds to the Company from the offering and the exercise of the underwriter’s over-allotment option were approximately $10.7 million, after deducting underwriting discounts and commissions and payment of other estimated expenses associated with the offering, but excluding the proceeds, if any, from the exercise of Series F Warrants and the Pre-Funded Warrants sold in the offering. The pre-funded warrants exercisable at a price of $0.015 per share of common stock.  

The Series F Warrants included in the Common Units and the Pre-Funded Units are immediately exercisable at a price of $7.425 per share of common stock, subject to adjustment in certain circumstances, and expire June 2, 2025. The shares of common stock, or Pre-Funded Warrants in the case of the Pre-Funded Units, and the Series F Warrants were offered together, but the securities contained in the Common Units and the Pre-Funded Units were issued separately.  

During the year ended December 31, 2020, 191,107 Series F Warrants were converted into 191,107 shares of common stock. The net proceeds to the Company from exercise of the Series F Warrants were approximately $1.4 million.  

Pursuant to the full ratchet anti-dilution adjustment provisions in the respective certificate of designation for the Company’s Series B Convertible Preferred Stock and Series C Preferred Stock, the conversion price of the outstanding shares of the Series B Convertible Preferred Stock and the Series C Preferred Stock was reduced to $6.75 per share, effective as of the date of the underwriting agreement entered for the June 2020 Offering, and the number of shares of common stock issuable upon conversion of the Series B Preferred Stock and the Series C Preferred Stock had increased as follows:

● An aggregate of 111,028 additional shares of common stock upon conversion of the Series B Preferred Stock and as payment of the dividends thereunder in common stock, based on 17,303 shares of Series B Preferred Stock outstanding as of June 2, 2020.  

● An aggregate of 18,886 additional shares of common stock upon conversion of the Series C Preferred Stock, based on 26,558 shares of Series C Preferred Stock outstanding as of June 2, 2020.  

for the purpose of calculating basic net loss per share, the additional shares of common stock that are issuable upon exercise of the Pre-funded Warrants have been included since the shares are issuable for a negligible consideration, as determined by the Company according to ASC 260-10-45-13, and have no vesting or other contingencies associated with them. The Company has also concluded that the series F warrants are classified as equity, since the warrants meet all criteria for equity classification.  

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

During the year ended December 31, 2020, the Company issued a total of 972,427 shares of common stock in connection with the exercise of all outstanding Pre-Funded Warrants issued in June 2020. In addition, the Company issued a total of 18,000 shares of its common stock in connection with the exercise of 18,000 Pre-Funded Warrants issued in September 2019. As of December 31, 2020, there are no outstanding Pre-Funded Warrants.  

On February 8, 2021, the Company closed an underwritten public offering (the “Offering”) of 1,935,484 units (“Units”), with each Unit being comprised of one share of the Company’s common stock, par value $0.0001 per share, and one Series G warrant (the “Series G Warrants”) to purchase one-half of one share of Common Stock. In connection with this public offering, the underwriter exercised its over-allotment option in full and purchased an additional 290,322 shares of common stock and 145,161 Series G Warrants. The offering price to the public was $9.30 per Unit. The Series G Warrants are immediately exercisable at a price of $10.23 per and expire five years from the date of issuance.  

The Company granted the underwriter compensation warrants to purchase up to 111,290 shares of Common Stock. The underwriter warrants have an exercise price of $10.23 per share and are exercisable immediately and for five years from the date of effectiveness of the registration statement in connection with the Offering.  

The net proceeds to the Company from the Offering, after giving effect to the exercise of the underwriter’s over-allotment option, were approximately $18.9 million, after deducting underwriting discounts and commissions and payment of other expenses associated with the Offering, but excluding the proceeds, if any, from the exercise of Series G Warrants sold in the Offering.  

On February 3, 2021, the Company entered into a Distribution Agreement with three China-based partners, See Note 6b. for details about the Distribution Agreement.

In addition, and on the same day, the Company entered into an investment transaction with one of the Chinese parties to the Distribution Agreement, which included (i) a Securities Purchase Agreement (the “SPA”), pursuant to which investor agreed to invest $900,000 in exchange for 89,445 shares of the Company’s common stock at a purchase price of $10.062 per share.  

During the year ended December 31, 2021, Series F and Series G warrants to purchase shares of common stock were exercised by investors at an exercise price of $7.425 and $10.23 per share, resulting in the issuance of 1,225,412 shares of common stock for proceeds of approximately $9,469,000.

ATM Offering

During the year ended December 31, 2020, the Company sold 861,163 shares of its common stock pursuant to its at-the-market (ATM) issuance sales agreement with A.G.P./Alliance Global Partners. These sales resulted in net proceeds to the Company of approximately $4,447,000.

During the year ended December 31, 2021, the Company sold 818,523 shares of its common stock pursuant to its at-the-market (ATM) issuance sales agreement with a sales agent. These sales resulted aggregate net proceeds to the Company of approximately $5,453,000.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

Pursuant to the full ratchet anti-dilution adjustment provisions in the respective certificate of designation for the Company’s Series B Convertible Preferred Stock and Series C Preferred Stock, the conversion price of the outstanding shares of the Series B Convertible Preferred Stock and the Series C Preferred Stock was reduced to $4.815 per share, triggered by the ATM Facility, effective as of December 14, 2020, and the number of shares of common stock issuable upon conversion of the Series B Preferred Stock and the Series C Preferred Stock had increased as follows:

● an aggregate of 59,491 additional shares of common stock upon conversion of the Series B Preferred Stock and as payment of the dividends thereunder in common stock, based on 17,303 shares of Series B Preferred Stock outstanding as of December 14, 2020.

● an aggregate of 893 additional shares of common stock upon conversion of the Series C Preferred Stock, based on 2,343 shares of Series C Preferred Stock outstanding as of December 14, 2020.

On July 7, 2016, we issued 442,424 shares of Series B Preferred Stock in a public offering. Our Series B Preferred Stock has a stated value of $495.00 which currently converted into 207,528 reflecting a conversion price equal to $ 4.815. The holders of Series B Preferred Stock are entitled to receive as cumulative dividends at the rate per share of 15% per annum of the stated value for five years, payable in cash or common stock, at the Company’s discretion, but excluding effect of future conversion price adjustment, if any.

On March 14, 2017, we issued 1,069,822 shares of Series C Preferred Stock in a public offering. Our Series C Preferred Stock has a stated value of $96 which currently converted into 3,114 reflecting a conversion price equal to $ 4.815.

During the year ended December 31, 2021, 625 shares of Series C Convertible Preferred Stock were converted into 831 shares of common stock. As of December 31, 2021, there were 1,718 shares of Series C Preferred Stock outstanding, convertible into an aggregate of 2,284 shares of our common stock.

During the year ended December 31, 2021, all the remaining 17,303 shares of Series B Convertible Preferred Stock were converted into 207,528 shares of common stock.

As of December 31, 2021, the Company has outstanding warrants to purchase an aggregate of 1,793,983 shares of common stock as follows:

	Number of underlying Common stock		Weighted average exercise price
Series E Warrants		198,159	$	27.000
Series F Warrants		433,878	$	7.425
Series G Warrants		1,092,344	$	10.230
Underwriter Warrants		18,277	$	7.425
Other warrants		51,325	$	225.000 and above
Total Warrants		1,793,983	$

As of December 31, 2021, the Company has 155,000,000 authorized shares of capital stock, par value $0.0001 per share, of which 150,000,000 are shares of common stock and 5,000,000 are shares of “blank check” preferred stock.

In the event of our liquidation, dissolution, or winding up, holders of Series C Convertible Preferred Stock are entitled to receive the amount of cash, securities or other property to which such holder would be entitled to receive with respect to such shares of Preferred Stock if such shares had been converted to common stock immediately prior to such event.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

b. Share-Based Compensation

1) Pursuant to the current Section 102 of the Israeli Tax Ordinance, which came into effect on January 1, 2003, options may be granted through a trustee (i.e., Approved 102 Options) or not through a trustee (i.e., Unapproved 102 Options). As a result of an election made by the Company under Section 102 of the Income Tax Ordinance, the Company will not be allowed to claim as an expense for tax purposes in Israel the amounts credited to the employee as capital gains to the grantees, although it will generally be entitled to do so in respect of the salary income component (if any) of such awards when the related tax is paid by the employee.

2) During the years ended December 31, 2021 and 2020, the Company granted stock options to the CEO, employees, consultants and directors to purchase a total of 225,225 and 92,007, respectively, shares of the Company’s common stock. The options have exercise prices ranging from $3.89-$10.05 and $4.95-$16.50 per share, respectively, which were the fair market value of the company’s common stock on the date of each respective grant. The fair value of the above options, using the Black-Scholes pricing models, was approximately $1,026,000 and $509,000, respectively. The options are subject to a three-year vesting period with one-third of such awards vesting each year.

3) During the years ended December 31, 2021 and 2020, the Company granted to the employees and directors 419,943 and 185,461 restricted stock, respectively. The fair value of these restricted stock was approximately $1,781,981 and $1,051,604, respectively. The restricted stock are subject to a three-year vesting period, with one-third of such awards vesting each year.

4) During the years ended December 31, 2021 and 2020, the Company granted to the CEO 146,567 and 90,511 Restricted Stock Units, respectively. The fair value of these restricted stock units was approximately $603,856 and $658,981, respectively. The restricted stock units granted during the years ended December 31, 2021 and 2020, are subject to a three-year vesting period, with one-third of such awards vesting each year.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

5) The following table summarizes information about stock options granted to employees:

	Year ended December 31
	2021					2020
	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price
Outstanding - beginning of period		91,692			6.20		-		$	-
Granted		205,223			4.90		92,007			6.20
Forfeited		(7,507	)		5.69		(315	)		5.85
Outstanding-end of period		289,408		$	5.29		91,692		$	6.20
Exercisable at the end of the period		28,360			6.26		-			-

6) The following table summarizes information about stock options granted to non-employees:

	Year ended December 31
	2021				2020
	Number of options		Weighted average exercise price		Number of options		Weighted average exercise price
Outstanding - beginning of period		-		-		-		-
Granted		20,002		6.90		-		-
Forfeited		-		-		-		-
Exercised		-				-		-
Outstanding - end of period		20,002		6.90		-		-
Exercisable at the end of the period		-		-		-		-

7) The following table summarizes information about restricted stock granted to employees:

	Year ended December 31
	2021			2020
	Number of restricted stock
Outstanding - beginning of period		185,725			4,642
Reverse Split Adjustments		59			-
Granted		419,943			185,461
Forfeited		(20,822	)		(3,717	)
Vested		(57,237	)		(661	)
Outstanding - end of period		527,668			185,725

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

8) The following table summarizes information about Restricted Stock Units granted to employees:

	Year ended December 31
	2021		2020
	Number of restricted stock units
Outstanding - beginning of period		90,511		11,000
Granted		146,567		90,511
Forfeited		-		-
Vested		-		(11,000	)
Outstanding - end of period		237,078		90,511

9) The following table provides additional information about all options outstanding and exercisable:

		Outstanding as of December 31, 2021
Exercise price		Options outstanding		Weighted average remaining contractual life (years)		Options exercisable
$	3.89-4.12		146,539		9.81		-
$	4.95-10.05		158,819		8.99		27,009
$	16.50		4,052		8.01		1,351
			309,410		9.37		28,361

The weighted average of the remaining contractual life of total vested and exercisable options as of December 31, 2021 was 8.65 years.

The aggregate intrinsic value of the total exercisable options as of December 31, 2021 was approximately $0.4.

The weighted average fair value of options granted was $4.56 for the year ended December 31, 2021. The weighted average fair value of options granted was estimated using the Black-Scholes option-pricing model.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

10) The following table sets forth the assumptions that were used in determining the fair value of options granted to employees for the year December 31, 2021:

	Year ended December 31
	2021		2020
	Number of restricted stock
Expected life	5.5-6.5 years		5.5-6.5 years
Risk-free interest rates	0.59%-1.40	%	0.32%-0.42	%
Volatility	129.11%-136.78	%	124.53%-136.66	%
Dividend yield	-		-

The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Accordingly, as to ordinary course options granted, the expected term was determined using the simplified method, which takes into consideration the option’s contractual life and the vesting periods (for non-employees, the expected term is equal to the option’s contractual life).

The annual risk-free rates are based on the yield rates of zero coupon non-index linked U.S. Federal Reserve treasury bonds as both the exercise price and the share price are in dollar terms. The Company’s expected volatility is derived from its historical data.

11)

As of December 31, 2021, the total unrecognized compensation cost on employee and non-employee stock options, restricted stock and restricted stock units, related to unvested stock-based compensation, amounted to approximately $3.4 million. This cost is expected to be recognized over a weighted-average period of approximately 1.01 years. This expected cost does not include the impact of any future stock-based compensation awards.

12)

The following table summarizes the allocation of total share-based compensation expense in the consolidated statements of operations:

	Year ended December 31
	2021		2020
	($ in thousands)
Cost of revenues	$	49	$	22
Research and development		64		29
Sales and marketing		182		32
General and administrative		1,281		523
	$	1,576	$	606

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)