EQUITY

12 Months Ended

Dec. 31, 2022

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.”

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.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

Public Offering

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 a securities purchase agreement 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, 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.

On July 7, 2016, the Company issued 442,424 shares of Series B Preferred Stock in a public offering. 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.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

On March 14, 2017, the Company issued 1,069,822 shares of Series C Preferred Stock in a public offering.

During the year ended December 31, 2021, an amount of 625 shares of Series C Convertible Preferred Stock were converted into 831 shares of common stock. As of December 31, 2021 and 2022, there were 1,718 shares of Series C Preferred Stock outstanding with a total stated value of $10,997 which convertible into an aggregate of 2,284 shares of our common stock reflecting a conversion price equal to $ 4.815.

As of December 31, 2022, the Company has outstanding warrants to purchase an aggregate of 1,793,815 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		51,157	$	225.000 and above
Total Warrants		1,793,815	$

As of December 31, 2022, 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.

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, 2022 and 2021, the Company granted stock options to the CEO, employees, consultants and directors to purchase a total of 154,508 and 225,225, respectively, shares of the Company’s common stock. The options have exercise prices ranging from $2.61-$2.97 and $3.89-$10.05 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 $360,356 and $1,026,000, respectively. Of the 154,508 options granted during the year ended December 31, 2022, 109,839 options are subject to a three-year vesting period, with one-third of such awards vesting each year and 44,669 options with performance conditions, mainly related to clinical activities.
3)	During  the years ended December 31, 2022 and 2021, the Company granted to the employees and directors 45,494 and 419,943 restricted stock, respectively. The fair value of these restricted stock was approximately $109,886 and $1,781,981, respectively. The restricted stock are subject to a three-year vesting period, with one-third of such awards vesting each year.
4)	During the year ended December 31, 2021, the Company granted to the CEO 146,567 RSUs. The fair value of these restricted stock units was approximately $603,856. The RSUs granted during the year ended December 31, 2021, 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
	2022					2021
	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price
Outstanding - beginning of period		289,408			5.29		91,692		$	6.20
Granted		7,841			2.61		205,223			4.90
Forfeited		(2,537	)		5.70		(7,507	)		5.69
Outstanding- end of period		294,712			5.21		289,408		$	5.29
Exercisable at the end of the period		123,115			5.51		28,360			6.26

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

	Year ended December 31
	2022				2021
	Number of options		Weighted average exercise price		Number of options		Weighted average exercise price
Outstanding - beginning of period		20,002		6.90		-		-
Granted		146,667		2.89		20,002		6.90
Forfeited		-		-		-		-
Exercised		-		-		-		-
Outstanding - end of period		166,669		3.37		20,002		6.90
Exercisable at the end of the period		35,667		3.61		-		-

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

	Year ended December 31
	2022			2021
	Number of restricted stock
Outstanding - beginning of period		527,668			185,725
Reverse Split Adjustments		-			59
Granted		45,494			419,943
Forfeited		(10,832	)		(20,822	)
Vested		(206,379	)		(57,237	)
Outstanding - end of period		355,951			527,668

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

8) The following table summarizes information about RSUs granted to employees:

	Year ended December 31
	2022		2021
	Number of RSUs
Outstanding - beginning of period		237,078		90,511
Granted		-		146,567
Forfeited		-		-
Vested		-		-
Outstanding - end of period		237,078		237,078

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

				Outstanding as of December 31, 2022
Exercise price		Options outstanding		Weighted average remaining contractual life (years)		Options exercisable
$	2.61-2.97		154,508		9.25		29,000
$	3.89-4.12		146,347		8.81		48,782
$	4.95-10.05		156,473		8.00		78,298
$	16.50		4,053		7.01		2,702
			461,381		8.67		158,782

The weighted average of the remaining contractual life of total vested and exercisable options as of December 31, 2022 was 8.41 years.

The aggregate intrinsic value of the total exercisable options as of December 31, 2022 was approximately $0.

The weighted average fair value of options granted was $2.56 for the year ended December 31, 2022. The weighted average fair value of options granted was estimated using the Black-Scholes option-pricing model.

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, 2022 and 2021:

	Year ended December 31
	2022	2021
Expected life	5.125-6.5 years	5.5-6.5 years
Risk-free interest rates	1.79%-2.88%-	0.59%-1.40%
Volatility	127.43%-130.93%	129.11%-136.78%
Dividend yield	-	-

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 7 – EQUITY (continued):

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, 2022, the total unrecognized compensation cost on employee and non-employee stock options, restricted stock and RSUs, related to unvested stock-based compensation, amounted to approximately $1.30 million. This cost is expected to be recognized over a weighted-average period of approximately 0.85 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
	2022		2021
	($ in thousands)
Cost of revenues	$	72	$	49
Research and development		582		64
Sales and marketing		318		182
General and administrative		1,380		1,281
	$	2,352	$	1,576

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)