Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.

Unless the context requires otherwise, references in this Form 10-Q to the "Company," "InspireMD," "we," "our" and "us" refer to InspireMD, Inc., a Delaware corporation, and its subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements," which include information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation, including revenue growth. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

	●	our history of recurring losses and negative cash flows from operating activities, significant future commitments and the uncertainty regarding the adequacy of our liquidity to pursue our complete business objectives, and substantial doubt regarding our ability to continue as a going concern;
	●	our need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute our stockholders' ownership interests;
	●	the clinical development, commercialization and market acceptance of our products;
	●	whether the clinical trial results for our products will be predictive of real-world results;
	●	an inability to secure and maintain regulatory approvals for the sale of our products;
	●	any impact of a product recall, including the current recall in the U.S. regarding the CGuard Prime 135cm Carotid Stent System, on our business, results of operations and financial conditions;
	●	negative clinical trial results or lengthy product delays in key markets;
	●	our ability to maintain compliance with the Nasdaq listing standards;
	●	our ability to generate significant revenues from our products;
	●	estimates of our expenses, future revenues, capital requirements and our needs for and ability to access sufficient additional financing, including any unexpected costs or delays in the ongoing commercial launch of our products;
	●	our dependence on a single manufacturing facility and our ability to comply with stringent manufacturing quality standards and to increase production as necessary;
	●	the risk that the data collected from our current and planned clinical trials may not be sufficient to demonstrate that our technology is an attractive alternative to other procedures and products;

	●	intense competition in our industry, with competitors having substantially greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do;
	●	entry of new competitors and products and potential technological obsolescence of our products;
	●	inability to carry out research, development and commercialization plans;
	●	loss of a key customer or supplier;
	●	technical problems with our research and products and potential product liability claims;
	●	product malfunctions;
	●	price increases for supplies and components;
	●	whether access to our products is achieved in a commercially viable manner and whether our products receive adequate reimbursement by governmental and other third-party payers;
	●	our efforts to successfully obtain and maintain intellectual property protection covering our products, which may not be successful;
	●	adverse federal, state and local government regulation, in the United States, Europe or Israel and other foreign jurisdictions;

	●	the fact that we conduct business in multiple foreign jurisdictions, exposing us to foreign currency exchange rate fluctuations, logistical and communications challenges, burdens and costs of compliance with foreign laws and political and economic instability in each jurisdiction;
	●	security, political and economic instability in the Middle East that could harm our business, including due to the current security situation in Israel;
	●	current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk; and
	●	changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements and the impact of such policies on us, our customers and suppliers, and the global economic environment.

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and investing in our common stock, you should carefully review the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission. The forward-looking statements contained in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

Overview

We are a medical device company specializing in the development and commercialization of products for the treatment of carotid artery disease and other vascular conditions. Our portfolio includes two commercial products based on our proprietary CGuard carotid stent technology, designed to provide market-leading embolic protection during and after stenting procedures. A stent is an expandable scaffold-like metallic device placed in an artery to widen the lumen and restore blood flow.

Our first product, the CGuard Carotid Embolic Prevention System ("CGuard EPS"), integrates a self-expanding nitinol stent with a MicroNet mesh sleeve as a single device for carotid artery revascularization. In January 2024, we received CE Mark recertification for CGuard EPS under the EU Medical Device Regulation ("MDR"). Our CGuard EPS previously held CE Mark approval under the former Medical Device Directive ("MDD"). CGuard EPS is marketed in over 30 countries outside the United States through a network of distributors. In the first quarter of 2026, we submitted a premarket approval for the CGuard EPS with a view to potential FDA approval in the in the third quarter of 2026.

Our second product, the CGuard Prime Carotid Stent System ("CGuard Prime"), uses the same stent and MicroNet mesh as the CGuard EPS with a differentiated deployment mechanism. CGuard Prime received premarket approval ("PMA") by the U.S. Food and Drug Administration ("FDA") on June 23, 2025, and is marketed exclusively in the United States through our direct salesforce. It also received MDR CE Mark approval on June 12, 2025.

In October 2024, the FDA approved the Company's IDE to initiate the CGUARDIANS II pivotal study of its CGuard Prime 80 cm carotid stent system during transcarotid revascularization ("TCAR") procedures. In the first quarter of 2026, we completed enrollment in the CGUARDIANS II pivotal study. In May 2026, the FDA approved the Company's IDE to initiate the CGUARDIANS III pivotal study of its CGuard Prime 80 cm carotid stent system during TCAR procedures.

In October 2023, the Centers for Medicare & Medicaid Services ("CMS") issued its final National Coverage Determination ("NCD"), expanding coverage for both carotid artery stenting ("CAS") and TCAR procedures to include both asymptomatic and standard risk patients, significantly expanding and supporting the future growth of the U.S. addressable market for CAS.

In November 2025, the results of the CREST-2 study were released, which showed that CAS combined with medical therapy demonstrated a significantly lower stroke risk as compared to intensive medical management alone in patients with severe asymptomatic carotid stenosis. CREST-2 was an independent study sponsored by the National Institute of Health (NIH) with a set of two parallel, observer-blinded clinical trials across 155 centers globally. CREST-2 showed that, among patients with high-grade carotid stenosis without recent neurological symptoms, the addition of stenting led to significantly better outcomes than intensive medical management alone, as measured by a decreased risk of the composite of perioperative stroke or death or ipsilateral stroke within four years. In a separate arm of the same trial, carotid endarterectomy ("CEA") did not achieve a significant benefit for these patients as compared to intensive medical management alone.

We continue to invest in new product generations and potential new clinical indications for the CGuard platform with a strategy of focusing on advancing a "stent-first" approach to carotid revascularization. As part of this strategy, we are evaluating CGuard Prime in TCAR-based clinical programs, including the CGUARDIANS II pivotal trial, which studies the use of the CGuard Prime 80 cm carotid stent system in conjunction with an established neuroprotection device, and the CGUARDIANS III pivotal trial, which evaluates our proprietary SwitchGuard neuroprotection system ("SwitchGuard NPS") paired with CGuard Prime to enable flow-reversal neuroprotection during TCAR. In parallel, we are pursuing new clinical applications outside TCAR, including the treatment of acute ischemic stroke with tandem lesions, which is currently being studied in an early feasibility study conducted with the Jacobs Institute. In this acute-stroke setting, the flexible, low-metal-burden design and MicroNet mesh of CGuard Prime may offer advantages where traditional embolic-protection devices cannot be used.

We consider our current addressable market for our CGuard EPS, CGuard Prime, and SwitchGuard NPS to be both symptomatic and asymptomatic individuals with diagnosed high-grade carotid artery stenosis for whom intervention is preferable to medical (drug) therapy. This group includes not only patients eligible for either CAS or TCAR procedures, but also individuals who are candidates for CEA, as all three approaches can be options to treat these patients. Assuming full penetration of the intervention caseload, we estimate that the addressable market for CGuard EPS, CGuard Prime, and SwitchGuard NPS is approximately $1.3 billion (source: Health Research International Personal Medical Systems, Inc. September 13, 2021 Results of Update Report on Global Carotid Stenting Procedures and Markets by Major Geography and Addressable Markets and internal estimates). According to this same report and internal estimates, assuming full penetration of treatment for all individuals diagnosed with high-grade carotid artery stenosis, we estimate the total available market for CGuard EPS, CGuard Prime, and SwitchGuard NPS to be approximately $9.3 billion, which may grow over time if expanded treatment options such as our products lead to increased patient screening for carotid artery disease.

In May 2026, we announced a voluntary recall in the U.S. of CGuard Prime, initiated in consultation with the FDA. The Company acted after determining during a controlled launch that the technical success of the delivery system during CAS procedures had not met performance expectations. The voluntary action pertained specifically to the CGuard Prime delivery system and did not include the CGuard stent implant. The action was voluntary with no implications for the safety of patients who had previously received the CGuard stent. The Company expects to establish a reserve for customer returns of approximately $700,000 and a reserve for inventory impairment and remediation costs of approximately $650,000.

We were organized in the State of Delaware on February 29, 2008. In October 2024, we established our global headquarters in Miami, Florida to support the U.S. launch and commercialization of CGuard Prime.

Critical Accounting Policies

A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are more fully described in both (i) "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and (ii) Note 2 of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2025. There have not been any material changes to such critical accounting policies since December 31, 2025.

The currency of the primary economic environment in which our operations are conducted is the U.S. dollar ("$" or "dollar").

Results of Operations

Three months ended March 31, 2026, compared to the three months ended March 31, 2025

Revenues. For the three months ended March 31, 2026, revenue was $3,398,000, an increase of $1,869,000, or 122 %, compared to $1,529,000 during the three months ended March 31, 2025. Growth in the quarter was driven mainly by the commercial launch of direct sales of the CGuard Prime product in the U.S. following FDA approval in June 2025, and continued growth in sales of the CGuard product through distributors in international markets.

With respect to geographical regions, the increase in revenue was primarily attributable to a $1,151,000 increase in North America due to the commercial launch of CGuard Prime in the U.S. following FDA approval in June 2025, and a $718,000 increase in international markets outside North America due to continued adoption of our CGuard technology.

Gross Profit. For the three months ended March 31, 2026, gross profit (revenue less cost of revenues) was $687,000 compared to gross profit of $292,000 for the three months ended March 31, 2025. The increase resulted mainly from the increase in revenue year-on-year, partially offset by higher cost of revenues resulting from an impairment charge of $473,000 for inventory obsolescence related to our CGuard Prime delivery system

Gross margin represents our gross profit as a percentage of our revenue. Gross margin was 20.2% for the three months ended March 31, 2026, an increase of 1.1 percentage points compared to 19.1% for the three months ended March 31, 2025. This increase in gross margin resulted primarily from a more favorable revenue mix driven by direct sales in the U.S., which carry higher margins due to a higher average selling price per unit compared with sales to international distributors. The impact from the favorable sales mix was primarily offset by the impact of the impairment charge for excess and obsolete inventory referenced above.

Research and Development Expenses. For the three months ended March 31, 2026, research and development expenses were $4,763,000, an increase of $704,000, or 17.4%, compared to $4,059,000 during the three months ended March 31, 2025. This increase resulted primarily due to higher staff levels in connection with our expansion in the U.S., an increase in regulatory activities expenses, and higher development and clinical expenses for the SwitchGuard NPS and CGuard Prime 80 cm carotid stent system, respectively. These increases were partially offset by a decrease in expenses for the C-GUARDIANS clinical study and related product preparation activity prior to the FDA approval of CGuard Prime in June 2025.

Selling and Marketing Expenses. For the three months ended March 31, 2026, selling and marketing expenses were $5,180,000, an increase of $2,430,000, or 88.4%, compared to $2,750,000 during the three months ended March 31, 2025. This increase resulted primarily from higher commercial staffing levels in connection with the commercial launch of CGuard Prime in the U.S.

General and Administrative Expenses. For the three months ended March 31, 2026, general and administrative expenses were $4,722,000, a decrease of $221,000, or 4.5%, compared to $4,943,000 during the three months ended March 31, 2025. The decrease was primarily driven by a reduction in share-based compensation expense resulting from forfeitures associated with executive employees who departed during the period.

Financial Income. For the three months ended March 31, 2026, financial income was $289,000, a decrease of $5,000 or 1.7% compared to $294,000 during the three months ended March 31, 2025.

Tax Expenses. We did not incur any tax expenses during the three months ended March 31, 2026 and March 31, 2025.

Net Loss. For the three months ended March 31, 2026, our net loss was $13,689,000, an increase of $2,523,000, or 22.6%, compared to $11,166,000 during the three months ended March 31, 2025. The increase in net loss resulted primarily from an increase of $2,913,000 in operating expenses.

Liquidity and Capital Resources

We had an accumulated deficit as of March 31, 2026, of $316 million, as well as a net loss of $13.7 million for the three months ended March 31, 2026 and negative operating cash flows. We expect to continue incurring losses and negative cash flows from operations until we expand our commercial revenue to a scale that funds our commercial resources, development activities and support functions. As a result of these expected losses and negative cash flows from operations, along with our current cash position, we believe we do not have sufficient resources to fund operations for at least the next 12 months. Therefore, there is substantial doubt about our ability to continue as a going concern.

Our plans include continued commercialization of our products and raising capital through sale of additional equity securities, debt or capital inflows from strategic partnerships and exercise of warrants. There are no assurances, however, that we will be successful in obtaining the level of financing needed for our operations. If we are unsuccessful in commercializing our products or raising capital, we may need to reduce activities, curtail or cease operations.

In May 2023, we closed a private placement offering that resulted in aggregate gross proceeds of approximately $42.2 million, before deducting fees payable to the placement agent and other offering expenses payable by us, pursuant to which we issued and sold 10,266,270 shares of our common stock, pre-funded warrants to purchase up to 15,561,894 shares of common stock and warrants to purchase up to an aggregate of 51,656,328 shares of common stock, consisting of Series H warrants to purchase up to 12,914,086 shares of common stock (the "Series H Warrants"), Series I warrants to purchase up to 12,914,078 shares of common stock (the "Series I Warrants"), Series J warrants to purchase up to 12,914,086 shares of Common Stock (the "Series J Warrants") and Series K warrants to purchase up to 12,914,078 shares of common stock (the "Series K Warrants" and together with the Series H Warrants, Series I Warrants and Series J Warrants, the "May 2023 Warrants"), at an offering price of $1.6327 per Private Placement Share and associated May 2023 Warrants and an offering price of $1.6326 per pre-funded warrant and associated May 2023 Warrants. If the May 2023 Warrants are exercised in cash in full this would result in an additional $71.4 million of gross proceeds (of which approximately $33.8 million has been received as of the date of this Quarterly Report on Form 10-Q). There can be no assurance that we will achieve any of the remaining milestones set forth in the May 2023 Warrants or that the outstanding May 2023 Warrants will be exercised in cash in full.

Following the announcement of the one year follow up study results from the Company's C-GUARDIANS trial, the Series H Warrants were exercised in full into 292,996 shares of common stock and pre-funded warrants to purchase 12,621,090 shares of common stock. The net proceeds from the exercise of the Series H Warrants were $16.9 million after deducting placement agent fees.

Following the announcement of the PMA approval of the CGuard Prime carotid stent system in the United States, the Series I warrants were exercised in full into 2,352,393 shares of common stock and pre-funded warrants to purchase 10,561,685 shares of common stock during June and July 2025. The net proceeds from the exercise of the Series I Warrants were $16.9 million after deducting placement agent fees.

In May 2024, we entered into an Equity Distribution Agreement (the "2024 Distribution Agreement") with Piper Sandler & Co., as sales agent ("Piper Sandler"). Pursuant to the 2024 Distribution Agreement, we were able offer and sell from time to time, at our option, through or to Piper Sandler shares of our common stock having an aggregate offering price of up to $75 million. We paid Piper Sandler a commission at a fixed rate of 3.0% of the aggregate gross proceeds from each sale of the shares under the 2024 Distribution Agreement. On April 3, 2026, we terminated the 2024 Distribution Agreement in connection with our entry into the 2026 Distribution Agreement (as defined below) with BTIG (as defined below). During the first quarter of 2026, we did not sell any shares pursuant to the 2024 Distribution Agreement.

In August 2025, we closed the private placement offering that resulted in aggregate gross proceeds of approximately $40.1 million, before deducting fees payable to the placement agent and other offering expenses payable by us.

In April 2026, we entered into an Equity Distribution Agreement (the "2026 Distribution Agreement") with BTIG, LLC, as sales agent ("BTIG"). Pursuant to the 2026 Distribution Agreement, we may offer and sell from time to time, at our option, through or to BTIG shares of our common stock having an aggregate offering price of up to $75 million. We will pay BTIG a commission at a fixed rate of up to 3.0% of the aggregate gross proceeds from each sale of the shares under the 2026 Distribution Agreement. As of the date hereof, we have not sold any shares pursuant to the 2026 Distribution Agreement.

Three months ended March 31, 2026, compared to the Three months ended March 31, 2025

General. As of March 31, 2026, we had cash and cash equivalents of $11,362,000 and marketable securities of $30,208,000, as compared to cash and cash equivalents of $8,939,000 and marketable securities of $45,272,000 as of December 31, 2025. We have historically met our cash needs through a combination of issuing new shares, borrowing activities and product sales. Our cash requirements are generally for research and development, marketing and sales activities, finance and administrative costs, capital expenditures and general working capital.

For the three months ended March 31, 2026, net cash used in our operating activities increased by $3,545,000, or 40.3%, to $12,337,000, from $8,792,000 during the same period in 2025. The primary reasons for the increase in cash used in our operating activities were an increase of $5,038,000 in compensation costs paid during the three months ended March 31, 2026 (from $6,132,000 in the three months ended March 31, 2025 to $11,170,000 in the three months ended March 31, 2026) offset by an increase of $1,561,000 in payments received from customers during the three months ended March 31, 2026 (from $1,555,000 in the three months ended March 31, 2025 to $3,116,000 during the three months ended March 31, 2026).

Cash provided by our investing activities was $14,779,000 during the three months ended March 31, 2026, compared to $1,702,000 during the three months ended March 31, 2025. The primary reason for the increase in cash provided by our investing activities is withdrawal of $15,000,000 from our investment in marketable securities.

There was no cash provided by financing activities for the three months ended March 31, 2026. Cash provided by financing activities for the three months ended March 31, 2025, was $506,000. The source of the cash provided by financing activities during the three months ended March 31, 2025, were the proceeds from issuance of shares of $506,000, net of issuance costs, received from the 2024 Distribution Agreement.

Off Balance Sheet Arrangements

We have no off-balance sheet transactions, arrangements, obligations (including contingent obligations) or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Factors That May Affect Future Operations

We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the market acceptance of the U.S. commercial launch, cyclical nature of the ordering patterns of our distributors, timing of regulatory approvals, the implementation of various phases of our clinical trials, manufacturing efficiencies due to the learning curve of utilizing new materials and equipment and the costs or other consequences associated with any current or future product recall that may occur. Product recalls in particular may adversely affect our operating results through the direct costs of executing a recall, lost revenues resulting from the removal of affected products from the market and the interruption of sales during any remediation period, costs associated with redesigning and remanufacturing affected products, potential regulatory, litigation and other legal costs, and longer-term reputational harm that may reduce market acceptance of our current and future products. Our operating results could also be impacted by a weakening of the Euro and strengthening of the NIS, both against the U.S. dollar. Lastly, other economic conditions we cannot foresee may affect customer demand, such as individual country reimbursement policies pertaining to our products.

Contractual Obligations and Commitments

During the three months ended March 31, 2026, there were no material changes to our contractual obligations and commitments since the year ended December 31, 2025.

Recently Adopted and Issued Accounting Pronouncements

See Note 3 to our condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for new accounting pronouncements adopted.